[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 325 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 325

To amend the Agricultural Marketing Act of 1946 to increase competition 
 and transparency among packers that purchase livestock from producers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 6, 2003

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

_______________________________________________________________________

                                 A BILL


 
To amend the Agricultural Marketing Act of 1946 to increase competition 
 and transparency among packers that purchase livestock from producers.

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

SECTION 1. SPOT MARKET PURCHASES OF LIVESTOCK BY PACKERS.

    Chapter 5 of subtitle B of the Agricultural Marketing Act of 1946 
(7 U.S.C. 1636 et seq.) is amended by adding at the end the following:

``SEC. 260. SPOT MARKET PURCHASES OF LIVESTOCK BY PACKERS.

    ``(a) Definitions.--In this section:
            ``(1) Cooperative association of producers.--The term 
        `cooperative association of producers' has the meaning given 
        the term in section 1a of the Commodity Exchange Act (7 U.S.C. 
        1a).
            ``(2) Covered packer.--
                    ``(A) In general.--The term `covered packer' means 
                a packer that is required under this subtitle to report 
                to the Secretary each reporting day information on the 
                price and quantity of livestock purchased by the 
                packer.
                    ``(B) Exclusion.--The term `covered packer' does 
                not include a packer that owns only 1 livestock 
                processing plant.
            ``(3) Nonaffiliated producer.--The term `nonaffiliated 
        producer' means a producer of livestock--
                    ``(A) that sells livestock to a packer;
                    ``(B) that has less than 1 percent equity interest 
                in the packer, which packer has less than 1 percent 
                equity interest in the producer;
                    ``(C) that has no officers, directors, employees, 
                or owners that are officers, directors, employees, or 
                owners of the packer;
                    ``(D) that has no fiduciary responsibility to the 
                packer; and
                    ``(E) in which the packer has no equity interest.
            ``(4) Spot market sale.--
                    ``(A) In general.--The term `spot market sale' 
                means a purchase and sale of livestock by a packer from 
                a producer--
                            ``(i) under an agreement that specifies a 
                        firm base price that may be equated with a 
                        fixed dollar amount on the date the agreement 
                        is entered into;
                            ``(ii) under which the livestock are 
                        slaughtered not more than 7 days after the date 
                        on which the agreement is entered into; and
                            ``(iii) under circumstances in which a 
                        reasonable competitive bidding opportunity 
                        exists on the date on which the agreement is 
                        entered into.
                    ``(B) Reasonable competitive bidding opportunity.--
                For the purposes of subparagraph (A)(iii), 
                circumstances in which a reasonable competitive bidding 
                opportunity shall be considered to exist if--
                            ``(i) no written or oral agreement 
                        precludes the producer from soliciting or 
                        receiving bids from other packers; and
                            ``(ii) no circumstance, custom, or practice 
                        exists that--
                                    ``(I) establishes the existence of 
                                an implied contract (as determined in 
                                accordance with the Uniform Commercial 
                                Code); and
                                    ``(II) precludes the producer from 
                                soliciting or receiving bids from other 
                                packers.
    ``(b) General Rule.--Of the quantity of livestock that is 
slaughtered by a covered packer during each reporting day in each 
plant, the covered packer shall slaughter not less than the applicable 
percentage specified in subsection (c) of the quantity through spot 
market sales from nonaffiliated producers.
    ``(c) Applicable Percentages.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        applicable percentage shall be--
                    ``(A) in the case of a covered packer that is not a 
                cooperative association, 25 percent; and
                    ``(B) in the case of a covered packer that is a 
                cooperative association, 12.5 percent.
            ``(2) Exceptions.--
                    ``(A) Covered packers with a high percentage of 
                captive supply cattle.--In the case of a covered packer 
                (other than a covered packer described in subparagraph 
                (B)) that reported to the Secretary in the 2001 annual 
                report that more than 75 percent of the cattle of the 
                covered packer were captive supply cattle, the 
                applicable percentage shall be the greater of--
                            ``(i) the difference between the percentage 
                        of captive supply so reported and 100 percent; 
                        and
                            ``(ii)(I) during each of calendar years 
                        2004 and 2005, 5 percent;
                            ``(II) during each of calendar years 2006 
                        and 2007, 15 percent; and
                            ``(III) during calendar year 2008 and each 
                        calendar year thereafter, 25 percent.
                    ``(B) Cooperative associations with high percentage 
                of captive supply cattle.--In the case of a covered 
                packer that is a cooperative association and that 
                reported to the Secretary in the 2001 annual report 
                that more than 87.5 percent of the cattle of the 
                covered packer were captive supply cattle, the 
                applicable percentage shall be the greater of--
                            ``(i) the difference between the percentage 
                        of captive supply so reported and 100 percent; 
                        and
                            ``(ii)(I) during each of calendar years of 
                        2004 and 2005, 5 percent;
                            ``(II) during each of calendar years of 
                        2006 and 2007, 7.5 percent; and
                            ``(III) during calendar year 2008 and each 
                        calendar year thereafter, 12.5 percent.
    ``(d) Nonpreemption.--Notwithstanding section 259, this section 
does not preempt any requirement of a State or political subdivision of 
a State that requires a covered packer to purchase on the spot market a 
greater percentage of the livestock purchased by the covered packer 
than is required under this section.
    ``(e) Relationship to Other Provisions.--Nothing in this section 
affects the interpretation of any other provision of this Act, 
including section 202.''.
                                 <all>