[Federal Register Volume 77, Number 163 (Wednesday, August 22, 2012)]
[Rules and Regulations]
[Pages 50561-50575]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20443]



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Rules and Regulations
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Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / 
Rules and Regulations

[[Page 50561]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 59

[Doc. No. AMS-LS-11-0049]
RIN 0581-AD07


Livestock Mandatory Reporting Program; Establishment of the 
Reporting Regulation for Wholesale Pork

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: On April 2, 2001, the U.S. Department of Agriculture (USDA), 
Agricultural Marketing Service (AMS) implemented the Livestock 
Mandatory Reporting (LMR) program as required by the Livestock 
Mandatory Reporting Act of 1999 (1999 Act). In October 2006, the LMR 
program was reauthorized by Congress through September 2010. On 
September 28, 2010, the Mandatory Price Reporting Act of 2010 (2010 
Reauthorization Act) reauthorized LMR for an additional 5 years and 
added a provision for mandatory reporting of wholesale pork cuts. The 
2010 Reauthorization Act directed the Secretary to engage in negotiated 
rulemaking to make required regulatory changes for mandatory wholesale 
pork reporting and establish a negotiated rulemaking committee to 
develop these changes. This final rule reflects the work of the USDA 
Wholesale Pork Reporting Negotiated Rulemaking Committee (Committee).

DATES: Effective Date: This rule is effective on January 7, 2013.

FOR FURTHER INFORMATION CONTACT: Michael Lynch, Director; USDA, AMS, 
LS, LGMN Division; 1400 Independence Ave. SW., Room 2619-S; Washington, 
DC 20250; at (202) 720-6231; fax (202) 690-3732, or email 
Michael.Lynch@ams.usda.gov.

SUPPLEMENTARY INFORMATION:

Background

    The 1999 Act was enacted into law on October 22, 1999 (Pub. L. 106-
78) as an amendment to the Agricultural Marketing Act of 1946 (7 U.S.C. 
1621-1627, 1635-1638d). The purpose of the 1999 Act was to establish a 
program of information regarding the marketing of cattle, swine, lambs, 
and the products of such livestock that provides information that can 
be readily understood by producers; improves the price and supply 
reporting services of USDA; and encourages competition in the 
marketplace for livestock and livestock products. On December 1, 2000, 
AMS published the final rule to implement the LMR program as required 
by the 1999 Act (65 FR 75464) with an effective date of January 30, 
2001. This effective date was subsequently delayed until April 2, 2001 
(66 FR 8151).
    The statutory authority for the program lapsed on September 30, 
2005. At that time, AMS sent letters to all packers required to report 
under the 1999 Act requesting they continue to submit information 
voluntarily. In October 2006, Congress passed the Livestock Mandatory 
Reporting Reauthorization (2006 Reauthorization Act) (Pub. L. 109-296). 
The 2006 Reauthorization Act re-established the regulatory authority 
for the continued operation of the LMR program through September 30, 
2010, and separated the reporting requirements for sows and boars from 
barrows and gilts, among other changes. On May 16, 2008, USDA published 
the final rule to re-establish and revise the LMR program (73 FR 
28606). The rule incorporated the swine reporting changes contained 
within the 2006 Reauthorization Act, and enhanced the program's overall 
effectiveness and efficiency based on AMS' experience in the 
administration of the program. The LMR final rule became effective on 
July 15, 2008.
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
(Pub. L. 110-234) directed the Secretary of Agriculture (Secretary) to 
conduct a study to determine advantages, drawbacks, and potential 
implementation issues associated with adopting mandatory wholesale pork 
reporting. The report from this study concluded that voluntary 
negotiated wholesale pork price reporting is thin, and becoming 
thinner. It also found some degree of support for moving to mandatory 
price reporting at every segment of the industry interviewed, and that 
the benefits likely would exceed the cost of moving from a voluntary to 
a mandatory reporting program for wholesale pork. The report was 
delivered to Congress on March 25, 2010. A copy of the full report is 
available on the AMS Web site at http://www.ams.usda.gov/AMSv1.0/marketnews by clicking on ``Livestock, Meats, Grain, and Hay,'' then 
``Livestock Mandatory Reporting.''
    On September 28, 2010, the 2010 Reauthorization Act (Pub. L. 111-
239), reauthorized LMR for an additional 5 years and added a provision 
for mandatory reporting of wholesale pork cuts. The 2010 
Reauthorization Act directed the Secretary to engage in negotiated 
rulemaking to make required regulatory changes for mandatory wholesale 
pork reporting and establish a negotiated rulemaking committee to 
develop these changes. The statute required that the committee include 
representatives from (i) organizations representing swine producers; 
(ii) organizations representing packers of pork, processors of pork, 
retailers of pork, and buyers of wholesale pork; (iii) the USDA; and 
(iv) interested parties that participate in swine or pork production. 
Further, the 2010 Reauthorization Act stated that any negotiated 
rulemaking committee established by the Secretary would not be subject 
to the Federal Advisory Committee Act (5 U.S.C. Appendix 2).

Purpose of Regulatory Action

    The objective of this rule is to improve the price and supply 
reporting services of AMS in order to encourage competition in the 
marketplace for wholesale pork products by increasing the amount of 
information available to participants. This is accomplished through the 
establishment of a program of information regarding the marketing of 
wholesale pork products as specifically directed by the 1999 Act, the 
2010 Reauthorization Act, and these regulations, as described in detail 
in the background section. Further, a mandatory wholesale pork 
reporting program will address concerns relative to the asymmetric 
availability of market

[[Page 50562]]

information. Previously, pork processors were not required by law to 
report wholesale pork cut prices. Rather, AMS collected information on 
daily sales and price information from pork processors on a voluntary 
basis. The 2008 Farm Bill directed the Secretary to conduct a study to 
determine advantages, drawbacks, and potential implementation issues 
associated with adopting mandatory wholesale pork reporting. The study 
found that wholesale pork price reporting is thin, and frequently 
results in missing or unreportable price quotes for subprimals.
    This final rule is issued in accordance with the Mandatory Price 
Reporting Act of 2010 (2010 Reauthorization Act) [Pub. L. 111-239], 
which reauthorized Livestock Mandatory Reporting for 5 years and 
required the addition of wholesale pork through negotiated rulemaking.

Summary of the Major Provisions of the Regulatory Action in Question

    This final rule requires packers to report wholesale pork sales to 
AMS. Specifically, the rule outlines what information packers will be 
required to submit to AMS, how the information should be submitted, and 
other program requirements. Packers will submit the price of each sale, 
quantity, and other characteristics (e.g., type of sale, item 
description, destination) that AMS will use to produce timely, 
meaningful market reports.
    The final rule is effective January 7, 2013. The effective date for 
this final rule is the date on which packers are required to submit 
data. Data submitted after this date is subject to audit for compliance 
with the 1999 Act and subsequent regulations, including this final 
rule.
    During the 4-month period following the publication of the 
regulation, AMS will conduct an industry education and outreach program 
concerning the provisions and requirements of this rule. The Agency 
believes this period of time is adequate for packers to adapt to the 
wholesale pork reporting requirements.
    AMS plans to continue publishing voluntary wholesale pork reports 
for a period of 180 days after the effective date of this regulation.

Costs and Benefits

    The benefits of this rule are diffuse and difficult to quantify; 
therefore, this analysis considers benefits only on a qualitative 
basis. The qualitative benefits derived from the literature are:
    1. The increased number of firms reporting prices to AMS under the 
mandatory program will provide a more complete data set, leading to 
increased price transparency and more efficient price discovery;
    2. Allows AMS more opportunity to keep wholesale pork reporting 
current with industry marketing practices and product offerings; and,
    3. Provides information to industry participants that cannot afford 
to purchase data, including small pork processing operations, small 
wholesalers and retailers, and direct and niche marketing operations.
    The major cost of complying with this rule involves the information 
collection and reporting process. The regulatory objective of this rule 
is to increase the amount of information available to participants in 
the marketplace for wholesale pork and pork products by mandating 
reporting of market information by certain members of the industry. The 
Committee developed the rule to achieve this objective in the most 
cost-effective manner possible. To the extent practicable, the 
Committee drew upon current industry practices and reporting procedures 
for other commodities covered by LMR in order to minimize the burden to 
the industry.
    Annual industry costs are expected to be $95,770. These represent 
start-up costs associated with information technology enhancements, 
recordkeeping, and submission costs. The annual cost for each of the 56 
respondents is estimated to be $1,710. Total annual cost to the 
government is expected to be approximately $300,000. This is largely 
for salaries and benefits for personnel who will collect, review, 
assemble, and publish market reports on wholesale pork. Additional 
costs of approximately $325,000 will be incurred in the first year to 
accommodate information technology system development. A complete 
discussion of the cost and benefits can be found under the Executive 
Order 12866 section.

