[Federal Register Volume 74, Number 205 (Monday, October 26, 2009)]
[Proposed Rules]
[Pages 54928-54935]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25570]
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DEPARTMENT OF AGRICULTURE
Grain Inspection, Packers and Stockyards Administration
9 CFR Part 206
RIN 0580-AB06
Swine Contract Library
AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.
ACTION: Proposed rule.
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SUMMARY: On August 11, 2003, the Grain Inspection, Packers and
Stockyards Administration (GIPSA) implemented new Subtitle B of Title
II of the Packers and Stockyards Act which was added by the Livestock
Mandatory Reporting Act of 1999 (1999 Act), by establishing the Swine
Contract Library (SCL). The statutory authority for the library lapsed
on September 30, 2005. On October 5, 2006, the Livestock Mandatory
Reporting Reauthorization Act (Reauthorization Act) reauthorized the
1999 Act until September 30, 2010, and also amended the swine reporting
requirements of the 1999 Act. This proposed rulemaking would re-
establish the regulatory authority for the library's continued
operation and incorporate certain changes contained within the
Reauthorization Act that impact the SCL, as well as make other changes
to enhance the library's overall effectiveness and efficiency in
response to input from regulated entities and the public. We also
intend to request a 3-year extension of and revision to the currently
approved information collection in support of the reporting and
recordkeeping requirements for the SCL program. This approval is
required under the Paperwork Reduction Act.
DATES: We will consider comments we receive by December 28, 2009.
ADDRESSES: We invite you to submit comments on this proposed rule. You
may submit comments by any of the following methods:
E-Mail: comments.gipsa@usda.gov.
Mail: Tess Butler, GIPSA, USDA, 1400 Independence Avenue,
SW., Room 1643-S, Washington, DC 20250-3604.
Fax: (202) 690-2173.
Hand Deliver or Courier: Tess Butler, GIPSA, USDA, 1400
Independence Avenue, SW., Room 1643-S, Washington, DC 20250-3604.
Internet: Go to http://www.regulation.gov and follow the
on-line instructions.
Instructions: All comments should make reference to the date and
page number of this issue of the Federal Register. Regulatory analyses
and other documents relating to this action will be available for
public inspection in Room 1643-S, 1400 Independence Avenue, SW.,
Washington, DC 20250-3604, during regular business hours (7 CFR
1.27(b)). Please call a member of the GIPSA Management Support Staff at
(202) 720-7486 to view the comments reviewed.
FOR FURTHER INFORMATION CONTACT: S. Brett Offutt, Director, Policy and
Litigation Division, P&SP, GIPSA, 1400 Independence Ave., SW.,
Washington, DC 20250, (202) 720-7363, or via E-mail at
s.brett.offutt@usda.gov.
SUPPLEMENTARY INFORMATION:
Background
GIPSA is responsible for the enforcement of the Packers and
Stockyards Act of 1921 (7 U.S.C. 181 et seq.) (P&S Act or Act). Under
authority delegated to GIPSA by the Secretary of Agriculture
(Secretary) in Section 407(a) of the P&S Act (7 U.S.C. 228), we are
authorized to create regulations necessary to carry out the provisions
of the Act.
The 1999 Act (Pub. L. 106-78) amended Title II of the P&S Act to
include Subtitle B--Swine Packer Marketing Contracts. The 1999 Act
mandated the creation and maintenance of a library of marketing
contracts offered by certain packers to producers for the purchase of
swine. To implement this legislation, GIPSA established the SCL and
promulgated SCL regulations (9 CFR Part 206) requiring that packers, as
defined in Subtitle B, Title II, of the P&S Act, file example marketing
contracts with GIPSA along with monthly estimates of the number of
swine to be delivered under contract. GIPSA compiles this information
and makes summary reports available to the public.
On October 22, 2004, the 1999 Act expired and was not reauthorized
until December 3, 2004 (Pub. L. 108-444). Authority for the 1999 Act
was extended, however, to September 30, 2005. The 1999 Act lapsed again
in 2005 and was reauthorized and amended on October 5, 2006, when the
Reauthorization Act (Pub. L. 109-296) was signed into law. The 1999 Act
is scheduled to once again expire on September 30, 2010.
When the 1999 Act expired in October 2004, GIPSA asked swine
packers to continue to comply with the SCL regulations voluntarily.
With the information submitted voluntarily by packers, GIPSA has
continued to make summary reports available to the public.
This proposed rule would re-establish authority for the SCL
regulations (9 CFR Part 206) by amending the regulations' authority
citation to include Subtitle B of Title II of the P&S Act (7 U.S.C.
198-198b). In addition to amending the SCL regulations to make them
consistent with the Reauthorization Act, we would also amend the SCL
regulations to incorporate suggestions received from the public and
regulated entities. Specifically, we propose to:
(1) Revise the definition of ``packer'' to be consistent with the
Reauthorization Act;
(2) Revise the definitions of several contract types;
(3) Add definitions of terms used in several contract types to
describe the
[[Page 54929]]
market price that is being paid for swine;
(4) Add a new requirement that an example contract submission, a
notification of contract expiration, and a notification of a contract
withdrawal include a standard cover sheet; and
(5) Add a waiver for packers that do not utilize marketing
contracts.
The purpose of these amendments is to make the information
collected more uniform and more useful, while reducing the burden on
the reporting entities.
Description of Proposed Amendments
The SCL final rule was published in the Federal Register (68 FR
47802) on August 11, 2003, and became effective on September 10, 2003.
