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[House Report 114-768]
[From the U.S. Government Publishing Office]

114th Congress    }                                      {      Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                      {     114-768

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CLARIFICATION OF TREATMENT OF ELECTRONIC SALES OF LIVESTOCK ACT OF 2016

                                _______
                                

 September 20, 2016.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Conaway, from the Committee on Agriculture, submitted the following

                              R E P O R T

                        [To accompany H.R. 5883]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Agriculture, to whom was referred the bill 
(H.R. 5883) to amend the Packers and Stockyards Act, 1921, to 
clarify the duties relating to services furnished in connection 
with the buying or selling of livestock in commerce through 
online, video, or other electronic methods, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Clarification of Treatment of 
Electronic Sales of Livestock Act of 2016''.

SEC. 2. DEFINITION OF MARKET AGENCY.

  (a) In General.--Section 301(c) of the Packers and Stockyards Act, 
1921 (7 U.S.C. 201(c)) is amended--
          (1) by striking ``; and'' at the end and inserting a period; 
        and
          (2) by adding at the end the following: ``Beginning on the 
        date of the enactment of the Clarification of Treatment of 
        Electronic Sales of Livestock Act of 2016, such term includes 
        any person who engages in the business of buying or selling 
        livestock, on a commission or other fee basis, through the use 
        of online, video, or other electronic methods when handling or 
        providing the means to handle receivables or proceeds from such 
        buying or selling, so long as such person's annual average of 
        online, video, or electronic sales of livestock, on a 
        commission or other fee basis, exceeds $250,000.''.
  (b) Technical Amendments.--Section 301 of the Packers and Stockyards 
Act, 1921 (7 U.S.C. 201) is amended--
          (1) in the matter preceding subsection (a), by striking 
        ``When used in this Act--'' and inserting ``In this Act:'';
          (2) in subsection (a), by striking the semicolon at the end 
        and inserting a period; and
          (3) in subsection (b)--
                  (A) by striking ``weighting'' and inserting 
                ``weighing''; and
                  (B) by striking the semicolon at the end and 
                inserting a period.

SEC. 3. METHODS TO TRANSFER FUNDS.

  Section 409(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 
228b(a)) is amended--
          (1) in the first proviso, by striking ``shall wire transfer 
        funds to the seller's account'' each place it appears and 
        inserting ``shall transfer funds for the full amount of the 
        purchase price to the account of the seller by wire, electronic 
        funds transfer, or any other expeditious method determined 
        appropriate by the Secretary''; and
          (2) in the second proviso, by striking ``or dealer shall wire 
        transfer funds'' and inserting ``or dealer shall transfer funds 
        for the full amount of the purchase price by wire, electronic 
        funds transfer, or any other expeditious method determined 
        appropriate by the Secretary''.

                           Brief Explanation

    The Clarification of Treatment of Electronic Sales of 
Livestock Act of 2016, H.R. 5883, clarifies the duties of the 
Secretary of Agriculture relating to services furnished in 
connection with the buying and selling of livestock in commerce 
through online, video, or other electronic methods and updates 
the acceptable payment methods.

                    Purpose and Need for Legislation

    The Packers and Stockyards Act (P&S Act or the Act) was 
originally enacted in 1921 to protect buyers and sellers of 
livestock from unfair, deceptive, and discriminatory practices. 
However, the law has not been thoroughly revised in decades, 
resulting in a few outdated provisions. H.R. 5883 updates 
certain provisions of the P&S Act to account for advances in 
technology and the avenues businesses and producers use to buy 
and sell livestock.
    While the P&S Act currently gives the Secretary the 
authority to regulate any person engaged in buying or selling 
livestock ``in commerce,'' it is unclear to what extent online 
livestock auctions are regulated. H.R. 5883, amends the Act to 
clarify that the protections of the P&S Act apply to persons 
buying or selling livestock online or through other electronic 
means.
    Many businesses currently selling livestock online are 
already voluntarily registered with the Department of 
Agriculture. However, to ensure that H.R. 5833 does not 
unintentionally burden small scale producers who rely on the 
internet to market their livestock, the language includes a de 
minimis provision so that only those individuals with average 
online sales over $250,000 are subject the requirements of the 
Act.
    The P&S Act currently references only two forms of payment 
methods acceptable under the Act's prompt payment requirements 
for sales transactions: checks and wire transfers. To address 
this outdated requirement, H.R. 5883 updates the acceptable 
payment methods to include the electronic transfer of funds and 
gives the Secretary the flexibility to approve other new 
methods of payment as deemed appropriate.