Negotiated Rulemaking Committee

    AMS convened a negotiated rulemaking committee to develop the 
regulatory language outlined in this rule as mandated by the 2010 
Reauthorization Act. The negotiated rulemaking process, which is 
authorized by the Negotiated Rulemaking Act of 1996 (NRA) (5 U.S.C. 
561-570), involves a committee composed of people representing 
interests that will be significantly affected by the rule, and the 
rulemaking agency developing the regulations.
    On November 24, 2010, AMS published a notice announcing its intent 
to convene a negotiated rulemaking committee (75 FR 71568). The notice 
sought public comment on the need for the committee and on its proposed 
membership, and provided others interested in being committee members 
the opportunity to submit nominations. AMS proposed a number of 
organizations for membership on the committee that represented those 
interests required to be included on such a committee by the 2010 
Reauthorization Act.
    Additionally, AMS solicited nominations from affected organizations 
who also wanted to be represented on the committee. In determining 
membership, AMS considered whether the interest represented by a member 
will be affected significantly by the final product of the committee 
and whether that interest was already adequately represented by other 
members. Under section 562(5) of the NRA, ``interest'' means ``with 
respect to an issue or matter, multiple parties which have a similar 
point of view or which are likely to be affected in a similar manner.'' 
In accordance with the NRA, committee membership was limited to a 
maximum of 25 members.
    On January 26, 2011, AMS announced the establishment of the 
Wholesale Pork Reporting Negotiated Rulemaking Committee (Committee); 
responded to comments from the November 24, 2010, notice; identified 
the final list of members; and set forth the dates for the first 
meeting (76 FR 4554). The Committee members were: American Meat 
Institute; Chicago Mercantile Exchange; Food Marketing Institute; 
Grocery Manufacturers Association; Livestock Marketing Information 
Center; National Farmers Union; National Livestock Producers 
Association; National Meat Association; National Pork Producers 
Council; North American Meat Processors Association, American 
Association of Meat Processors, and Southeastern Meat Association (one 
combined representative for all three per organizations' request); 
United Food and Commercial Workers Union; and USDA, Agricultural 
Marketing Service.
    On February 8-10, 2011, the Committee met in St. Louis, Missouri. 
Notably, during this meeting, the Committee members developed ground 
rules that addressed general rules of conduct, participation, and 
reiterated the Committee's purpose. The ground rules also established 
that all decisions would be made by ``consensus,'' and defined 
``consensus'' as unanimous concurrence among the Committee members. The 
Committee held second (76 FR 12887) and third (76 FR 23513) meetings in 
Arlington, Virginia; March

[[Page 50563]]

15-17, 2011, and May 10-11, 2011, respectively. All meetings were open 
to the public without advance registration. Members of the public were 
given opportunities to make statements during the meetings at the 
discretion of the Committee, and were able to file written statements 
with the Committee for its consideration. The language developed by the 
Committee served as the basis for the proposed rule (77 FR 16951) and 
the regulatory text outlined in this final rule.

Reporting Requirements

    Pork processors, or packers, will be required to report sales of 
wholesale pork to AMS so that AMS may produce timely, meaningful market 
reports. These requirements are discussed in detail in the sections 
immediately following and represent the information on price, volume, 
and related characteristics of wholesale pork sales that packers will 
be required to submit under LMR.
    According to the LMR program (7 CFR part 59), a packer, for 
purposes of swine and wholesale pork reporting, is defined as any 
person engaged in the business of buying swine in commerce for the 
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. For any 
calendar year, the term ``packer'' includes only federally inspected 
swine processing facilities that slaughtered an average of at least 
100,000 swine per year during the immediately preceding 5 calendar 
years and a person that slaughtered an average of at least 200,000 
sows, boars, or combination thereof per year during the immediately 
preceding 5 calendar years. Additionally, in the case of a swine 
processing plant or person that did not slaughter swine during the 
immediately preceding 5 calendar years, it shall be considered a packer 
if the Secretary determines the processing plant or person should be 
considered a packer under this subpart after considering its capacity.
    For the ease of the reader, this section is organized to highlight 
major components of the rule.

Definition of Wholesale Pork

    The term ``wholesale pork'' represents what is widely considered 
wholesale pork to packers, processors, retailers, and others in the 
supply chain. For example, items with commonly-added ingredients used 
to extend shelf life, such as a salt or sodium phosphate solution, are 
included in this definition, and, therefore, required to be reported. 
However, items that are flavored (e.g., teriyaki pork tenderloins, 
seasoned ribs, lemon pepper sirloin roasts) are not considered 
wholesale pork and are, therefore, excluded from LMR reporting 
requirements. For the purposes of this rule, offal (e.g., heart, 
kidney) is not considered wholesale pork; whereas processing floor 
variety meats that are normally harvested from the chilled carcass--
such as neck bones, tails, skins, feet, hocks, jowls, and backfat--are 
considered wholesale pork and must be reported.

Reporting Times

    Packers will be required to report twice a day (by 10:00 a.m. and 
2:00 p.m. Central Time) for barrow and gilt product and once per day 
(by 2:00 p.m. Central Time) for sow and boar product. These reporting 
times are outlined in section 59.205, and are consistent with reporting 
times for other commodities covered under LMR. Separation of the 
reporting requirements for sow and boar product will minimize the 
reporting burden on sow and boar packers where possible and makes the 
information published for sow and boar products more meaningful to the 
industry. As a general rule, these plants slaughter fewer animals than 
their counterparts who primarily slaughter barrows and gilts, and 
would, therefore, have a lower number of reportable transactions. 
Further, publishing sow/boar product information twice daily would 
provide little benefit in terms of added market transparency, as prices 
in this sector of the market fluctuate less than in the barrow/gilt 
market. Many of the plants producing this type of product would be 
smaller in nature, and it would be unnecessarily burdensome to require 
twice daily reporting.

Price Reporting Basis

    Packers will submit prices using two different reporting bases: 
Free-on-Board (F.O.B.) Omaha basis, which was used for the voluntary 
program; and F.O.B. Plant basis, which is used for mandatory reporting 
of boxed beef and lamb. This method is used to assuage concern within 
the industry that moving to a different reporting basis would cause 
unnecessary disruption in the marketplace. To ensure consistent and 
uniform methodology is used to obtain F.O.B. Omaha prices, AMS will 
provide freight information. While this information is not part of the 
regulation and will not be published in the Code of Federal 
Regulations, AMS received comments during the public comment period 
that its proposed methodology did not capture all the variables 
involved in determining the cost of transportation. In response, AMS 
will investigate alternative methods for deriving an F.O.B. Omaha price 
and will consult, as necessary, with industry stakeholders. AMS is 
currently engaged in this research in order to have resolution by the 
informational meeting with packers, which will be scheduled following 
the publication of in the final rule. AMS does not believe this 
approach will impede or hinder packers' ability to adapt or develop 
information technology systems or otherwise prepare for mandatory 
wholesale pork reporting.
    As discussed in the proposed rule, AMS initially considered two 
options in developing this information to derive F.O.B. Omaha prices--a 
freight map with concentric zones that reflect different freight 
adjustments based on a shipping destination's distance from Omaha and a 
per loaded mile freight rate. A zone map could prove to be difficult 
for reporting entities to comply with as it would not be practical to 
display every U.S. city, nor to expect reporting entities to know which 
cities belong in which zones. AMS believed a simpler option was to 
establish a per loaded mile freight rate that packers could apply. For 
example, to determine the F.O.B. Omaha price for a load of pork loins 
shipped to Phoenix, Arizona, the packer would figure the distance from 
Omaha to Phoenix and multiply that distance by the per loaded mile 
rate, which would then be divided by the total hundredweight of the 
product being shipped. This resulting freight expense would be deducted 
from the actual delivered price per hundredweight to reflect the F.O.B. 
Omaha price submitted to AMS. AMS also believed this method would be 
easier for reporting packers to comply with and document for audit 
purposes. It should be noted that regardless of the final method for 
determining freight, AMS will revisit this information on a quarterly 
basis to ensure it is up-to-date.
    Prices reported to AMS shall include any applicable brokerage fees, 
but should not include any direct, specific, and identifiable marketing 
costs (such as point of purchase material, marketing funds, accruals, 
rebates, and export costs). Removing these types of additional costs 
provides AMS a more homogeneous price for reporting purposes. 
Furthermore, costs for things such as accruals or rebates, if known at 
the time of transaction, should be removed from the price provided to 
AMS. The requirements for reporting prices of wholesale pork sales are 
outlined in section 59.205.

[[Page 50564]]

Product Characteristics

    Outlined below are items characteristic of a sale that will be 
reported to AMS. These items are discussed below appear in section 
59.205.
    Type of Sale. When packers report sales of wholesale pork to AMS, 
they will be identified using one of these three categories: 
Negotiated, forward, or formula marketing arrangement. A negotiated 
sale is one that represents what is considered the ``spot'' market, 
and, therefore, sets delivery parameters for both boxed product (within 
14 days of the date of agreement) and combo product (within 10 days of 
the date of agreement). To ensure consistency with current industry 
practices, the day after the seller-buyer agreement will be considered 
``Day 1'' for reporting delivery periods.
    The definition of a forward sale is designed to capture 
transactions that occur outside the traditional negotiated, or spot, 
window. Therefore, the definition for forward sale means an agreement 
for the sale of pork where the delivery is beyond the timeframe of a 
negotiated sale and means a sale by a packer selling wholesale pork to 
a buyer of wholesale pork under which the price is determined by 
seller-buyer interaction and agreement.
    The definition of a formula marketing arrangement bases the price 
paid not on seller-buyer interaction and agreement on a given day, but 
instead in reference to publicly available quoted prices. The 
definition of formula marketing arrangement was revised based on 
comments received to remove the requirement that this type of sale only 
covered product that had not already been produced. These definitions 
for the terms ``Type of sale,'' ``Negotiated sale,'' ``Forward sale,'' 
and ``Formula marketing agreement'' appear in section 59.200.
    Specifications. Packers will report a description of the 
specifications of each pork item being transacted (e.g., vacuum-packed 
\1/4\ inch loins) to AMS. It will be the agency's responsibility to 
group like products together for the purpose of publishing reports. The 
item's specification will also contain weight ranges for the product. 
Characteristics that entities would be required to report are outlined 
in section 59.205(a)(1).
    Product Delivery Period. Packers will report the delivery period 
for negotiated pork trades in calendar days, as outlined in section 
59.205(a)(1). This is consistent with other commodities reported under 
LMR, but is a change from the way transactions were reported under the 
voluntary system.
    Pork class. Packers will report the type of swine from which the 
product was derived from one of three categories: Barrow/gilt, sow, or 
boar. This is outlined in section 59.205(a)(1) and is accompanied by a 
definition for ``pork class'' in section 59.200.
    Destination. Packers will report a product's destination in one of 
three categories: Domestic, Export overseas, or North American Free 
Trade Agreement (NAFTA).
    Refrigeration. Packers will report a product's refrigeration type 
as a means for distinguishing fresh product transactions that may be 
discounted or priced differently due to age of the product. Splitting 
the fresh category into two product age groups provides a means for 
identifying product that may be discounted due to potential shelf life 
limitations. For reporting purposes, ``Day 1'' is considered the day 
after production. The form contained in Appendix A provides timeframes 
against which packers will report product refrigeration.
    Specialty Pork Products. Packers will be required to report 
specialty pork products in order to capture trade of wholesale pork 
that is produced or marketed under any specialty program, such as, but 
not limited to, genetically-selected pork, certified programs, or 
specialty selection programs for quality or breed characteristics. A 
trademark brand on a product will not by itself make the product a 
specialty pork product, as outlined in section 59.200.

