H. R. 1103

One Hundred Fourth Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Wednesday,

the fourth day of January, one thousand nine hundred and ninety-five

An Act

To amend the Perishable Agricultural Commodities Act, 1930, to modernize, streamline, and strengthen the operation of the Act.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Agricultural Commodities Act Amendments of 1995’’.

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

SEC. 2. ADDITION OF DEFINITIONS OF RETAILER AND GROCERY

WHOLESALER.

Section 1(b) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499a(b)), is amended by adding at the end the

following new paragraphs:

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

in the business of selling any perishable agricultural commodity

at retail.

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

a dealer primarily engaged in the full-line wholesale distribution

and resale of grocery and related nonfood items (such as perishable

agricultural commodities, dry groceries, general merchandise, meat,

poultry, and seafood, and health and beauty care items) to retailers.

However, such term does not include a person described in the

preceding sentence if the person is primarily engaged in the wholesale distribution and resale of perishable agricultural commodities

rather than other grocery and related nonfood items.’’.
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SEC. 3. GRADUAL ELIMINATION OF ANNUAL LICENSE FEE FOR RETAILERS AND GROCERY WHOLESALERS THAT ARE DEALERS.

(a) ELIMINATION OF ANNUAL FEES OVER THREE-YEAR PERIOD.— Subsection (b) of section 3 of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499c), is amended—

(1) by inserting ‘‘(1) APPLICATION FOR LICENSE.—’’ before

the start of the first sentence and adjusting the margin to

conform to paragraph (3); (2) by striking the third and fourth sentences;

(3) by inserting ‘‘(5) PERISHABLE AGRICULTURAL COMMOD- ITIES ACT FUND.—’’ before the start of the fifth sentence and

adjusting the margin to conform to paragraph (3); (4) by striking the last sentence; and

(5) by inserting before paragraph (5) (as so designated) the following new paragraphs: ‘‘(3) ONE-TIME FEE FOR RETAILERS AND GROCERY WHOLE- SALERS THAT ARE DEALERS.—During the three-year period beginning on the date of the enactment of the Perishable Agricultural Commodities Act Amendments of 1995, a retailer or

grocery wholesaler making an initial application for a license

under this section shall pay the license fee required under

subparagraph (A), (B), or (C) of paragraph (4) for license renewals in the year in which the initial application is made. After

the end of such period, a retailer or grocery wholesaler making

an initial application for a license under this section shall

pay an administrative fee equal to $100. In either case, a

retailer or grocery wholesaler paying a fee under this paragraph

shall not be required to pay any fee for renewal of the license

for subsequent years. ‘‘(4) GRADUAL ELIMINATION OF ANNUAL FEES FOR RETAILERS

AND GROCERY WHOLESALERS THAT ARE DEALERS.—In the case

of a retailer or grocery wholesaler that holds a license under

this section as of the date of the enactment of the Perishable

Agricultural Commodities Act Amendments of 1995, payments

for the renewal of the license shall be made pursuant to the

following schedule:

‘‘(A) For anniversary dates occurring during the oneyear period beginning on the date of the enactment of

the Perishable Agricultural Commodities Act Amendments

of 1995, the licensee shall pay a renewal fee in an amount

equal to 100 percent of the applicable renewal fee (subject

to the $4,000 aggregate limit on such payments) in effect

under this subsection on the day before such enactment

date.

‘‘(B) For anniversary dates occurring during the oneyear period beginning at the end of the period in subparagraph (A), the licensee shall pay a renewal fee in an amount

equal to 75 percent of the amount paid by the licensee

under subparagraph (A). ‘‘(C) For anniversary dates occurring during the oneyear period beginning at the end of the period in subparagraph (B), the licensee shall pay a renewal fee in an amount

equal to 50 percent of the amount paid by the licensee

under subparagraph (A).

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

on the date of the enactment of the Perishable Agricultural

Commodities Act Amendments of 1995, the licensee shall
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not be required to pay any fee if the licensee seeks renewal

of the license.’’.

(b) STYLISTIC AMENDMENTS.—Such section is further

amended—

(1) by striking the section heading and ‘‘SEC. 3. (a)’’ and

inserting the following:

‘‘SEC. 3. LICENSES.

‘‘(a) LICENSE REQUIRED; PENALTIES FOR VIOLATIONS.—’’;

(2) in subsection (b), by inserting ‘‘APPLICATION AND FEES

FOR LICENSES.—’’ after ‘‘(b)’’; and

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

NAMES.—’’ after ‘‘(c)’’.

SEC. 4. ESTABLISHMENT AND ALTERATION OF LICENSE FEES FOR

COMMISSION MERCHANTS, DEALERS (OTHER THAN

RETAILERS AND GROCERY WHOLESALERS), AND BROKERS.

