IIA

104TH CONGRESS

1ST SESSION H. R. 1103

IN THE SENATE OF THE UNITED STATES

JULY 31 (legislative day, JULY 10), 1995

Read twice and referred to the Committee on Agriculture, Nutrition, and

Forestry

AN ACT

To amend the Perishable Agricultural Commodities Act,

1930, to modernize, streamline, and strengthen the operation of the Act.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Perishable Agricultural Commodities Act Amendments of

4 1995’’.

5 (b) TABLE OF CONTENTS.—The table of contents of

6 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Addition of definitions of retailer and grocery wholesaler.

Sec. 3. Gradual elimination of annual license fee for retailers and grocery

wholesalers that are dealers.

Sec. 4. Establishment and alteration of license fees for commission merchants,

dealers (other than retailers and grocery wholesalers), and brokers.

Sec. 5. Increase in penalties for operating without a license and increase in late

renewal fee.

Sec. 6. Statutory trust on commodities and sale proceeds.

Sec. 7. Authority of Department of Agriculture regarding possible violations.

Sec. 8. Filing and handling fees for reparation complaints.

Sec. 9. Consideration of collateral fees and expenses.

Sec. 10. Clarification of misbranding prohibition.

Sec. 11. Imposition of civil penalty in lieu of license suspension or revocation.

Sec. 12. Extension of sanctions to persons responsibly connected to a commission merchant, dealer, or broker.

7 SEC. 2. ADDITION OF DEFINITIONS OF RETAILER AND GRO8 CERY WHOLESALER.

9 Section 1(b) of the Perishable Agricultural Commod10 ities Act, 1930 (7 U.S.C. 499a(b)), is amended by adding

11 at the end the following new paragraphs:

12 ‘‘(11) The term ‘retailer’ means a person that is a

13 dealer engaged in the business of selling any perishable

14 agricultural commodity at retail.

15 ‘‘(12) The term ‘grocery wholesaler’ means a person

16 that is a dealer primarily engaged in the full-line wholesale

17 distribution and resale of grocery and related nonfood
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1 items (such as perishable agricultural commodities, dry

2 groceries, general merchandise, meat, poultry, and sea3 food, and health and beauty care items) to retailers. How4 ever, such term does not include a person described in the

5 preceding sentence if the person is primarily engaged in

6 the wholesale distribution and resale of perishable agricul7 tural commodities rather than other grocery and related

8 nonfood items.’’.

9 SEC. 3. GRADUAL ELIMINATION OF ANNUAL LICENSE FEE

10 FOR RETAILERS AND GROCERY WHOLE11 SALERS THAT ARE DEALERS.

12 (a) ELIMINATION OF ANNUAL FEES OVER THREE13 YEAR PERIOD.—Subsection (b) of section 3 of the Perish14 able Agricultural Commodities Act, 1930 (7 U.S.C. 499c),

15 is amended—

16 (1) by inserting ‘‘(1) APPLICATION FOR LI17 CENSE.—’’ before the start of the first sentence and

18 adjusting the margin to conform to paragraph (3);

19 (2) by striking the third and fourth sentences;

20 (3) by inserting ‘‘(5) PERISHABLE AGRICUL21 TURAL COMMODITIES ACT FUND.—’’ before the start

22 of the fifth sentence and adjusting the margin to

23 conform to paragraph (3);

24 (4) by striking the last sentence; and
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1 (5) by inserting before paragraph (5) (as so

2 designated) the following new paragraphs:

3 ‘‘(3) ONE-TIME FEE FOR RETAILERS AND GRO4 CERY WHOLESALERS THAT ARE DEALERS.—During

5 the three-year period beginning on the date of the

6 enactment of the Perishable Agricultural Commod7 ities Act Amendments of 1995, a retailer or grocery

8 wholesaler making an initial application for a license

9 under this section shall pay the license fee required

10 under subparagraph (A), (B), or (C) of paragraph

11 (4) for license renewals in the year in which the ini12 tial application is made. After the end of such pe13 riod, a retailer or grocery wholesaler making an ini14 tial application for a license under this section shall

15 pay an administrative fee equal to $100. In either

16 case, a retailer or grocery wholesaler paying a fee

17 under this paragraph shall not be required to pay

18 any fee for renewal of the license for subsequent

19 years.