General Provisions

    This rule amends the regulations issued in 7 CFR part 59, Livestock 
Mandatory Reporting, to incorporate wholesale pork into LMR. Subpart A 
of part 59, General Provisions, addresses requirements pertinent to all 
aspects of mandatory reporting. Some conforming changes are necessary 
to fully incorporate wholesale pork into Subpart A, and are largely 
administrative in nature. Most sections in Subpart A remain unchanged, 
but are discussed here to provide context for the reader.
    Section 59.10 details how packers will be required to report 
information and how reporting will be handled over weekends and 
holidays. The information will be reported to AMS by electronic means. 
Electronic reporting involves the transfer of data from a packer's 
electronic recordkeeping system to a centrally located AMS electronic 
database. The packer is required to organize the information in an AMS-
approved format before electronically transmitting the information to 
AMS. Once the required information has been entered into the AMS 
database, it will be aggregated and processed into various market 
reports which will be released according to the daily and weekly time 
schedule set forth in these regulations. Information regarding the 
specific characteristics of each reported sale must be supplied by lot 
without aggregation. No changes were made to section 59.10 to 
accommodate the additional requirement of reporting wholesale pork 
cuts.
    This rule requires the reporting of specific market information 
regarding the sales of wholesale pork products. Section 59.20 is 
amended by the addition of (f), Reporting Sales of Wholesale Pork. In 
addition to the aforementioned reporting requirements, packers will be 
required to maintain a record to indicate the time a unit of wholesale 
pork cuts was sold, as occurring either before 10 a.m. central time, 
between 10 a.m. and 2 p.m. central time, or after 2 p.m. central time. 
To allow packers time to collect, assemble, and submit the information 
to AMS by the prescribed deadlines, all covered transactions up to 
within one half hour of the specified reporting times are to be 
reported.
    Further, section 59.20 identifies the recordkeeping requirements 
imposed by the 1999 Act and regulations on reporting entities. 
Reporting packers are required to maintain and to make available the 
original contracts, agreements, receipts, and other records associated 
with any transaction relating to the purchase, sale, pricing, 
transportation, delivery, weighing, slaughter, or carcass 
characteristics of all livestock and livestock products. In addition, 
they are required to maintain such records or other information as is 
necessary or appropriate to verify the accuracy of the information 
required to be reported under these regulations. All of the above 
mentioned documentation must be maintained for at least 2 years and 
must be made available to employees or agents of USDA for routine 
compliance audits, as well as for investigations involving suspected 
noncompliance or potential violations. More information regarding 
compliance and review procedures can be found in the LMR Information 
section of the Livestock and Grain Market News Web site at http://marketnews.usda.gov/portal/lg.
    Lastly, under Subpart A, section 59.30 details the general 
definitions of terms used throughout the regulations and applicable to 
all subparts. Where definitions apply to only one reportable commodity, 
those are included in the

[[Page 50565]]

appropriate subpart. For example, definitions that pertain only to 
swine and swine products are contained in Subpart C. The majority of 
definitions in section 59.30 remain unchanged from those that were 
published in the 2008 final rule. Changes to section 59.30 as a result 
of the addition of wholesale pork are found in the definitions for the 
terms ``F.O.B.'' and ``Lot.'' The change to F.O.B. is amended to 
require packers to report prices on both a plant and Omaha basis. The 
change to the term ``Lot'' adds wholesale pork. There is also an 
administrative change to the definition of IMPS to update a Web site 
address and phone number.

Other Provisions

    The 1999 Act set forth the requirements for maintaining 
confidentiality regarding the packer reporting of proprietary 
information and list the conditions under which Federal employees can 
release such information. While none of these provisions were amended 
by the 2010 Reauthorization Act or will be changed as a result of this 
rule, they are presented here for information. These administrative 
provisions also establish that the Secretary can make necessary 
adjustments in the information reported by packers and take action to 
verify the information reported, and directs the Secretary to report 
and publish reports by electronic means to the maximum extent 
practical. The 1999 Act provides for what constitutes violations of 
that Act, such as failure to report the required information on time or 
failure to report accurate information.
    The section on enforcement establishes a civil penalty of $10,000 
for each violation and provides for the Secretary's issuance of cease 
and desist orders. This section also provides for notice and hearing of 
violations before the Secretary, judicial review, and issuance of an 
injunction or restraining order. The fees section directs the Secretary 
to not charge or assess fees for the submission, reporting, receipt, 
availability, or access to published reports or information collected 
through this program. The section on recordkeeping requires each packer 
to make available to the Secretary on request for 2 years the original 
contracts, agreements, receipts, and other records associated with any 
transaction relating to the purchase, sale, pricing, transportation, 
delivery, weighing, slaughter, or carcass characteristics of all 
livestock and livestock products, as well as such records or other 
information that is necessary or appropriate to verify the accuracy of 
information required to be reported. Also, the 1999 Act provides that 
reporting entities will not be required to report new or additional 
information that they do not generally have available or maintain, or 
the provisions of which would be unduly burdensome.

Committee Recommendations

    As noted in the proposed rule (77 FR 16951), the Committee's work 
focused on developing regulatory text to implement mandatory wholesale 
pork reporting under the LMR program. The Committee also developed 
several recommendations that, while outside their statutory purview, 
were discussed in the proposed rule and were further supported by some 
of the comments received by AMS during the comment period. For a 
complete discussion of these recommendations, see the ``Comments and 
Responses'' section of this rule.

OMB Control Numbers

    Subpart E of part 59 covers the OMB control number 0581-0186 
assigned pursuant to the Paperwork Reduction Act of 1995 (PRA) (44 
U.S.C. Chapter 35) for the information collection requirements listed 
in Subparts B through D of part 59. All required information must be 
reported to AMS in a standardized format. The standardized form is 
embodied in the data collection form that is contained in Appendix A 
and described in Appendix B at the end of this document.
    For reporting wholesale pork information, swine packers will 
utilize one form (Appendix A). This additional reporting requirement 
does not impact the reporting requirement that packers may have for 
other reportable commodities, such as swine.

Appendices

    The final section of this document contains two appendices. These 
appendices will not appear in the Code of Federal Regulations. Appendix 
B describes the form that will be used by those required to report 
information under this program. The actual form is contained in 
Appendix A.

Comments and Responses

    AMS received nine comments in response to the proposed rule (77 FR 
16951). In general, commenters were supportive of the proposal, 
bringing wholesale pork under LMR, and of the negotiated rulemaking 
process. Many of the comments dealt with issues outside the scope of 
the proposed regulation, such as development of reports, transition 
period, and training sessions.

Definitions

    Two commenters stated that the definition of ``Specialty pork 
product'' should be amended to clarify that the examples identified in 
the definition of what constitutes a specialty pork product are not 
limiting or all inclusive. AMS agrees with this comment and believes 
the changes proposed do not contradict, only clarify, the work of the 
Committee. Accordingly, AMS has amended the definition of specialty 
pork product as it appears in this rule.
    One commenter suggested AMS amend the definition of ``Formula 
marketing arrangement'' because the inclusion of the phrase ``executed 
in advance of manufacture'' would exclude formula-priced product whose 
sale is agreed upon following manufacture. AMS agrees with this comment 
and believes the changes proposed do not contradict, only clarify, the 
work of the Committee. Accordingly, AMS has amended the definition of 
formula marketing arrangement as it appears in this rule.

Costs of Compliance With the Rule

    One commenter asked that AMS provide technical support personnel 
that packers can easily access as a means of reducing start-up costs. 
As outlined in the preamble of the proposed rule and in this final 
rule, AMS recognizes there are costs associated with complying with 
this new requirement of LMR. Further, AMS understands the differences 
that exist among companies, information technology (IT) systems, and 
business structure. While AMS does not have the resources to dedicate 
an IT specialist to this transition, it will make every effort to 
provide IT support when needed by packers. In regards to testing of the 
information technology systems, AMS understands that affected entities 
(i.e., packers) will not effectively be able to make enhancements to 
their reporting systems until the requirements are known; that is, 
until the final rule is published. AMS will work with packers to ensure 
that an appropriate amount of time is allowed for development and 
testing of systems necessary to submit the required data. Another 
commenter suggested that AMS' estimates for initial start-up costs and 
annual submission costs were too low; however, the commenter did not 
provide additional information.

Transition Period

    Three commenters asserted that the 6-month transition period during 
which both mandatory and voluntary reports will be published side-by-
side is

[[Page 50566]]

insufficient and suggested instead a 12-month transition period. 
Commenters suggested that a 6-month period would not allow for 
observance of the seasonal differences that may exist, and, 
subsequently, would not provide market participants with enough 
information to adjust price formulas properly. While these comments do 
not pertain to the regulation, but rather to AMS' implementation of the 
mandatory wholesale pork reporting program, AMS will take these 
suggestions into account.
    As described in the proposed rule, AMS plans to transition from a 
voluntary program to a mandatory program by publishing ``dual'' reports 
for 6 months. That is, for a period of time, AMS will publish reports 
reflecting information collected under a voluntary reporting system and 
reports reflecting information collected under a mandatory reporting 
system for wholesale pork. If AMS determines that the information 
collected under a voluntary program becomes of little utility before 
the 6-month mark, or if sufficient AMS resources are not available, it 
will cease collecting and publishing this information. On the contrary, 
if at the end of the 6-month period any problems still exist with the 
collection or publication of data, or if the cessation of dual reports 
would unnecessarily cause market disruption, AMS will consult with the 
industry to determine an appropriate course of action. In that 
instance, AMS would consider extending the dual reporting period until 
a full 12-month period has occurred. Further, during the transition 
period, AMS intends to publish reports reflecting information collected 
under the mandatory program on a delay and will consider the 
Committee's recommendation regarding the appropriate time to release 
such reports.

