I

104TH CONGRESS

1ST SESSION H. R. 1103

Entitled, ‘‘Amendments to the Perishable Agricultural Commodities Act,

1930’’.

IN THE HOUSE OF REPRESENTATIVES

MARCH 1, 1995

Mr. POMBO (for himself, Mr. DOOLITTLE, Mr. FOLEY, Mrs. THURMAN, Mr.

PASTOR, and Mr. FARR) introduced the following bill; which was referred

to the Committee on Agriculture

A BILL

Entitled, ‘‘Amendments to the Perishable Agricultural

Commodities Act, 1930’’.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. DEFINITIONS.

4 (a) Section 1(b)(6) of the Perishable Agricultural

5 Commodities Act, 1930 (7 U.S.C. 499a) is hereby amend6 ed to read as follows:

7 ‘‘(b)(6) The term ‘dealer’ means any person engaged

8 in the business of buying or selling in wholesale or jobbing

9 quantities, including for resale at retail, as defined by the

10 Secretary, any perishable agricultural commodity in inter-
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1 state or foreign commerce, except that (A) no producer

2 shall be considered a ‘dealer’ in respect to sales of any

3 such commodity of his own raising; and (B) no person

4 buying any commodity other than potatoes for canning

5 and/or processing within the State where grown shall be

6 considered a ‘dealer’ whether or not the canned or proc7 essed product is to be shipped in interstate or foreign com8 merce, unless such product is frozen or packed in ice or

9 consists of cherries in brine, within the meaning of para10 graph (4) of this section. Any person not considered as

11 a ‘dealer’ under clauses (A) or (B) may elect to secure

12 a license under the provisions of section 499c of this title,

13 and in such case and while the license is in effect such

14 person shall be considered as a ‘dealer’.’’

15 (b) Section 1 of the Perishable Agricultural Commod16 ities Act, 1930 (7 U.S.C. 499a) is hereby amended to add

17 a new subsection (b)(11) and a new subsection (b)(12),

18 to read as follows:

19 ‘‘(11) The terms ‘collateral fees and expenses’

20 mean any promotional allowances, rebates, service or

21 materials fees paid or provided, directly or indirectly,

22 in connection with the distribution or marketing of

23 any perishable agricultural commodity.

24 ‘‘(12) The term ‘producer’ means any person

25 who raises perishable agricultural commodities for
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1 sale of those commodities in wholesale or jobbing

2 quantities, under the producer’s own brands or la3 bels, as defined by the Secretary.’’.

4 SEC. 2. UNFAIR TRADE PRACTICES.

5 (a) Section 2(1) of the Perishable Agricultural Com6 modities Act, 1930 (7 U.S.C. 499b) is hereby amended

7 to read as follows:

8 ‘‘(1) For any commission merchant, dealer,

9 broker, or producer to engage in or use any unfair,

10 unreasonable, discriminatory, or deceptive practice

11 in connection with the weighing, counting, or in any

12 way determining the quantity of any perishable agri13 cultural commodity received, bought, sold, shipped,

14 or handled in interstate or foreign commerce;’’.

15 (b) Section 2(4) of the Perishable Agricultural Com16 modities Act, 1930 (7 U.S.C. 499b) is hereby amended

17 to read as follows:

18 ‘‘(4) For any commission merchant, dealer,

19 broker, or producer to make, for a fraudulent pur20 pose, any false or misleading statement in connec21 tion with any transaction involving any perishable

22 agricultural commodity which is received in inter23 state or foreign commerce by such commission mer24 chant, or bought or sold, or contracted to be bought,

25 sold or consigned, in such commerce by such dealer,
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1 or the purchase or sale of which in such commerce

2 is negotiated by such broker; or to fail or refuse

3 truly and correctly to account and make full pay4 ment promptly in respect of any transaction in any

5 such commodity to the person with whom such

6 transaction is had; or to fail to disclose the grant or

7 receipt of any collateral fee or expense in connection

8 with any cost-plus transaction in any such commod9 ity to the person with whom such transaction is had;

10 or to fail, without reasonable cause to perform any

11 specification or duty, express or implied, arising out

12 of any undertaking in connection with any such

13 transaction; or to fail to maintain the trust as re14 quired under section 499e(c) of this title;’’.

