Livestock Mandatory Reporting Program; Establishment of the Reporting Regulation for Wholesale Pork, 16951-16967 [2012-6992]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 77, Number 57 (Friday, March 23, 2012)]
[Proposed Rules]
[Pages 16951-16967]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6992]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / 
Proposed Rules

[[Page 16951]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 59

[Doc. No. AMS-LS-11-0049]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: On April 2, 2001, the U.S. Department of Agriculture, 
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 proposed rule reflects the work of the USDA 
Wholesale Pork Reporting Negotiated Rulemaking Committee (Committee).

DATES: Written comments must be received by May 22, 2012. Written 
comments on the information collection and recordkeeping provisions of 
this proposed rule must be received by May 22, 2012.

ADDRESSES: Comments should be submitted electronically at https://www.regulations.gov. Comments may also be sent to Michael Lynch, 
Director; USDA, AMS, LS, LGMN Division; 1400 Independence Ave. SW., 
Room 2619-S; Washington, DC 20250; Telephone number (202) 720-6231; or 
Fax (202) 690-3732.
    Comments should reference docket number AMS-LS-11-0049 and note the 
date and page number of this issue of the Federal Register. Submitted 
comments will be available for public inspection at https://www.regulations.gov, or during regular business hours at the above 
address. All comments submitted in response to this proposed rule will 
be included in the record and will be made available to the public. 
Please be advised that the identity of the individuals or entities 
submitting the comments will be made public on the Internet at the 
address provided above.
    Comments that specifically pertain to the information collection 
and recordkeeping requirements of this action should also be sent to 
the Desk Officer for Agriculture, Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, 725 17th Street NW., Room 725, Washington, DC 20503.

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, as well as enhanced the program's 
overall effectiveness and efficiency based on AMS's 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 https://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

[[Page 16952]]

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 Department of Agriculture; 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 proposed 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 information. Pork processors are not currently 
required by law to report wholesale pork cut prices. Rather, AMS 
collects 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 results in frequent missing or unreportable 
price quotes for subprimals.
    This proposal is done 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 proposed rule requires packers to report wholesale pork sales 
to AMS. Specifically, the proposed rule outlines what information 
packers will be required to submit to AMS, how the information should 
be submitted, and other program requirements. Packers will be required 
to 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.

Costs and Benefits

    The benefits of this proposed rule are diffuse and difficult to 
quantify, therefore, this analysis considers benefits only on a 
qualitative basis. The qualitative benefits derived from the literature 
and 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 
proposed 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 proposed 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 discussion 
of Executive Order 12866.

Negotiated Rulemaking Committee

    Negotiated rulemaking is a procedure authorized by the Negotiated 
Rulemaking Act of 1996 (NRA) (5 U.S.C. 561-570) in which a proposed 
rule is developed by a committee composed of people representing 
interests that will be significantly affected by the rule, and the 
rulemaking agency. Experience of various Federal agencies in negotiated 
rulemaking demonstrated that using a trained neutral party to 
facilitate the process assists parties during negotiations in 
identifying their real interests, evaluating their positions, 
communicating effectively, and reaching consensus where possible. AMS 
engaged the Federal Conciliation and Mediation Service--a government 
agency providing mediation, arbitration, negotiation, and related 
services for government agencies and industry--for this purpose.
    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;

[[Page 16953]]

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 (1 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 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. 
Meeting minutes from all Committee proceedings and supporting materials 
can be found at www.ams.usda.gov/NegotiatedRulemaking.

Proposed Requirements

    As previously discussed, the Committee was tasked with negotiating 
and developing a proposed rule to implement mandatory reporting of 
wholesale pork. In doing so, the Committee determined what 
characteristics describing sales of wholesale pork should be reported 
to AMS to allow the promulgation of meaningful, timely 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 of 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 by topic 
andhighlights discussion for the proposed changes as considered by the 
Committee.

