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.

Proposed Rules Federal Register

16951 

Vol. 77, No. 57 

Friday, March 23, 2012 

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 http:// 

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 http:// 

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 

http://www.ams.usda.gov/AMSv1.0/ 

marketnews by clicking on ‘‘Livestock, 

Meats, Grain, and Hay,’’ then ‘‘Livestock 

Mandatory Reporting.’’ 

On September 28, 2010, the 2010 

Reauthorization Act (Pub. L. 111–239), 

reauthorized LMR for an additional 

5 years and added a provision for 

mandatory reporting of wholesale pork 

cuts. The 2010 Reauthorization Act 

directed the Secretary to engage in 

negotiated rulemaking to make required 

regulatory changes for mandatory 

wholesale pork reporting and establish 

a negotiated rulemaking committee to 

develop these changes. The statute 


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16952 Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 

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; 


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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 commonlyadded 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-onBoard (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 


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16954 Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 

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 sellerbuyer 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). 


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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 geneticallyselected 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 http:// 

marketnews.usda.gov/portal/lg. 

Lastly, under Subpart A, section 59.30 

details the general definitions of terms 

used throughout the regulations and 

applicable to all subparts. Where 

definitions apply to only one reportable 

commodity, those are included in the 

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 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
16956 Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 

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 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 16957 

1 ‘‘The SverigesRiksbank Prize in Economic 

Sciences in Memory of Alfred Nobel 2001.’’ 

Nobelprize.org. 7 Sep 2011 available at http:// 

www.nobelprize.org/nobel_prizes/economics/ 

laureates/2001/. 

2Stiglitz, J.E. ‘‘The Contributions of the 

Economics of Information to Twentieth Century 

Economics.’’ 2000. The Quarterly Journal of 

Economics 115(November):1441–1478. 

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. 

The wholesale pork reporting study 

mandated by Congress found evidence 

consistent with Akerloff, et al., and 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
16958 Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 

3Ward, C.E. and T.C. Schroeder.‘‘Understanding 

Livestock Pricing Issues.’’ Oklahoma Cooperative 

Extension Fact Sheet, AGEC–551 August 2009. 

4Ward, 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. 

5Perry, 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. 

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. 

7Lee 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. 

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. 

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. 

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. 

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 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 16959 

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

0000. 

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. 

INITIAL ELECTRONIC STARTUP COST

PER RESPONDENT

Hours to develop interface ........... 15 

Labor cost per hour ...................... × $49.30 

Total cost per respondent ......... 739.50 

INITIAL ELECTRONIC STARTUP COST

PER RESPONDENT—Continued 

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

Type of product Number of 

respondents 

Cost per 

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 

respondent 

Number of 

respondents 

Total cost 

to 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. Salaryrelated costs in each year are estimated 

at $271,000. Other costs include 

approximately $20,000 for travel/ 

transportation, training, and outreach; 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
16960 Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 

$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

Cost type First year 

costs 

Following 

years’ costs 

Average 

cost/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. 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 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. 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
16962 Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 

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

Item Reporting 

days Responses Total responses 

I. Number of Responses per Respondent per Year 

Commodity Pork/Combination ...................................................................................... 260 × 2 daily = 520 

Sow/Boar Meat ............................................................................................................. 260 × 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. 

Item Submissions/ 

year 

Hours/ 

submission 

Total 

hours/year 

II. Number of Submission Hours per Respondent per Year 

Commodity Pork/Combination ...................................................................................... 520 × .125 = 65.00 

Sow/Boar Meat ............................................................................................................. 260 × .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. 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 16963 

Item Total Hours/ 

year Cost/hour Total $’s/ year 

III. Total Submission Cost per Respondent per Year 

Commodity Pork/Combination ...................................................................................... 65.00 × $23.22 = $1,509.30 

Sow/Boar Meat ............................................................................................................. 32.50 × 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. 

Item Total $’s/ 

year 

# of 

Respondents Total Cost 

IV. Total Yearly Submission Cost for all Respondents 

Commodity Pork/Combination ...................................................................................... $1,509.30 × 44 = $66,409.20 

Sow/Boar Meat ............................................................................................................. 754.65 × 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: 

http://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: 

§ 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. 

§ 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 http://

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. 

§ 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 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS
16964 Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 

manufacture under which the price is 

established in reference to publiclyavailable 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 subprimals, 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: 

§ 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 § 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 § 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 


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


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16966 Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 


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Federal Register / Vol. 77, No. 57 / Friday, March 23, 2012 / Proposed Rules 16967 

[FR Doc. 2012–6992 Filed 3–22–12; 8:45 am] 

BILLING CODE 3410–02–C 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2012–0079; Directorate 

Identifier 2012–NE–06–AD] 

RIN 2120–AA64 

Airworthiness Directives; Pratt & 

Whitney Division Turbofan Engines 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to adopt a new 

airworthiness directive (AD) for Pratt & 

Whitney PW4052, PW4152, PW4056, 

PW4156A, PW4060, PW4060A, 

PW4060C, PW4062, PW4062A, 

PW4158, PW4460, PW4462, PW4164, 

PW4164C, PW4164C/B, PW4168, and 

PW4168A turbofan engines with certain 

high-pressure turbine (HPT) stage 1 

front hubs installed. This proposed AD 

was prompted by Pratt & Whitney’s 

updated low-cycle-fatigue analysis that 

indicated certain HPT stage 1 front hubs 

could initiate a crack prior to the 

published life limit. This proposed AD 

would require removing the affected 

HPT stage 1 front hubs from service 

using a drawdown plan. We are 

proposing this AD to prevent failure of 

the HPT stage 1 front hub, which could 

lead to an uncontained engine failure 

and damage to the airplane. 