15 (c) Section 2(5) of the Perishable Agricultural Com16 modities Act, 1930 (7 U.S.C. 499b) is hereby amended

17 to read as follows:

18 ‘‘(5) For any commission merchant, dealer,

19 broker, or producer to misrepresent by word, act,

20 mark, stencil, label, statement, or deed, the char21 acter, kind, grade, quality, quantity, size, pack,

22 weight, condition, degree of maturity, or State,

23 country, or region of origin of any perishable agri24 cultural commodity received, shipped, sold, or of25 fered to be sold in interstate or foreign commerce:
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1 Provided, That any commission merchant, dealer,

2 broker, or producer who has violated—

3 ‘‘(A) any provision of this paragraph may,

4 with the consent of the Secretary, admit the

5 violation or violations; or

6 ‘‘(B) any provision of this paragraph relat7 ing to a misrepresentation by mark, stencil, or

8 label shall be permitted by the Secretary to

9 admit the violation or violations if such viola10 tion or violations are not repeated or flagrant;

11 and pay, in the case of a violation under either

12 clause (A) or (B) of this paragraph, a monetary pen13 alty not to exceed $2,000 in lieu of a formal pro14 ceeding for the suspension or revocation of license,

15 any payment so made to be deposited in the Treas16 ury of the United States as miscellaneous receipts:

17 Provided further, That a person other than the first

18 licensee handling misbranded perishable agricultural

19 commodities shall not be held liable for a violation

20 of this paragraph by reason of the conduct of an21 other if that person did not have knowledge of the

22 violation or lacked the ability to correct the viola23 tion;’’.

24 (d) Section 2(6) of the Perishable Agricultural Com25 modities Act, 1930 (7 U.S.C. 499b) is hereby amended
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1 to strike the words ‘‘any commission merchant, dealer, or

2 broker,’’ and in lieu thereof insert the words ‘‘any commis3 sion merchant, dealer, broker, or producer,’’.

4 (e) Section 2(7) of the Perishable Agricultural Com5 modities Act, 1930 (7 U.S.C. 499b) is hereby amended

6 to strike the words ‘‘any commission merchant, dealer, or

7 broker,’’ and in lieu thereof insert the words ‘‘any commis8 sion merchant, dealer, broker, or producer,’’.

9 SEC. 3. LICENSE FEES.

10 Section 3(b) of the Perishable Agricultural Commod11 ities Act, 1930 (7 U.S.C. 499c(b)) is amended to read as

12 follows:

13 ‘‘Any person desiring any such license shall make ap14 plication to the Secretary. The Secretary may by regula15 tion prescribe the information to be contained in such ap16 plication and to be furnished thereafter. Upon filing the

17 application, and annually thereafter, the applicant shall

18 pay such fees, both individually and in the aggregate, as

19 the Secretary determines, upon rulemaking pursuant to 5

20 U.S.C. section 553, are necessary to meet the reasonably

21 anticipated expenses for administering this chapter and

22 section 491, 493 to 497 of this title. For fiscal year 1996,

23 such individual license fee shall not exceed $500, plus

24 $200 for each branch or additional business facility oper25 ated by the applicant in excess of nine such facilities, as
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1 determined by the Secretary. For fiscal year 1996, total

2 annual fees for any applicant shall not exceed $2,000 in

3 the aggregate. No retailer shall be required to pay a li4 cense fee until the invoice cost of its purchases of perish5 able agricultural commodities in any calendar year are in

6 excess of $400,000. The Secretary shall provide by regula7 tion that persons operating subsidiary organizations may

8 consolidate those organizations on the license of the parent

9 organization. Such fee, when collected, shall be deposited

10 in the Treasury of the United States as a special fund,

11 without fiscal year limitation, to be designated as the ‘Per12 ishable Agricultural Commodities Act Fund’ which shall

13 be available for all expenses necessary to the administra14 tion of this chapter, and sections 491, 493 to 497 of this

15 title, referred to above. License fees paid into such fund

16 by persons designated as ‘retailers’ by the Secretary shall

17 not exceed more than 25 percent of all fees collected in

18 any fiscal year. Any reserve funds in the Perishable Agri19 cultural Commodities Act Fund may be invested by the