               Section-by-Section Analysis of Legislation

Section 1. Short title

    Section 1 of the bill designates the title of the bill as 
the ``Clarification of Treatment of Electronic Sales of 
Livestock Act of 2016.''

Section 2. Definition of market agency

    Subsection (a) of section 2 amends the current definition 
of ``market agency'' in the P&S Act to clarify that a person 
who buys or sells livestock on a commission or other fee basis 
online, or through video or other electronic methods, is 
considered to be a market agency for the purposes of the P&S 
Act. However, subsection (a) makes clear that the term does not 
include a person whose annual average online, video, or other 
electronic sales of livestock on a commission or other fee 
basis is less than $250,000.
    Subsection (b) is a technical amendment.

Section 3. Methods to transfer funds

    Section 3 amends section 409 of the P&S Act and updates it 
to allow for electronic funds transfer and other expeditious 
payment methods, as determined appropriate by the Secretary, as 
options for individuals covered by the P&S Act to meet prompt 
payment requirements.

                        Committee Consideration

                              I. HEARINGS

    On May 24, 2016, the Subcommittee on Livestock and Foreign 
Agriculture held a hearing to review the economic state of the 
livestock industry. The hearing record includes testimony from 
the Livestock Marketing Association, highlighting the need to 
update the Packers and Stockyards Act to account for modern 
technologies and containing specific recommendations similar to 
those ultimately included in H.R. 5883.

                           II. FULL COMMITTEE

    The Committee on Agriculture met, pursuant to notice, with 
a quorum present, on September 14, 2016, to consider H.R. 5883, 
the Technical and Clarifying Amendments to the Packers and 
Stockyards Act of 2016.
    H.R. 5883 was placed before the Committee for 
consideration. Without objection, a first reading of the bill 
was waived and it was open to amendment at any point. Chairman 
Conaway offered an Amendment in the Nature of a Substitute to 
H.R. 5883. Without objection, the Amendment in the Nature of a 
Substitute was considered as original text for purposes of 
amendment.
    Chairman Conaway, Mr. Peterson, and Mr. Rouzer were 
recognized for statements. There being no other amendments, Mr. 
Peterson was recognized to offer a motion that the Amendment in 
the Nature of a Substitute to H.R. 5883 be approved. The 
Amendment in the Nature of a Substitute was adopted by voice 
vote. Mr. Peterson was then recognized to offer a motion that 
the bill H.R. 5583 be reported, as amended, favorably to the 
House with the recommendation that it do pass. The motion was 
subsequently approved by voice vote.
    At the conclusion of the meeting, Chairman Conaway advised 
Members, that pursuant to the rules of the House of 
Representatives, Members had until September 16, 2016 to file 
any supplemental, minority, additional, or dissenting views 
with the Committee. Without objection, staff was given 
permission to make any necessary clerical, technical or 
conforming changes to reflect the intent of the Committee. 
Chairman Conaway thanked all the Members and adjourned the 
meeting.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the House of 
Representatives, H.R. 5883 was reported by voice vote with a 
majority quorum present. There was no request for a recorded 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee on Agriculture's 
oversight findings and recommendations are reflected in the 
body of this report.

           Budget Act Compliance (Sections 308, 402, and 423)

    The provisions of clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives and section 308(a)(1) of the 
Congressional Budget Act of 1974 (relating to estimates of new 
budget authority, new spending authority, new credit authority, 
or increased or decreased revenues or tax expenditures) are not 
considered applicable. The estimate and comparison required to 
be prepared by the Director of the Congressional Budget Office 
under clause 3(c)(3) of rule XIII of the Rules of the House of 
Representatives and sections 402 and 423 of the Congressional 
Budget Act of 1974 submitted to the Committee prior to the 
filing of this report are as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 16, 2016.
Hon. K. Michael Conaway,
Chairman, Committee on Agriculture,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5883, the 
Clarification of Treatment of Electronic Sales of Livestock Act 
of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Tiffany 
Arthur.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 5883--Clarification of Treatment of Electronic Sales of Livestock 
        Act of 2016

