I 
112TH CONGRESS 
1ST SESSION H. R. 2631 
To amend the Packers and Stockyards Act, 1921, to prohibit the use of 
certain anti-competitive forward contracts. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 25, 2011 
Mrs. LUMMIS (for herself and Ms. KAPTUR) introduced the following bill; 
which was referred to the Committee on Agriculture 
A BILL 
To amend the Packers and Stockyards Act, 1921, to prohibit 
the use of certain anti-competitive forward contracts. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Livestock Marketing 
Fairness Act’’. 
SEC. 2. PURPOSE. 
The purpose of the amendments made by this Act 
is to prohibit the use of certain anti-competitive forward 
contracts— 
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(1) to require a firm base price in forward con-
tracts and marketing agreements; and 
(2) to require that forward contracts be traded 
in open, public markets. 
SEC. 3. LIMITATION ON USE OF ANTI-COMPETITIVE FOR-
WARD CONTRACTS. 
(a) IN GENERAL.—Section 202 of the Packers and 
Stockyards Act, 1921 (7 U.S.C. 192), is amended— 
(1) by striking ‘‘Sec. 202. It shall be’’ and in-
serting the following: 
‘‘SEC. 202. UNLAWFUL PRACTICES. 
‘‘(a) IN GENERAL.—It shall be’’; 
(2) by striking ‘‘to:’’ and inserting ‘‘to—’’; 
(3) by redesignating subsections (a), (b), (c), 
(d), (e), (f), and (g) as paragraphs (1), (2), (3), (4), 
(5), (7), and (8), respectively, and indenting appro-
priately; 
(4) in paragraph (7) (as redesignated by para-
graph (3)), by redesignating paragraphs (1), (2), 
and (3) as subparagraphs (A), (B), and (C), respec-
tively, and indenting appropriately; 
(5) in paragraph (8) (as redesignated by para-
graph (3)), by striking ‘‘subdivision (a), (b), (c), (d), 
or (e)’’ and inserting ‘‘paragraph (1), (2), (3), (4), 
(5), or (6)’’; 
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(6) in each of paragraphs (1), (2), (3), (4), (5), 
(7), and (8) (as redesignated by paragraph (3)), by 
striking the first capital letter of the first word in 
the paragraph and inserting the same letter in the 
lowercase; 
(7) in each of paragraphs (1) through (5) (as 
redesignated by paragraph (3)), by striking ‘‘or’’ at 
the end; 
(8) by inserting after paragraph (5) (as redesig-
nated by paragraph (3)) the following: 
‘‘(6) except as provided in subsection (c), use, 
in effectuating any sale of livestock, a forward con-
tract that— 
‘‘(A) does not contain a firm base price 
that may be equated to a fixed dollar amount 
on the day on which the forward contract is en-
tered into; 
‘‘(B) is not offered for bid in an open, pub-
lic manner under which— 
‘‘(i) buyers and sellers have the oppor-
tunity to participate in the bid; and 
‘‘(ii) buyers and sellers may witness 
bids that are made and accepted; 
‘‘(C) is based on a formula price; or 
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‘‘(D) subject to subsection (b), provides for 
the sale of livestock in a quantity in excess of— 
‘‘(i) in the case of cattle, 40 cattle; 
‘‘(ii) in the case of swine, 30 swine; 
and 
‘‘(iii) in the case of other types of live-
stock, a comparable quantity of the type of 
livestock determined by the Secretary.’’; 
and 
(9) by adding at the end the following: 
‘‘(b) ADJUSTMENTS.—The Secretary may adjust the 
maximum quantity of livestock described in subsection 
(a)(6)(D) to reflect advances in marketing and transpor-
tation capabilities if the adjusted quantity provides rea-
sonable market access for all buyers and sellers. 
‘‘(c) EXEMPTION FOR COOPERATIVES.—Subsection 
(a)(6) shall not apply to— 
‘‘(1) a cooperative or entity owned by a cooper-
ative, if a majority of the ownership interest in the 
cooperative is held by active cooperative members 
that— 
‘‘(A) own, feed, or control livestock; and 
‘‘(B) provide the livestock to the coopera-
tive for slaughter; 
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‘‘(2) a packer that is not required to report to 
the Secretary on each reporting day (as defined in 
section 212 of the Agricultural Marketing Act of 
1946 (7 U.S.C. 1635a)) information on the price 
and quantity of livestock purchased by the packer; 
or 
‘‘(3) a packer that owns only 1 livestock proc-
essing plant.’’. 
(b) DEFINITIONS.—Section 2(a) of the Packers and 
Stockyards Act, 1921 (7 U.S.C. 182(a)), is amended by 
adding at the end the following: 
‘‘(15) FIRM BASE PRICE.—The term ‘firm base 
price’ means a transaction using a reference price 
from an external source. 
‘‘(16) FORMULA PRICE.— 
‘‘(A) IN
GENERAL.—The term ‘formula 
price’ means any price term that establishes a 
base from which a purchase price is calculated 
on the basis of a price that will not be deter-
mined or reported until a date after the day the 
forward price is established. 
‘‘(B) EXCLUSION.—The term ‘formula 
price’ does not include— 
‘‘(i) any price term that establishes a 
base from which a purchase price is cal-
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culated on the basis of a futures market 
price; or 
‘‘(ii) any adjustment to the base for 
quality, grade, or other factors relating to 
the value of livestock or livestock products 
that are readily verifiable market factors 
and are outside the control of the packer. 
‘‘(17) FORWARD
CONTRACT.—The term ‘for-
ward contract’ means an oral or written contract for 
the purchase of livestock that provides for the deliv-
ery of the livestock to a packer at a date that is 
more than 7 days after the date on which the con-
tract is entered into, without regard to whether the 
contract is for— 
‘‘(A) a specified lot of livestock; or 
‘‘(B) a specified number of livestock over a 
certain period of time.’’. 
Æ 
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