20 Secretary in insured or fully-collateralized interest-bearing

21 accounts or, at the discretion of the Secretary, by the Sec22 retary of the Treasury in United States Government debt

23 instruments. Any interest earned on such reserve funds

24 shall be credited to the Perishable Agricultural Commod25 ities Act Fund and shall be available for the same pur-
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1 poses as the fees deposited in such fund. The amount of

2 money accumulated and on hand in the special fund at

3 the end of any fiscal year shall not exceed 33 percent of

4 the projected budget for the next following fiscal year. Fi5 nancial statements prescribed by the Director of the Office

6 of Management and Budget for the last completed fiscal

7 year, and as estimated for the current and ensuing fiscal

8 years, shall be included in the budget as submitted to the

9 Congress annually.’’.

10 SEC. 4. ISSUANCE OF LICENSE.

11 Section 4(a) of the Perishable Agricultural Commod12 ities Act, 1930 (7 U.S.C. 499d(a)) is amended to read

13 as follows:

14 ‘‘(a) Whenever an applicant has made application and

15 paid any applicable fee, the Secretary, except as provided

16 elsewhere in this chapter, shall issue to such applicant a

17 license, which shall entitle the licensee to do business as

18 a commission merchant and/or dealer and/or broker unless

19 and until it is suspended or revoked by the Secretary in

20 accordance with the provisions of this chapter, or is auto21 matically suspended under section 499g(d) of this title,

22 but said license shall automatically terminate on any anni23 versary date thereof unless the application has been made

24 and any applicable fee has been paid: Provided, That no25 tice of the necessity of application and paying any applica-
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1 ble fee shall be mailed at least thirty days before the anni2 versary date: Provided further, That if the application is

3 not made and any applicable fee is not paid by the anni4 versary date the licensee may obtain a renewal of that li5 cense at any time within thirty days by making application

6 and paying any applicable fee provided in section 499c(b)

7 of this title, plus $5, which shall be deposited in the Per8 ishable Agricultural Commodities Act fund provided for by

9 section 499c(b) of this title: Provided further, That the

10 license of any licensee shall terminate upon said licensee,

11 or in case the licensee is a partnership, a partner being

12 discharged as a bankrupt, unless the Secretary finds upon

13 examination of the circumstances of such bankruptcy,

14 which he shall examine if requested to do so by said li15 censee, that such circumstances do not warrant such ter16 mination.’’.

17 SEC. 5. LIABILITY TO PERSON INJURED.

18 (a) Section 5 of the Perishable Agricultural Commod19 ities Act, 1930 (7 U.S.C. 499e(a)) is hereby amended to

20 strike the words ‘‘any commission merchant, dealer, or

21 broker,’’ and in lieu thereof insert the words ‘‘any commis22 sion merchant, dealer, broker, or producer,’’.

23 (b) Section 5 of the Perishable Agricultural Commod24 ities Act, 1930 (7 U.S.C. 499e(c)(3)) is hereby amended

25 to add at the end thereof the following: ‘‘The Secretary
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1 of Agriculture shall require persons who do not pay license

2 fees under section 499c of this title to pay a filing fee

3 for each notice of intent to preserve trust benefits filed

4 pursuant to section 499e of this title. For fiscal year 1996,

5 such filing fee shall be set at $20. Thereafter, such fee

6 shall be set by the Secretary upon rulemaking pursuant

7 to 5 U.S.C. section 553, in order to meet the reasonably

8 anticipated expenses for administering direct and indirect

9 costs for such persons’ participation in proceedings under

10 this chapter.’’.

11 SEC. 6. COMPLAINT AND INVESTIGATION.

12 (a) Section 6(a) of the Perishable Agricultural Com13 modities Act, 1930 (7 U.S.C. 499f(a)) is hereby amended

14 to designate existing section (a) as section (a)(1), and to

15 strike the words ‘‘any commission merchant, dealer, or

16 broker,’’ and in lieu thereof insert the words ‘‘any commis17 sion, merchant, dealer, broker, or producer,’’ in the two

18 instances in which it appears in that subsection.