We have not amended these regulations since the implementation of the
library. The following describes the proposed changes to the 2003 SCL
regulations required by the Reauthorization Act, along with changes
that have been requested by regulated entities.
Definitions
In section 206.1, we propose to revise the definitions of
``packer,'' ``other market formula purchase,'' ``other purchase
arrangement,'' and ``swine or pork market formula purchase,'' and add
new definitions for several terms that are used currently in contracts
to describe the market price being paid for swine. While the definition
of ``packer'' would be revised to make the SCL regulations consistent
with the Reauthorization Act, other existing definitions would be
revised and new definitions added to make the SCL regulations
consistent with the definitions used by USDA's Agricultural Marketing
Service (AMS) in its mandatory price reporting program regulations, and
to respond to suggestions received from regulated entities.
Under the 1999 Act, the term ``packer'' was defined as only those
persons purchasing and slaughtering an average of at least 100,000
swine per year at a federally inspected swine processing plant during
the immediately preceding 5 calendar years. The Reauthorization Act,
however, amended the term ``packer'' to include those persons who
slaughter an average of at least 200,000 sows, boars or combination
thereof per year during the immediately preceding 5 calendar years. In
addition, the Reauthorization Act separated the reporting requirements
for sows and boars from barrows and gilts. Because boars and sows fall
under the original definition of the term ``swine'' in the 1999 Act's
provisions that authorize the Swine Contract Library, slaughterers of
at least 100,000 boars and sows at a single federally inspected
processing plant would continue to be subject to the SCL regulations.
The Reauthorization Act expanded the definition of the term ``packer''
to include not only federally inspected swine processing plants of a
certain size, but also persons who slaughter a certain number of sows
and boars at multiple plants. We believe that the proposed revised
definition of the term ``packer'' reflects Congressional intent to have
persons who slaughter less than 100,000 swine at one plant, but
slaughter at least 200,000 boars and sows total at multiple small
plants, report prices under the mandatory reporting requirements. We
have identified only one firm that would be affected by this change in
the definition of the term ``packer'' in the SCL.
Because there is no legislative history for the Reauthorization Act
to assist us in interpreting the intended meaning of the amended
definition of the term ``packer,'' we are proposing a definition that
would be consistent with the term as defined in the 2003 SCL
regulations. That definition, which meets the requirements of the 1999
Act, excludes small packers who do not purchase large numbers of swine
and likely would not use marketing contracts to make those
purchases.\1\ Therefore, we propose to include in the definition of the
term ``packer'' only those persons who purchase at least 200,000 sows,
boars, or some combination thereof per year and have those animals
slaughtered at federally inspected swine processing plants. We believe
that our proposed revised definition of the term ``packer'' would
continue to exclude small sow and boar packers.
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\1\ 68 FR 47802, 47802-02 (2003).
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In our proposal, we also distinguish between the terms ``packer''
and ``plant'' in our revised definition of the term ``packer'' to show
that a packer is a person, or entity that purchases swine for slaughter
and a plant is a facility where the swine are slaughtered. We also
propose to add the phrase ``alone or in combination with other plants''
after the phrase ``slaughtering capacity'' to Sec. 206.2(a), 206.2(b),
206.3(a) and 206.3(b) of the regulations to reflect the revised
definition of the term ``packer.''
Because the Reauthorization Act redefined the term ``packer'' to
include a person who slaughters sows, boars, or some combination
thereof, the terms ``boar'' and ``sow,'' which are defined in section
231 of the AMA (7 U.S.C. 1635i), would be added to the definitions in
the SCL regulations.
Based on the usage of the terms ``floor,'' ``window,'' and
``ceiling'' prices in the amended definition of ``other purchase
arrangement,'' and ``swine or pork market formula purchase,'' in
section 206.1 of the regulations, we propose that definitions for the
terms ``floor price,'' ``window price,'' and ``ceiling price'' be added
to the regulations for clarity.
The term ``floor price'' would be defined as the minimum market
price for swine; the term ``ceiling price'' would be the maximum market
price for swine; and, the term ``window price'' would be the range of
market prices paid for swine between the ``floor price'' and the
``ceiling price.'' The proposed definitions of these terms provide for
adjustments in the market price.
We also propose to revise the definitions for the terms ``swine or
pork market formula purchase,'' ``other market formula purchase,'' and
``other purchase arrangement,'' all of which refer to categories of
contracts. Swine packers that are required to report under both the
1999 Act and the SCL have requested that we make these changes so that
they can use the same contract types for reporting the estimated swine
contract deliveries to GIPSA, and reporting actual swine deliveries to
USDA's Agricultural Marketing Service (AMS). Regulated entities have
told us that it is contrary to the purpose of price discovery to have
different definitions for different mandatory price reporting systems,
as well as an unnecessary burden for reporting entities.
Based on the request received from the industry, we propose to:
(1) Revise the definition of the term ``other market formula
purchase'' to remove specific examples of this type of contract and
state that the pricing could include a formula based on futures or
options. This change would make the definition consistent with AMS
mandatory price reporting regulations;
(2) Revise the definition of the term ``other purchase
arrangement'' to specify that this category includes long term contract
agreements, fixed price contracts, cost of production formulas, and
formula purchases with a floor, window (range or spread), or ceiling
price; and
(3) Revise the definition of the term ``swine or pork market
formula purchase'' to add references to floor, window, or ceiling
prices. The proposed change would clarify that a formula purchase with
a floor, window, or ceiling price is not considered to be a swine or
pork market formula purchase.
