I 
108TH CONGRESS 
2D SESSION 
H. R. 4006
To amend the Packers and Stockyards Act, 1921, to prohibit the use of 
certain anti-competitive forward contracts. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 18, 2004
Mr. POMEROY (for himself and Mrs. CUBIN) 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 ‘‘Captive Supply Reform 
Act’’. 
SEC. 2. LIMITATION ON USE OF FORWARD CONTRACTS. 
(a) IN GENERAL.—Section 202 of the Packers and 
Stockyards Act, 1921 (7 U.S.C. 192), is amended—
(1) by striking ‘‘to:’’ and inserting ‘‘to—’’;
(2) 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; 
(3) in paragraph (7) (as redesignated by para-
graph (2)), by designating paragraphs (1), (2), and 
(3) as subparagraphs (A), (B), and (C), respectively; 
(4) in paragraph (8) (as redesignated by para-
graph (2)), by striking ‘‘subdivision (a), (b), (c), (d), 
or (e)’’ and inserting ‘‘paragraph (1), (2), (3), (4), 
(5), or (6)’’; 
(5) in each of paragraphs (1), (2), (3), (4), (5), 
(7), and (8) (as redesignated by paragraph (2)), by 
striking the first capital letter of the first word in 
the paragraph and inserting the same letter in the 
lower case; 
(6) in each of paragraphs (1) through (5) (as 
redesignated by paragraph (2)), by striking ‘‘or’’ at 
the end; and 
(7) by inserting after paragraph (5) (as redesig-
nated by paragraph (2)) the following: 
‘‘(6) use, in effectuating any sale of livestock, 
a forward contract 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; 
‘‘(ii) more than 1 blind bid is solic-
ited; and 
‘‘(iii) buyers and sellers may witness 
bids that are made and accepted; 
‘‘(C) is based on a formula price; or 
‘‘(D) 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.’’. 
(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) 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-
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. 
‘‘(16) 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