Sec. 7. Market acquisition of fed cattle
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It is the sense of the House of Representatives that— all participants in the fed cattle market have a responsibility to contribute to sufficient levels of negotiated trade of fed cattle in all cattle feeding regions in order to achieve competitive bidding and maximum transparency in all relevant markets and robust price discovery for the benefit of all market participants; covered packers that use negotiated market prices or internal formulations thereof as the basis for formula marketing arrangements may have incentives to not participate in price discovery in fed cattle markets, including in order to influence the price, especially if the majority of the cattle purchases are under fed cattle formula marketing arrangements under which it is particularly important to have minimum participation; and the Department of Agriculture should examine academic literature regarding minimum levels of negotiated transactions necessary to achieve robust price discovery, eliminate the potential for price manipulation, and enhance cattle producer leverage in the marketplace in each of the cattle marketing regions.
Section 253(a) of the Agricultural Marketing Act of 1946 ( 7 U.S.C. 1636b(a) ) is amended— in paragraph (1)— by striking the paragraph designation and heading and all that follows through Any packer and inserting the following: Except as provided in subparagraph (B), any packer ; and by adding at the end the following: Any packer or other person that violates section 259 may be assessed a civil penalty by the Secretary of not more than $90,000 for each violation (as adjusted for inflation). ; and in paragraph (2)— by striking Each day and inserting the following:
Except as provided in subparagraph (B), each day ; and by adding at the end the following: Each week during which a violation of section 259 continues shall be considered to be a separate violation. . The Agricultural Marketing Act of 1946 is amended— by redesignating sections 259 and 260 ( 7 U.S.C. 1636h , 1636i) as sections 260 and 261, respectively; and by inserting after section 258 ( 7 U.S.C. 1636g ) the following: The purpose of this section is to establish mandatory minimums— to enhance price discovery, transparency, and cattle producer leverage for cattle market participants; and to minimize and mitigate conflicts of interest and other incentives for a covered packer to influence the base price of formula marketing arrangements for the benefit of the covered packer through action or inaction in the market in which the base price is determined.
Not later than 2 years after the date of enactment of the Cattle Price Discovery and Transparency Act of 2022 , the Secretary shall establish— 5 to 7 contiguous regions (referred to in this section as covered regions ) that— together encompass the entire continental United States; and to the extent practicable, reasonably reflect similar fed cattle purchase practices; a mandatory minimum— for each covered region established under subparagraph (A); and that shall be applicable with respect to each processing plant of a covered packer located in that covered region; and a time period within which a covered packer shall be required to meet the applicable mandatory minimum, which shall be not less than 1 week but not more than 30 days.
The Secretary— shall review the mandatory minimums established under paragraph
(1)not later than 2 years after the date of establishment and periodically thereafter, but not less frequently than once every 5 years; and modify any such mandatory minimum, as necessary, after consulting with representatives of the United States cattle and beef industry and in accordance with paragraph (4). In carrying out this subsection, the Secretary shall make all proposed mandatory minimums subject to notice and comment rulemaking and a cost-benefit analysis. In establishing or modifying mandatory minimums under this subsection for any covered region, the Secretary shall consider the following factors: The number of covered packers in the covered region. The availability of fed cattle in the covered region. Pre-existing contractual arrangements of packers in the covered region. The number of pricing transactions (pens of cattle sold) in the covered region. The proportion of fed cattle purchased in the covered region through negotiated purchases or negotiated grid purchases relative to the number of formula marketing arrangements that use the negotiated prices or negotiated grid prices as base prices. The initial mandatory minimum established under paragraph (1)(B) for each covered region shall be— not less than the average percentage of negotiated purchases and negotiated grid purchases made in that covered region between January 1, 2020, and January 1, 2022; and not more than 50 percent. A covered packer shall, with respect to each processing plant of the covered packer, purchase through an approved pricing mechanism not less than the percentage of fed cattle required under the mandatory minimum established under subsection
(b)for the covered region in which the processing plant is located. On establishing mandatory minimums under subsection (b), the Secretary— shall regularly monitor compliance by covered packers with those mandatory minimums; and in the case of noncompliance by a covered packer in a given period, may allow the covered packer to remedy the noncompliance by purchasing the applicable shortfall in the approved pricing mechanism in 1 or more subsequent periods, subject to paragraph (2). The Secretary shall not allow a covered packer to remedy noncompliance under paragraph (1)(B) if the covered packer has a pattern or practice of noncompliance, as determined by the Secretary. Nothing in this section prohibits a formula marketing arrangement from including a premium in addition to the base price, including a premium for meat quality, consistency, breed, production method, branding, or any other value-added effort. .
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