The proposed changes to the definition of the term ``other purchase
arrangement'' would make the SCL
[[Page 54930]]
definition consistent with the AMS definition. The proposed amendments
to the other definitions listed above clarify that GIPSA does not
consider a contract with a floor, window or ceiling price, or formula
based on the cost of production to be a type of market purchase. As a
result of these changes in definitions, categorization of some existing
contracts would change. For example, a contract in which the formula
contains a floor or ceiling price would be categorized as an ``other
purchase arrangement'' rather than a ``swine or pork market formula.''
A contract in which the base price is determined by the cost of
production, including formulas based on feed markets, would be an
``other purchase arrangement'' rather than an ``other market formula.''
These revised definitions would appear both in the regulations and on
the cover sheet for contract submissions.
Furthermore, in our administration of the SCL, approximately 25
percent of packers currently subject to the SCL regulations have
reported that they do not use marketing contracts and have reported the
estimates of swine to be delivered under contract as zero each month.
Swine packers who buy swine on the spot market or who contract with
growers to produce swine might not have any marketing contracts and
therefore would have no contracts to submit. But, these packers are
still required to submit a monthly report. GIPSA believes that monthly
reports filled with zeroes do not provide information that is relevant
to the price discovery process. An annual waiver would reduce the
burden on regulated entities and reduce the number of essentially blank
entries in the SCL database. Therefore, we propose to amend Sec.
206.3, ``Monthly Report,'' to include a new procedure that would allow
swine packers who do not use any marketing contracts to file a yearly
waiver request.
Options Considered
This rulemaking is necessary to give the SCL regulations the force
and effect of law. This proposal is possible now that the statute
creating the SCL has been reauthorized. When the authorizing
legislation lapsed, GIPSA requested that packers who are required to
report under the SCL continue to submit their reports voluntarily, and
many packers did so. Now that the 1999 Act has been reauthorized, the
statutory basis for enforcing the SCL regulations again exists. In
order to effectively resume the SCL program, this rulemaking is
necessary.
We considered one alternative to the proposed changes in the
definitions, which was to ask packers to continue to voluntarily comply
with regulations that are not enforceable and are no longer consistent
with the authorizing legislation. Since that is not a viable option, we
have no alternative but to revise the SCL regulations to carry out
provisions of the P&S Act.
We considered not waiving the requirement that packers who do not
purchase swine under contract report information to GIPSA for the SCL.
However, we did not see value in filling GIPSA's SCL database with
blank monthly reports. We also considered a waiver of longer than 1
year, but did not wish to provide such a blanket waiver since business
conditions change over time. Packers with a waiver who commence
purchasing swine under marketing contracts would be required to begin
filing contracts on the first business day of the following month as
described in Sec. 206.2, and commence submitting monthly reports as
required by Sec. 206.3 of the regulations.
Effects on Regulated Entities
If these proposed regulations are implemented, the reporting burden
for most packers should remain about the same or slightly less than the
reporting burden under the expired regulations. Swine packers would
have to comply with regulations that they have complied with in the
past. We anticipate that 35 swine packers that operate or have swine
slaughtered at 55 plants would be required to comply with the SCL
regulations. This represents only 8.5 percent of all federally
inspected swine plants; the others do not meet the size and capacity
definition of ``packer'' for the purpose of the proposed rule. Nearly
half of the 35 swine packers now comply with the SCL requirements
voluntarily. Three of the entities that would be subject to this
proposed rule are new respondents, and their anticipated burden is
under 4 hours to initiate the reporting process. For the 32 remaining
swine packers, the expected burden is .25 hours per packing plant to
submit an example of each new or amended contract to GIPSA.
The proposed change in the definition of the term ``packer'' would
require reporting by one additional firm. That firm would otherwise not
meet the previous size and capacity definition of ``packer.''
This proposal should benefit swine producers by increasing their
knowledge about contract terms and the number of swine under contract,
improve market transparency, and give swine producers the ability to
make more informed marketing decisions. Market transparency facilitates
market efficiency by reducing price information search costs for market
participants. Availability of market information may also contribute to
considerations of equity and fairness in the marketplace.
Executive Order 12866 and Regulatory Flexibility Act
The Office of Management and Budget (OMB) has designated this rule
as not significant for the purposes of Executive Order 12866.
We have determined that this rule will not have a significant
economic impact on a substantial number of small entities as defined in
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Therefore, an
initial regulatory flexibility analysis has not been provided. This
rule will apply to approximately 35 packers operating at 55 plants.
This represents only 8.5 percent of all federally inspected swine
plants; the others are too small to meet the size and capacity
definition of the term ``packer'' for the purpose of this proposed
rule. Of those 35 packers, 18 have fewer than 500 employees and will
therefore meet the applicable size standard for small entities in the
Small Business Administration (SBA) regulations (13 CFR 121.201). For
the North American Industry Classification System (NAICS) code 311611
``Animal (except poultry) Slaughtering,'' the SBA size standard is 500
employees. However, the firms to which this rule applies are the
largest of the firms in this industry that meet the size standard for
small businesses. We estimate that eight of those 18 small entities
would be eligible for an annual waiver, thus reducing the required
reporting burden on those entities from 12 monthly reports to one
annual waiver request. For the remaining 10 small entities that are not
eligible for a waiver, the requirement to submit marketing contracts to
GIPSA is estimated at .25 hours (15 minutes) per contract, and the
monthly report is estimated to average 2 hours per report prepared and
submitted by mail or facsimile, and 1 hour per report prepared and
submitted electronically, which does not represent a significant
economic burden or impact.