Definition of Wholesale Pork

    The term ``wholesale pork'' presented in this proposed rule 
reflects only product that the Committee feels adequately represents 
the wholesale market. The Committee carefully considered the inclusion, 
or exclusion, of items that would not represent what is widely 
considered wholesale pork to packers, processors, retailers, and others 
in the supply chain. For example, it was determined that items with 
commonly-added ingredients used to extend shelf life, such as a salt or 
sodium phosphate solution, would be included. However, items that are 
flavored (e.g., teriyaki pork tenderloins, seasoned ribs, lemon pepper 
sirloin roasts) would not be considered wholesale pork and would 
therefore be excluded from LMR reporting requirements. The Committee 
also discussed whether or not variety meats and offal should be 
included in the proposed definition of wholesale pork. It was 
determined that offal (e.g., heart, kidney) would not be considered 
wholesale pork; whereas processing floor variety meats that are 
harvested from the chilled carcass--such as neck bones, tails, skins, 
feet, hocks, jowls, and backfat--would be considered wholesale pork and 
would be reported. Committee consensus on the definition of wholesale 
pork requires variety meats to be reported, and refers to a separate 
new definition for variety meats as proposed herein. Definitions for 
wholesale pork and variety meats appear in the proposed revisions to 
section 59.200.

Reporting Times

    The Committee discussed daily reporting times and reached consensus 
on twice a day (by 10 a.m. and 2 p.m. Central Time) for barrow and gilt 
product and once per day (by 2 p.m. Central Time) for sow and boar 
product. These reporting times are outlined in proposed new section 
59.205, and are consistent with reporting times for other commodities 
covered under LMR. For sow and boar plants, the Committee agreed that 
reporting once per day was practical. Separation of the reporting 
requirements for sow and boar product is being proposed to minimize the 
reporting burden on sow and boar packers where possible and to make 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. The Committee agreed that reporting this type of product 
once per day meets the industry's needs.

Price Reporting Basis

    Over the course of the three meetings, price reporting basis 
generated significant discussion by the Committee. There was Committee 
discussion regarding two different reporting methods that could be 
proposed for pork mandatory reporting: Free-on-Board (F.O.B.) Omaha 
basis, which was used for the voluntary program, and F.O.B. Plant 
basis, which is currently used for mandatory reporting of boxed beef 
and lamb. Committee members who indicated a preference for reporting 
F.O.B. Plant basis stated that reporting prices on this basis would 
reflect the actual transaction that occurred within the marketplace 
without additional adjustments for a centralized reporting location. 
Further, there was concern expressed that reporting swine purchases on 
a plant delivered basis (as is currently the case under LMR for swine) 
and pork on an F.O.B. Omaha basis would make data comparison difficult. 
Committee members who indicated a preference for reporting prices on an 
F.O.B. Omaha basis cited the desire for consistency with current

[[Page 16954]]

practice, among other factors. During the final meeting, the Committee 
reached consensus that prices would be reported on both an F.O.B. Omaha 
basis and F.O.B. Plant basis.
    The Committee agreed that F.O.B. Omaha basis will be calculated 
using freight information provided by AMS. While this information is 
not intended for inclusion in the regulations, AMS is outlining its 
plan to assist reporting entities. The Committee believed that this 
requirement for all packers to utilize the same conversion methodology 
provides greater consistency with these reported prices, and is 
conducive to the audit process implicit with LMR. As reflected in the 
draft regulatory language, AMS will develop freight adjustment 
information for use in developing F.O.B. Omaha prices. AMS 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 believes a simpler 
option is 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 FOB Omaha price to be submitted to AMS. 
AMS also believes this method would be easier for reporting packers to 
comply with and document for audit purposes. Based on information 
gathered from various sources on transportation costs, AMS believes 
that, if the freight rate would be applied today, that per loaded mile 
rate would be $2.11. Once the final rule is in place, AMS would 
reevaluate the per loaded mile rate on a quarterly basis.
    The Committee considered other price-determining characteristics as 
they relate to the reporting requirements of LMR. For example, the 
Committee reached consensus that the price 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, the Committee 
agreed that it would be overly burdensome on reporting entities and 
provide little utility for market reports to include costs for things 
such as accruals or rebates as many of these costs are not known at the 
time of transaction. The requirements for reporting prices of wholesale 
pork sales are outlined in proposed section 59.205.