20 ‘‘(4) GRADUAL ELIMINATION OF ANNUAL FEES

21 FOR RETAILERS AND GROCERY WHOLESALERS THAT

22 ARE DEALERS.—In the case of a retailer or grocery

23 wholesaler that holds a license under this section as

24 of the date of the enactment of the Perishable Agri25 cultural Commodities Act Amendments of 1995,
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1 payments for the renewal of the license shall be

2 made pursuant to the following schedule:

3 ‘‘(A) For anniversary dates occurring dur4 ing the one-year period beginning on the date

5 of the enactment of the Perishable Agricultural

6 Commodities Act Amendments of 1995, the li7 censee shall pay a renewal fee in an amount

8 equal to 100 percent of the applicable renewal

9 fee (subject to the $4,000 aggregate limit on

10 such payments) in effect under this subsection

11 on the day before such enactment date.

12 ‘‘(B) For anniversary dates occurring dur13 ing the one-year period beginning at the end of

14 the period in subparagraph (A), the licensee

15 shall pay a renewal fee in an amount equal to

16 75 percent of the amount paid by the licensee

17 under subparagraph (A).

18 ‘‘(C) For anniversary dates occurring dur19 ing the one-year period beginning at the end of

20 the period in subparagraph (B), the licensee

21 shall pay a renewal fee in an amount equal to

22 50 percent of the amount paid by the licensee

23 under subparagraph (A).

24 ‘‘(D) After the end of the three-year period

25 beginning on the date of the enactment of the
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1 Perishable Agricultural Commodities Act

2 Amendments of 1995, the licensee shall not be

3 required to pay any fee if the licensee seeks re4 newal of the license.’’.

5 (b) STYLISTIC AMENDMENTS.—Such section is fur6 ther amended—

7 (1) by striking the section heading and ‘‘SEC.

8 3. (a)’’ and inserting the following:

9 ‘‘SEC. 3. LICENSES.

10 ‘‘(a) LICENSE REQUIRED; PENALTIES FOR VIOLA11 TIONS.—’’;

12 (2) in subsection (b), by inserting ‘‘APPLICA13 TION AND FEES FOR LICENSES.—’’ after ‘‘(b)’’; and

14 (3) in subsection (c), by inserting ‘‘USE OF

15 TRADE NAMES.—’’ after ‘‘(c)’’.

16 SEC. 4. ESTABLISHMENT AND ALTERATION OF LICENSE

17 FEES FOR COMMISSION MERCHANTS, DEAL18 ERS (OTHER THAN RETAILERS AND GROCERY

19 WHOLESALERS), AND BROKERS.

20 (a) DISCRETION OF SECRETARY TO ESTABLISH AND

21 ALTER FEES.—Section 3(b) of the Perishable Agricul22 tural Commodities Act, 1930 (7 U.S.C. 499c(b)), is

23 amended by inserting after paragraph (1), as designated

24 by section 3(a)(1), the following new paragraph:
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1 ‘‘(2) LICENSE FEES.—Upon the filing of an ap2 plication under paragraph (1), the applicant shall

3 pay such license fees, both individually and in the

4 aggregate, as the Secretary determines necessary to

5 meet the reasonably anticipated expenses for admin6 istering this Act and the Act to prevent the destruc7 tion or dumping of farm produce, approved March

8 3, 1927 (7 U.S.C. 491–497). Thereafter, the li9 censee shall pay such license fees annually or at

10 such longer interval as the Secretary may prescribe.