The proposed change in the definition of the term ``packer'' would
require one additional firm. That firm would otherwise not meet the
previous size and capacity definition of ``packer.''
This proposed rule requires swine packers to submit certain
information to GIPSA. It does not impose any restrictions on the form,
timing, or
[[Page 54931]]
location of contracts in which regulated entities may engage. It places
no additional burden or limit on current or future business
relationships into which affected firms may enter.
We have considered the effects of this rulemaking action under the
Regulatory Flexibility Act and we believe that it will not have a
significant economic impact on a substantial number of small entities.
We welcome comments on the cost of compliance with this rule, and
particularly on the impact of this proposed rule on any small entities.
We also welcome comments on alternatives to the proposed rule that
could achieve the same purpose with less cost or burden.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. These actions are not intended to have retroactive
effect. This rule will not pre-empt state or local laws, regulations,
or policies, unless they present an irreconcilable conflict with this
rule. In addition, the 1999 Act, as amended, does not restrict or
modify the authority of the Secretary to administer or enforce the
Packers and Stockyards Act of 1921 (7 U.S.C. 181 et seq.). There are no
administrative procedures that must be exhausted prior to any judicial
challenge to the provisions of this rule.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.), GIPSA is also requesting an extension for and revision
to a currently approved information collection in support of the
reporting and recordkeeping requirements under the SCL program.
Title: Swine Contract Library.
OMB Number: 0580-0021.
Expiration Date of Approval: October 31, 2009.
Type of Request: Extension and revision of a currently approved
information collection.
Abstract: The Grain Inspection, Packers and Stockyards
Administration (GIPSA) is responsible for maintaining the Swine
Contract Library (SCL), which is authorized by the Packers and
Stockyards Act and requires that certain swine packers submit
procurement contracts and delivery estimates to GIPSA. Congress
reauthorized the SCL on October 5, 2006, and this information
collection describes the requirements as they exist in that 2006
reauthorization. The information collection and recordkeeping
requirements for the SCL are essential to maintaining the mandatory
library of swine marketing contracts and reporting the number of swine
that are contracted for delivery. Thirty-five packers are currently
required to file contracts and report certain information on
deliveries. These packers operate or they have swine slaughtered at a
total of 55 plants. We expect the overall number of swine packers and
plants to remain relatively constant, but the specific swine packers
required to report under the SCL will vary with consolidation and
construction within the industry.
Packers are required to report information for individual plants
even in instances when a particular company owned or used the
slaughtering services of more than one plant. The information
collection burden estimates provided below are based on time and cost
requirements at the plant level, so packers that report for more than
one plant would bear a cost that would be a multiple of the per-plant
estimates.
We understand from discussions with packers complying with current
reporting requirements that reporting packers have adapted pre-existing
data and information systems to provide the required information.
There are two types of information collections required for the
Swine Contract Library discussed below.
The first information collection requirement consists of submitting
example contracts. Initially, a packer submits example contracts
currently in effect or available for each swine processing plant that
is subject to the regulations. Subsequently, a packer submits example
contracts for any offered, new, or amended contracts that vary from
contracts submitted previously in regard to the base price
determination, the application of a ledger or accrual account, carcass
merit premium and discount schedules (including the determination of
the lean percent or other merits of the carcass that is used to
determine the amount of the premiums and discounts and how those
premiums and discounts are applied), or the use and amount of
noncarcass merit premiums or discounts. The initial submission of
example contracts requires more time than subsequent filings of new
contracts or changes, as packers initially need to review all their
contracts to identify the unique types that need to be represented by
an example submitted to GIPSA.
Thereafter, subsequent filings require a minimal amount of effort
on the part of packers, as only example contracts that represent a new
or different type need to be filed with GIPSA. An optional contract
submission cover sheet is available, but not required, for submitting
example contracts. Approximately one-half of the packers currently
subject to the regulations use Form P&SP 342, Contract Submission Cover
Sheet. This cover sheet is required for entering the contract into our
system; if a contract is submitted without a cover sheet, one is
completed by GIPSA staff.
The required submission of contracts includes both written and
verbal contracts. Packers have added documentation of verbal contracts
to their existing recordkeeping systems in order to comply with this
requirement. The optional form that is available (P&SP-343), but not
required for reporting verbal contracts, is used by 10 packers; 1
packer that relies heavily on verbal contracts uses this optional form
exclusively to document its verbal contracts. Of 579 contract files on
file with GIPSA in the SCL, the optional verbal contract sheet was used
by packers to document 157 verbal contracts.
The second information collection requirement is a monthly filing
of summary information on Form P&SP 341, Monthly Report: Estimates of
Swine To Be Delivered Under Contract. The form for the monthly filing
is simple and brief. For new packers required to start reporting, this
data should be readily available to packers in their existing record
system. We encourage electronic submission of data to GIPSA and provide
information on how that can be accomplished effectively. In 2008,
approximately 90 percent of monthly reports were submitted via the Web
site, with the remaining 10 percent submitted via fax or by mail.
The estimates of time requirements used for the burden estimates
below were developed in consultation with GIPSA personnel who are
knowledgeable of the industry's recordkeeping practices. The estimates
also reflect our experience in assembling large amounts of data during
the course of numerous investigations using data collected from the
industry. Estimates of time requirements and hourly wage costs for
developing electronic recordkeeping and reporting systems are based on
our experience in developing similar systems in consultation with our
automated information systems staff.
