Preserving Trust Benefits Under the Packers and Stockyards Act, 41015-41023 [2023-13418]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 88, Number 120 (Friday, June 23, 2023)]
[Rules and Regulations]
[Pages 41015-41023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13418]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 88, No. 120 / Friday, June 23, 2023 / Rules 
and Regulations

[[Page 41015]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

9 CFR Parts 201 and 203

[Doc. No. AMS-FTPP-21-0015]
RIN 0581-AE01


Preserving Trust Benefits Under the Packers and Stockyards Act

AGENCY: Agricultural Marketing Service, Department of Agriculture 
(USDA).

ACTION: Final rule.

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SUMMARY: This final rule revises the Packers and Stockyards regulations 
to provide instructions for livestock sellers who desire to preserve 
their interest in the statutory livestock dealer trust under the 
Packers and Stockyards Act (Act). This rule adds procedures and 
timeframes for a livestock seller to notify the livestock dealer and 
the Secretary of Agriculture (Secretary) that the seller has not 
received full payment for livestock purchased by the dealer and that 
the seller intends to preserve its trust interests. Additionally, this 
rule provides that livestock dealers with average annual purchases over 
$100,000 are required to obtain written acknowledgement from livestock 
sellers that trust benefits do not pertain to credit sales. This rule 
provides further that livestock dealers are required to maintain 
records related to credit sales. These revisions to the Packers and 
Stockyards regulations reflect recent amendments to the Act that 
provide for a livestock dealer trust.

DATES: Effective July 24, 2023.

FOR FURTHER INFORMATION CONTACT: S. Brett Offutt, Chief Legal Officer/
Policy Advisor; Packers and Stockyards Division, USDA AMS Fair Trade 
Practices Program; phone: 202-690-4355; or email: 
usda.gov">[email protected]usda.gov.

SUPPLEMENTARY INFORMATION: Section 763 of the Consolidated 
Appropriations Act, 2021 (Pub. L. 116-260; December 27, 2020), amended 
the Packers and Stockyards Act, 1921, as previously amended (7 U.S.C. 
181 et seq.), by adding a new sec. 318 (7 U.S.C. 217b) establishing a 
statutory trust for the benefit of unpaid cash sellers of livestock. 
Under the new trust provisions, livestock dealers whose average annual 
purchases of livestock exceed $100,000 must hold all inventories of, 
and receivables and proceeds from, livestock purchased in cash sales in 
trust for the benefit of all unpaid cash sellers of livestock until the 
cash sellers have been paid in full. Livestock sellers lose the benefit 
of the trust unless they notify livestock dealers and the Secretary in 
writing that payment has not been received. Such notice must be 
provided within 30 days of the final date when payment was due, or 
within 15 days of notice that a dealer's payment instrument has been 
dishonored.
    The newly added sec. 318 of the Act further provides that the 
dealer trust provisions apply only to cash sales, which are defined in 
the statute as sales in which the seller does not expressly extend 
credit to the buyer. Thus, livestock sellers have no claim against the 
trust if they have extended credit to the buyer.
    Currently, Sec.  203.15 of the Packers and Stockyards regulations 
outlines the process by which livestock sellers and live poultry 
sellers and growers preserve their interest in the packer and poultry 
trusts previously established under the Act (see 9 CFR 203.15). This 
final rule revises Sec.  203.15, which will continue to provide for 
preservation of trust benefits under the packer and poultry trusts, by 
adding the process by which livestock sellers can preserve their 
interests under the new livestock dealer trust. Sections 206, 207, and 
318 of the Act (7 U.S.C. 196, 197, 217b) require livestock sellers and 
poultry sellers or growers to notify packers, live poultry dealers, or 
livestock dealers and the Secretary in writing of their intent to 
preserve their trust benefits within 30 days of the final day on which 
payment was due or within 15 days of receiving notice that the 
packer's, live poultry dealer's, or livestock dealer's payment 
instrument was dishonored. Accordingly, the revised Sec.  203.15 of the 
regulations outlines how sellers and growers can comply with the 
statutory requirement. The written notification should state that 
notification is to preserve trust benefits; identify both parties in 
the transaction; and include the date of the transaction, the date 
notice was received that the payment instrument was dishonored (if 
applicable), and the amount of money due. Written notification may be 
by letter, fax, email, or other electronic transmission, filed with the 
Packers and Stockyards Division (PSD) of the Agricultural Marketing 
Service (AMS). Section 203.15 of the regulations still provides that 
while the written notification described above is preferred, any 
written notice to the buyer and the Secretary that the seller has not 
received full payment is sufficient to meet the statutory requirement 
if it is given within the prescribed timeframes. Finally, Sec.  203.15 
is revised to include the statutory definition of a cash sale, meaning 
a sale in which the seller does not expressly extend credit to the 
buyer.
    Section 201.200 of the regulations currently prohibits packers 
whose average annual livestock purchases exceed $500,000 from entering 
into credit agreements with livestock sellers unless the packer obtains 
written acknowledgement from the seller that the seller has no trust 
rights with respect to each particular sale under a credit agreement. 
Under this final rule, Sec.  201.200 also prohibits livestock dealers 
whose average annual livestock purchases exceed $100,000 from entering 
into credit agreements with livestock sellers unless the purchasing 
dealer obtains written acknowledgement from the seller that the seller 
has no trust rights with respect to each particular sale under a credit 
agreement. The seller's written acknowledgment statement must further 
provide that the credit agreement covers a single sale, remains in 
effect until a specified date, or remains in effect until it is 
canceled in writing by either party. The seller's acknowledgement 
should be dated and signed by the seller. The purchasing livestock 
dealer is required to maintain records of the acknowledgement, as well 
as all other documents related to the credit agreement, for as long as 
required by any law or by the AMS Administrator, but for no less than 
two years following the expiration of the credit agreement referred to 
in the acknowledgment. Finally, the purchasing dealer is required to 
provide a copy of the acknowledgment to the seller.

[[Page 41016]]

    Average annual livestock purchase amounts may be determined using 
information establishing actual yearly dealer purchases, or a dealer's 
purchases as stated on its most recent annual report filed pursuant to 
the requirements of 9 CFR 201.97. Average annual livestock purchase 
amounts may be determined for new dealers that have not operated for a 
year's time--and for dealers that have not filed an annual report in 
the prior two years--according to their actual livestock purchases for 
the current year to date, extrapolated to a yearly amount, if 
necessary. In general, the new requirements for livestock dealers in 
Sec.  201.200 are similar to the current requirements for packers who 
enter into credit agreements with livestock sellers.