Freight Calculations

    Three commenters stated their belief that the freight calculation 
methodology proposed by AMS is too simplistic. Commenters suggested 
that there are associated costs with loading product that may not be 
included if a simple ``per mile'' freight cost is used. Commenters 
believed this would result in F.O.B. Omaha prices that are higher than 
they should be, and that the agency should consider issues involving 
less-than-truckload (LTL) freight rates. While these comments do not 
pertain to the regulation, but rather to AMS' implementation of the 
mandatory wholesale pork reporting program, AMS will take these 
suggestions into account. AMS plans to discuss the freight calculation 
with stakeholders, with the goal of having the final methodology 
determined for the planned workshops. Additional discussion is provided 
in the Reporting Requirements section of this document.

Reporting of Products

    Two commenters requested that AMS keep the reporting of pork skins 
destined for domestic, North American Free Trade Agreement (NAFTA), and 
overseas markets separate and distinct. While these comments do not 
pertain to the regulation, but rather to AMS' implementation of the 
mandatory wholesale pork reporting program, AMS will take these 
suggestions into account. Further, AMS is unable to determine if 
confidentiality issues will arise regarding these products until 
information is submitted under the new program. The 1999 Act requires 
USDA to publish mandatory data on livestock and meat price trends, 
contracting arrangements, and supply and demand conditions in a manner 
that protects the identity of reporting entities and preserves the 
confidentiality of proprietary transactions. AMS' guidelines, which are 
commonly referred to as the ``3/70/20 rule'' requires the following 
three conditions be met for publication of information: (1) At least 
three reporting entities need to provide data at least 50 percent of 
the time over the most recent 60-day time period; (2) No single 
reporting entity may provide more than 70 percent of the data for a 
report over the most recent 60-day time period; and (3) No single 
reporting entity may be the sole reporting entity for an individual 
report more than 20 percent of the time over the most recent 60-day 
time period.

Training and Outreach

    One commenter suggested that AMS conduct training sessions for 
packers who will be required to submit wholesale pork prices under LMR. 
AMS agrees with this comment and has allotted $20,000 in funds for this 
type of activity, as outlined in the Executive Order 12866 and 
Executive Order 13563 sections of the proposed rule (77 FR 16951) and 
this rule.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
Section 259 of the 1999 Act prohibits States or political subdivisions 
of a State to impose any requirement that is in addition to, or 
inconsistent with, any requirement of the 1999 Act with respect to the 
submission or reporting of information, or the publication of such 
information, on the prices and quantities of livestock or livestock 
products. In addition, the 2010 Reauthorization Act 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. 181-229); administer, 
enforce, or collect voluntary reports under the 1999 Act, the 2006 
Reauthorization Act, or any other law; or access documentary evidence 
as provided under sections 9 and 10 of the Federal Trade Commission Act 
(15 U.S.C. 41-58). There are no administrative procedures that must be 
exhausted prior to any judicial challenge to the provisions of this 
rule.

Civil Rights Review

    AMS has considered the potential civil rights implications of this 
rule on minorities, women, or persons with disabilities to ensure that 
no person or group shall be discriminated against on the basis of race, 
color, national origin, gender, religion, age, disability, sexual 
orientation, marital or family status, political beliefs, parental 
status, or protected genetic information. This review included persons 
that are employees of the entities that are subject to this regulation. 
This rule does not require affected entities to relocate or alter their 
operations in ways that could adversely affect such persons or groups. 
Further, this rule would not deny any persons or groups the benefits of 
the program or subject any persons or groups to discrimination.

Executive Order 13132

    This rule has been reviewed under Executive Order 13132, 
Federalism. This Order directs agencies to construe, in regulations and 
otherwise, a Federal statute to preempt State law only when the statute 
contains an express preemption provision. This rule is required by the 
1999 Act. Section 259 of the 1999 Act, Federal preemption, states, ``In 
order to achieve the goals, purposes, and objectives of this title on a 
nationwide basis and to avoid potentially conflicting State laws that 
could impede the goals, purposes, or objectives of this title, no State 
or political subdivision of a State may impose a requirement that is in 
addition to, or inconsistent with, any requirement of this subtitle 
with respect to the submission or reporting of information, or the 
publication of such information, on the prices and quantities of 
livestock or livestock products.''
    Prior to the passage of the 1999 Act, several States enacted 
legislation mandating, to various degrees, the reporting of market 
information on transactions of cattle, swine, and lambs conducted 
within that particular State.

[[Page 50567]]

However, since the national LMR program was implemented on April 2, 
2001, these State programs are no longer in effect. Therefore, there 
are no Federalism implications associated with this rulemaking.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. The review reveals that this regulation will not have 
substantial and direct effects on Tribal governments and will not have 
significant Tribal implications.

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives, and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated ``not significant'' under 
section 3(f) of Executive Order 12866, and, therefore, has not been 
reviewed by the Office of Management and Budget (OMB). The proposed 
rule (77 FR 16951), however, was designated significant; and, 
therefore, AMS prepared a cost-benefit analysis for the proposed rule, 
and it was reviewed by OMB. For the final rule, AMS has prepared a 
cost-benefit analysis notwithstanding this rule's non-significant 
designation.
    Regulations must be designed in the most cost-effective manner 
possible to obtain the regulatory objective while imposing the least 
burden on society. This rule would amend the LMR regulations to 
implement mandatory wholesale pork reporting and was developed by the 
Committee, comprising organizations representing pork packers, 
processors, retailers, and buyers of wholesale pork; swine producers; 
USDA; and other interested parties.
    Since all of the entities who will be required to report wholesale 
pork sales already report information under LMR regarding their swine 
purchases, costs to reporting another commodity are expected to be 
minimal. A complete analysis of the number of affected entities and the 
required volume of reporting is discussed under the Paperwork Reduction 
Act (PRA) section following this section.
    Alternatives to the rule's language were thoroughly discussed 
during the course of the negotiated rulemaking meetings, and the 
consensus language reflects the best efforts of all participating 
parties to ensure the successful implementation of wholesale pork 
reporting.
    Until the promulgation of this rule, pork processors were not 
required by law to report wholesale pork cut prices. Rather, AMS 
collected information on daily sales and price information from pork 
processors on a voluntary basis. The 2008 Farm Bill directed the 
Secretary to conduct a study to determine advantages, drawbacks, and 
potential implementation issues associated with adopting mandatory 
wholesale pork reporting. The study found that voluntary wholesale pork 
price reporting is thin, and frequently results in missing or 
unreportable price quotes for subprimals. The number of missing data 
has increased over time.
    In addition, changes in the way pork is traded in recent years have 
led to inconsistencies in industry practices and current AMS guidelines 
for defining reportable trades. The study found that more pork is 
being: (1) Traded in forms that are either not reported or not 
reportable (e.g., enhanced product, case ready product, branded 
product, or frozen product); (2) transacted through intra-firm 
transfer, through inter-firm transfer, through formula pricing, through 
forward price contracts well in advance of delivery (beyond 7 or 10 
days forward as used by AMS); and, (3) destined for export markets 
which are excluded from AMS pork price reports for the negotiated cash 
guidelines used by AMS.
    As a result of thin pork price reporting, industry participants had 
raised concerns about potential selective price reporting in the 
voluntary program. These concerns have reduced the perceived value of 
published price reports to the industry. The study found support for 
mandatory price reporting throughout the industry, and concluded that 
the benefits likely would exceed the cost of moving from a voluntary to 
a mandatory reporting program for wholesale pork.
    The benefits of this rule are diffuse and difficult to quantify; 
therefore, this analysis considers benefits only on a qualitative 
basis. A complete discussion of the benefits is found in the summary of 
benefits section. The major cost of complying with this rule involves 
the information collection and reporting process. The information 
collection and reporting process is explained in the Summary of Costs 
section and is referenced in section 59.10(f), Reporting Methods. A 
complete discussion of the cost analysis can be found in the summary of 
costs section.
    Summary of Benefits. Government intervention in a market is 
conducted because the free market has tendencies to fail whenever 
certain criteria hold. Market failures occur in cases such as public 
goods, externalities, and asymmetric and/or missing information 
problems appear. Agricultural markets in particular are subject to 
information asymmetry, with both large and small operators in every 
aspect of the value chain, ranging from multinational corporations to 
part-time operators. Agricultural markets are also characterized by a 
large degree of uncertainty and missing information.
    In 2001, George Akerloff, Michael Spence, and Joseph Stiglitz \1\ 
won the Nobel Prize in Economics for their seminal work on the 
Economics of Information, establishing it as a field within economics. 
Their combined works showed that: (1) Even small gaps in information 
can cause a misallocation of resources; (2) attempts to gather 
information by market participants generally incur costs that may not 
be recouped; (3) participants may turn to the use of nonmarket 
``signaling'' to gather information, rather than the price mechanism; 
(4) attempts to obtain information by the participants may themselves 
cause sufficient levels of distortion in the markets, even with small 
information costs; and, (5) the existence of other market failures can 
alter the individual's valuation of the benefits and costs of 
information.\2\ Each of these situations can lead to either a failure 
to attain an efficient equilibrium, or may lead to multiple 
equilibriums, both of which reduce economic welfare. Failure to achieve 
an equilibrium outcome can result in the failure of supply and demand 
to intersect at an equilibrium point, with persistent surpluses or 
shortages in the market.
---------------------------------------------------------------------------

