[Federal Register: July 15, 2003 (Volume 68, Number 135)]
[Notices]
[Page 41783-41784]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jy03-39]
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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