SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Packers and Stockyards Improvement 
Act of 1996''.

SEC 2. LIVESTOCK DEALER TRUST.

    Title III of the Packers and Stockyards Act, 1921 (7 U.S.C. 201 et 
seq.), is amended by adding at the end the following:

``SEC. 318. LIVESTOCK DEALER TRUST.

    ``(a) Findings.--Congress finds that--
            ``(1) a burden on and obstruction to commerce in livestock 
        is caused by financing arrangements under which dealers and 
        market agencies purchasing livestock on commission encumber, 
        give lenders security interests in, or have liens placed on 
        livestock purchased by the dealers and market agencies in cash 
        sales, or on receivables from or proceeds of the sales, when 
        payment is not made for the livestock; and
            ``(2) the carrying out of the arrangements is contrary to 
        the public interest.
    ``(b) Purpose.--The purpose of this section is to remedy the burden 
on and obstruction to commerce in livestock described in subsection 
(a)(1) and protect the public interest.
    ``(c) Definitions.--In this section:
            ``(1) Cash sale.--The term `cash sale' means a sale in 
        which the seller does not expressly extend credit to the buyer.
            ``(2) Trust.--The term `trust' means 1 or more assets of a 
        buyer that (subsequent to a cash sale of livestock) constitute 
        the corpus of a trust held for the benefit of a seller and 
        consist of--
                    ``(A) accounts receivable and proceeds earned from 
                the cash sale of livestock by a dealer or market agency 
                buying on a commission basis;
                    ``(B) accounts receivable and proceeds of a 
                marketing agency earned on commission from the cash 
                sale of livestock;
                    ``(C) the inventory of the dealer or marketing 
                agency; or
                    ``(D) livestock involved in the cash sale, if the 
                seller has not received payment in full for the 
                livestock and a bona fide third-party purchaser has not 
                purchased the livestock from the dealer or marketing 
                agency.
    ``(d) Holding in Trust.--
            ``(1) In general.--The accounts receivable and proceeds 
        generated in a cash sale made by a dealer or a market agency on 
        commission and the inventory of the dealer or market agency 
        shall be held by the dealer or market agency in trust for the 
        benefit of the seller of the livestock until the seller 
        receives payment in full for the livestock.
            ``(2) Exemption.--Paragraph (1) does not apply in the case 
        of a cash sale made by a dealer or market agency if the total 
        amount of cash sales made by the dealer or market agency during 
        the preceding 12 months does not exceed $250,000.
            ``(3) Dishonor of instrument of payment.--A payment in a 
        sale described in paragraph (1) shall not be considered to be 
        made if the instrument by which payment is made is dishonored.
            ``(4) Loss of benefit of trust.--If an instrument by which 
        payment is made in a sale described in paragraph (1) is 
        dishonored, the seller shall lose the benefit of the trust 
        under paragraph (1) on the earlier of--
                    ``(A) the date that is 15 business days after the 
                date on which the seller receives notice of the 
                dishonor; or
                    ``(B) the date that is 30 days after the final date 
                for making payment under section 409;
        unless the seller gives written notice to the dealer or market 
        agency of the seller's intention to preserve the trust and 
        submits a copy of the notice to the Secretary.
            ``(5) Rights of third-party purchaser.--The trust 
        established under paragraph (1) shall have no effect on the 
        rights of a bona fide third-party purchaser of the livestock, 
        without regard to whether the livestock are delivered to the 
        bona fide purchaser.
    ``(e) Jurisdiction.--The district courts of the United States shall 
have jurisdiction in a civil action--
            ``(1) by the beneficiary of a trust described in subsection 
        (d)(1), to enforce payment of the amount held in trust; and
            ``(2) by the Secretary, to prevent and restrain dissipation 
        of a trust described in subsection (d)(1).''.

SEC. 3. REPORTS TO SECRETARY.

    Section 401 of the Packers and Stockyards Act, 1921 (7 U.S.C. 221), 
is amended--
            (1) by striking ``Sec. 401. Every'' and inserting the 
        following:

``SEC. 401. ACCOUNTS AND RECORDS OF BUSINESSES; REPORTS TO SECRETARY.

    ``(a) Accounts and Records.--Each''; and
            (2) by adding at the end the following:
    ``(b) Reports to Secretary.--Each packer, stockyard owner, market 
agency, and dealer shall report to the Secretary, in a manner 
determined by the Secretary--
            ``(1) the quantity of livestock and livestock products 
        exported from, and imported into, the United States; and
            ``(2) the price paid for livestock.''.

SEC. 4. INCLUSION OF FORMULA-PRICED CATTLE IN DEFINITION OF CAPTIVE 
              SUPPLY.

    Section 407 of the Packers and Stockyards Act, 1921 (7 U.S.C. 228), 
is amended by adding at the end the following:
    ``(e) Inclusion of Formula-Priced Cattle in Definition of Captive 
Supply.--The Secretary shall include all formula-priced cattle in the 
definition of captive supply for purposes of collecting data to carry 
out this Act.''.
Packers and Stockyards Improvement Act of 1996 - Amends the Packers and Stockyards Act, 1921 to provide that a livestock dealer or market agency shall hold the proceeds of a cash sale in trust for the seller until the seller receives full payment.   Exempts certain small dealers or market agencies from such provision. 
States that:  (1) a dishonored payment instrument shall not constitute a sale (with resultant loss of trust benefit); (2) third-party purchaser rights shall not be affected by such livestock dealer trust; and (3) jurisdiction for related civil matters shall be in U.S. district courts. 
Revises certain business recordkeeping requirements, including elimination of fine and imprisonment provisions. 
Includes formula-priced cattle in the definition of captive supply for data collection purposes.
Packers and Stockyards Improvement Act of 1996