    \1\ ``The Sveriges Riksbank Prize in Economic Sciences in Memory 
of Alfred Nobel 2001.'' Nobelprize.org. 7 Sep 2011 available at 
http://www.nobelprize.org/nobel_prizes/economics/laureates/2001/.
    \2\ Stiglitz, J.E. ``The Contributions of the Economics of 
Information to Twentieth Century Economics.'' 2000. The Quarterly 
Journal of Economics 115(November):1441-1478.
---------------------------------------------------------------------------

    The wholesale pork reporting study mandated by Congress found 
evidence consistent with Akerloff, et al., and indicates that mandatory 
price reporting will improve information in the wholesale pork market. 
Following the results of Akerloff, et al. cited above, this report 
found that: (1) The wholesale

[[Page 50568]]

pork reporting information under the voluntary program is thin, getting 
thinner, and does not properly reflect changes in the pork market in 
recent years. Mandatory reporting would improve this situation by 
increasing the number of reporting firms, including sow/boar meat in 
the reporting, responding to changes in the marketing of pork and pork 
products, and reducing the number of missing price quotes, particularly 
for subprimals; (2) Data users will have improved information without 
incurring additional costs such as private market analyses and data 
subscriptions, which may be too costly for small producers, small 
packers, small processors, and other data users; (3) Mandatory price 
reporting will lead to increased transparency in prices and more 
efficient price discovery. In addition, price data will be more 
consistent with current trade practices, providing more clear-cut 
market information, and less need for ``signaling''; (4) Mandatory 
wholesale pork price reporting will reduce concerns the industry now 
has about selective price reporting, which can potentially distort 
market information; and (5) Mandatory wholesale pork price reporting 
will benefit small market participants to a greater extent than larger 
participants, who are likely to have more information available to them 
than the smaller participants, although larger firms with more staff 
may have greater ability to analyze the data than small firms. The 
report concluded that mandatory wholesale pork reporting would reduce 
the inequities in market information and create a more competitive 
environment.
    These findings indicate that mandatory price reporting will be an 
improvement over the current voluntary program, and that market 
efficiency as well as overall economic welfare will be increased by 
implementing the mandatory price reporting program for pork and pork 
products. Research on existing mandatory livestock price reporting also 
supports this conclusion.
    Early research on problems associated with pricing in livestock 
markets often considered the distinction between price determination 
and price discovery, and the resulting issues faced by livestock 
producers in a particular market. Ward and Schroeder (2009) \3\ 
describe the difference between price determination and price discovery 
by noting that price determination is the interaction of supply and 
demand factors in a broad market situation to determine the general 
price level. Price discovery is the process whereby buyers and sellers 
interact in a specific market at a specific time to ascertain the value 
of a commodity in that market at that time. Price discovery involves 
the consideration of multiple factors, including market structure, 
futures prices and risk management options. However, the first 
consideration in price discovery is typically the general market price 
level, i.e. price determination is the starting point for price 
discovery.
---------------------------------------------------------------------------

    \3\ Ward, C.E. and T.C. Schroeder. ``Understanding Livestock 
Pricing Issues.'' Oklahoma Cooperative Extension Fact Sheet, AGEC-
551 August 2009.
---------------------------------------------------------------------------

    The importance of price reporting by AMS is that it provides data 
that gives market participants knowledge of the general price levels of 
a commodity, as well as insight into the overall conditions in that 
market. This information assists participants in more effectively 
discovering prices in their specific market.
    Research on livestock mandatory pricing has demonstrated that 
mandatory pricing does increase transparency and improves the 
efficiency of the price discovery process. Ward (2004a and b) \4\ found 
that mandatory price reporting increased information, showing mandatory 
reports significantly improved the amount, type, and timeliness of data 
related to captive supplies, and increasing transparency. USDA's 
Economic Research Service (ERS) (Perry, MacDonald, Nelson, Hahn, Arnade 
and Plato, 2005) \5\ extended Ward's work, yielding similar results. 
ERS also found that prices were twice as volatile under the mandatory 
system than under the voluntary system. The reason was thought to be 
the filtering or interpretive role of market reporters under voluntary 
reporting relative to the reduced filtering role with mandatory 
reporting.
---------------------------------------------------------------------------

    \4\ Ward, C.E. ``Captive Supply Trends since Mandatory Price 
Reporting.'' Oklahoma Cooperative Extension Fact Sheet F-597, 
November 2004a. Ward, C.E. ``Captive Supply Price Relationships and 
Impacts.'' Oklahoma Cooperative Extension Fact Sheet F-598, November 
2004b.
    \5\ Perry, J., J. McDonald, K. Nelson, W. Hahn, C. Arnade, and 
G. Plato. 2005. ``Did the Mandatory Requirement Aid the Market? 
Impact of the Livestock Mandatory Reporting Act.'' United States 
Department of Agriculture, Economic Research Service, LDP-M-135-01.
---------------------------------------------------------------------------

    Koontz (2007) \6\ studied the vertical relationship between the 
national fed cattle price and boxed beef cutout values using a standard 
price transmission model. He found boxed beef cutout values had both a 
greater and quicker impact on fed cattle than before the mandatory 
program. However, he also detected more uncertainty. This supports 
earlier research indicating both increased transparency and increased 
volatility associated with mandatory reporting. In addition, Lee, Ward 
and Brorsen (2011) \7\ examined the role of cash prices in price 
discovery for fed cattle and hogs as cash market share fell over the 
years of 2001-2010. They found that the cash market remains important 
for price discovery, although thinning of the cash market has had a 
negative impact on the process.
---------------------------------------------------------------------------

    \6\ Koontz, S.R. ``Impacts of Mandatory Price Reporting on the 
Relationship Between Fed Cattle Prices and the USDA Boxed Beef 
Cutout Value.'' 2007. Working Paper, Department of Agricultural and 
Resource Economics, Colorado State University.
    \7\ Lee Y., Ward C.E. and Brorsen, B.W. 2011. ``Cash Market 
Importance in Price Discovery for Fed Cattles and Hogs.'' Division 
of Agricultural Science and Natural Resources, Oklahoma Agricultural 
Experiment Station, Oklahoma State University.
---------------------------------------------------------------------------

    As the wholesale pork study indicated, there are some market 
participants who are likely to benefit more than others. Niche and 
direct marketing producers are likely to benefit from improved data, as 
they are less likely to be able to have other means of price 
determination available to them, primarily due to cost. These producers 
account for a small but growing segment of U.S. agriculture.
    In summary, research on existing livestock mandatory price 
reporting has demonstrated that it has improved transparency issues in 
livestock markets, enabling more efficient and effective price 
discovery in these markets, although there has been increased 
variability in reported prices, largely due to the change in approach 
from voluntary to mandatory. This improved transparency and increased 
efficiency is consistent with economic theory of information. The 
wholesale pork reporting study mandated by Congress shows evidence that 
mandatory reporting will have a similar impact on the wholesale pork 
market.
    For the economic analysis of the rule, AMS was unable to determine 
a quantitative assessment of the benefits due to limitations on 
existing research and the disparate nature of the benefits to be 
achieved. The qualitative benefits derived from the literature and are:
     The increased number of firms reporting prices to AMS 
under the mandatory program will provide a more complete data set, 
leading to increased price transparency and more efficient price 
discovery;
     Allows AMS more opportunity to keep wholesale pork 
reporting current with industry marketing practices and product 
offerings; and
     Provides information to industry participants that cannot 
afford to purchase data, including small pork processing operations, 
small

[[Page 50569]]

wholesalers and retailers, and direct and niche marketing operations.
    Summary of Costs. The regulatory objective of this rule is to 
increase the amount of information available to participants in the 
marketplace for wholesale pork and pork products by mandating reporting 
of market information by certain members of the industry. The rule was 
developed in the most cost-effective manner possible, and, to the 
extent practicable, draws upon current industry practices and reporting 
procedures for other commodities covered by LMR in order to minimize 
the burden to the industry.
    The least cost reporting method to accomplish the objectives of the 
rule continues to be the transfer of electronic data from the reporting 
entity to AMS, as is the current practice with mandatory price 
reporting for other covered commodities. Electronic data transmission 
of information is accomplished using an interface with an existing 
electronic recordkeeping system. Packers will provide for the 
translation of the information from their existing electronic 
recordkeeping system into the required AMS standardized format. Once 
accomplished, the information will be electronically transmitted to AMS 
where it will be automatically loaded into an AMS database. We 
estimated that the creation of this interface by in-house computer 
personnel will require an industry average of 15 hours per respondent. 
Further, we estimated the cost per hour for labor to average $49.30 
(Bureau of Labor Statistics),\8\ for a total cost, on average, of $740. 
Those companies not having in-house computer personnel will incur such 
costs as are necessary to bring in outside computer programmers to 
accomplish the task.
---------------------------------------------------------------------------

    \8\ http://www.bls.gov/oes/current/oes_nat.htm#00-0000.

             Initial Electronic Startup Cost per Respondent
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Hours to develop interface.................................           15
Labor cost per hour........................................     x $49.30
                                                            ------------
  Total cost per respondent................................      $739.50
------------------------------------------------------------------------

    Startup Cost Prorated over 3 Year Life of Program:

$739.50 / 3 = $246.50 annual cost per respondent

    Additionally, AMS estimated the annual cost per respondent for the 
storage of the electronic data files which were submitted to AMS in 
compliance with the reporting provisions of this rule to be $116.10 (5 
hours for recordkeeping at $23.22).
    In this rule, information collection requirements include 
submission of the required information on a daily basis in the standard 
format provided in the Wholesale Pork Daily Report (LS-89). A copy of 
this report is included in the Appendices at the end of this rule. 
There are expected to be a total of 56 respondents (34 commodity pork 
processors, 12 sow and boar meat processors, and 10 processors of all 
types of meat). Plants that slaughter both commodity pork (from barrows 
and gilts), and sow/boar meat will file one combined report so that the 
maximum number of reports per day is two.