Comments

    AMS published a proposed rule regarding this action on May 5, 2022 
(87 FR 26695), and allowed 30 days for the public to submit comments on 
the proposal. The comment period closed June 6, 2022. AMS received six 
separate comments. Two comments were submitted by farm bureau 
federations. Three comments were submitted by livestock industry 
marketing associations. One comment was submitted by an association of 
community bankers.
    Both farm bureau commenters supported establishment of the trust 
and the proposed rule generally, saying that the proposed regulations 
would benefit their members. One livestock marketing association 
commenter similarly supported establishment of the trust and AMS's 
efforts to add structure and functionality to the trust operation. One 
livestock marketing association commenter did not support establishment 
of the trust and opposed some provisions in the proposed rule. Another 
livestock marketing association commenter expressed concern about 
potential unintended consequences of the trust itself, as well as 
perceived shortcomings of the proposed rule. The association of 
community bankers opposed certain provisions of the dealer statutory 
trust and urged AMS to suspend rulemaking pending further industry 
outreach. Specific comments and AMS's responses are detailed below.

Credit Sales Acknowledgements

    One commenter supported the proposed requirements that dealers 
obtain acknowledgments from sellers that sellers waive their trust 
rights when making credit sales and that credit agreements specify 
whether those agreements cover a single sale, remain in effect until a 
certain date, or remain in effect until cancelled. The commenter stated 
these requirements protect sellers against waiving their trust rights 
unknowingly.
    AMS agrees that requiring dealers to obtain credit sales waivers 
and requiring such acknowledgments to specify the length of the credit 
agreement term can protect livestock sellers from waiving their trust 
rights inadvertently. AMS is making no changes to the proposed rule 
based on these comments.

Definition of Cash Sale

    The same commenter recommended that AMS revise the proposed 
definition of cash sale to mean one in which the seller does not 
expressly extend credit to the buyer in writing. The commenter cited 
case law that found ``that unless the parties clearly agree in writing 
to a credit agreement, the transaction is a cash sale.'' \1\ The 
commenter asserted that adding ``in writing'' to the cash sale 
definition would clarify that a written extension of credit is needed 
for the sale to no longer be a cash sale and would make the definition 
of cash sale align with the requirements that the credit agreement and 
waiver be in writing.
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    \1\ In re Gotham Provision Co., 669 F.2d 1000, 1005 (5th Cir. 
1982).
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    AMS notes that the definition of cash sale is already established 
by the Act: sec. 409(b) of the Act (7 U.S.C. 228b), regarding prompt 
payment for livestock purchases, requires credit agreements to be in 
writing, and sec. 318(d) of the Act (7 U.S.C. 217b), provides that 
``[f]or the purpose of this section, a cash sale means a sale in which 
the seller does not expressly extend credit to the buyer.'' 
Accordingly, AMS is making no changes to the proposed regulatory 
definition of cash sale based on this comment.
    One commenter suggested that the definition of cash sale should be 
only those in which neither the seller nor any lender has extended 
credit to the buyer to purchase the seller's livestock. The commenter 
asserted that livestock sales ultimately involve more participants than 
just the buyers and sellers, and that lenders would face increased 
burden as they attempted to follow all the transactions involved to 
determine whether sales were actually cash sales.
    The prompt payment and trust provisions of the Act are intended to 
protect livestock sellers, and do not, as currently stated, involve 
lenders and any relationship they may have with buyers of livestock. 
Under the Act and attendant regulations, lenders do not have priority 
over the livestock for which the dealer has borrowed money; rather the 
trust is designed specifically to protect livestock sellers from non-
payment, including situations where a lender might take livestock or 
proceeds from a buyer who has not paid for the livestock. Further, as 
mentioned above, the cash sale definition is statutory and not open to 
agency revision. Accordingly, AMS is making no change to the rule as 
proposed based on this comment.

Notifications

    One commenter supported the proposed language in Sec.  203.15 that 
provides what information should be submitted with a claim for a 
livestock seller to preserve the benefit of the dealer trust and that 
such a claim must be submitted to both the defaulting dealer and the 
Secretary. The commenter agreed that the required information properly 
identifies the sale for which trust benefits are being preserved and 
concurred with the proposal that while such information is desirable, 
any timely written notice informing the dealer and the Secretary that 
the dealer has failed to pay is sufficient to meet the notice 
requirement in order to preserve the seller's interest in the trust.
    AMS notes that the proposed notification requirements mirror those 
currently in place in Sec.  203.15 relating to the packer and live 
poultry dealer trusts. Accordingly, AMS is making no changes to the 
proposed rule based on these comments.
    Two commenters stated that the proposed timeframes for notification 
are too long, one suggesting that trust notifications should be made no 
later than 10 business days from the date payment was due and/or 
postmarked, as per current prompt payment rules, with an additional 
three business days allowed after a payment instrument is dishonored. 
Both commenters expressed concern that the proposed rule's notification 
timeframes could allow for up to 45 days of ``clear title'' disruption 
and comingling of the non-paying dealer's receivables and assets. Two 
commenters further asserted that the proposed timeline could allow 
unpaid sellers to collude with non-paying dealers, allowing those 
dealers to operate illegally for up to 45 days from the date of the 
original transgression, and also allowing competitors to unknowingly 
sell livestock to offending dealers.
    AMS notes that notification timeframes are based on the date of the 
transaction for which payment is not received. Later transactions do 
not extend the filing timeframe for earlier transactions. The proposed 
notification

[[Page 41017]]

timeframes are statutory and have been established by Congress, and AMS 
cannot issue regulations that would conflict with the statute; as 
stated above, the proposed notification requirements are in accord with 
those currently in place in Sec.  203.15 relating to the packer and 
live poultry dealer trusts. Accordingly, AMS is making no changes to 
the proposed rule based on these comments.
    In connection with the list of registered dealers on PSD's website, 
two commenters suggested PSD also should be required to report trust 
claim notifications against dealers so all industry participants can 
verify not only the registration and bonding status of dealers, but 
also their status regarding trust claims. The commenters expressed 
concern about PSD's ability to maintain and publish such lists in a 
timely manner. Further, commenters suggested the proposed notification 
timelines and a lack of reliable disclosure about dealer payment 
defaults potentially harms other market participants. Commenters 
asserted there must be transparency and disclosure about dealers so 
that industry participants can make appropriate decisions with respect 
to their perceived risk.
    PSD is prohibited under 9 CFR 201.96--Unauthorized disclosure of 
business information prohibited--from publicizing any facts or 
information regarding dealers' businesses without their consent. 
However, PSD acts quickly to initiate investigations when it receives 
trust notifications. PSD reviews packers', dealers', and live poultry 
dealers' records and determines whether other sellers have not been 
paid. As appropriate, PSD notifies other unpaid sellers that they may 
need to file trust notifications to protect their interests. 
Accordingly, AMS is making no changes to the proposed regulations based 
on these comments.