Product Characteristics

    The Committee reached consensus on the type of information packers 
will report to AMS as part of mandatory wholesale pork reporting. These 
items are discussed below and are outlined in the proposed section 
59.205.
    Type of Sale. Committee members reached consensus on the types of 
sales of wholesale pork that must be reported. The Committee identified 
and defined three types of sale: negotiated, forward, and formula 
marketing arrangement. When packers report sales of wholesale pork to 
AMS, they will be identified using one of these three categories. For 
negotiated sale, the Committee desired to capture the traditional 
``spot'' market, and therefore crafted a proposed definition that 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). Additionally, there was discussion regarding which day 
would be considered ``Day 1'' for reporting purposes. It was agreed by 
the Committee that the day after the seller-buyer agreement shall be 
considered ``Day 1'' for reporting delivery periods to ensure 
consistency with current industry practices.
    For the definition of a forward sale, the Committee desired to 
establish these types of transactions as occurring outside the 
traditional negotiated, or spot, window. Therefore, the Committee 
agreed that the proposed 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 Committee also agreed that 
the definition proposed for formula marketing arrangement bases the 
price paid not on seller-buyer interaction and agreement on a given 
day, but instead is established in reference to publicly-available 
quoted prices. The proposed definitions for the terms ``Type of sale,'' 
``Negotiated sale,'' ``Forward sale,'' and ``Formula marketing 
agreement'' appear in proposed section 59.200.
    Specifications. The Committee discussed the options for submitting 
data to AMS on cuts of pork according to Institutional Meat Purchase 
Specifications (IMPS), as is commonly used with mandatory boxed beef 
trade. It was decided that IMPS are not widely used in the wholesale 
pork trade, and therefore, would not be good descriptors of product 
specifications. Instead, the Committee decided that a description of 
the specifications of each pork item being transacted (e.g., vacuum-
packed \1/4\ inch loins) would be submitted to AMS and then the agency 
would group like products together for the purpose of publishing 
reports. The item's specification would also contain weight ranges for 
the product. Characteristics that entities would be required to report 
are outlined in proposed section 59.205 (a)(1).
    The Committee also discussed whether or not to include a provision 
in the proposed rule that requires packers to submit product yield data 
to AMS. It was discussed in Committee meetings that this information 
was needed to calculate the daily pork carcass cutout. The pork carcass 
cutout is an estimate of the value of a hog carcass based upon current 
wholesale prices for sub-primal pork cuts reported to AMS. The cutout 
provides an indication of the overall supply and demand situation of 
the wholesale pork cuts market. A composite value is calculated each 
day for the various pork primals and these values are aggregated to 
reflect a single composite value of a pork carcass. These cuts reflect 
a standard cutting specification and must be traded on a negotiated 
basis to deliver within 10 working days of the time of sale for combo 
items (processing cuts) and 14 working days for boxed items (retail 
cuts). It was decided by the Committee that packers would provide the 
necessary product yield information voluntarily to AMS upon request 
and, therefore, was not included in the Committee's proposed rule.
    Product Delivery Period. Under the existing voluntary pork 
reporting program, the delivery period for negotiated pork trades is 
measured in working days rather than calendar days. It was decided by 
the Committee that the product delivery period should be reported in 
calendar days to be consistent with the requirements for boxed beef and 
boxed lamb. This reportable characteristic is outlined in proposed 
section 59.205 (a)(1).

[[Page 16955]]

    Pork class. The Committee considered the categories of pork class, 
which describes the type of swine from which the product was derived, 
and reached consensus that there should be three categories for 
reporting product: barrow/gilt, sow, and boar. This reportable 
characteristic is outlined in proposed section 59.205 (a)(1). Further, 
a proposed definition for ``pork class''appears insection 59.200.
    Destination. The Committee agreed to add ``Destination'' as a 
characteristic of each sale and discussed how to report export product, 
especially if the report's primary objective is to capture sales within 
the United States. It was agreed that packers would report products' 
destination in one of three categories: Domestic, Export overseas, or 
North American Free Trade Agreement (NAFTA).
    Refrigeration. Consensus was reached by the Committee that a 
product's refrigeration type should be reported to AMS to be used 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 would provide a means 
for identifying product that may be discounted due to potential shelf 
life limitations. The Committee determined that ``Day 1'' should be 
considered the day after production. The form contained in Appendix A 
provides timeframes against which packers should report product 
refrigeration.
    Specialty Pork Products. The Committee included a reporting 
category for specialty pork products in order to capture trade of 
wholesale pork that is produced or marketed under any specialty 
program, such as genetically-selected pork, certified programs, or 
specialty selection programs for quality or breed characteristics. It 
was noted by the Committee that AMS publishes similar information 
reported under the boxed beef program for ``branded'' programs. It was 
agreed by the Committee that a trademark brand on a product would not 
by itself make the product a specialty pork product, as outlined in the 
proposed definition in section 59.200.