(a) DISCRETION OF SECRETARY TO ESTABLISH AND ALTER FEES.—

Section 3(b) of the Perishable Agricultural Commodities Act, 1930

(7 U.S.C. 499c(b)), is amended by inserting after paragraph (1),

as designated by section 3(a)(1), the following new paragraph:

‘‘(2) LICENSE FEES.—Upon the filing of an application under

paragraph (1), the applicant shall pay such license fees, both

individually and in the aggregate, as the Secretary determines

necessary to meet the reasonably anticipated expenses for

administering this Act and the Act to prevent the destruction

or dumping of farm produce, approved March 3, 1927 (7 U.S.C.

491–497). Thereafter, the licensee shall pay such license fees

annually or at such longer interval as the Secretary may prescribe. The Secretary shall take due account of savings to

the program when determining an appropriate interval for

renewal of licenses. The Secretary shall establish and alter

license fees only by rulemaking under section 553 of title 5,

United States Code, except that the Secretary may not alter

the fees required under paragraph (3) or (4) for retailers and

grocery wholesalers that are dealers. Effective on the date

of the enactment of the Perishable Agricultural Commodities

Act Amendments of 1995 and until such time as the Secretary

alters such fees by rule, an individual license fee shall equal

$550 per year, plus $200 for each branch or additional business

facility operated by the applicant in excess of nine such facilities, as determined by the Secretary, subject to an annual

aggregate limit of $4,000 per licensee. Any increase in license

fees prescribed by the Secretary under this paragraph shall

not take effect unless the Secretary determines that, without

such increase, the funds on hand as of the end of the fiscal

year in which the increase takes effect will be less than 25

percent of the projected budget to administer such Acts for

the next fiscal year. In no case may a license fee increase

by the Secretary take effect before the end of the three-year

period beginning on the date of the enactment of the Perishable

Agricultural Commodities Act Amendments of 1995.’’.

(b) REPEAL OF CURRENT CAP ON RESERVE FUNDS.—Paragraph

(5) of such section, as designated by section 3(a)(3), is amended

by striking the sentence that begins with ‘‘The amount of money’’.
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(c) CONFORMING AMENDMENTS REGARDING THIS SECTION AND

SECTION 3.—Section 4(a) of such Act (7 U.S.C. 499d(a)) is

amended—

(1) in the matter preceding the provisos, by striking ‘‘any

anniversary date thereof unless the annual fee has been paid’’

and inserting ‘‘the anniversary date of the license at the end

of the annual or multiyear period covered by the license fee

unless the licensee submits the required renewal application

and pays the applicable renewal fee (if such fee is required)’’;

(2) in the first proviso, by striking ‘‘the necessity of paying

the annual fee’’ and inserting ‘‘the necessity of renewing the

license and of paying the renewal fee (if such fee is required)’’;

and

(3) in the second proviso, by striking ‘‘annual fee’’ and

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

SEC. 5. INCREASE IN PENALTIES FOR OPERATING WITHOUT A LICENSE

AND INCREASE IN LATE RENEWAL FEE.

(a) LICENSE PENALTIES.—Section 3(a) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499c(a)), as amended by

section 3(b)(1), is further amended—

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

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

‘‘$250’’.

(b) LATE FILING FEES.—Section 4(a) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499d(a)), as amended by

section 4(c), is further amended in the second proviso by striking

‘‘plus $5’’ and inserting ‘‘plus $50’’.

SEC. 6. STATUTORY TRUST ON COMMODITIES AND SALE PROCEEDS.

(a) REPEAL OF SECRETARIAL NOTIFICATION REQUIREMENT.— Paragraph (3) of section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)), is amended in the first sentence

by striking ‘‘and has filed such notice with the Secretary’’. (b) CLARIFICATION OF CONTENT OF NOTIFICATION.—Such paragraph is further amended by inserting after the first sentence

the following new sentence: ‘‘The written notice to the commission

merchant, dealer, or broker shall set forth information in sufficient

detail to identify the transaction subject to the trust.’’. (c) ADDITIONAL METHOD OF NOTIFICATION FOR LICENSEES.— Such section is further amended—

(1) by redesignating paragraph (4) as paragraph (5); and

(2) by inserting after paragraph (3) the following new paragraph:

‘‘(4) In addition to the method of preserving the benefits of

the trust specified in paragraph (3), a licensee may use ordinary

and usual billing or invoice statements to provide notice of the

licensee’s intent to preserve the trust. The bill or invoice statement

must include the information required by the last sentence of paragraph (3) and contain on the face of the statement the following:

‘The perishable agricultural commodities listed on this invoice are

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

the Perishable Agricultural Commodities Act, 1930 (7 U.S.C.

499e(c)). The seller of these commodities retains a trust claim

over these commodities, all inventories of food or other products

derived from these commodities, and any receivables or proceeds

from the sale of these commodities until full payment is received.’.’’.
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SEC. 7. AUTHORITY OF DEPARTMENT OF AGRICULTURE REGARDING

POSSIBLE VIOLATIONS.