Dealers

    The Packers and Stockyards regulations currently require livestock 
dealers to register with PSD. PSD maintains and publishes the list of 
registered dealers on its website. One commenter pointed out that 
regardless of their compliance with the registration requirement, any 
individual engaging in the business of buying and selling livestock in 
commerce is a dealer, and that sellers thus retain their statutory 
trust rights even when a buyer fails to register as a dealer. Another 
commenter disagreed, saying that the trust should only be enforceable 
against regulated livestock dealers identified and disclosed by PSD. 
According to this commenter, a seller engaging in livestock trade with 
an unidentified and unregulated livestock buyer, or ``alleged dealer,'' 
should assume the risk of doing so when there are alternative methods 
of marketing livestock in a secure manner, such as through a regulated 
dealer or livestock market. A third commenter asserted that the 
proposed rule could cause many buyers to unknowingly be classified as 
dealers (who ostensibly do not fit the definition of ``dealer'' under 
the Act).
    Section 301(d) of the Act (7 U.S.C. 201) defines the term dealer--
as used in the Act--to mean ``any person, not a market agency, engaged 
in the business of buying or selling in commerce livestock, either on 
his own account or as the employee or agent of the vendor or 
purchaser.'' The courts have held that if someone is not a market 
agency,\2\ and is engaged in the business of buying and selling in 
commerce livestock, their activities fall within the provision of sec. 
301(d) of the Act, and that to hold otherwise would be to ignore 
completely the definition of a dealer as prescribed by Congress.\3\ 
Further, sec. 318(a)(1) of the Act (7 U.S.C. 217b) specifies that 
``[a]ll livestock purchased by a dealer in cash sales and all 
inventories of, or receivables or proceeds from, such livestock sales 
shall be held by such dealer in trust for the benefit of all unpaid 
cash sellers of such livestock until full payment has been received by 
such unpaid cash sellers.'' Only dealers whose average annual purchases 
of livestock do not exceed $100,000 are exempt from the dealer trust 
provisions (sec. 318(a)(2)).
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    \2\ The term market agency is defined in sec. 307(c) of the Act 
(7 U.S.C. 201) to mean ``any person engaged in the business of (1) 
buying or selling in commerce livestock on a commission basis or (2) 
furnishing stockyard services.'' The term includes ``any person who 
engages in the buying or selling of livestock, on a commission or 
other fee basis, through the use of online, video, or other 
electronic methods when handling or providing the means to handle 
receivables or proceeds from such buying or selling, so long as such 
person's annual average of online, video, or electronic sales of 
livestock, on a commission or other fee basis, exceeds $250,000.''
    \3\ U.S. v. Kelly, 106 F.Supp 394 (E.D. Okla., 1952).
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    AMS notes that the statutory trust provisions do not differentiate 
between registered and unregistered dealers, nor between sales to 
registered and unregistered dealers. AMS believes that if the 
regulations were to exclude unregistered dealers from trust 
applicability, it could entice some dealers to not register, and 
thereby put more sellers at risk. Accordingly, AMS is making no changes 
to the rule as proposed based on these comments.
    One commenter objected to the definition of a dealer as one with 
purchases exceeding $100,000, finding the definition to be too broad 
and unenforceable from a regulatory standpoint. AMS clarifies that the 
$100,000 threshold does not alter the statutory definition of dealer, 
as discussed above. The $100,000 average annual purchases threshold, 
which is established by Congress in the amended statute, identifies 
which dealers are subject to the provisions of the trust and must 
comply with the requirement to obtain credit sales trust waiver 
acknowledgements from sellers. PSD is able to determine a dealer's 
average annual purchase amount using information provided by dealers in 
their annual reports, filed pursuant to the requirements of 9 CFR 
201.97. PSD is also able to extrapolate average annual purchases for 
new dealers, or those who have not filed recent reports, using current 
year-to-date purchase information. The $100,000 average annual 
purchases threshold was established by Congress when the dealer trust 
was enacted, and AMS has no authority to alter or amend the statutory 
provision. Moreover, for the reasons cited, AMS believes the proposed 
requirement to be reasonably enforceable. Accordingly, AMS is making no 
change to the proposed regulation based on this comment.

Regulatory Burden

    One commenter concurred with AMS's assessment of the reporting and 
recordkeeping burden related to compliance with these proposed 
requirements, agreeing that completing each acknowledgement would take 
one half hour or less and that the need for such acknowledgements would 
likely be infrequent. The commenter observed that the required credit 
sales acknowledgment is consistent with existing requirements related 
to the packer trust. AMS notes that these requirements intentionally 
mirror the packer trust provisions because the industry is already 
familiar with the process. AMS made no changes to the proposed rule 
based on these comments.
    Another commenter stated that AMS grossly underestimated the 
financial impact of the trust itself on small businesses operating as 
livestock sellers, markets, producers, and/or dealers. The commenter 
suggested AMS has not considered costs to sellers related to offering 
credit terms. The commenter asserted that livestock marketing agencies 
would be forced by dealers to extend credit and would incur additional 
interest costs to secure lines of credit to cover their custodial 
accounts. The commenter speculated further that other industry 
participants, such as lenders and government

[[Page 41018]]

agencies, would incur massive legal, interest, and administrative 
costs.
    AMS notes that the scope of the proposed rule is confined to 
provisions related to making timely trust claim notifications and 
requiring dealers to obtain credit sales trust waiver acknowledgements 
from sellers. AMS's cost/benefit and Regulatory Flexibility analyses, 
which were published in the proposed rule, evaluated only the potential 
burdens, costs, and benefits of effectuating the proposed provisions. 
Thus, comments related to the burden of effectuating the statutory 
trust itself--which as noted above, has already been established by 
Congress with the enactment of the statute--are outside the scope of 
the proposed rule, and AMS is making no changes to the rule as proposed 
based on these comments.