General Provisions

    As discussed, the Committee developed proposed changes to 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 
changes are necessary to fully incorporate wholesale pork into Subpart 
A, and are largely administrative in nature. These conforming changes, 
as they appear in the proposed regulatory text, were presented by AMS 
and adopted by the Committee. Some sections in Subpart A remain 
unchanged, but are discussed here to provide context for the reader.
    Section 59.10 details how packers would 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 record keeping 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 are proposed for section 59.10 to 
accommodate the additional requirement of reporting wholesale pork 
cuts.
    This proposed rule requires the reporting of specific market 
information regarding the sales of wholesale pork products.
    Section 59.20 is proposed to be amended by the addition of (f), 
Reporting Sales of Wholesale Pork. In addition to the aforementioned 
reporting requirements, packers would 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 paperwork 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 https://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 appropriate subpart. For example, definitions 
that pertain only to swine and swine products are contained in Subpart 
C and are proposed herein accordingly. 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 proposed to reflect the 
Committee's desire to have prices reported on both a plant and Omaha 
basis. The proposed change to the term ``Lot'' adds wholesale pork. 
There is also an administrative change proposed 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 were proposed for amendment by the 
Committee, 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

[[Page 16956]]

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, 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, warrant discussion here. The 
Committee recommended that AMS implement a transition period that would 
continue voluntary reporting methodology until 12 months after the 
commencement of mandatory reporting; allow for a 12 month beta testing 
period for the new mandatory system; and release mandatory data 
publicly each Monday for the previous week. The Committee asserts that 
this would minimize market disruption.
    Based on these recommendations, 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.
    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 then 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.
    It should also be noted that many of the Committee's 
recommendations, which can be found at www.ams.usda.gov/
negotiatedrulemaking, are contained in the proposed regulatory text.

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 
bereported 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.

Executive Order 12988

    This proposed 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 proposed rule does not require affected entities to relocate or 
alter their operations in ways that could adversely affect such persons 
or groups. Further, this proposed 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 proposed 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

[[Page 16957]]

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. However, since the nationalLMR 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 proposed 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 a ``significant regulatory 
action'' under section 3(f) of Executive Order 12866. Accordingly, the 
rule has been reviewed by the Office of Management and Budget (OMB).
    Regulations must be designed in the most cost-effective manner 
possible to obtain the regulatory objective while imposing the least 
burden on society. This proposed 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.
    Alternatives to the proposed 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. These alternatives are reviewed in detail in the ``Proposed 
Requirements'' section of this preamble.
    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.
    Currently, pork processors are not required by law to report 
wholesale pork cut prices. Rather, AMS collects 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 
results in frequent 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 
have 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 proposed 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 SverigesRiksbank Prize in Economic Sciences in Memory 
of Alfred Nobel 2001.'' Nobelprize.org. 7 Sep 2011 available at 
https://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

[[Page 16958]]

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 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 models. 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:
    4. 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;
    5. Allows AMS more opportunity to keep wholesale pork reporting 
current with industry marketing practices and product offerings; and

[[Page 16959]]

    6. 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.
    Summary of Costs. The regulatory objective of this proposed 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 proposed 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.
    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 record keeping 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 estimate 
that the creation of this interface by in-house computer personnel will 
require an industry average of 15 hours per respondent. Further, we 
estimate 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\ https://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 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 (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 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
                                                           ------------------
                                                                          56  ................  ................
                                                           -----------------------------------------------------
    Total Annual Submission Costs.........................  ................  ................         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 proposed 
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;

[[Page 16960]]

$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.

                                         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............................................     $500,277.52
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 proposed 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 proposed 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 proposed 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 initial 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 
proposed 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 these proposed regulations.
    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.

[[Page 16961]]

    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 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 record keeping 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 proposed 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 swine federally inspected 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 are illustrative of 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 head                Number of 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 
proposed rule would not have a significant economic impact on a 
substantial number of small entities.

[[Page 16962]]

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 
proposed rule. If the proposed rule is finalized, it is the intent of 
AMS to submit to OMB a request to merge this collection into the 
currently approved collection, ``Livestock Mandatory Reporting Act of 
1999'', OMB number 0581-0186.
    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 
record keeping systems and business operation practices and conduct 
their operations in a similar manner. The Committee believes that all 
of the information required under this proposed 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 proposed 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 
proposed 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 proposed 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 proposed 
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 16963]]



----------------------------------------------------------------------------------------------------------------
                                                       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.