Contract Submission Cover Sheet (Form P&SP-342)
Estimate of Burden: The reporting burden for submission of
contracts is estimated to include 4 hours per plant for an initial
review of all contracts to categorize them into types and to identify
unique examples, plus an additional 0.25 hours per unique contract
identified to submit an example
[[Page 54932]]
of that contract. After the initial filing, the reporting burden is
estimated to include 0.25 hours per plant to submit an example of each
new or amended contract.
Respondents: Swine packers that are required to report information
for the Swine Contract Library.
Estimated Number of Respondents: 35 swine packers (55 plants
total).
Estimated Number of Responses per Plant: The number of responses
per plant varies. Some plants would have no contracts, while others
could have up to 80 contracts. We receive an average of six example
contracts per plant per year for offered contracts and amended existing
or available contracts.
Estimated Total Annual Burden on Respondents: The initial filing of
examples of existing contracts by all plants newly subject to the
regulations combined is estimated to be 5.5 hours. Based on changes in
the industry, we anticipate that one new plant would become subject to
the regulations each year. The burden is calculated as follows: 4 hours
per plant for initial review x 1 new plant = 4 hours for initial
review; 0.25 hours per contract x 6 example contracts per plant x 1 new
plant = 1.5 hours; 4 hours + 1.5 hours = 5.5 total hours.
Thereafter, we expect the burden to be 82.5 total hours annually
for all subsequent filings of examples of offered or amended existing
or available contracts by all plants combined, based on an average of 6
offered or amended existing or available contracts annually. The burden
is calculated as follows: 0.25 hours per contract x 6 example contracts
per plant x 55 plants = 82.5 hours.
The initial review of 55 plants x 1 respondent per plant x 4 hours
= 220 hours.
Total Cost: We expect an initial filing cost of $138 for the one
new plant required to report, which is calculated as follows: 5.5 hours
x $25 per hour = $138. Thereafter, we expect a total cost of $2,063
annually for all plants combined for submission of subsequent filings.
This is calculated as follows: 82.5 hours x $25 per hour = $2,063.
Monthly Report: Estimate of Swine To Be Delivered Under Contract (Form
P&SP-341)
Estimate of Burden: The reporting burden for compiling data,
completing and submitting the monthly report form is estimated to
average 2 hours per report prepared and submitted manually by mail or
facsimile, and 1 hour per report prepared and submitted electronically.
There would be an estimated additional one-time set up burden of 1 hour
at a cost of $60 per plant for a packer to create a spreadsheet or a
database for recordkeeping and preparing monthly estimates. There would
be an estimated additional 2 hour burden at a cost of $60 per hour or
$120 per plant for a packer to develop procedures to extract and format
the required information and to develop an interface between the packer
and GIPSA's electronic recordkeeping systems. The hourly rate for the
development of electronic tools is assumed to be high due to the need
to use personnel with specialized computer skills.
Respondents: Swine packers that are required to report information
for the Swine Contract Library.
Estimated Number of Respondents: 35 packers (55 plants total).
Estimated Number of Responses per Plant: 12 (1 per month for 12
months).
Estimated Total Annual Burden on Respondents: 1,320 hours for all
plants combined if all plants used manual compiling, preparation, and
submission. The annual burden is calculated as follows: 2 hours per
response x 55 plants x 12 responses per plant = 1,320.
For plants using electronic compiling, preparation and submission,
the annual burden would be 600 hours, which is calculated as follows: 1
hour per response x 50 plants (90% x 55 = 50) x 12 responses per plant
= 600 hours.
Total Cost: For all 55 plants, the cost is estimated at $33,000
annually if all plants submit data manually. This is calculated as
follows: 1,320 x $25 per hour = $33,000.
For all 55 plants, the cost is estimated at $16,500 annually if all
prepared and submitted data electronically. This is calculated as
follows: 660 hours x $25 per hour = $16,500.
We estimate an additional one-time set-up cost of $180 if all
plants newly subject to the regulations were to utilize only electronic
systems for preparing and submitting data. This cost is calculated as
follows: 1 hour to build spreadsheet/database + 2 hours to develop
electronic interface = 3 hours; then 3 hours total development x $60
per hour x 1 new plant = $180.
The Paperwork Reduction Act also requires GIPSA to measure the
recordkeeping burden. Under the P&S Act and regulations, each packer is
required to maintain and make available upon request such records as
are necessary to verify information on all transactions between the
packer and producers from whom the packer obtains swine for slaughter.
Records that packers are required to maintain under existing
regulations would meet the requirements for verifying the accuracy of
information required to be reported for the SCL. These records include
original contracts, agreements, receipts, schedules, and other records
associated with any transaction related to the purchase, pricing, and
delivery of swine for slaughter under the terms of marketing contracts.
Additional annual costs of maintaining records would be nominal since
packers are required to store and maintain such records in the course
of normal business practices and in conformity with existing
regulations.
As required by the Paperwork Reduction Act (44 U.S.C.
3506(c)(2)(A)) and its implementing regulations (5 CFR
1320.8(d)(1)(i)), we specifically request comments on:
(a) Whether the proposed collection of information is necessary for
the proper performance of the functions of the agency, including
whether the information will have practical utility;
(b) The accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected; and
(d) Ways to minimize the burden on the collection of information on
those who are to respond, including through the use of appropriate
automated electronic, mechanical, or other technological collection
techniques or other forms of information technology.