Trust Provisions and Enforcement

    AMS notes that the Act regulates the business activities of 
livestock dealers. The trust was created to protect livestock sellers 
doing business with dealers. The trust is specifically intended to keep 
inventories of livestock and the proceeds therefrom in trust so that 
livestock sellers are paid.
    Prior to implementing the trust, Congress instructed USDA to 
conduct a study on the feasibility of a dealer trust. The study, 
released on February 4, 2020, included input from the industry and 
lenders that Congress later considered when amending the Act to 
establish the livestock dealer statutory trust.\4\ Congressional 
establishment of the dealer statutory trust through amendment of the 
Packers and Stockyards Act became effective December 27, 2020. The 
provisions of the proposed rule are preliminary steps to trust 
enforcement and include the regulations AMS deemed necessary to begin 
trust administration. The proposed provisions are intended to help 
sellers understand the conditions under which they can preserve their 
trust rights, and to help both sellers and dealers engaged in credit 
transactions understand the conditions of credit sales as they relate 
to trust benefits.
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    \4\ Report Pursuant to Section 12103 of the Agriculture 
Improvement Act of 2018: Study to Determine the Feasibility of 
Establishing a Livestock Dealer Statutory Trust (usda.gov); accessed 
August 2, 2022.
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    Three commenters expressed concern with regard to the establishment 
of the livestock dealer statutory trust, as well as other existing 
provisions of the amended Act and the regulations, such as prompt 
payment requirements, ``clear title'' of cleared livestock 
transactions, and definition of the term dealer. One commenter asserted 
that the trust was established by Congress without any meaningful or 
robust discussion with industry participants, who felt there was 
already ample protection available in the marketplace for livestock 
sellers operating within the guidelines of prompt payment rules. One 
commenter suggested that AMS suspend implementation of the proposed 
rule, so that AMS can conduct outreach to the affected industry and 
lenders, to mitigate possible unintended consequences (purportedly of 
the trust itself), including lower prices to producers. As noted above, 
USDA conducted a study which included input from the industry and 
lenders, that Congress later considered when amending the Act.
    Comments about the establishment and merits of the trust itself, 
about provisions of the amended Act, or about other existing 
regulations are outside the scope of the proposed rule of May 5, 2022. 
Congress created the trust to protect livestock sellers doing business 
with dealers; the trust is specifically intended to keep inventories of 
livestock and the proceeds therefrom in trust so that livestock sellers 
are paid. AMS has no authority to alter or amend the statutory 
provisions that Congress has enacted for these purposes. Accordingly, 
AMS is making no changes to the rule as proposed based on those 
comments.
    One commenter suggested that a new program to be instituted by the 
Federal Reserve will make it possible to transact instant interbank 
payments for livestock purchases.\5\ The commenter stated that the 
proposed rule does not discuss use of an instant payment system in lieu 
of the dealer trust itself, nor its potential impact on information 
collection. The sole purpose of this rule is to delineate the process 
for sellers to preserve their dealer trust rights. Congress created the 
trust to protect livestock sellers doing business with dealers; the 
trust is specifically intended to keep inventories of livestock and the 
proceeds therefrom in trust so that livestock sellers are paid. The 
manner of payment is not addressed in the amendment to the statute. AMS 
has no authority to alter or amend the statutory provisions that 
Congress has enacted. Accordingly, AMS is making no changes to the rule 
as proposed based on those comments.
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    \5\ https://www.federalreserve.gov/paymentsystems/fednow_about.htm; accessed August 2, 2022.
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    One commenter asserted that trust provisions conflict with Uniform 
Commercial Code (UCC) provisions regarding ``clear title'' on livestock 
transactions and lenders' liens and security interest in livestock. The 
application of the UCC to the statute and its operation, if any, and 
the question of ``clear title,'' cannot be addressed by AMS in this 
rulemaking. Congress created the trust to protect livestock sellers 
from non-payment; the trust is specifically intended to keep 
inventories of livestock and the proceeds therefrom in trust so that 
livestock sellers are paid. AMS has no authority to alter or amend the 
statutory provisions that Congress has enacted for these purposes.
    The commenter further questioned whether competing buyers under UCC 
and trust provisions would be in a truly competitive bidding process or 
level playing field at public markets, because in the commenter's 
opinion, the trust creates a lien that interferes with clear title, and 
treats different classes of buyers differently. Congress, by statute, 
granted livestock sellers trust rights for their protection; this 
attendant rule to the statute only provides instructions for sellers 
who desire to preserve the benefit of the statutory livestock dealer 
trust. As stated previously, AMS cannot address what Congress has 
already established as the statutory trust.
    One commenter expressed the opinion that according to the text of 
the statute, the non-paying dealer would be the trustee of the trust 
created under the Act. AMS notes that the statute also includes 
authority for USDA to replace the dealer with another person as trustee 
to better protect livestock sellers.
    Two commenters expressed concerns about the mechanics of enforcing 
a dealer trust claim and the U.S. Department of Agriculture's (USDA) 
ability to enforce trust claims. One commenter further expressed belief 
that the trust and the proposed regulations may disrupt livestock 
markets and undermine current industry efforts to ``establish true 
price discovery,'' thereby damaging livestock producers who ``are 
already languishing under current market conditions.'' This comment 
appears to take issue with the establishment of the trust itself (and 
not the current proposed rule), which AMS cannot address. The same 
commenter stated there may be substantial dealer trust enforcement 
issues with regard to livestock transactions between members inside and 
outside of tribal nations. The commenter asserted that USDA has not met 
its burden of proof with regard to the impact and enforcement of the 
trust on Indian tribal nations.
    The scope of the proposed rule regarding the trust already enacted 
by Congress is confined to provisions related to making timely trust 
claim

[[Page 41019]]

notifications and requiring dealers to obtain credit sales trust waiver 
acknowledgements from sellers. Comments related to the existence of the 
statutory trust itself, or any burden of effectuating the trust are 
outside the scope of the proposed rule, and AMS is making no changes to 
the rule as proposed based on comments relating to the establishment of 
the trust. With regard to trust enforcement in tribal nations and 
without, AMS agrees that trust enforcement is important. In the 
development of the proposed rule, AMS determined that the proposed rule 
would be unlikely to have substantial direct effects on one or more 
Indian tribes, on the relationship between the Federal Government and 
Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes. While AMS has not yet 
addressed the procedure for enforcement of the dealer statutory trust 
itself, AMS plans to engage in future rulemaking to establish 
regulations for trust enforcement, and AMS intends to work with UDSA's 
Office of Tribal Relations and with tribal governments in the 
development of future trust enforcement regulations to ensure those 
rules address concerns such as those raised by the commenter. 
Forthcoming trust enforcement regulations would provide for 
consideration and consultation regarding trust enforcement inside and 
outside tribal nations.
    One commenter noted that USDA's enforcement role in the dealer 
trust appears to be greater than its role in enforcement of the packer 
trust, and encouraged USDA to prioritize the establishment of dealer 
trust enforcement procedures so the agency is prepared to act 
immediately when a default occurs. AMS acknowledges that trust 
enforcement procedures should be established, and assures commenters 
that we are working on trust enforcement regulations to be proposed in 
the future. In that regard, AMS will endeavor to create trust 
enforcement regulations that provide for the most efficient enforcement 
response. In the meantime, PSD responds quickly to all complaints of 
nonpayment for livestock in order to notify sellers of their right to 
file trust claims and bond claims. Where appropriate, PSD brings 
enforcement action against violators, which could result in civil 
penalties and/or suspension of registration.