(a) DISCIPLINARY VIOLATIONS.—Subsection (b) of section 6 of

the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499f),

is amended to read as follows:

‘‘(b) DISCIPLINARY VIOLATIONS.—Any officer or agency of any State or Territory having jurisdiction over commission merchants,

dealers, or brokers in such State or Territory and any other

interested person (other than an employee of an agency of the

Department of Agriculture administering this Act) may file, in

accordance with rules prescribed by the Secretary, a written

notification of any alleged violation of this Act by any commission

merchant, dealer, or broker. In addition, any official certificates

of the United States Government or States or Territories of the

United States and trust notices filed pursuant to section 5 shall

constitute written notification for the purposes of conducting an

investigation under subsection (c). The identity of any person filing

a written notification under this subsection shall be considered

to be confidential information. The identity of such person, and

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

the identity of such person, are specifically exempt from disclosure

under section 552 of title 5, United States Code (commonly known

as the Freedom of Information Act), as provided in subsection

(b)(3) of such section.’’.

(b) GROUNDS AND PROCESS OF INVESTIGATIONS.—Subsection (c)

of such section is amended to read as follows:

‘‘(c) INVESTIGATION OF COMPLAINTS AND NOTIFICATIONS.— ‘‘(1) COMMENCING OR EXPANDING AN INVESTIGATION.—If

there appears to be, in the opinion of the Secretary, reasonable

grounds for investigating a complaint made under subsection

(a) or a written notification made under subsection (b), the

Secretary shall investigate such complaint or notification. In

the course of the investigation, if the Secretary determines

that violations of this Act are indicated other than the alleged

violations specified in the complaint or notification that served

as the basis for the investigation, the Secretary may expand

the investigation to include such additional violations.

‘‘(2) ISSUANCE OF COMPLAINT BY SECRETARY; PROCESS.—

In the opinion of the Secretary, if an investigation under this

subsection substantiates the existence of violations of this Act,

the Secretary may cause a complaint to be issued. The Secretary

shall have the complaint served by registered mail or certified

mail or otherwise on the person concerned and afford such

person an opportunity for a hearing thereon before a duly

authorized examiner of the Secretary in any place in which

the subject of the complaint is engaged in business. However,

in complaints wherein the amount claimed as damages does

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

in support of the complaint and in support of respondent’s

answer may be supplied in the form of depositions or verified

statements of fact.

‘‘(3) SPECIAL NOTIFICATION REQUIREMENTS FOR CERTAIN

INVESTIGATIONS.—Whenever the Secretary initiates an investigation on the basis of a written notification made under

subsection (b) or expands such an investigation, the Secretary

shall promptly notify the subject of the investigation of the

existence of the investigation and the nature of the alleged
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violations of this Act to be investigated. Not later than 180

days after providing the initial notification, the Secretary shall

provide the subject of the investigation with notice of the status

of the investigation, including whether the Secretary intends

to issue a complaint under paragraph (2), terminate the investigation, or continue or expand the investigation. The Secretary

shall provide additional status reports at the request of the

subject of the investigation and shall promptly notify the subject

of the investigation whenever the Secretary terminates the

investigation.’’.

(c) INCREASE IN THRESHOLD FOR SHORTENED PROCEDURE

CASES.—Subsection (d) of such section is amended by striking

‘‘$15,000’’ both places it appears and inserting ‘‘$30,000’’.

(d) STYLISTIC AMENDMENTS.—Such section is further

amended—

(1) by striking the section heading and ‘‘SEC. 6.’’ and inserting the following:

‘‘SEC. 6. COMPLAINTS, WRITTEN NOTIFICATIONS, AND INVESTIGATIONS.’’;

(2) in subsection (d), by inserting ‘‘DECISIONS ON COMPLAINTS.—’’ after ‘‘(d)’’; and

(3) in subsection (e), by inserting ‘‘BOND REQUIRED FOR

CERTAIN COMPLAINTS.—’’ after ‘‘(e)’’.

SEC. 8. FILING AND HANDLING FEES FOR REPARATION COMPLAINTS.

(a) PERMANENT FILING AND HANDLING FEES.—Section 6(a) of

the Perishable Agricultural Commodities Act, 1930 (7 U.S.C.

499f(a)), is amended—

(1) by striking ‘‘(a)’’ and inserting the following: ‘‘(a) REPARATION COMPLAINTS.— ‘‘(1) PETITION; PROCESS.—’’; and

(2) by adding at the end the following new paragraph:

‘‘(2) FILING AND HANDLING FEES.—A person submitting a petition to the Secretary under paragraph (1) shall include

a filing fee of $60 per petition. If the Secretary determines

under paragraph (1) that the facts contained in the petition

warrant further action, the person or persons submitting the

petition shall submit to the Secretary a handling fee of $300.

