II 

109TH CONGRESS 

1ST SESSION S. 960 

To amend the Packers and Stockyards Act, 1921, to prohibit the use of 

certain anti-competitive forward contracts. 

IN THE SENATE OF THE UNITED STATES 

APRIL 28, 2005 

Mr. ENZI (for himself, Mr. DORGAN, Mr. JOHNSON, and Mr. THOMAS) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry 

A BILL 

To amend the Packers and Stockyards Act, 1921, to prohibit 

the use of certain anti-competitive forward contracts. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Captive Supply Reform 

5 Act’’. 

6 SEC. 2. LIMITATION ON USE OF FORWARD CONTRACTS. 

7 (a) IN GENERAL.—Section 202 of the Packers and 

8 Stockyards Act, 1921 (7 U.S.C. 192), is amended— 

9 (1) by striking ‘‘to:’’ and inserting ‘‘to—’’; 
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1 (2) by redesignating subsections (a), (b), (c), 

2 (d), (e), (f), and (g) as paragraphs (1), (2), (3), (4), 

3 (5), (7), and (8), respectively, and indenting appro4 priately; 

5 (3) in paragraph (7) (as redesignated by para6 graph (2)), by designating paragraphs (1), (2), and 

7 (3) as subparagraphs (A), (B), and (C), respectively; 

8 (4) in paragraph (8) (as redesignated by para9 graph (2)), by striking ‘‘subdivision (a), (b), (c), (d), 

10 or (e)’’ and inserting ‘‘paragraph (1), (2), (3), (4), 

11 (5), or (6)’’; 

12 (5) in each of paragraphs (1), (2), (3), (4), (5), 

13 (7), and (8) (as redesignated by paragraph (2)), by 

14 striking the first capital letter of the first word in 

15 the paragraph and inserting the same letter in the 

16 lower case; 

17 (6) in each of paragraphs (1) through (5) (as 

18 redesignated by paragraph (2)), by striking ‘‘or’’ at 

19 the end; and 

20 (7) by inserting after paragraph (5) (as redesig21 nated by paragraph (2)) the following: 

22 ‘‘(6) use, in effectuating any sale of livestock, 

23 a forward contract that— 

24 ‘‘(A) does not contain a firm base price 

25 that may be equated to a fixed dollar amount 
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1 on the day on which the forward contract is en2 tered into; 

3 ‘‘(B) is not offered for bid in an open, pub4 lic manner under which— 

5 ‘‘(i) buyers and sellers have the oppor6 tunity to participate in the bid; 

7 ‘‘(ii) more than 1 blind bid is solic8 ited; and 

9 ‘‘(iii) buyers and sellers may witness 

10 bids that are made and accepted; 

11 ‘‘(C) is based on a formula price; or 

12 ‘‘(D) provides for the sale of livestock in a 

13 quantity in excess of— 

14 ‘‘(i) in the case of cattle, 40 cattle; 

15 ‘‘(ii) in the case of swine, 30 swine; 

16 and 

17 ‘‘(iii) in the case of other types of live18 stock, a comparable quantity of the type of 

19 livestock determined by the Secretary.’’. 

20 (b) DEFINITIONS.—Section 2(a) of the Packers and 

21 Stockyards Act, 1921 (7 U.S.C. 182(a)) is amended by 

22 adding at the end the following: 

23 ‘‘(15) FORMULA PRICE.— 

24 ‘‘(A) IN GENERAL.—The term ‘formula 

25 price’ means any price term that establishes a 
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1 base from which a purchase price is calculated 

2 on the basis of a price that will not be deter3 mined or reported until a date after the day the 

4 forward price is established. 

5 ‘‘(B) EXCLUSION.—The term ‘formula 

6 price’ does not include— 

7 ‘‘(i) any price term that establishes a 

8 base from which a purchase price is cal9 culated on the basis of a futures market 

10 price; or 

11 ‘‘(ii) any adjustment to the base for 

12 quality, grade, or other factors relating to 

13 the value of livestock or livestock products 

14 that are readily verifiable market factors 

15 and are outside the control of the packer. 

16 ‘‘(16) FORWARD CONTRACT.—The term ‘for17 ward contract’ means an oral or written contract for 

18 the purchase of livestock that provides for the deliv19 ery of the livestock to a packer at a date that is 

20 more than 7 days after the date on which the con21 tract is entered into, without regard to whether the 

22 contract is for— 

23 ‘‘(A) a specified lot of livestock; or 
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1 ‘‘(B) a specified number of livestock over a 

2 certain period of time.’’. 

Æ