Comment Period Extension

    The proposed rule provided a 30-day comment period for public input 
about the proposals. One commenter submitted two requests for an 
extension of the public comment period. One request simply asked for 
additional time to file comments. The other asked for a 90-day comment 
period.
    As explained above, the provisions of the proposed rule, while very 
narrow in scope, are necessary to the administration of the dealer 
statutory trust. They mirror the provisions related to making timely 
trust claim notifications under the existing packer and live poultry 
dealer trusts, and they mirror provisions requiring packers to obtain 
credit sales trust waiver acknowledgements under the packer trust. AMS 
believes the 30-day comment period provided was sufficient to obtain 
input about these relatively non-controversial proposals. Accordingly, 
AMS denied the requests for an extended comment period.

Regulatory Analyses

Executive Orders 12866 and 13563

    AMS is issuing this final rule in conformance with Executive Orders 
(E.O.) 12866 and 13563, which direct agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulations are 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). E.O. 13563 emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility.
    AMS believes that the livestock industry is best served by revising 
the existing regulation at 9 CFR 203.15 that addresses preserving 
packer and poultry trust benefits under the Act to include provisions 
related to the new livestock dealer trust. The industry is already 
familiar with the notification process. AMS anticipates that additional 
costs or the adoption of new practices related to compliance with this 
final rule will be minimal. Livestock sellers can use the instructions 
in this final rule to file notice most efficiently with dealers and AMS 
of their intent to preserve trust benefits. However, this final rule 
also provides flexibility because the revisions allow that any written 
notification to dealers and the Secretary within the prescribed 
timeframes that the seller has not received full payment for livestock 
will meet the statutory requirement. Furthermore, AMS believes that 
including the statutory definition of ``cash sale'' in Sec.  203.15 can 
help sellers better understand the conditions under which they can 
preserve their trust benefits.
    Regarding revisions to Sec.  201.200, AMS believes that both buyers 
and sellers benefit when livestock dealers with more than $100,000 
average annual purchases are required to obtain written acknowledgment 
from sellers that trust benefits do not extend to livestock purchases 
under credit terms, and to maintain all records related to such sales, 
including the written acknowledgement. Obtaining the written 
acknowledgement, as well as providing the seller with a copy of the 
written agreement and maintaining pertinent records, demonstrates that 
both parties understand the conditions of credit sales as they relate 
to dealer trust benefits. AMS does not expect this final rule to 
provide any environmental, public health, or safety benefits.
    This final rule does not meet the criteria of a significant 
regulatory action under E.O. 12866 as supplemented by E.O. 13563. 
Therefore, the Office of Management and Budget (OMB) has not reviewed 
this rule under those orders.

Regulatory Flexibility Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.), AMS has considered the economic impact of 
this action on small business entities.
    The final rule affects dealers that purchase more than $100,000 in 
cattle, hogs, sheep, goats, horses, or mules annually. It also affects 
livestock producers, other dealers, and livestock auctions from which 
the dealers purchased livestock.
    The Small Business Administration (SBA) defines small businesses by 
their North American Industry Classification System (NAICS) codes. 
Livestock dealers and livestock auctions would be classified as NAICS 
code 424520--Livestock Merchant Wholesalers, which includes all 
livestock dealers except dealers in horses and mules, and code 424590--
Other Farm Product Raw Material Merchant Wholesalers.\6\ For both 
classifications, SBA defined a small business as one with 100 employees 
or fewer.\7\
---------------------------------------------------------------------------

    \6\ Office of the President, OMB. ``North American Industry 
Classification System United States, 2017,'' pp. 336-337. https://www.census.gov/naics/reference_files_tools/2017_NAICS_Manual.pdf.
    \7\ ``Table of Small Business Size Standards Matched to North 
American Industry Classification System Codes,'' Small Business 
Administration, effective August 19, 2019, p. 24. https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
---------------------------------------------------------------------------

    Livestock dealers, including livestock auctions, are required to 
register and file annual reports with AMS. In 2017 and 2018, 3,015 
livestock dealers purchased more than $100,000 in livestock for

[[Page 41020]]

their own account or for the account of others.\8\ Livestock dealers do 
not disclose the number of employees in their annual reports, but based 
on its familiarity with the industry, AMS estimates at most three or 
four firms had more than 100 employees. At least 99.8 percent would be 
small businesses under the SBA definition.
---------------------------------------------------------------------------

    \8\ USDA, AMS. ``Report Pursuant to Section 12103 of the 
Agriculture Improvement Act of 2018: Study to Determine the 
Feasibility of Establishing a Livestock Dealer Statutory Trust.'' 
December 20, 2019, p. 39. https://www.ams.usda.gov/sites/default/files/media/LivestockDealerStatutoryTrustSenttoCongress.pdf.
---------------------------------------------------------------------------

    Producers selling livestock would be classified as NAICS codes: 
12111--Beef Cattle Ranching and Farming, 112210--Hog and Pig Farming, 
112410--Sheep Farming, 112420--Goat Farming, and 112920--Horses and 
Other Equine Production. For each producer classification, SBA defined 
a small business as one with $1 million or less in annual receipts.\9\
---------------------------------------------------------------------------

    \9\ ``Table of Small Business Size Standards Matched to North 
American Industry Classification System Codes,'' Small Business 
Administration, effective August 19, 2019, pp. 2-3.
---------------------------------------------------------------------------