19 (b) Section 6(a) of the Perishable Agricultural Com20 modities Act, 1930 (7 U.S.C. 499f(a)) is hereby amended

21 to add at the end thereof a new subsection (a)(2), a new

22 subsection (a)(3), and a new subsection (a)(4), to read as

23 follows:

24 ‘‘(2) The Secretary shall require all persons,

25 other than Federal employees acting within the
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1 scope of their official duties, who submit informal

2 complaints to the Secretary under this section, alleg3 ing a violation of section 2 of the Act (7 U.S.C.

4 499b), to include a filing fee. For licensed persons

5 that have also paid an annual license fee, such filing

6 fee shall be $60 per petition. For all other persons,

7 such fee shall be $100 per petition. If the Secretary

8 determines under section 6(a) of the Act (7 U.S.C.

9 499f(a)), that the facts contained in a petition de10 scribed in such section warrant further action, the

11 person or persons submitting the petition shall sub12 mit to the Secretary a further filing fee. For licensed

13 persons that have also paid an annual license fee,

14 such filing fee shall be $300 per petition. For all

15 other persons, other than Federal employees acting

16 within the scope of their official duties, such fee

17 shall be $500 per petition. The Secretary may not

18 forward a copy of a complaint to the commission

19 merchant, dealer, broker, or producer involved until

20 after the Secretary receives the required filing fees.

21 ‘‘(3) In determining the amount of damages in22 curred by a prevailing party in a formal reparation

23 proceeding under section 7 of this Act (7 U.S.C.

24 499g), the Secretary shall assess the amount of fil25 ing fees against the losing party: Provided, That a
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1 prevailing party shall have any filing fees paid by

2 it refunded as part of any formal reparation

3 award.’’.

4 (c) Section 6(b) of the Perishable Agricultural Com5 modities Act, 1930 (7 U.S.C. 499f(b)) is hereby amended

6 to strike the words ‘‘any commission merchant, dealer, or

7 broker,’’ and in lieu thereof insert the words ‘‘any commis8 sion merchant, dealer, broker, or producer,’’ in two in9 stances in which it appears in that subsection.

10 (d) Section 6(d) of the Perishable Agricultural Com11 modities Act, 1930 (7 U.S.C. 499f(d)) is hereby amended

12 to strike the words ‘‘any commission merchant, dealer, or

13 broker,’’ and in lieu thereof insert the words ‘‘any commis14 sion merchant, dealer, broker, or producer’’.

15 SEC. 7. GROUNDS FOR SUSPENSION OR REVOCATION OF LI16 CENSE; CIVIL PENALTIES.

17 (a) Section 8(a) of the Perishable Agricultural Com18 modities Act, 1930 (7 U.S.C. 499h(a)) is hereby amended

19 to strike the words ‘‘any commission merchant, dealer, or

20 broker,’’ and in lieu thereof insert the words ‘‘any commis21 sion merchant, dealer, broker, or producer’’.

22 (b) Section 8 of the Perishable Agricultural Commod23 ities Act, 1930 (7 U.S.C. 499h) is hereby amended to add

24 a new subsection (b) to read as follows:
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1 ‘‘(b) Whenever the Secretary determines, as provided

2 by section 499f of this title, that any commission mer3 chant, dealer, broker, or producer has violated section

4 499b, 499h(c), or 499h(d) of this title, the Secretary may

5 assess a monetary penalty not to exceed $2,000 for each

6 violative transaction or each day the violation continues,

7 to be deposited in the Treasury of the United States as

8 miscellaneous receipts.’’.

9 (c) Section 8 of the Perishable Agricultural Commod10 ities Act, 1930 (7 U.S.C. 499h) is hereby amended by re11 designating existing subsection (b) as subsection (c), exist12 ing subsection (c) as subsection (d), and existing sub13 section (d) as subsection (e).

14 (d) Redesignated section 8(e) of the Perishable Agri15 cultural Commodities Act, 1930 (7 U.S.C. 499h(e)) is

16 hereby amended to strike the words ‘‘any commission mer17 chant, dealer, or broker,’’ and in lieu thereof insert the

18 words ‘‘any commission merchant, dealer, broker, or pro19 ducer’’.