11 The Secretary shall take due account of savings to

12 the program when determining an appropriate inter13 val for renewal of licenses. The Secretary shall es14 tablish and alter license fees only by rulemaking

15 under section 553 of title 5, United States Code, ex16 cept that the Secretary may not alter the fees re17 quired under paragraph (3) or (4) for retailers and

18 grocery wholesalers that are dealers. Effective on the

19 date of the enactment of the Perishable Agricultural

20 Commodities Act Amendments of 1995 and until

21 such time as the Secretary alters such fees by rule,

22 an individual license fee shall equal $550 per year,

23 plus $200 for each branch or additional business fa24 cility operated by the applicant in excess of nine

25 such facilities, as determined by the Secretary, sub-
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1 ject to an annual aggregate limit of $4,000 per li2 censee. Any increase in license fees prescribed by the

3 Secretary under this paragraph shall not take effect

4 unless the Secretary determines that, without such

5 increase, the funds on hand as of the end of the fis6 cal year in which the increase takes effect will be

7 less than 25 percent of the projected budget to ad8 minister such Acts for the next fiscal year. In no

9 case may a license fee increase by the Secretary take

10 effect before the end of the three-year period begin11 ning on the date of the enactment of the Perishable

12 Agricultural Commodities Act Amendments of

13 1995.’’.

14 (b) REPEAL OF CURRENT CAP ON RESERVE

15 FUNDS.—Paragraph (5) of such section, as designated by

16 section 3(a)(3), is amended by striking the sentence that

17 begins with ‘‘The amount of money’’.

18 (c) CONFORMING AMENDMENTS REGARDING THIS

19 SECTION AND SECTION 3.—Section 4(a) of such Act (7

20 U.S.C. 499d(a)) is amended—

21 (1) in the matter preceding the provisos, by

22 striking ‘‘any anniversary date thereof unless the an23 nual fee has been paid’’ and inserting ‘‘the anniver24 sary date of the license at the end of the annual or

25 multiyear period covered by the license fee unless
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1 the licensee submits the required renewal application

2 and pays the applicable renewal fee (if such fee is

3 required)’’;

4 (2) in the first proviso, by striking ‘‘the neces5 sity of paying the annual fee’’ and inserting ‘‘the ne6 cessity of renewing the license and of paying the re7 newal fee (if such fee is required)’’; and

8 (3) in the second proviso, by striking ‘‘annual

9 fee’’ and inserting ‘‘renewal fee (if required)’’.

10 SEC. 5. INCREASE IN PENALTIES FOR OPERATING WITH11 OUT A LICENSE AND INCREASE IN LATE RE12 NEWAL FEE.

13 (a) LICENSE PENALTIES.—Section 3(a) of the Per14 ishable Agricultural Commodities Act, 1930 (7 U.S.C.

15 499c(a)), as amended by section 3(b)(1), is further

16 amended—

17 (1) by striking ‘‘$500’’ and inserting ‘‘$1,000’’;

18 and

19 (2) by striking ‘‘$25’’ both places it appears

20 and inserting ‘‘$250’’.

21 (b) LATE FILING FEES.—Section 4(a) of the Perish22 able Agricultural Commodities Act, 1930 (7 U.S.C.

23 499d(a)), as amended by section 4(c), is further amended

24 in the second proviso by striking ‘‘plus $5’’ and inserting

25 ‘‘plus $50’’.
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1 SEC. 6. STATUTORY TRUST ON COMMODITIES AND SALE

2 PROCEEDS.

3 (a) REPEAL OF SECRETARIAL NOTIFICATION RE4 QUIREMENT.—Paragraph (3) of section 5(c) of the Perish5 able Agricultural Commodities Act, 1930 (7 U.S.C.

6 499e(c)), is amended in the first sentence by striking ‘‘and

7 has filed such notice with the Secretary’’.

8 (b) CLARIFICATION OF CONTENT OF NOTIFICA9 TION.—Such paragraph is further amended by inserting

10 after the first sentence the following new sentence: ‘‘The

11 written notice to the commission merchant, dealer, or

12 broker shall set forth information in sufficient detail to

13 identify the transaction subject to the trust.’’.

14 (c) ADDITIONAL METHOD OF NOTIFICATION FOR LI15 CENSEES.—Such section is further amended—

16 (1) by redesignating paragraph (4) as para17 graph (5); and

18 (2) by inserting after paragraph (3) the follow19 ing new paragraph:

20 ‘‘(4) In addition to the method of preserving the ben21 efits of the trust specified in paragraph (3), a licensee may

22 use ordinary and usual billing or invoice statements to

23 provide notice of the licensee’s intent to preserve the trust.

