[Federal Register Volume 68, Number 135 (Tuesday, July 15, 2003)]
[Notices]
[Pages 41783-41784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17819]


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COMMODITY FUTURES TRADING COMMISSION


Chicago Mercantile Exchange: Proposed Amendments to the Live 
Cattle Futures Contract Restricting Delivery to Cattle Born and Raised 
in the United States

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of availability for public comment of the proposed 
amendments to the Chicago Mercantile Exchange's live cattle futures 
contract restricting delivery to cattle born and raised in the United 
States.

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SUMMARY: The Chicago Mercantile Exchange (CME or Exchange) has 
requested that the Commission approve the subject proposed amendments 
for the live cattle futures contract. The proposals were submitted 
pursuant to the provisions of Section 5c(c)(2) of the Commodity 
Exchange Act (Act) and Commission Regulation 405.5. The proposals will 
require that all cattle delivered on the futures contract must be born 
and raised exclusively in the United States, and the seller must 
provide supporting documentation that conforms to industry standards at 
the time of delivery. The amendments are contingent upon the 
promulgation by the United States Department of Agriculture (USDA) of 
regulations implementing Country Of Origin Labeling (COOL) requirements 
pursuant to Section 10816 of Public Law 107-171 (the Farm Security and 
Rural Investment Act of 2002), which by statute is intended to take 
effect on September 30, 2004.
    The Director of the Division of Market Oversight (Division) of the 
Commission, acting pursuant to the authority delegated by Commission 
Regulation 140.96, has determined that publication of the Exchange's 
proposed amendments for comment is in the public interest, and will 
assist the Commission in considering the views of interested persons.

DATES: Comments must be received on or before July 30, 2003.

ADDRESSES: Interested persons should submit their views and comments to 
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. In 
addition, comments may be sent by facsimile transmission to (202) 418-
5521 or by electronic mail to [email protected]. Reference should be 
made to ``CME Live Cattle Amendments.''

FOR FURTHER INFORMATION CONTACT: Please contact Martin G. Murray of the 
Division of Market Oversight, Commodity Futures Trading Commission, 
Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581, 
(202) 418-5276. Facsimile number: (202) 418-5527. Electronic mail: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Background

    The CME's live cattle futures contract calls for delivery at par of 
40,000 pounds of live steers at specified CME-approved livestock yards 
in Texas, Kansas, Nebraska, Oklahoma, and New Mexico.\1\ Under current 
contract terms, there is no country of origin requirement.
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    \1\ At the buyer's option, cattle may be graded on a live basis 
at the delivery stockyard, or on a carcass basis at a CME-approved 
packaging plant located within the originating stockyard's delivery 
region.
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    The proposed amendments will require that all cattle delivered on 
the futures contract must be born and raised exclusively in the United 
States, and the seller must provide supporting documentation that 
conforms to industry standards at the time of delivery. The amendments 
are contingent upon the promulgation by the USDA of final regulations 
implementing the COOL provisions (Section 10816 of Public Law 107-171), 
which by statute is intended to take effect on September 30, 2004. The 
Exchange intends to implement the amendments with respect to all newly 
listed futures contract months beginning with the October 2004 contract 
month.\2\
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    \2\ The Exchange intends to list the October 2004 futures 
contract month on September 2, 2003.
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    In support of the proposed amendments, the Exchange states the 
following:

[T]hese amendments are based on input from the Exchange's Ad Hoc 
Live Cattle Advisory Group, which includes a cross-section of 
industry representatives. This Group was convened on Monday, June 
2nd specifically to discuss the implications associated with the 
impending adoption of COOL regulations. The Group agreed that the 
Live Cattle contract delivery specifications should be modified to 
require that all delivered cattle must be born and raised 
exclusively in the United States. Further, the seller (short) must 
provide documentation that conforms to industry standards at the 
time of delivery, verifying country of origin information. Finally, 
a contingency clause has been adopted in the event that COOL is 
postponed or repealed.

    The Division is requesting comment on the proposals. The Division 
is particularly interested in comments assessing the potential impact 
of the proposals on available deliverable supplies for the live cattle 
futures contract and the consequential effects

[[Page 41784]]

on the susceptibility of the futures contract to manipulation.
    The Division notes that the COOL provisions, which the USDA is 
charged with implementing and enforcing, require country of origin 
labeling by specified large retailers of fresh beef (muscle cuts and 
ground beef).\3\ The labeling must identify the country (or countries) 
of origin in which the cattle was born, raised, and slaughtered. The 
COOL provisions also define the criteria for a covered commodity such 
as beef to be labeled as ``U.S. Country of Origin.'' To receive this 
label, beef must be derived exclusively from animals born, raised, and 
slaughtered in the United States.\4\ The COOL provisions also require 
any person supplying beef to a retailer to provide information to the 
retailer indicating the country of origin of the cattle. The provisions 
further provide USDA with the authority to require persons in the 
distribution chain to maintain a verifiable recordkeeping audit trail 
to verify compliance. The USDA must issue final regulations 
implementing the COOL provisions by September 30, 2004, when the 
labeling requirement takes effect.
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    \3\ The legislation also requires country of origin labeling for 
other specified commodities, including pork, lamb, fish, shellfish, 
fresh and frozen fruits and vegetables, and peanuts.
    \4\ There is an exception for beef from cattle born and raised 
in Alaska or Hawaii and transported through Canada for not longer 
than 60 days before slaughter in the United States.
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    Copies of the Exchange's proposed amendments will be available for 
inspection at the Office of the Secretariat, Commodity Futures Trading 
Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, 
DC 20581. Copies of the proposed amendments can also be obtained 
through the Office of the Secretariat by mail at the above address or 
by phone at (202) 418-5100.
    Other materials submitted by the CME in support of the request for 
approval may be available upon request pursuant to the Freedom of 
Information Act (5 U.S.C. 552) and the Commission's regulations there 
under (17 CFR Part 145 (2000)), except to the extent they are entitled 
to confidential treatment as set forth in 7 CFR 145.5 and 145.9 
Requests for copies of such materials should be made to the FOI, 
Privacy and Sunshine Act Compliance Staff of the Office of Secretariat 
at the Commission's headquarters in accordance with 17 CFR 145.7 and 
145.8.
    Any person interested in submitting written data, views, or 
arguments pertaining to the proposed amendments or with respect to 
other materials submitted by the CME should send such comments to Jean 
A. Webb, Secretary, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581 by the 
specified date.

    Issued in Washington, DC on July 9, 2003.
Michael Gorham,
Director, Division of Market Oversight.
[FR Doc. 03-17819 Filed 7-14-03; 8:45 am]
BILLING CODE 6351-01-M