    The 2017 Census of Agriculture categorizes cattle producers, hog 
producers, sheep and lamb producers, and horse and mule producers by 
the size of their operation. The Census of Agriculture tables 
categorize producers' sales by number of head not the value of their 
receipts, but data from the tables enable AMS to make a rough estimate 
of the number of producers that would qualify as small businesses as 
defined by SBA.
    Census of Agriculture tables indicate that 711,827 farms reported 
sales of cattle or calves in 2017, of which 704,776 (99 percent) 
produced fewer than 1,000 head, averaged less than $1 million in sales, 
and would be small businesses.\10\ Of the 64,871 hog farms reporting 
sales, the 57,084 farms (88 percent) that produced fewer than 5,000 
head would qualify as small businesses.\11\ Of the 101,387 farms 
producing sheep and lambs, 101,280 (99.9 percent) would qualify as 
small businesses.\12\ The Census of Agriculture reported 74,227 farms 
that sold horses. Of those, 74,065 (99.8 percent) sold fewer than 50 
horses, averaged less than $1 million in sales, and would be considered 
small businesses. All the 10,435 farms that sold donkeys or mules were 
small businesses.\13\ The Census did not have sales information for 
goat producers.
---------------------------------------------------------------------------

    \10\ USDA, National Agricultural Statistics Service (NASS). 
``2017 Census of Agriculture: United States Summary and State Data'' 
Volume 1. April 2019, p. 23. https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Volume_1,_Chapter_1_US/usv1.pdf.
    \11\ Ibid., p. 24.
    \12\ Ibid., p. 25.
    \13\ Ibid., p. 26.
---------------------------------------------------------------------------

    More than 99 percent of the cattle, sheep and lamb, horse, and mule 
producers were small businesses. Hog production was more concentrated, 
with only 88 percent qualifying as small businesses. As group, these 
livestock producers were about 98.5 percent small businesses.
    The final rule includes two new provisions that affect small 
businesses: (1) The rule outlines how sellers can comply with the 
statutory requirement of providing written notification to dealers and 
to the Secretary if they wish to preserve their rights to the dealer 
trust, and (2) the rule requires dealers to obtain written 
acknowledgement from the seller that the seller waives their rights to 
the trust with respect to each particular sale under a credit 
agreement.
    The costs of filing a trust claim would only apply to livestock 
sellers. There are few requirements. The cost would be the value of the 
time required to write and send the notification. AMS expects writing 
and sending the notification would require no more than a half hour of 
a manager's time. The U.S. Bureau of Labor Statistics estimated the 
average hourly wage for farmers, ranchers, and other agricultural 
managers to be $36.93.\14\ If it takes one half hour to file the claim, 
filing the claim would cost $18.47.
---------------------------------------------------------------------------

    \14\ Department of Labor (USDOL), Bureau of Labor Statistics 
(BLS). Occupational Employment Statistics. ``Occupational Employment 
and Wages, May 2020. 11-9013 Farmers, Ranchers, and Other 
Agricultural Managers.'' https://www.bls.gov/oes/current/oes119013.htm#nat.
---------------------------------------------------------------------------

    In a review of dealer bond claims filed with AMS from October 2013 
through June 2019, AMS found claims against 82 dealers from 184 
claimants.\15\ If sellers file trust claims at a similar rate as they 
have filed bond claims in the past, AMS could expect 14.5 incidents in 
which one or more sellers makes a valid claim against a dealer's trust 
each year, with an average of 2.25 claimants for each trust incident, 
or 33 claimants per year. At a cost of $18.47 for each claim, AMS 
expects annual costs to the industry to be $609.51. Since nearly all 
livestock producers and livestock dealers who might sell livestock to 
other dealers are small business entities, AMS expects that nearly all 
of the claimants would be small businesses.
---------------------------------------------------------------------------

    \15\ USDA, AMS. ``Report Pursuant to Section 12103 of the 
Agriculture Improvement Act of 2018: Study to Determine the 
Feasibility of Establishing a Livestock Dealer Statutory Trust.'' 
December 20, 2019, p. 70.
---------------------------------------------------------------------------

    The cost of obtaining a written waiver acknowledgement from the 
seller would only apply to livestock dealers. AMS provides sample 
wording for the acknowledgment and expects that obtaining written 
acknowledgment from the seller would take no more than a half hour of a 
dealer's time, or $18.47 for each acknowledgement.
    AMS has no data on the number of dealers that purchase livestock 
with credit agreements, or the number of trust waiver acknowledgements 
dealers obtain from sellers and maintain. AMS's experience has been 
that the number of sellers acknowledging they waive their trust rights 
is relatively small. Sellers are reluctant to extend credit because 
they would be required to give up their rights to file trust claims or 
they have not had the financial resources to extend credit. With packer 
trusts, packers typically have not created separate trust waiver 
acknowledgements for each transaction. Instead, the waiver 
acknowledgments tend to cover a number of transactions over a period of 
time, limiting the number of written trust waivers required.
    Regarding dealer trusts, AMS expects that relatively few sellers 
would enter into credit agreements requiring trust waiver 
acknowledgments. However, if a dealer must obtain waiver 
acknowledgments according to Sec.  201.200, AMS expects that the dealer 
would limit the number of waiver acknowledgments by having a single 
waiver acknowledgment cover a number of transactions over a period of 
time. AMS estimates that at most, ten percent (302) of the 3,015 
dealers that average annual purchases of more than $100,000 in 
livestock would have credit agreements that require trust waiver 
acknowledgements. Dealers that purchase livestock with credit 
agreements may also purchase other livestock through cash sales, for 
which they are not required to obtain trust waiver acknowledgements 
from sellers. AMS estimates that each dealer that purchases livestock 
with credit and obtains trust waivers from sellers will only do so with 
an average of five customers in a year. That amounts to a total cost of 
$27,890 for all of the expected trust waivers (302 dealers x 5 waivers/
dealer x $18.47/waiver).
    The costs would not be spread uniformly across dealers. Dealers 
that do not enter into credit agreements would have no costs. Only the 
estimated ten percent of dealers that purchase livestock under a credit 
agreement with the seller would need trust waiver acknowledgments. The 
cost would average $92 for each dealer that purchases livestock with a 
credit agreement, which is about 0.1 percent of the minimum amount 
($100,000) of

[[Page 41021]]

average annual livestock purchases that makes a dealer responsible for 
obtaining waiver acknowledgments from credit sellers. Costs would 
likely be correlated with the size of the dealer: smaller dealers that 
purchase livestock on credit from fewer sellers would have fewer trust 
waiver acknowledgements.
    AMS expects total marginal costs for the two provisions to be 
$28,599. Small businesses would be responsible for nearly all of the 
costs. In 2017 and 2018, livestock dealers that purchased more than 
$100,000 in a year purchased a yearly total of $27.065 billion in 
livestock.\16\ Compared to the amount of business that livestock 
dealers conduct, an annual cost of $28,599 is 0.00011 percent of total 
dealer livestock purchases. Accordingly, AMS has determined that this 
action would not have a significant negative economic impact on a 
substantial number of these small business entities.
---------------------------------------------------------------------------