24 The bill or invoice statement must include the information

25 required by the last sentence of paragraph (3) and contain

26 on the face of the statement the following: ‘The perishable
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1 agricultural commodities listed on this invoice are sold

2 subject to the statutory trust authorized by section 5(c)

3 of the Perishable Agricultural Commodities Act, 1930 (7

4 U.S.C. 499e(c)). The seller of these commodities retains

5 a trust claim over these commodities, all inventories of

6 food or other products derived from these commodities,

7 and any receivables or proceeds from the sale of these

8 commodities until full payment is received.’.’’.

9 SEC. 7. AUTHORITY OF DEPARTMENT OF AGRICULTURE

10 REGARDING POSSIBLE VIOLATIONS.

11 (a) DISCIPLINARY VIOLATIONS.—Subsection (b) of

12 section 6 of the Perishable Agricultural Commodities Act,

13 1930 (7 U.S.C. 499f), is amended to read as follows:

14 ‘‘(b) DISCIPLINARY VIOLATIONS.—Any officer or

15 agency of any State or Territory having jurisdiction over

16 commission merchants, dealers, or brokers in such State

17 or Territory and any other interested person (other than

18 an employee of an agency of the Department of Agri19 culture administering this Act) may file, in accordance

20 with rules prescribed by the Secretary, a written notifica21 tion of any alleged violation of this Act by any commission

22 merchant, dealer, or broker. In addition, any official cer23 tificates of the United States Government or States or

24 Territories of the United States and trust notices filed

25 pursuant to section 5 shall constitute written notification
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1 for the purposes of conducting an investigation under sub2 section (c). The identity of any person filing a written no3 tification under this subsection shall be considered to be

4 confidential information. The identity of such person, and

5 any portion of the notification to the extent that it would

6 indicate the identity of such person, are specifically ex7 empt from disclosure under section 552 of title 5, United

8 States Code (commonly known as the Freedom of Infor9 mation Act), as provided in subsection (b)(3) of such sec10 tion.’’.

11 (b) GROUNDS AND PROCESS OF INVESTIGATIONS.—

12 Subsection (c) of such section is amended to read as fol13 lows:

14 ‘‘(c) INVESTIGATION OF COMPLAINTS AND NOTIFICA15 TIONS.—

16 ‘‘(1) COMMENCING OR EXPANDING AN INVES17 TIGATION.—If there appears to be, in the opinion of

18 the Secretary, reasonable grounds for investigating a

19 complaint made under subsection (a) or a written

20 notification made under subsection (b), the Sec21 retary shall investigate such complaint or notifica22 tion. In the course of the investigation, if the Sec23 retary determines that violations of this Act are in24 dicated other than the alleged violations specified in

25 the complaint or notification that served as the basis
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1 for the investigation, the Secretary may expand the

2 investigation to include such additional violations.

3 ‘‘(2) ISSUANCE OF COMPLAINT BY SECRETARY;

4 PROCESS.—In the opinion of the Secretary, if an in5 vestigation under this subsection substantiates the

6 existence of violations of this Act, the Secretary may

7 cause a complaint to be issued. The Secretary shall

8 have the complaint served by registered mail or cer9 tified mail or otherwise on the person concerned and

10 afford such person an opportunity for a hearing

11 thereon before a duly authorized examiner of the

12 Secretary in any place in which the subject of the

13 complaint is engaged in business. However, in com14 plaints wherein the amount claimed as damages does

15 not exceed $30,000, a hearing need not be held and

16 proof in support of the complaint and in support of

17 respondent’s answer may be supplied in the form of

18 depositions or verified statements of fact.

19 ‘‘(3) SPECIAL NOTIFICATION REQUIREMENTS

20 FOR CERTAIN INVESTIGATIONS.—Whenever the Sec21 retary initiates an investigation on the basis of a

22 written notification made under subsection (b) or ex23 pands such an investigation, the Secretary shall

24 promptly notify the subject of the investigation of

25 the existence of the investigation and the nature of
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1 the alleged violations of this Act to be investigated.