All responses to this notice will be summarized and included in the
request for the Office of Management and Budget approval. All comments
will also become a matter of public record.
E-Government Act Compliance
GIPSA is committed to complying with the E-Government Act, to
promote the use of the internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes.
List of Subjects in 9 CFR Part 206
Swine, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, we propose to amend 9
CFR Chapter II as follows:
1. Revise Part 206 to read as follows:
PART 206--SWINE CONTRACT LIBRARY
Sec.
206.1 Definitions.
206.2 Swine contract library.
206.3 Monthly report.
Authority: 7 U.S.C. 198-198b; 7 U.S.C. 222.
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Sec. 206.1 Definitions.
The definitions in this section apply to the regulations in this
part. The definitions in this section do not apply to other regulations
issued under the Packers and Stockyards Act (P&S Act) or to the P&S Act
as a whole.
Accrual account. (Synonymous with the term ``ledger,'' as defined
in this section.) An account held by a packer on behalf of a producer
that accrues a running positive or negative balance as a result of a
pricing determination included in a contract that establishes a minimum
and/or maximum level of base price paid. Credits and/or debits for
amounts beyond these minimum and/or maximum levels are entered into the
account. Further, the contract specifies how the balance in the account
affects producer and packer rights and obligations under the contract.
Base price. The price paid for swine before the application of any
premiums or discounts, expressed in dollars per unit.
Boar. A sexually-intact male swine.
Ceiling price. The maximum market price that will be paid for
swine. Adjustments may be made to the base price if the market price
rises above this price.
Contract. Any agreement, whether written or verbal, between a
packer and a producer for the purchase of swine for slaughter, except a
negotiated purchase (as defined in this section).
Contract type. The classification of contracts or risk management
agreements for the purchase of swine committed to a packer, by the
determination of the base price and the presence or absence of an
accrual account or ledger (as defined in this section). The contract
type categories are:
(1) Swine or pork market formula purchases with a ledger,
(2) Swine or pork market formula purchases without a ledger,
(3) Other market formula purchases with a ledger,
(4) Other market formula purchases without a ledger,
(5) Other purchase arrangements with a ledger, and
(6) Other purchase arrangements without a ledger.
Floor price. The minimum market price that will be paid for swine.
Adjustments may be made to the base price if the market price falls
below this price.
Formula price. A price determined by a mathematical formula under
which the price established for a specified market serves as the basis
for the formula.
Ledger. (Synonymous with ``accrual account,'' as defined in this
section.) An account held by a packer on behalf of a producer that
accrues a running positive or negative balance as a result of a pricing
determination included in a contract that establishes a minimum and/or
maximum level of base price paid. Credits and/or debits for amounts
beyond these minimum and/or maximum levels are entered into the
account. Further, the contract specifies how the balance in the account
affects producer and packer rights and obligations under the contract.
Negotiated purchase. A purchase, commonly known as a ``cash'' or
``spot market'' purchase, of swine by a packer from a producer under
which:
(1) The buyer-seller interaction that results in the transaction
and the agreement on actual base price occur on the same day; and
(2) The swine are scheduled for delivery to the packer not later
than 14 days after the date on which the swine are committed to the
packer.
Noncarcass merit premium or discount. An increase or decrease in
the price for the purchase of swine made available by an individual
packer or packing plant, based on any factor other than the
characteristics of the carcass, if the actual amount of the premium or
discount is known before the purchase and delivery of the swine.
Other market formula purchase. A purchase of swine by a packer in
which the pricing determination is a formula price based on any market
other than the markets for swine, pork, or a pork product. This
includes a formula purchase where the price formula is based on one or
more futures or options contracts.
Other purchase arrangement. A purchase of swine by a packer that is
not a negotiated purchase, swine or pork market formula purchase, or
other market formula purchase, and does not involve packer-owned swine.
This contract type includes long term contract agreements, fixed price
contracts, cost of production formulas, and formula purchases with a
floor, window or ceiling price.
Packer. Any person engaged in the business of buying swine in
commerce for purposes of slaughter, of manufacturing or preparing meats
or meat food products from swine for sale or shipment in commerce, or
of marketing meats or meat food products from swine in an
unmanufactured form, acting as a wholesale broker, dealer, or
distributor in commerce. The regulations in this part apply only to a
packer that meets the conditions in either paragraph (1) or (2) of this
definition:
(1) A packer purchasing at least 100,000 swine per year and
slaughtering swine at one or more federally inspected processing plants
that meet either of the following conditions:
(i) A swine processing plant that slaughtered an average of at
least 100,000 head of swine per year during the immediately preceding 5
calendar years, with the average based on those periods in which the
plant slaughtered swine; or
(ii) A swine processing plant that did not slaughter swine during
the immediately preceding 5 calendar years that has the capacity to
slaughter at least 100,000 swine per year, based on plant capacity
information.
(2) Any packer purchasing an average of at least 200,000 sows,
boars, or any combination thereof, per year and slaughtering at least
200,000 sows, boars, or any combination thereof at one or more
federally inspected processing plants during the immediately preceding
5 calendar years, with the average based on those periods in which the
plant slaughtered swine.
Producer. Any person engaged, either directly or through an
intermediary, in the business of selling swine to a packer for
slaughter (including the sale of swine from a packer to another
packer).