    \16\ USDA, AMS. ``Report Pursuant to Section 12103 of the 
Agriculture Improvement Act of 2018: Study to Determine the 
Feasibility of Establishing a Livestock Dealer Statutory Trust.'' 
December 20, 2019, p. 33.
---------------------------------------------------------------------------

    One comment submitted in response to the proposed rule suggested 
that AMS grossly underestimated the financial impacts of the dealer 
statutory trust on small businesses operating as livestock sellers, 
markets, producers, and/or dealers. The commenter asserted that, in 
light of statutory trust provisions, dealers will force sellers to 
extend credit to dealers, incurring additional interest costs to secure 
lines of credit to cover their custodial accounts, which AMS did not 
consider. The commenter estimated this additional interest cost alone 
could range between $30,000 and $60,000 annually per market, or between 
$40 million and $50 million collectively. The commenter identified 
other industry participants that could be financially impacted by the 
trust, citing legal fees, interest fees on unsettled notes, and 
extensive administrative costs to industry participants and government 
agencies. Finally, the commenter urged USDA to submit to a more 
extensive rulemaking process that incorporates the input and 
cooperation of the impacted businesses.
    AMS acknowledges that the general impacts and costs related to 
establishment of the dealer statutory trust were not considered in the 
initial Regulatory Flexibility analysis performed in conjunction with 
the proposed rule, nor should they have been. AMS's cost/benefit and 
Regulatory Flexibility analyses, which were published in the proposed 
rule, properly evaluated only the potential burdens, costs, and 
benefits of effectuating these proposed provisions that provide 
instructions for livestock sellers who desire to preserve their 
interest in the statutory livestock dealer trust under the Packers and 
Stockyards Act. Impacts related to the existence or establishment of 
the statutory trust itself are outside the scope of the proposed rule. 
Accordingly, AMS has made no changes to the proposed rule, nor to the 
analysis, based on this comment. AMS's analysis focused on the impacts 
of the proposed rule's provisions on small business entities, as was 
appropriate. Some of the commenter's observations and projections may 
be applicable to future rulemaking about trust enforcement. We 
encourage the commenter and all other interested parties to participate 
in that effort.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (44 U.S.C. Chapter 
35), the information collection requirements under the Packers and 
Stockyards regulations have been approved previously by OMB and 
assigned OMB No. 0581-0308. Changes to those requirements are necessary 
in connection with this final rule.
    Title: Preserving Trust Benefits Under the Packers and Stockyards 
Act.
    OMB Number: 0581-0336.
    Expiration Date of Approval: 3 years from approval.
    Type of Request: Intent to seek approval to conduct a new 
information collection.
    Abstract: The Packers and Stockyards Act, 1921 (Act) (7 U.S.C. 181 
et seq.), was recently amended by the addition of section 318 (7 U.S.C. 
217b), establishing a statutory trust for the benefit of unpaid cash 
sellers of livestock. Under the amended Act, livestock dealers whose 
average annual purchases of livestock exceed $100,000 must hold all 
inventories of and receivables and proceeds from livestock purchased in 
cash sales in trust for the benefit of all unpaid cash sellers of that 
livestock until the cash sellers have been paid in full.
    Under the new statutory trust provisions, livestock sellers lose 
their interest in the trust unless they notify livestock dealers and 
the Secretary of Agriculture (Secretary) in writing that payment has 
not been received. Such notice must be provided within 30 days of the 
final date when payment was due or within 15 days of notice that a 
dealer's payment instrument has been dishonored. The statute further 
provides that trust provisions apply only to cash sales, which are 
defined in the statute as sales in which the seller does not expressly 
extend credit to the buyer. Thus, livestock sellers have no claim 
against the trust if they have extended credit to the buyer.
    AMS seeks approval for a new information collection related to the 
livestock dealer trust to implement new regulatory requirements. 
Livestock dealers who purchase livestock under credit terms and whose 
average annual purchases of livestock exceed $100,000 must obtain 
written acknowledgements from sellers that trust benefits do not 
pertain to credit sales. Dealers must provide copies of the 
acknowledgements to sellers and must retain the acknowledgements for 
two years after the expiration of the subject credit agreements. 
Additionally, a livestock seller who has not received payment in full 
for cash livestock sales must notify both the dealer and the Secretary 
of Agriculture in writing and within specified timeframes that the 
seller has not received full payment and intends to preserve their 
interest in the dealer trust. Providing such notice to the Secretary 
will enable USDA to initiate enforcement investigations and further 
actions as necessary.
    Authority:
     In accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. Chapter 35) and
     The Packers and Stockyards Act, 1921 (7 U.S.C. 181 et 
seq.), as amended.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 15 to 30 minutes.
    Respondents: Livestock dealers and sellers.
    Estimated Number of Potential Respondents: 335.
    Estimated Total Potential Annual Responses: 1,845.
    Maximum Estimated Total Annual Burden on All Respondents: 847 
hours.
    A 60-day public comment period regarding the information collection 
related to this rule was imbedded in the proposed rule that was 
published on May 5, 2022 (87 FR 26695). The comment period closed July 
5, 2022. AMS received one comment referencing the estimated information 
collection burden on regulated entities. The commenter supported the 
proposed requirement to obtain credit sales trust waiver 
acknowledgements and concurred with AMS's estimate of the amount of 
time to do so and the likely infrequency of needing to do so. The 
commenter said the requirement protects sellers by ensuring they are 
well informed that they are giving up their trust rights when extending 
credit to a dealer. The commenter stated also that the statutory trust 
is an important tool for collecting funds in the event of a default, 
and producers should not be

[[Page 41022]]

put in a position to waive this protection without notice. The 
commenter observed that the burden of creating the acknowledgement is 
low, as the language for dealers to use in the document is provided in 
the regulation. Finally, the commenter recognized that the requirement 
is consistent with the existing regulation for extending credit to 
packers and waiving packer statutory trust protections. AMS made no 
changes to the information collection requirements of the proposed rule 
based on this comment.
    Upon approval by OMB, this information collection will be merged 
with the information collection currently approved for the Packers and 
Stockyards Division.
    Reports and forms are periodically reviewed to reduce information 
requirements and duplication by industry and public sector agencies. 
Should additional changes become necessary, they would be submitted to 
OMB for approval.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this final 
rule as not a major rule as defined by 5 U.S.C. 804(2).