2 Not later than 180 days after providing the initial

3 notification, the Secretary shall provide the subject

4 of the investigation with notice of the status of the

5 investigation, including whether the Secretary in6 tends to issue a complaint under paragraph (2), ter7 minate the investigation, or continue or expand the

8 investigation. The Secretary shall provide additional

9 status reports at the request of the subject of the in10 vestigation and shall promptly notify the subject of

11 the investigation whenever the Secretary terminates

12 the investigation.’’.

13 (c) INCREASE IN THRESHOLD FOR SHORTENED PRO14 CEDURE CASES.—Subsection (d) of such section is amend15 ed by striking ‘‘$15,000’’ both places it appears and in16 serting ‘‘$30,000’’.

17 (d) STYLISTIC AMENDMENTS.—Such section is fur18 ther amended—

19 (1) by striking the section heading and ‘‘SEC.

20 6.’’ and inserting the following:

21 ‘‘SEC. 6. COMPLAINTS, WRITTEN NOTIFICATIONS, AND IN22 VESTIGATIONS.’’;

23 (2) in subsection (d), by inserting ‘‘DECISIONS

24 ON COMPLAINTS.—’’ after ‘‘(d)’’; and
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1 (3) in subsection (e), by inserting ‘‘BOND RE2 QUIRED FOR CERTAIN COMPLAINTS.—’’ after ‘‘(e)’’.

3 SEC. 8. FILING AND HANDLING FEES FOR REPARATION

4 COMPLAINTS.

5 (a) PERMANENT FILING AND HANDLING FEES.—

6 Section 6(a) of the Perishable Agricultural Commodities

7 Act, 1930 (7 U.S.C. 499f(a)), is amended—

8 (1) by striking ‘‘(a)’’ and inserting the follow9 ing:

10 ‘‘(a) REPARATION COMPLAINTS.—

11 ‘‘(1) PETITION; PROCESS.—’’; and

12 (2) by adding at the end the following new

13 paragraph:

14 ‘‘(2) FILING AND HANDLING FEES.—A person

15 submitting a petition to the Secretary under para16 graph (1) shall include a filing fee of $60 per peti17 tion. If the Secretary determines under paragraph

18 (1) that the facts contained in the petition warrant

19 further action, the person or persons submitting the

20 petition shall submit to the Secretary a handling fee

21 of $300. The Secretary may not forward a copy of

22 the complaint to the commission merchant, dealer,

23 or broker involved until after the Secretary receives

24 the required handling fee. The Secretary shall de25 posit fees submitted under this paragraph into the
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1 Perishable Agricultural Commodities Act Fund pro2 vided for by section 3(b). The Secretary may alter

3 the fees specified in this paragraph by rulemaking

4 under section 553 of title 5, United States Code.’’.

5 (b) INCLUSION OF HANDLING FEE IN CALCULATION

6 OF DAMAGES.—Section 5(a) of such Act (7 U.S.C.

7 499e(a)) is amended by inserting after ‘‘damages’’ the fol8 lowing: ‘‘(including any handling fee paid by the injured

9 person or persons under section 6(a)(2))’’.

10 (c) CONFORMING AMENDMENT TO TEMPORARY FEE

11 AUTHORITY.—Public Law 103–276 (7 U.S.C. 499f note)

12 is repealed.

13 SEC. 9. CONSIDERATION OF COLLATERAL FEES AND EX14 PENSES.

15 (a) DEFINITION.—Section 1(b) of the Perishable Ag16 ricultural Commodities Act, 1930 (7 U.S.C. 499a(b)), is

17 amended by inserting after paragraph (12), as added by

18 section 2, the following new paragraph:

19 ‘‘(13) The term ‘collateral fees and expenses’ means

20 any promotional allowances, rebates, service or materials

21 fees paid or provided, directly or indirectly, in connection

22 with the distribution or marketing of any perishable agri23 cultural commodity.’’.