----------------------------------------------------------------------------------------------------------------
                                                                              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.
    A 60-day comment period is also provided for interested persons to 
comment on the regulatory provisions of this proposed rule. AMS is also 
inviting comments concerning the information collection and 
recordkeeping requirements contained in this proposed rule. Comments 
are specifically invited on: (1) The accuracy of the burden estimate of 
the proposed collection of information including the validity of the 
methodology and the assumptions used; (2) ways to minimize the burden 
of the collection of information on those who would be required to 
respond, including through the use of appropriate electronic collection 
methods; (3) whether the proposed collection of information was 
sufficient or necessary for the proper performance of the functions of 
the agency as mandated by the 1999 Act and the Reauthorization Act; and 
(4) ways to enhance the quality, utility, and clarity of the 
information to be collected. All comments should be submitted at: 
https://www.regulations.gov, or may be sent to Michael Lynch, Director, 
Livestock and Grain Market News Division, 1400 Independence Ave. SW., 
Room 2619-S, Washington, DC 20250-0252, or by fax to (202) 690-3732.
    Comments that specifically pertain to the information collection 
and recordkeeping requirements of this action should also be sent to 
the Desk Officer for Agriculture, Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, 725 17th Street NW., Room 725, Washington, DC 20503, and 
should reference the date and page number of this issue of the Federal 
Register. All responses to this proposed rule will be summarized and 
included in the request for OMB approval, and will become a matter of 
public record. The comment period for the information collection and 
recordkeeping requirements contained in this proposed rule is also 60 
days.

List of Subjects in 7 CFR Part 59

    Cattle, Hogs, Sheep, Livestock, Lamb.

    For the reasons set forth in the preamble, it is proposed that 
Title 7, Chapter I of the Code of Federal Regulations is amended by 
revising part 59 to read as follows:

PART 59--LIVESTOCK MANDATORY REPORTING

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

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

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


Sec.  59.20  [Amended]

* * * * *
    (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 a.m. central time;
    (2) Between 10 a.m. and 2 p.m. central time; or
    (3) After 2 p.m. central time.


Sec.  59.30  [Amended]

    3. Section 59.30 is amended by:
    A. Revising the definition of ``F.O.B.'' to read as follows:
    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).
    B. Revising the last two sentences in the definition of 
``Institutional Meat Purchase Specifications'' to reflect an updated 
phone number and Web address.


* * * Phone (202) 260-8295 or Fax (202) 720-1112. Copies may also be 
obtained over the Internet at https://www.ams.usda.gov/AMSv1.0/LivestockStandardizationIMPS.
    C. Revising the definition of ``Lot'' to read as follows:
* * * * *
    (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.


Sec.  59.200  [Amended]

    4. Section 59.200 is amended by:
    A. Adding, in alphabetical order, a definition for ``Formula 
marketing arrangement'':
    Formula marketing arrangement. When used in reference to wholesale 
pork, the term `formula marketing arrangement' means an agreement for 
the sale of pork executed in advanceof

[[Page 16964]]

manufacture under which the price is established in reference to 
publicly-available quoted prices.
    B. Adding, in alphabetical order, a definition for ``Forward 
sale'':
    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.
    C. Adding, in alphabetical order, a definition for ``Negotiated 
sale'':
    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.
    D. Adding, in alphabetical order, a definition for ``Pork class'':
    Pork class. The term ``pork class'' means the following types of 
swine purchased for slaughter: (1) Barrow/gilt; (2) sow; (3) boar.
    E. Adding, in alphabetical order, a definition for ``Specialty pork 
products'':
    Specialty pork product. The term `specialty pork product' means 
wholesale pork produced and marketed under any specialty program such 
as genetically-selected pork, certified programs, or specialty 
selection programs for quality or breed characteristics.
    F. Adding, in alphabetical order, a definition for ``Type of 
sale'':
    Type of sale. The term ``type of sale'' with respect to wholesale 
pork means a negotiated sale, forward sale, or formula marketing 
arrangement.
    G. Adding, in alphabetical order, a definition for ``Variety 
meats'':
    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.
    H. Adding, in alphabetical order, a definition for ``Wholesale 
pork'':
    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.
    I. Adding a new section 59.205 that reads 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: March 15, 2012.
Robert C. Keeney,
Acting Administrator, Agricultural Marketing Service.

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

Appendix A to Subpart C--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 to Subpart C--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 was submitted (mm/dd/yyyy),and reporting 
time (the submission time corresponding to the 10 a.m. and the 2 
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 outside of 
the 50 States; 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

[[Page 16965]]

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 16966]]

[GRAPHIC] [TIFF OMITTED] TP23MR12.000


[[Page 16967]]


[FR Doc. 2012-6992 Filed 3-22-12; 8:45 am]
BILLING CODE 3410-02-C