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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1103 Enrolled Bill (ENR)]

        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.''.

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 commodities 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 wholesalers 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 one-year 
        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 one-year 
        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 one-year 
        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 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''.
    (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 necessityof 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.'.''.

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 maycause 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 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 after 
paragraph (12), as added by section 2, the following new paragraph:
    ``(13) The term `collateral fees and expenses' means any 
promotional 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 paragraph 
    (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 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.
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