                                     Annual Submission Costs per Respondent
----------------------------------------------------------------------------------------------------------------
                                                                     Number of       Cost per
                         Type of product                            respondents     respondent      Total cost
----------------------------------------------------------------------------------------------------------------
Commodity Pork..................................................              34       $1,509.30      $51,316.20
Sow/Boar Meat...................................................              12          754.65        9,055.80
Combination Meat Types..........................................              10        1,509.30       15,093.00
                                                                 -----------------------------------------------
    Total Annual Submission Costs...............................              56  ..............       75,465.00
----------------------------------------------------------------------------------------------------------------

    By dividing total submission costs of $75,465.00 over the total 
number of respondents (56) yield an average submission cost of 
$1,347.59 on an annual basis. This value can be used to estimate the 
total cost burden to the industry, which is determined to be $95,770.64 
per year.

                                              Annual Industry Costs
----------------------------------------------------------------------------------------------------------------
                                                                     Cost per        Number of    Total cost  to
                                                                    respondent      respondents      industry
----------------------------------------------------------------------------------------------------------------
Start-up Costs..................................................         $246.50              56      $13,804.00
Recordkeeping/..................................................          116.10              56        6,501.60
Average Submission Costs........................................        1,347.59              56       75,465.04
                                                                 -----------------------------------------------
    Total Annual Costs..........................................        1,710.19              56       95,770.64
----------------------------------------------------------------------------------------------------------------

    In 2010, federally inspected pork production was 22.274 billion 
pounds. Assuming this level of production, the cost of this final rule 
to the private sector is $4.30 per million pounds ($95,770.64/22.274 
billion pounds).
    In addition to these costs to packers for submitting information, 
AMS will reallocate staff, issue regulations, and set up an electronic 
database to capture data and develop reports. The 3 staff years 
required to administer and produce mandatory price reports include 
reporters and auditors. Salary-related costs in each year are estimated 
at $271,000. Other costs include approximately $20,000 for travel/
transportation, training, and outreach; $5,000 for miscellaneous costs 
such as printing, training, office supplies, and equipment; and 
$325,000 in the first year for a computer systems contract to develop 
the database required to manage the data.
    The mandatory price reporting program would cost AMS $621,161 in 
the first year of implementation, and subsequent year costs are 
estimated to be $296,161. Therefore, the costs would be roughly 
$404,500 per year.

[[Page 50570]]



                                         Total Annual Cost to Government
----------------------------------------------------------------------------------------------------------------
                                                                    First year       Following    Average  cost/
                            Cost type                                  costs       years' costs        year
----------------------------------------------------------------------------------------------------------------
Salaries........................................................     $271,160.82     $271,160.82     $271,160.82
System Development Contract.....................................      325,000.00  ..............      108,333.33
Travel (20 trips @$1,000/trip)..................................       20,000.00       20,000.00       20,000.00
Miscellaneous...................................................        5,000.00        5,000.00        5,000.00
                                                                 -----------------------------------------------
    Total Costs.................................................      621,160.82      296,160.82      404,494.15
----------------------------------------------------------------------------------------------------------------

    Adding the costs to industry, together with the costs to 
government, yields the total cost to society associated with this 
regulation. Because benefits could not be quantified, comparison of 
costs with benefits is not possible. However, total costs, shown 
annually, over the life of the rule, and discounted over the life of 
the rule have been calculated. These figures show that this rule does 
not meet the threshold for an economically significant rule ($100 
million).

                        Total Costs of Regulation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Annual Costs............................................   $5,000,277.52
Total Costs over 3 Years................................    1,500,832.56
Discounted Costs over 3 Years (3% rate).................    1,457,543.39
Discounted Costs over 3 Years (7% rate).................    1,404,788.36
------------------------------------------------------------------------
 

Regulatory Flexibility Act

    This rule has been reviewed under the requirements of the 
Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612). The purpose of the 
RFA is to consider the economic impact of a rule on small business 
entities. Alternatives, which would accomplish the objectives of the 
rule without unduly burdening small entities or erecting barriers that 
would restrict their ability to compete in the marketplace, were 
evaluated by the Committee. Moreover, the requirements contained in 
this rule were negotiated with members of the industry, some of whom 
represented small and mid-size firms.
    Regulatory action should be appropriate to the scale of the 
businesses subject to the action. The collection of information is 
necessary for the proper performance of the functions of AMS concerning 
the mandatory reporting of livestock information. The 1999 Act requires 
AMS to collect and publish livestock market information. The required 
information is only available directly from those entities required to 
report under the 1999 Act and by these regulations and exists nowhere 
else. Therefore, this rule does not duplicate market information 
reasonably accessible to USDA.
    For any calendar year, any federally inspected swine plant which 
slaughtered an average of 100,000 head of swine a year for the 
immediately preceding 5 calendar years, and any packing firm that 
slaughtered at least 200,000 sows and/or boars on average during the 
preceding 5 years, are required to report information. Additionally, 
any swine plant that did not slaughter swine during the immediately 
preceding 5 calendar years is required to report if the Secretary 
determines that the plant should be considered a packer based on the 
capacity of the processing plant. This accounts for approximately 56 
out of 611 swine plants or 9.2 percent of all federally inspected swine 
plants. Fully 90.8 percent of all swine plants in the U.S. are exempted 
by this rule from reporting information.
    Accordingly, we also have prepared this final regulatory 
flexibility analysis. The RFA compares the size of meat packing plants 
to the North American Industry Classification System (NAICS) to 
determine the percentage of small businesses within the meat packing 
industry. Under these size standards, meat packing companies with 500 
or less employees are considered small business entities.
    Objectives and Legal Basis. The objective of this rule is to 
improve the price and supply reporting services of AMS in order to 
encourage competition in the marketplace for wholesale pork products by 
increasing the amount of information available to participants. This is 
accomplished through the establishment of a program of information 
regarding the marketing of wholesale pork products as specifically 
directed by the 1999 Act, the 2010 Reauthorization Act, and these 
regulations, as described in detail in the background section.
    Estimated Number of Small Businesses. This rule provides for the 
mandatory reporting of market information by pork wholesalers who, for 
any calendar year, have slaughtered 100,000 head of swine during the 
immediately preceding 5 calendar years, or any packing firm that has 
slaughtered at least 200,000 sows and/or boars on average during the 
preceding 5 years. Processing plants that have not slaughtered 
livestock during the immediately preceding 5 calendar years are also 
required to report if the Secretary determines that the plants should 
be considered packers based on their capacity.
    The NAICS size standard classifies a small business in the meat 
packing industry as a company with less than 500 employees. Although it 
is common in the red meat industry for larger companies to own several 
plants, some of which may employ less than 500 people, those companies 
with a total slaughter plant employment at all locations of less than 
500 are considered to be small businesses for the purposes of this rule 
even though individual plants are mandated to report as provided by the 
1999 Act, 2010 Reauthorization Act, and this regulation.
    Approximately 36 individual pork packing companies representing a 
total of 56 individual plants are required to report information to 
AMS. Based on the NAICS size standard, 24 of these 36 pork packing 
companies are considered small businesses, representing 27 individual 
plants that are required to report. The figure of 56 plants required to 
report represents 9.2 percent of the swine plants in the United States. 
The remaining 90.8 percent of swine plants, nearly all estimated to 
qualify as small business, are exempt from mandatory reporting.
    AMS estimates the total annual burden on each swine packing entity 
to be, on average, $1,710.19, including $1,347.59 for annual costs 
associated with electronically submitting data, $246.50 for annual 
share of initial startup costs of $739.50, and $116.10 for the storage 
and maintenance of electronic files that were submitted to AMS.
    Projected Recordkeeping. Each packer required to report information 
to the Secretary must maintain such records as are necessary to verify 
the accuracy of

[[Page 50571]]

the information provided to AMS. This includes information regarding 
price, volume, weight, cut, and other factors necessary to adequately 
describe each transaction. These records are already kept by the 
industry. Reporting packers are required by these regulations to 
maintain and to make available the original contracts, agreements, 
receipts, and other records associated with any transaction relating to 
the purchase, sale, pricing, transportation, delivery, or weighing of 
all transactions. Reporting packers are also required to maintain 
copies of the information provided to AMS. All of the above-mentioned 
paperwork must be kept for at least 2 years. Packers are not required 
to report any other new or additional information that they do not 
generally have available or maintain. Further, they are not required to 
keep any information that would prove unduly burdensome to maintain. 
The paperwork burden that is imposed on the packers is further 
discussed in the section entitled ``Paperwork Reduction Act'' that 
follows. In addition, we have not identified any relevant Federal rules 
that are currently in effect that duplicate, overlap, or conflict with 
this rule.
    Professional skills required for recordkeeping under this rule are 
not different than those already employed by the reporting entities. 
Reporting will be accomplished using computers or similar electronic 
means. AMS believes the skills needed to maintain such systems are 
already in place in those small businesses affected by this rule.
    This rule as directed by the 2010 Reauthorization Act requires pork 
packing plants of a certain size to report information to the Secretary 
at prescribed times throughout the day and week. These regulations 
already exempt many small businesses by the establishment of daily 
slaughter and processing capacity thresholds. Based on figures 
published by the National Agricultural Statistics Service (NASS), there 
were 611 federally inspected swine slaughter plants operating in the 
United States at the end of 2010. AMS estimates that approximately 56 
swine plants are required to report information, representing 9.2 
percent of all federally inspected swine plants. Therefore, fully 90.8 
percent of all swine plants are not required to report.
    The impact of the costs of the rule to industry was also analyzed 
by plant capacity, measured in terms of number of head slaughtered. 
Industry cost by firm size, as measured in number of head slaughtered, 
is shown in the following table. Firms that slaughter fewer than 
100,000 per year are exempt from the rule. These data do not 
distinguish between barrow/gilt slaughter and sow/boar slaughter, so 
all firms are assumed to report on barrows/gilts.
    The data show that on a per head basis, the costs of this rule 
range from 0.033 cents per head slaughtered for the largest firms to 
approximately one cent per head for the smallest plants affected by the 
rule. On average, the cost burden is 0.084 cents per head slaughtered. 
Roughly 30 plants, or 4.5 percent of all plants in the industry, have 
costs that exceed this value. With an average hog carcass price of 
$87.90 for the year to date, and an average weight of 205 pounds per 
carcass, the price paid per head is roughly $180. The additional cost 
of one cent per head, the largest expected cost for plants impacted by 
the rule, does not appear to represent a significant cost increase.
    In the table below, showing data for 2010, 91.2 percent of all 
plants (or 557 of 611 plants) would not have been expected to incur any 
reporting costs. All the costs would have been borne by the largest 8.8 
percent of plants. Because the data in this table do not differentiate 
between sow/boar and barrow & gilt plants, these figures are 
approximates of the actual values, but illustrate the expected 
distributional impacts of the rule.