DATES: We must receive comments on 

this proposed AD by May 22, 2012. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, 

M–30, West Building Ground Floor, 

Room W12–140, 1200 New Jersey 

Avenue SE., Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal holidays. 

For service information identified in 

this proposed AD, contact Pratt & 

Whitney, 400 Main St., East Hartford, 

CT 06108; phone: 860–565–7700; fax: 

860–565–1605. You may review copies 

of the referenced service information at 

the FAA, Engine & Propeller Directorate, 

12 New England Executive Park, 

Burlington, MA. For information on the 

availability of this material at the FAA, 

call 781–238–7125. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Management Facility between 

9 a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains this proposed AD, the 

regulatory evaluation, any comments 

received, and other information. The 

street address for the Docket Office 

(phone: 800–647–5527) is in the 

ADDRESSES section. Comments will be 

available in the AD docket shortly after 

receipt. 

FOR FURTHER INFORMATION CONTACT: 

James Gray, Aerospace Engineer, Engine 

Certification Office, FAA, 12 New 

England Executive Park, Burlington, 

MA; phone: 781–238–7742; fax: 781– 

238–7199; email: james.e.gray@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposal. Send your comments to 

an address listed under the ADDRESSES

section. Include ‘‘Docket No. FAA– 

2012–0079; Directorate Identifier 2012– 

NE–06–AD’’ at the beginning of your 

comments. We specifically invite 

comments on the overall regulatory, 

economic, environmental, and energy 

aspects of this proposed AD. We will 

consider all comments received by the 

closing date and may amend this 

proposed AD because of those 

comments. 

We will post all comments we 

receive, without change, to http:// 

www.regulations.gov, including any 

personal information you provide. We 

will also post a report summarizing each 

substantive verbal contact we receive 

about this proposed AD. 

Discussion 

A PW2000 field event led Pratt & 

Whitney to re-evaluate the low-cycle 

fatigue analysis of the PW2000 engine 

and similar engine models, including 

the PW4000 engine. Pratt & Whitney’s 

updated analysis indicated that the 

original grain size requirement specified 

on the HPT stage 1 front hub design 

drawing was too large, and may not be 

sufficient to meet the published life 

limits. Although we have not received 

any reports of cracks, parts with the 

larger grain size may initiate a crack 

prior to the published life limits. This 

condition, if not corrected, could result 

in failure of the HPT stage 1 front hub, 

which could lead to an uncontained 

engine failure and damage to the 

airplane. 

Relevant Service Information 

We reviewed Pratt & Whitney Service 

Bulletin (SB) No. PW4ENG 72–795, 

Revision 2, dated April 5, 2011, and SB 

No. PW4G–100–72–220, Revision 4, 

dated September 30, 2011. The SBs list 

the serial numbers of HPT stage 1 front 

hubs with part number (P/N) 51L901 

that are NOT affected by this AD. 

However, all serial numbers of HPT 

stage 1 front hubs with P/N 51L201, 

P/N 51L201–001, P/N 51L601, and 

P/N 52L401 are affected. 

FAA’s Determination 

We are proposing this AD because we 

evaluated all the relevant information 

and determined the unsafe condition 

described previously is likely to exist or 

develop in other products of the same 

type design. 

Proposed AD Requirements 

This proposed AD would require 

removing the affected HPT stage 1 front 

hubs from service using a drawdown 

plan. 

Costs of Compliance 

We estimate that this proposed AD 

would affect 954 engines installed on 

airplanes of U.S. registry. About 605 

engines use a 20,000 cycles-since new 

(CSN) life limit for the HPT stage 1 front 

hub. For these engines, we estimate the 

lost part life to have a value of about 

$25,400 per engine. About 349 engines 

use a 15,000 CSN life limit. For these 

engines, we estimate the lost life to have 

a value of about $22,013 per engine. 

Based on these figures, we estimate the 

total cost of the proposed AD to U.S. 

operators is $23,049,537. 

Authority for This Rulemaking 

Title 49 of the United States Code 

specifies the FAA’s authority to issue 

rules on aviation safety. Subtitle I, 

section 106, describes the authority of 

the FAA Administrator. Subtitle VII: 

Aviation Programs, describes in more 

detail the scope of the Agency’s 

authority. 

We are issuing this rulemaking under 

the authority described in Subtitle VII, 

Part A, Subpart III, Section 44701: 

‘‘General requirements.’’ Under that 

section, Congress charges the FAA with 

promoting safe flight of civil aircraft in 

air commerce by prescribing regulations 

for practices, methods, and procedures 

the Administrator finds necessary for 

safety in air commerce. This regulation 

is within the scope of that authority 


TKELLEY on DSK3SPTVN1PROD with PROPOSALS