20 SEC. 8. PRESERVATION OF BUSINESS REPUTATION.

21 Section 13 of the Act (7 U.S.C. 499m) is hereby

22 amended to add a new subsection (g), to read as follows:

23 ‘‘(g) The Secretary is directed, during the course of

24 any investigation or inquiry under this title, to take due
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1 account of preservation of the business reputation of any

2 person under investigation.’’.

3 SEC. 9.

4 Section 15 of the Perishable Agricultural Commod5 ities Act, 1930 (7 U.S.C. 499o) is hereby amended to re6 designate the existing provisions as subsection (a), and to

7 add a new subsection (b) and a new subsection (c), to read

8 as follows:

9 ‘‘(b) REPORT AND INVESTIGATION.—The Secretary

10 shall investigate and issue a report on industry practices

11 requiring or soliciting collateral fees and expenses by or

12 to any commission merchant, dealer, broker, or producer

13 in connection with any transaction in perishable agricul14 tural commodities. Such report shall be made to the House

15 Committee on Agriculture and the Senate Committee on

16 Agriculture, Nutrition, and Forestry, within one hundred

17 and eighty days of enactment of this legislation.

18 ‘‘(c) DISCLOSURE OF COLLATERAL FEES AND EX19 PENSES; RULEMAKING.—If the investigation and report

20 required by this section conclude that such practices con21 form to the laws of the United States, the Secretary shall

22 promulgate regulations regarding the sufficiency of disclo23 sure by or to any commission merchant, dealer, broker,

24 or producer, of the grant or receipt of any collateral fee

25 or expense in connection with any cost-plus transaction
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1 in perishable agricultural commodities: Provided, That dis2 closure shall be considered sufficient if it is conspicuously

3 made on the face of the invoice or in any underlying con4 tract covering the transaction: Provided further, That no

5 commission merchant, dealer, broker, or producer, nor any

6 individual responsibly connected with any such commis7 sion merchant, dealer, broker, or producer shall be the

8 subject to any licensure, reparation, or trust enforcement

9 proceeding under this chapter for any act or omission con10 cerning the disclosure of any collateral fee or expense,

11 taken or required to be taken prior to the effective date

12 of regulations required under this subsection.’’.

13 SEC. 10. LIABILITY OF LICENSEES FOR ACTS AND OMIS14 SIONS OF AGENTS.

15 Section 16 of the Perishable Agricultural Commod16 ities Act, 1930 (7 U.S.C. 499p) is hereby amended to

17 strike the words ‘‘any commission merchant, dealer, or

18 broker,’’ and in lieu thereof insert the words ‘‘any commis19 sion merchant, dealer, broker, or producer,’’ in the two

20 instances in which it appears in that section.

21 SEC. 11. REVIEW OF PROCEDURES AND POLICIES.

22 The Perishable Agricultural Commodities Act, 1930

23 is hereby amended by adding at the end thereof the follow24 ing new section (7 U.S.C. 499t):
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1 ‘‘REVIEW OF POLICIES AND PROCEDURES.

2 ‘‘(a) The Secretary is directed to conduct an annual

3 review of enforcement procedures, policies, and priorities

4 regarding reparation proceedings, disciplinary complaints,

5 and the operation of the trust, as well as proceedings

6 under section 499h(c), to identify opportunities for effi7 ciency and cost reduction in such proceedings. The Sec8 retary shall invite public participation and input into such

9 review.

10 ‘‘(b) The Secretary is directed to submit, to the

11 House Committee on Agriculture and the Senate Commit12 tee on Agriculture, Nutrition, and Forestry, no later than

13 September 30 of each year, a projection of enforcement

14 priorities for the next twelve months. The Secretary is fur15 ther directed to submit, to the House Committee on Agri16 culture and the Senate Committee on Agriculture, Nutri17 tion, and Forestry, no later than September 30 of each

18 year in which a biennial review is conducted, a report con19 taining the results of its review and recommendations

20 based on such results. Such biennial report shall describe

21 reparation proceedings, disciplinary complaints, and the

22 operation of the trust during the previous twenty-four

23 months.’’.
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1 SEC. 12. EFFECTIVE DATE.

2 This Act shall be effective upon enactment.

Æ

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