24 (b) USE OF DEFINITION.—Section 2 of such Act (7

25 U.S.C. 499b) is amended—
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1 (1) by striking ‘‘commerce—’’ in the matter be2 fore paragraph (1) and inserting ‘‘commerce:’’;

3 (2) by striking the semicolon at the end of each

4 paragraph and inserting a period; and

5 (3) in paragraph (4), by adding at the end the

6 following new sentence: ‘‘However, this paragraph

7 shall not be considered to make the good faith offer,

8 solicitation, payment, or receipt of collateral fees and

9 expenses, in and of itself, unlawful under this Act.’’.

10 SEC. 10. CLARIFICATION OF MISBRANDING PROHIBITION.

11 Section 2(5) of the Perishable Agricultural Commod12 ities Act, 1930 (7 U.S.C. 499b(5)), is amended—

13 (1) by striking ‘‘commerce: Provided, That’’

14 and inserting ‘‘commerce. However,’’; and

15 (2) by adding at the end the following new sen16 tence: ‘‘A person other than the first licensee han17 dling misbranded perishable agricultural commod18 ities shall not be held liable for a violation of this

19 paragraph by reason of the conduct of another if the

20 person did not have knowledge of the violation or

21 lacked the ability to correct the violation.’’.
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1 SEC. 11. IMPOSITION OF CIVIL PENALTY IN LIEU OF LI2 CENSE SUSPENSION OR REVOCATION.

3 Section 8 of the Perishable Agricultural Commodities

4 Act, 1930 (7 U.S.C. 499h), is amended by adding at the

5 end the following new subsection:

6 ‘‘(e) ALTERNATIVE CIVIL PENALTIES.—In lieu of

7 suspending or revoking a license under this section when

8 the Secretary determines, as provided by section 6, that

9 a commission merchant, dealer, or broker has violated sec10 tion 2 or subsection (b) of this section, the Secretary may

11 assess a civil penalty not to exceed $2,000 for each viola12 tive transaction or each day the violation continues. In as13 sessing the amount of a penalty under this subsection, the

14 Secretary shall give due consideration to the size of the

15 business, the number of employees, and the seriousness,

16 nature, and amount of the violation. Amounts collected

17 under this subsection shall be deposited in the Treasury

18 of the United States as miscellaneous receipts.’’.

19 SEC. 12. EXTENSION OF SANCTIONS TO PERSONS RESPON20 SIBLY CONNECTED TO A COMMISSION MER21 CHANT, DEALER, OR BROKER.

22 (a) EXCEPTION TO DEFINITION.—Section 1(b)(9) of

23 the Perishable Agricultural Commodities Act, 1930 (7

24 U.S.C. 499a(b)(9)), is amended by adding at the end the

25 following new sentence: ‘‘A person shall not be deemed to

26 be responsibly connected if the person demonstrates by a
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1 preponderance of the evidence that the person was not ac2 tively involved in the activities resulting in a violation of

3 this Act and that the person either was only nominally

4 a partner, officer, director, or shareholder of a violating

5 licensee or entity subject to license or was not an owner

6 of a violating licensee or entity subject to license which

7 was the alter ego of its owners.’’.

8 (b) EXTENSION OF EMPLOYMENT SANCTION.—Sec9 tion 8(b) of such Act (7 U.S.C. 499h(b)) is amended by

10 adding at the end the following new sentence: ‘‘The Sec11 retary may extend the period of employment sanction as

12 to a responsibly connected person for an additional one13 year period upon the determination that the person has

14 been unlawfully employed as provided in this subsection.’’.

15 (c) CONFORMING AMENDMENT REGARDING LICENS16 ING SANCTION.—Section 4 of such Act (7 U.S.C. 499d)

17 is amended—

18 (1) in subsection (b), by inserting ‘‘is prohibited

19 from employment with a licensee under section 8(b)

20 or’’ after ‘‘with the applicant,’’ in the matter preced21 ing subparagraph (A); and

22 (2) in subsection (c), by adding at the end the

23 following new sentence: ‘‘The Secretary may not

24 issue a license to an applicant under this subsection

25 if the applicant or any person responsibly connected
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1 with the applicant is prohibited from employment

2 with a licensee under section 8(b).’’.

Passed the House of Representatives July 28, 1995.

Attest: ROBIN H. CARLE,

Clerk.