  Hogs, Number of Federally Inspected Plants, Head Slaughtered, Total Cost, and Cost/Head by Size Group United
                                                 States: 2010 *
----------------------------------------------------------------------------------------------------------------
                                                     Number of
                   Number head                        plants       Thousand head    Total cost       Cost/head
----------------------------------------------------------------------------------------------------------------
1-999...........................................             385           117.6           $0.00        $0.00000
1,000-9,999.....................................             116           328.4            0.00         0.00000
10,000-99,999...................................              56         2,163.0            0.00         0.00000
100,000-249,999.................................              14         2,235.8       23,942.66         0.01071
250,000-499,999.................................               8         2,799.8       13,681.52         0.00489
500,000-999,999.................................               5         3,346.7        8,550.95         0.00255
1,000,000-1,999,999.............................               3         4,850.5        5,130.57         0.00106
2,000,000-2,999,999.............................              11        26,862.7       18,812.09         0.00070
3,000,000-3,999,999.............................               1         3,862.4        1,710.19         0.00044
4,000,000+......................................              12        62,747.8       20,522.28         0.00033
                                                 ---------------------------------------------------------------
    Total.......................................             611       109,314.7       92,340.26         0.00084
----------------------------------------------------------------------------------------------------------------
* Source: U.S. Department of Agriculture, National Agricultural Statistics Service, ``Livestock Slaughter: 2010
  Annual Summary,'' April 2011.

    In summary, the RFA analysis showed that of the 56 firms facilities 
that are required to report, 27 (just under half) qualify as being 
owned by small businesses. These 27 facilities are owned by 24 of the 
36 companies subject to the rule. However, given the capital intensive 
nature of the industry, a more appropriate approach to the RFA analysis 
may be the number of head slaughtered by company. This approach was 
recognized by Congress in the original LMR legislation, by placing a 
100,000 head minimum slaughter requirement on firms which report. Using 
that standard, fewer than 10 percent of all firms in the industry are 
affected by this regulation. In addition, the increased cost of the 
rule represents at most roughly 0.006 percent the current hog carcass 
value ($0.01/$180.00). Based on this analysis, AMS determined that the 
rule would not have a significant economic impact on a substantial 
number of small entities.

Paperwork Reduction Act

    In accordance with 5 CFR part 1320, we include the description of 
the reporting and recordkeeping requirements and an estimate of the 
annual burden on packers required to report information under this 
rule. The OMB reference number assigned to this collection is 0581-
0279. AMS plans to submit to OMB a request to merge this collection 
into the currently approved collection, ``Livestock Mandatory

[[Page 50572]]

Reporting Act of 1999,'' OMB number 0581-0186. The reporting 
requirement timeline is fully discussed under Supplementary 
Information.
    The information collection and recordkeeping requirements in this 
regulation are essential to establishing and implementing a mandatory 
program of livestock and livestock products reporting. Based on the 
information available, AMS estimates that there are 34 commodity pork 
packer plants, 12 sow/boar meat packer plants, and 10 packer plants 
processing both commodity pork and sow/boar meat that are required to 
report market information under this rule. These companies have similar 
recordkeeping systems and business operation practices and conduct 
their operations in a similar manner. AMS believes that all of the 
information required under this rule can be collected from existing 
materials and systems and that these materials and systems can be 
adapted to satisfy the new requirements.
    The PRA also requires AMS to measure the recordkeeping burden. 
Under this rule, each packer required to report must maintain and make 
available upon request for 2 years, such records as are necessary to 
verify the accuracy of the information required to be reported. These 
records include original contracts, agreements, receipts, and other 
records associated with any transaction relating to the purchase, sale, 
pricing, transportation, delivery, weighing, slaughter, or carcass 
characteristics of all livestock. Under this rule, the electronic data 
files which the packers are required to utilize when submitting 
information to AMS will have to be maintained as these files provide 
the best record of compliance. Therefore, the recordkeeping burden 
includes the amount of time needed to store and maintain records. AMS 
estimates that, since records of original contracts, agreements, 
receipts, and other records associated with any transaction relating to 
the purchase, sale, pricing, transportation, delivery, and weighing of 
wholesale pork products are stored and maintained as a matter of normal 
business practice by these companies for a period in excess of 2 years, 
additional annual costs will nominal. AMS estimates the annual cost per 
respondent for the storage of the electronic data files which were 
submitted to AMS in compliance with the reporting provisions of this 
rule to be $116.10. This estimate includes the cost per respondent to 
maintain such records which is estimated to average 5 hours per year at 
$23.22 per hour.
    In this rule, information collection requirements have been 
designed to minimize disruption to the normal business practices of the 
affected entities. The requirements include the submission of the 
required information on a daily basis in the standard format provided 
in the form included in the Appendices section. This form requires the 
minimal amount of information necessary to properly describe each 
reportable transaction, as required under this rule.

1. Wholesale Pork Daily Report: Form LS-89

    Estimate of Burden: Public reporting burden for collection of 
information is estimated to be 0.125 hours per electronically submitted 
response.
    Respondents: Packer processing plants required to report 
information on wholesale pork sales to the Secretary.
    Estimated Number of Respondents: 34 commodity pork plants, 12 sow/
boar meat plants and 10 combination commodity pork/sow/boar meat 
plants.
    Estimated Number of Responses per Respondent: 520 per year for 
commodity pork (2 per day for 260 days); 260 per year for sow/boar meat 
(1 per day for 260 days); and 520 per year (2 per day) for combination 
commodity pork/sow/boar meat.
    Estimated Total Annual Burden on Respondents: 3,250 hours.
    With 260 reporting days per year, commodity pork processors, and 
processors which produce a combination of commodity pork/sow/boar meat, 
will submit a total of 520 responses per year, and sow/boar meat 
processors will submit a total of 260 responses per year. This includes 
5 hours for recordkeeping annually, for each of the 56 respondents 
(total recordkeeping hours of 280).

                               Breakdown of Estimated Data Submission Cost Burden
----------------------------------------------------------------------------------------------------------------
                                                                                                      Total
                        Item                          Reporting days          Responses             responses
----------------------------------------------------------------------------------------------------------------
                                 I. Number of Responses per Respondent per Year
----------------------------------------------------------------------------------------------------------------
Commodity Pork/Combination.........................             260    x          2 daily    =              520
Sow/Boar Meat......................................             260    x          1 daily    =              260
----------------------------------------------------------------------------------------------------------------

    At 0.125 hours per submission, commodity pork/combination 
processors will require 65.0 hours of reporting time, while sow/boar 
meat processors will require 32.5 hours of reporting time.

----------------------------------------------------------------------------------------------------------------
                                                       Submissions/             Hours/             Total hours/
                        Item                               year               submission               year
----------------------------------------------------------------------------------------------------------------
                             II. Number of Submission Hours per Respondent per Year
----------------------------------------------------------------------------------------------------------------
Commodity Pork/Combination.........................             520    x             .125    =            65.00
Sow/Boar Meat......................................             260    x             .125    =            32.50
----------------------------------------------------------------------------------------------------------------

    Total annual submission costs for commodity pork and combination 
pork processors is expected to be $1,509.30 with a clerical cost of 
$23.22 per hour, including benefits. Annual costs for sow meat 
processors will equal $754.65.

[[Page 50573]]



----------------------------------------------------------------------------------------------------------------
                                                       Total hours/
                        Item                               year               Cost/ hour         Total $'s/ year
----------------------------------------------------------------------------------------------------------------
                               III. Total Submission Cost per Respondent per Year
----------------------------------------------------------------------------------------------------------------
Commodity Pork/Combination.........................           65.00    x           $23.22    =        $1,509.30
Sow/Boar Meat......................................           32.50    x            23.22    =           754.65
----------------------------------------------------------------------------------------------------------------

    A total of 44 respondents are expected to report commodity pork/
combination wholesale data, while 12 sow/boar meat respondents are 
anticipated. Ten of the respondents will report on both types of 
product. In all, 56 different respondents will be reporting, incurring 
total annual submission costs of about $75,465.00.

----------------------------------------------------------------------------------------------------------------
                                                                              Number of
                        Item                         Total $'s/ year         respondents            Total cost
----------------------------------------------------------------------------------------------------------------
                              IV. Total Yearly Submission Cost for All Respondents
----------------------------------------------------------------------------------------------------------------
Commodity Pork/Combination.........................       $1,509.30    x               44    =       $66,409.20
Sow/Boar Meat......................................          754.65    x               12    =         9,055.80
                                                                                                ----------------
    Total..........................................  ...............  ...  ...............  ...       75,465.00
----------------------------------------------------------------------------------------------------------------

    Estimated Total Annual Burden on Respondents: $95,770.64 including 
$75,465.00 for annual costs associated with electronically submitted 
responses (3,250 annual hours (58.036 annual hours per 56 respondents) 
@ $23.22 per hour, for a total of $1,347.59 per respondent), initial 
electronic data transfer setup costs of $13,804.00 ($739.50 prorated 
over 3 years = $246.50 per 56 respondents), and $6,501.60 ($116.10 per 
56 respondents) for the storage and maintenance of electronic files 
that were submitted to AMS.

List of Subjects in 7 CFR Part 59

    Cattle, Hogs, Sheep, Livestock, Lamb.