Sow. An adult female swine that has produced one or more litters.
Swine. A porcine animal raised to be a feeder pig, raised for
seedstock, or raised for slaughter.
Swine or pork market formula purchase. A purchase of swine by a
packer in which the pricing mechanism is a formula price based on a
market for swine, pork, or pork product, other than any formula
purchase with a floor, window or ceiling price, or a futures or option
contract for swine, pork, or a pork product.
Window price. The range of market prices that will be paid for
swine. Adjustments may be made to the base price if the market prices
fall outside this range. The window price contains both the floor and
ceiling prices.
Sec. 206.2 Swine contract library.
(a) Do I need to provide swine contract information? Each packer,
as defined in Sec. 206.1, must provide information for each swine
processing plant that it operates or at which it has swine slaughtered
that has the slaughtering capacity, alone or in combination with other
plants, specified in the definition of packer in Sec. 206.1.
(b) What existing or available contracts do I need to provide and
when are they due? Each packer must send, to
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the Grain Inspection, Packers and Stockyards Administration (GIPSA), an
example of each contract it currently has with a producer or producers
or that is currently available at each plant that it operates or at
which it has swine slaughtered that meets the definition of packer in
Sec. 206.1. This initial submission of example contracts is due to
GIPSA on the first business day of the month following the
determination that the plant has the slaughtering capacity, alone or in
combination with other plants, specified in the definition of packer in
Sec. 206.1.
(c) What available contracts do I need to provide and when are they
due? After the initial submission, each packer must send GIPSA an
example of each new contract it makes available to a producer or
producers within 1 business day of the contract being made available at
each plant that it operates or at which it has swine slaughtered that
meets the definition of packer in Sec. 206.1.
(d) What criteria do I use to select example contracts? For
purposes of distinguishing among contracts to determine which contracts
may be represented by a single example, contracts will be considered to
be the same if they are identical with respect to all of the following
four example-contract criteria:
(1) Base price or determination of base price;
(2) Application of a ledger or accrual account (including the terms
and conditions of the ledger or accrual account provision);
(3) Carcass merit premium and discount schedules (including the
determination of the lean percent or other merits of the carcass that
are used to determine the amount of the premiums and discounts and how
those premiums and discounts are applied); and
(4) Use and amount of noncarcass merit premiums and discounts.
(e) Where and how do I send my contracts? Each packer may submit
the example contracts, notifications required by this section, and Form
P&SP 342, Contract Submission Cover Sheet, by either of the following
two methods:
(1) Electronic report. Example contracts and notifications required
by this section may be submitted by electronic means. Electronic
submission may be by any form of electronic transmission that has been
determined to be acceptable to the Administrator. To obtain current
options for acceptable methods to submit example contracts
electronically, contact GIPSA through the Internet on the GIPSA Web
site (http://www.gipsa.usda.gov) or at USDA GIPSA, Suite 317, 210
Walnut Street, Des Moines, Iowa 50309.
(2) Printed report. Each packer that chooses to submit printed
example contracts and notifications must deliver the printed contracts
and notifications to USDA GIPSA, Suite 317, 210 Walnut Street, Des
Moines, Iowa 50309.
(f) What information from the swine contract library will be made
available to the public? GIPSA will summarize the information it has
received on contract terms, including, but not limited to, base price
determination and the schedules of premiums or discounts. GIPSA will
make the information available by region and contract type, as defined
in Sec. 206.1, for public release 1 month after the initial submission
of contracts. Geographic regions will be defined in such a manner to
provide as much information as possible while maintaining
confidentiality in accordance with section 251 of the Agricultural
Marketing Act (7 U.S.C. 1636).
(g) How can I review information from the swine contract library?
The information will be available on the Internet on the GIPSA Web site
(http://www.gipsa.usda.gov) and at USDA-GIPSA, Suite 317, 210 Walnut
Street, Des Moines, Iowa 50309. The information will be updated as
GIPSA receives information from packers.
(h) What do I need to do when a previously submitted example
contract is no longer a valid example due to contract changes,
expiration, or withdrawal? Each packer must submit a new example
contract when contract changes result in changes to any of the four
example-contract criteria specified in paragraph (d) of this section
and notify GIPSA if the new example contract replaces the previously
submitted example contract. Each packer must notify GIPSA when an
example contract no longer represents any existing or available
contract (expired or withdrawn). Each packer must submit these example
contracts and notifications within 1 business day of the change,
expiration, or withdrawal.
Sec. 206.3 Monthly report.
(a) Do I need to provide monthly reports? Each packer, as defined
in Sec. 206.1, must provide information for each swine processing
plant that it operates or at which it has swine slaughtered that has
the slaughtering capacity, alone or in combination with other plants,
specified in the definition of packer.
(b) When is the monthly report due? Each packer must send a
separate monthly report for each plant that has the slaughtering
capacity, alone or in combination with other plants specified in the
definition of packer in Sec. 206.1. Each packer must deliver the
report to the GIPSA Regional Office in Des Moines, Iowa, by the close
of business on the 15th of each month, beginning at least 45 days after
the initial submission of example contracts. If the 15th day of a month
falls on a Saturday, Sunday, or federal holiday, the monthly report is
due no later than the close of the next business day following the
15th.
(c) What information do I need to provide in the monthly report?
The monthly report that each packer files must be reported on Form
P&SP-341, which will be available on the Internet on the GIPSA Web site
(http://www.gipsa.usda.gov) and at USDA GIPSA, Suite 317, 210 Walnut
Street, Des Moines, Iowa 50309. In the monthly report, each packer must
provide the following information:
(1) Number of swine to be delivered under existing contracts.