The Secretary may not forward a copy of the complaint to

the commission merchant, dealer, or broker involved until after

the Secretary receives the required handling fee. The Secretary

shall deposit fees submitted under this paragraph into the

Perishable Agricultural Commodities Act Fund provided for

by section 3(b). The Secretary may alter the fees specified

in this paragraph by rulemaking under section 553 of title

5, United States Code.’’.

(b) INCLUSION OF HANDLING FEE IN CALCULATION OF DAMAGES.—Section 5(a) of such Act (7 U.S.C. 499e(a)) is amended by

inserting after ‘‘damages’’ the following: ‘‘(including any handling

fee paid by the injured person or persons under section 6(a)(2))’’.

(c) CONFORMING AMENDMENT TO TEMPORARY FEE AUTHORITY.—

Public Law 103–276 (7 U.S.C. 499f note) is repealed.

SEC. 9. CONSIDERATION OF COLLATERAL FEES AND EXPENSES.

(a) DEFINITION.—Section 1(b) of the Perishable Agricultural

Commodities Act, 1930 (7 U.S.C. 499a(b)), is amended by inserting
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after paragraph (12), as added by section 2, the following new

paragraph: ‘‘(13) The term ‘collateral fees and expenses’ means any pro- motional allowances, rebates, service or materials fees paid or provided, directly or indirectly, in connection with the distribution

or marketing of any perishable agricultural commodity.’’. (b) USE OF DEFINITION.—Section 2 of such Act (7 U.S.C. 499b)

is amended—

(1) by striking ‘‘commerce—’’ in the matter before para- graph (1) and inserting ‘‘commerce:’’; (2) by striking the semicolon at the end of each paragraph and inserting a period; and (3) in paragraph (4), by adding at the end the following new sentence: ‘‘However, this paragraph shall not be considered

to make the good faith offer, solicitation, payment, or receipt

of collateral fees and expenses, in and of itself, unlawful under

this Act.’’.

SEC. 10. CLARIFICATION OF MISBRANDING PROHIBITION.

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

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

‘‘commerce. However,’’; and

(2) by adding at the end the following new sentence: ‘‘A

person other than the first licensee handling misbranded

perishable agricultural commodities shall not be held liable

for a violation of this paragraph by reason of the conduct

of another if the person did not have knowledge of the violation

or lacked the ability to correct the violation.’’.

SEC. 11. IMPOSITION OF CIVIL PENALTY IN LIEU OF LICENSE SUSPENSION OR REVOCATION.

Section 8 of the Perishable Agricultural Commodities Act, 1930

(7 U.S.C. 499h), is amended by adding at the end the following

new subsection:

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

revoking a license under this section when the Secretary determines, as provided by section 6, that a commission merchant, dealer,

or broker has violated section 2 or subsection (b) of this section,

the Secretary may assess a civil penalty not to exceed $2,000

for each violative transaction or each day the violation continues.

In assessing the amount of a penalty under this subsection, the

Secretary shall give due consideration to the size of the business,

the number of employees, and the seriousness, nature, and amount

of the violation. Amounts collected under this subsection shall be

deposited in the Treasury of the United States as miscellaneous

receipts.’’.

SEC. 12. EXTENSION OF SANCTIONS TO PERSONS RESPONSIBLY CONNECTED TO A COMMISSION MERCHANT, DEALER, OR

BROKER.

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

Agricultural Commodities Act, 1930 (7 U.S.C. 499a(b)(9)), is

amended by adding at the end the following new sentence: ‘‘A

person shall not be deemed to be responsibly connected if the

person demonstrates by a preponderance of the evidence that the

person was not actively involved in the activities resulting in a

violation of this Act and that the person either was only nominally
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a partner, officer, director, or shareholder of a violating licensee

or entity subject to license or was not an owner of a violating

licensee or entity subject to license which was the alter ego of

its owners.’’.

(b) EXTENSION OF EMPLOYMENT SANCTION.—Section 8(b) of such

Act (7 U.S.C. 499h(b)) is amended by adding at the end the following

new sentence: ‘‘The Secretary may extend the period of employment

sanction as to a responsibly connected person for an additional

one-year period upon the determination that the person has been

unlawfully employed as provided in this subsection.’’.

(c) CONFORMING AMENDMENT REGARDING LICENSING SANCTION.—Section 4 of such Act (7 U.S.C. 499d) is amended—

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

employment with a licensee under section 8(b) or’’ after ‘‘with

the applicant,’’ in the matter preceding subparagraph (A); and

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

new sentence: ‘‘The Secretary may not issue a license to an

applicant under this subsection if the applicant or any person

responsibly connected with the applicant is prohibited from

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

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.