    For the reasons set forth in the preamble, Title 7, Chapter I, part 
59 is amended to read as follows:

PART 59--LIVESTOCK MANDATORY REPORTING

0
1. The authority citation for part 59 continues to read as follows:

    Authority: 7 U.S.C 1635-1636i.


0
2. Section 59.20 is amended by adding paragraph (f) to read as follows:


Sec.  59.20  Recordkeeping.

* * * * *
    (f) Reporting sales of wholesale pork. A record of a sale of 
wholesale pork by a packer shall evidence whether the sale occurred:
    (1) Before 10:00 a.m. central time;
    (2) Between 10:00 a.m. and 2:00 p.m. central time; or
    (3) After 2:00 p.m. central time.

0
3. Section 59.30 is amended by:
0
A. Revising the definition of ``F.O.B.''.
0
B. Revising the last two sentences in the definition of ``Institutional 
Meat Purchase Specifications''.
0
C. Revising paragraph (3) of the definition of ``Lot''.
    The revisions read as follows:


Sec.  59.30  Definitions.

* * * * *
    F.O.B. The term ``F.O.B.'' means free on board, regardless of the 
mode of transportation, at the point of direct shipment by the seller 
to the buyer (e.g., F.O.B. Plant, F.O.B. Feedlot) or from a common 
basis point to the buyer (e.g., F.O.B. Omaha).
    Institutional Meat Purchase Specifications. * * * Phone (202) 260-
8295 or Fax (202) 720-1112. Copies may also be obtained over the 
Internet at http://www.ams.usda.gov/AMSv1.0/LivestockStandardizationIMPS.
* * * * *
    Lot. * * *
    (3) When used in reference to boxed beef, wholesale pork, and lamb, 
the term `lot' means a group of one or more boxes of beef, wholesale 
pork, or lamb items sharing cutting and trimming specifications and 
comprising a single transaction between a buyer and seller.
* * * * *

0
4. Section 59.200 is amended by:
0
A. Adding, in alphabetical order, a definition for ``Formula marketing 
arrangement''.
0
B. Adding, in alphabetical order, a definition for ``Forward sale''.
0
C. Adding, in alphabetical order, a definition for ``Negotiated sale''.
0
D. Adding, in alphabetical order, a definition for ``Pork class''.
0
E. Adding, in alphabetical order, a definition for ``Specialty pork 
product''.
0
F. Adding, in alphabetical order, a definition for ``Type of sale''.
0
G. Adding, in alphabetical order, a definition for ``Variety meats''.
0
H. Adding, in alphabetical order, a definition for ``Wholesale pork''.
    The additions read as follows:


Sec.  59.200  Definitions.

* * * * *
    Formula marketing arrangement. When used in reference to wholesale 
pork, the term `formula marketing arrangement' means an agreement for 
the sale of pork under which the price is established in reference to 
publicly-available quoted prices.
* * * * *
    Forward sale. When used in reference to wholesale pork, the term 
`forward sale' means an agreement for the sale of pork where the 
delivery is beyond the timeframe of a ``negotiated sale'' and means a 
sale by a packer selling wholesale pork to a buyer of wholesale pork 
under which the price is determined by seller-buyer interaction and 
agreement.
* * * * *
    Negotiated sale. The term `negotiated sale' means a sale by a 
packer selling wholesale pork to a buyer of wholesale pork under which 
the price is determined by seller-buyer interaction and agreement, and 
scheduled for delivery not later than 14 days for boxed product and 10 
days for combo product after the date of agreement. The day after the 
seller-buyer agreement shall be considered day one for reporting 
delivery periods.
* * * * *
    Pork class. The term ``pork class'' means the following types of 
swine purchased for slaughter:
    (1) Barrow/gilt;
    (2) Sow;
    (3) Boar.
* * * * *

[[Page 50574]]

    Specialty pork product. The term `specialty pork product' means 
wholesale pork produced and marketed under any specialty program such 
as, but not limited to, genetically-selected pork, certified programs, 
or specialty selection programs for quality or breed characteristics.
* * * * *
    Type of sale. The term ``type of sale'' with respect to wholesale 
pork means a negotiated sale, forward sale, or formula marketing 
arrangement.
    Variety meats. The term `variety meats' with respect to wholesale 
pork means cut/processing floor items, such as neck bones, tails, 
skins, feet, hocks, jowls, and backfat.
    Wholesale pork. The term `wholesale pork' means fresh and frozen 
primals, sub-primals, cuts fabricated from sub-primals, pork trimmings, 
pork for processing, and variety meats (excluding portion-control cuts, 
cuts flavored above and beyond normal added ingredients that are used 
to enhance products, cured, smoked, cooked, and tray packed products). 
When referring to wholesale pork, added ingredients are used to enhance 
the product's performance (e.g. tenderness, juiciness) through adding a 
solution or emulsion via an injection or immersion process. The 
ingredients shall be limited to water, salt, sodium phosphate, 
antimicrobials, or any other similar combination of foresaid or similar 
ingredients and in accordance with established USDA regulations.

0
5. Adding a new Sec.  59.205 to read as follows:


Sec.  59.205  Mandatory reporting of wholesale pork sales.

    (a) Daily reporting. The corporate officers or officially 
designated representatives of each packer processing plant shall report 
to the Secretary at least twice each reporting day for barrows and 
gilts (once by 10 a.m. central time, and once by 2 p.m. central time) 
and once each reporting day for sows and boars (by 2 p.m. central time) 
the following information on total pork sales established on that day 
inclusive since the last reporting as described in Sec.  59.10(b):
    (1) The price for each wholesale pork sale, as defined herein, 
quoted in dollars per hundredweight on an F.O.B. Plant and an F.O.B. 
Omaha basis as outlined in Sec.  59.205(d). The price shall include 
brokerage fees, if applicable. All direct, specific, and identifiable 
marketing costs (such as point of purchase material, marketing funds, 
accruals, rebates, and export costs) shall be deducted from the net 
price if applicable and known at the time of sale;
    (2) The quantity for each pork sale, quoted by number of pounds 
sold; and
    (3) The information regarding the characteristics of each sale is 
as follows:
    (i) The type of sale;
    (ii) Pork item description;
    (iii) Pork item product code;
    (iv) The product delivery period, in calendar days;
    (v) The pork class (barrow/gilt, sow, boar);
    (vi) Destination (Domestic, Export/Overseas, NAFTA);
    (vii) Type of Refrigeration (Fresh, Frozen, age range of fresh 
product); and
    (viii) Specialty pork product, if applicable
    (b) Publication. The Secretary shall make available to the public 
the information obtained under paragraph (a) of this section not less 
frequently than twice each reporting day for gilt and barrow product 
and once each reporting day for sow and boar product.
    (c) The Secretary shall obtain product specifications upon request.
    (d) The Secretary shall provide freight information for the purpose 
of calculating prices on an F.O.B. Omaha basis. The Secretary shall 
provide this information periodically, but not less than quarterly.

    Dated: August 15, 2012.
David R. Shipman,
Administrator, Agricultural Marketing Service.

    Note: The following Appendices will not appear in the Code of 
Federal Regulations.

Appendix A--Swine Mandatory Reporting Form

    The following form referenced in Subpart C of part 59 would be 
used by persons required to report electronically transmitted 
mandatory market information on domestic sales of boxed beef to AMS.
    Swine.
    LS-89--Wholesale Pork Daily Report

Appendix B--Mandatory Reporting Guideline

The following mandatory reporting form guidelines will be used by 
persons required to report electronically transmitted mandatory 
market information to AMS.
    The first 10 fields of each mandatory reporting form provide the 
following information: Identification number (plant establishment 
number ID number), company name (name of parent company), plant 
street address (street address for plant), plant city (city where 
plant is located), plant state (state where plant is located), plant 
zip code (zip code where plant is located), contact name (the name 
of the corporate representative contact at the plant), phone number 
(full phone number for the plant including area code), reporting 
date (date the information is due to be submitted (mm/dd/yyyy),and 
reporting time (the submission time corresponding to the 10:00 a.m. 
and the 2:00 p.m. reporting requirements).

(a) Wholesale Pork Mandatory Reporting Forms

    (1) LS-89--Wholesale Pork Daily Report. For lots comprising 
multiple items, provide information for each item in a separate 
record identified with the same lot identification or purchase order 
number.
    (i) Lot identification or purchase order number (11). Enter code 
used to identify the lot to the packer.
    (ii) Destination (12). Enter `1', domestic, for product shipped 
within the 50 States; `2', exported, for product shipped overseas; 
and `3', exported, for product shipped NAFTA (Canada or Mexico).
    (iii) Sales type code (13). Enter the code corresponding to the 
sale type of the lot of wholesale pork.
    (iv) Delivery period code (14). Enter the code corresponding to 
the delivery time period of the lot of wholesale pork.
    (v) Refrigeration (15). Enter `1' if the product is sold in 0-6 
days fresh, combo; `2' if the product is sold 7 or more days fresh, 
combo; `3' if the product is sold 0-10 days fresh, boxed; `4' if the 
product is sold 11 or more days fresh, boxed; and `5' if the product 
is sold in a frozen condition.
    (vi) Class code (16). Enter `1' if the product was derived from 
barrows/gilts, `2' for sows, `3' for boar, and `4' for mixed.
    (vii) Pork item product code (17). Enter the company product 
code for item sold.
    (viii) Pork item--Description (18). Enter the pork item name.
    (ix) Total product weight (19). Enter the total weight of the 
wholesale pork cuts in the lot in pounds.
    (xii) F.O.B. Plant Price (20). Enter the price received for each 
wholesale pork cut in the lot in dollars per one hundred pounds, FOB 
Plant basis.
    (xiii) F.O.B. Omaha Price (21). Enter the price received for 
each wholesale pork cut in the lot in dollars per one hundred 
pounds, FOB Omaha basis.
BILLING CODE 3410-02-P

[[Page 50575]]

[GRAPHIC] [TIFF OMITTED] TR22AU12.026

[FR Doc. 2012-20443 Filed 8-21-12; 8:45 am]
BILLING CODE 3410-02-C