Existing contracts are contracts the packer currently is using for the
purchase of swine for slaughter at each plant. Each packer must provide
monthly estimates of the number of swine committed to be delivered
under all of its existing contracts (even if those contracts are not
currently available for renewal or to additional producers) in each
contract type as defined in Sec. 206.1.
(2) Available contracts. Available contracts are the contracts the
packer is currently making available to producers, or is making
available for renewal to currently contracted producers, for the
purchase of swine for slaughter at each plant. On the monthly report, a
packer will indicate each contract type, as defined in Sec. 206.1,
that the packer is currently making available.
(3) Estimates of committed swine. Each packer must provide an
estimate of the total number of swine committed under existing
contracts for delivery to each plant for slaughter within each of the
following 12 calendar months beginning with the 1st of the month
immediately following the due date of the report. The estimate of total
swine committed will be reported by contract type as defined in Sec.
206.1.
(4) Expansion clauses. Any conditions or circumstances specified by
clauses in any existing contracts that could result in an increase in
the estimates specified in paragraph (c)(3) of this section. Each
packer will identify the expansion clauses in the monthly report by
listing a code for the following conditions:
(i) Clauses that allow for a range of the number of swine to be
delivered.
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(ii) Clauses that require a greater number of swine to be delivered
as the contract continues.
(iii) Other clauses that provide for expansion in the numbers of
swine to be delivered.
(5) Maximum estimates of swine. The packer's estimate of the
maximum total number of swine that potentially could be delivered to
each plant within each of the following 12 calendar months, if any or
all of the types of expansion clauses identified in accordance with the
requirement in paragraph (c)(4) of this section are executed. The
estimate of maximum potential deliveries must be reported for all
existing contracts by contract type as defined in Sec. 206.1.
(d) What if a contract does not specify the number of swine
committed? To meet the requirements of paragraphs (c)(3) and (c)(5) of
this section, the packer must estimate expected and potential
deliveries based on the best information available to the packer. Such
information might include, for example, the producer's current and
projected swine inventories and planned production.
(e) When do I change previously reported estimates? Regardless of
any estimates for a given future month that may have been previously
reported, current estimates of deliveries reported as required by
paragraphs (c)(3) and (c)(5) of this section must be based on the most
accurate information available at the time each report is prepared.
(f) Where and how do I send my monthly report? Each packer must
submit monthly reports required by this section by either of the
following two methods:
(1) Electronic report. Information reported under this section may
be reported by electronic means, to the maximum extent practicable.
Electronic submission may be by any form of electronic transmission
that has been determined to be acceptable to the Administrator. To
obtain current options for acceptable methods to submit information
electronically, contact GIPSA through the Internet on the GIPSA Web
site (http://www.gipsa.usda.gov) or at USDA GIPSA, Suite 317, 210
Walnut Street, Des Moines, Iowa 50309.
(2) Printed report. Each packer may deliver its printed monthly
report to USDA GIPSA, Suite 317, 210 Walnut Street, Des Moines, Iowa
50309.
(g) What information from monthly reports will be made available to
the public and when and how will the information be made available to
the public?
(1) Availability. GIPSA will provide a monthly report of estimated
deliveries by contract types as reported by packers in accordance with
this section, for public release on the first business day of each
month. The monthly reports will be available on the Internet on the
GIPSA Web site (http://www.gipsa.usda.gov) and at USDA GIPSA, Suite
317, 210 Walnut Street, Des Moines, Iowa 50309.
(2) Regions. Information in the report will be aggregated and
reported by geographic regions. Geographic regions will be defined in
such a manner to provide as much information as possible while
maintaining confidentiality in accordance with section 251 of the
Agricultural Marketing Act (7 U.S.C. 1636) and may be modified from
time to time.
(3) Reported information. The monthly report will provide the
following information:
(i) The existing contract types for each geographic region.
(ii) The contract types currently being made available to
additional producers or available for renewal to currently contracted
producers in each geographic region.
(iii) The sum of packers' reported estimates of the total number of
swine committed by contract for delivery during the next 6 and 12
months beginning with the month the report is published. The report
will indicate the number of swine committed by geographic reporting
region and by contract type.
(iv) The types of conditions or circumstances as reported by
packers that could result in expansion in the numbers of swine to be
delivered under the terms of expansion clauses in the contracts at any
time during the following 12 calendar months.
(v) The sum of packers' reported estimates of the maximum total
number of swine that potentially could be delivered during each of the
next 6 and 12 months if all expansion clauses in current contracts are
executed. The report will indicate the sum of estimated maximum
potential deliveries by geographic reporting region and by contract
type.
(h) Where and how do I file a waiver request? The waiver request
must be submitted in writing and include a statement that the packer
does not procure swine using marketing agreements. The packer must send
the waiver request to the GIPSA Regional Office in Des Moines, Iowa. If
the waiver request is approved, GIPSA will inform the packer in writing
that it has been granted a waiver for 12 months following the date of
receipt of the waiver request unless the status of the packer changes
during that year. The packer will be notified to submit the information
required in this part if it begins using marketing agreements during
the waiver period or if GIPSA determines that the packer utilizes
marketing agreements.
J. Dudley Butler,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. E9-25570 Filed 10-23-09; 8:45 am]
BILLING CODE 3410-KD-P