E-Government Act

    USDA is committed to complying with the E-Government Act (44 U.S.C. 
3601 et seq.) by promoting the use of the internet and other 
information technologies to provide increased opportunities for citizen 
access to Government information and services, and for other purposes.

Executive Order 13175

    This final rule has been reviewed under E.O. 13175--Consultation 
and Coordination with Indian Tribal Governments, which requires 
agencies to consider whether their rulemaking actions would have tribal 
implications. In the development of the proposed rule, AMS determined 
that the proposed rule would be unlikely to have substantial direct 
effects on one or more Indian tribes, on the relationship between the 
Federal Government and Indian tribes, or on the distribution of power 
and responsibilities between the Federal Government and Indian tribes.
    One comment submitted in response to the proposed rule suggested 
that AMS had not met its burden of proof with regard to the impact and 
enforcement implications of dealer trust regulations on livestock sales 
transactions between tribal and non-tribal industry participants. AMS 
clarifies that neither the proposed rule nor this final rule addresses 
the impacts or enforcement of the dealer statutory trust itself. AMS 
plans to engage in future rulemaking to establish regulations for trust 
enforcement regulations. AMS intends to work with USDA's Office of 
Tribal Relations and with Tribal governments in the development of 
future trust enforcement regulations to ensure those rules address 
concerns such as those raised by the commenter. However, AMS continues 
to believe that the provisions of the May 5, 2022, proposed rule, as 
well as this final rule, are unlikely to have substantial direct 
effects on one or more Indian Tribes, on the relationship between the 
Federal Government and Indian Tribes, or on the distribution of power 
and responsibilities between the Federal Government and Indian Tribes.

Executive Order 12988

    This final rule has been reviewed under E.O. 12988, Civil Justice 
Reform. It is not intended to have retroactive effect. There are no 
administrative procedures that must be exhausted prior to judicial 
challenge to the provisions of this rule.
    Additional regulations pertaining to the new livestock dealer trust 
will be considered in a separate rulemaking action.

List of Subjects

9 CFR Part 201

    Confidential business information, Reporting and recordkeeping 
requirements, Stockyards, Surety bonds, Trade practices.

9 CFR Part 203

    Reporting and recordkeeping requirements, Stockyards.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service amends 9 CFR chapter II as follows:

PART 201--ADMINISTERING THE PACKERS AND STOCKYARDS ACT

0
1. The authority citation for part 201 continues to read as follows:

    Authority: 7 U.S.C. 181-229c.


0
2. Amend Sec.  201.200 by:
0
a. Revising the section heading;
0
b. Redesignating paragraphs (b) and (c) as paragraphs (c) and (d), 
respectively;
0
c. Adding new paragraph (b);
0
d. Revising newly redesignated paragraph (c); and
0
e. Removing the parenthetical authority at the end of the section.
    The revisions and addition read as follows:


Sec.  201.200   Sale of livestock on credit.

* * * * *
    (b) No dealer whose average annual purchases of livestock exceed 
$100,000 shall purchase livestock on credit unless:
    (1) Before purchasing livestock on credit, the dealer obtains from 
the seller a written acknowledgement that includes the information 
described in this paragraph (b)(1).
    (i) The following statement:
    On this date I am entering into a written agreement for the sale of 
livestock on credit to ___, a dealer, and I understand that in doing so 
I will have no rights under the trust provisions of section 318 of the 
Packers and Stockyards Act, 1921, as amended (7 U.S.C. 217b), with 
respect to any such credit sale.
    (ii) A statement about whether the credit sales agreement covers a 
single sale; covers multiple sales and remains in effect through a 
certain date and states the date; or remains in effect until canceled 
in writing by either party.
    (iii) The date the seller signed the agreement.
    (iv) The seller's signature.
    (2) The dealer retains the written acknowledgment, together with 
all other documents, if any, setting forth the terms of credit sales on 
which the purchaser and seller have agreed, and the dealer retains a 
copy thereof, in their records for such time as is required by any law, 
or by written notice served on the dealer by the Administrator, but not 
less than two calendar years from the date of expiration of the written 
agreement referred to in the acknowledgment.
    (3) The dealer provides a copy of the acknowledgment to the seller.
    (c) Purchasing livestock for which payment is to be made by a draft 
which is not a check shall constitute purchasing such livestock on 
credit within the meaning of paragraphs (a) and (b) of this section. 
(See also Sec.  201.43(b)(1).)
* * * * *

PART 203--STATEMENTS OF GENERAL POLICY UNDER THE PACKERS AND 
STOCKYARDS ACT

0
3. The authority citation for part 203 continues to read as follows:

    Authority: 7 CFR 2.22 and 2.81.


0
4. Revise Sec.  203.15 to read as follows:


Sec.  203.15   Trust benefits under sections 206, 207, and 318 of the 
Packers and Stockyards Act.

    (a) Within the times specified under sections 206(b), 207(d), and 
318(b) of

[[Page 41023]]

the Act, any livestock seller, live poultry seller or grower, to 
preserve their interest in the statutory trust, must give written 
notice to the appropriate packer, live poultry dealer, or livestock 
dealer and file such notice with the Secretary within the prescribed 
time by letter, fax, email, or other electronic transmission. The 
written notice should provide:
    (1) Notification to preserve trust benefits;
    (2) Identification of packer, live poultry dealer, or livestock 
dealer;
    (3) Identification of seller or poultry grower;
    (4) Date of the transaction;
    (5) Date of seller's or poultry grower's receipt of notice that 
payment instrument has been dishonored (if applicable); and
    (6) Amount of money due; and to make certain that a copy of such 
letter, fax, email, or other electronic transmission is filed with a 
PSD regional office or with the PSD headquarters office within the 
prescribed time.
    (b) While the information in paragraphs (a)(1) through (6) of this 
section is desirable, any written notice which informs the packer, live 
poultry dealer, or livestock dealer, and the Secretary that the packer, 
live poultry dealer, or livestock dealer has failed to pay is 
sufficient to meet the statutory requirement in paragraph (a) of this 
section if it is given within the prescribed time.
    (c) For purposes of administering statutory trusts under the Act, a 
cash sale means a sale in which the seller does not expressly extend 
credit to the buyer.

(Approved by the Office of Management and Budget under control 
number 0581-0308)

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-13418 Filed 6-22-23; 8:45 am]
BILLING CODE P