    H.R. 5883 would amend the Packers and Stockyards Act of 
1921 to include livestock sales conducted through electronic 
communications. Specifically, the legislation updates the 
definition of a market agency to include persons who buy or 
sell livestock through electronic methods if such person's 
average annual livestock sales exceed $250,000. The legislation 
also would permit the use of electronic funds transfers or any 
other exchange methods the Secretary of Agriculture determines 
appropriate to complete livestock sales.
    Based on information from the Department of Agriculture. 
CBO estimates that the cost to implement the provisions of the 
bill would be insignificant; such spending would be subject to 
the availability of appropriated funds. Enacting H.R. 5883 
would not affect direct spending or revenues; therefore, pay-
as-you-go procedures do not apply. CBO estimates that enacting 
the legislation would not increase net direct spending or on-
budget deficits in any of the four consecutive 10-year periods 
beginning in 2027.
    H.R. 5883 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments.
    The bill would impose private-sector mandates, as defined 
in UMRA, on some operators of online and video livestock 
auctions. Under the bill, those operators would need to comply 
with provisions of the Packers and Stockyards Act such as 
requirements for bonding and for prompt payment to sellers. 
However, infonnation from industry sources about current 
business practices indicates that most operators of online and 
video auctions already comply with those provisions. 
Consequently, CBO estimates that the incremental cost to comply 
with the mandates would be minimal and fall well below the 
annual threshold established in UMRA for private-sector 
mandates ($154 million in 2016, adjusted annually for 
inflation).
    The CBO staff contacts for this estimate are Tiffany Arthur 
(for federal costs) and Amy Petz (for private-sector mandates). 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    H.R. 5883 does not authorize funding, therefore, clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives is inapplicable.

                        Committee Cost Estimate

    Pursuant to clause 3(d)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee report incorporates the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to sections 402 and 423 of the 
Congressional Budget Act of 1974.

                      Advisory Committee Statement

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

                       Federal Mandates Statement

    The Committee adopted as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act (Public Law 104-4).

  Earmark Statement Required by Clause 9 of Rule XXI of the Rules of 
                        House of Representatives

    H.R. 5883 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(e), 9(f), or 9(g) of rule XXI of the Rules of the 
House Representatives.

                    Duplication of Federal Programs

    This bill does not establish or reauthorize a program of 
the Federal Government known to be duplicative of another 
Federal program, a program that was included in any report from 
the Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139, or a program related to a 
program identified in the most recent Catalog of Federal 
Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee does not believe that the legislation directs 
an executive branch official to conduct any specific rule 
making proceedings within the meaning of 5 U.S.C. 551.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

PACKERS AND STOCKYARDS ACT, 1921

           *       *       *       *       *       *       *

                         Title III--Stockyards

  Sec. 301. [When used in this Act--] In this Act:
  (a) The term ``stockyard owner'' means any person engaged in 
the business of conducting or operating a stockyard[;].
  (b) The term ``stockyard services'' means services or 
facilities furnished at a stockyard in connection with the 
receiving, buying, or selling on a commission basis or 
otherwise, marketing, feeding, watering, holding, delivery, 
shipment, [weighting] weighing, or handling, in commerce, of 
livestock[;].
  (c) The term ``market agency'' means any person engaged in 
the business of (1) buying or selling in commerce livestock on 
a commission basis or (2) furnishing stockyard services[; and]. 
Beginning on the date of the enactment of the Clarification of 
Treatment of Electronic Sales of Livestock Act of 2016, such 
term includes any person who engages in the business of buying 
or selling livestock, on a commission or other fee basis, 
through the use of online, video, or other electronic methods 
when handling or providing the means to handle receivables or 
proceeds from such buying or selling, so long as such person's 
annual average of online, video, or electronic sales of 
livestock, on a commission or other fee basis, exceeds 
$250,000.
  (d) The term ``dealer'' means any person, not a market 
agency, engaged in the business of buying or selling in 
commerce livestock, either on his own account or as the 
employee or agent of the vendor or purchaser.

           *       *       *       *       *       *       *

Title IV--General Provisions

           *       *       *       *       *       *       *

  Sec. 409. (a) Each packer, market agency, or dealer 
purchasing livestock shall, before the close of the next 
business day following the purchase of livestock and transfer 
of possession thereof, deliver to the seller or his duly 
authorized representative the full amount of the purchase 
price: Provided, That each packer, market agency, or dealer 
purchasing livestock for slaughter shall, before the close of 
the next business day following purchase of livestock and 
transfer of possession thereof, actually deliver at the point 
of transfer of possession to the seller or his duly authorized 
representative a check or [shall wire transfer funds to the 
seller's account] shall transfer funds for the full amount of 
the purchase price to the account of the seller by wire, 
electronic funds transfer, or any other expeditious method 
determined appropriate by the Secretary for the full amount of 
the purchase price; or, in the case of a purchase on a carcass 
or ``grade and yield'' basis, the purchaser shall make payment 
by check at the point of transfer of possession or [shall wire 
transfer funds to the seller's account] shall transfer funds 
for the full amount of the purchase price to the account of the 
seller by wire, electronic funds transfer, or any other 
expeditious method determined appropriate by the Secretary for 
the full amount of the purchase price not later than the close 
of the first business day following determination of the 
purchase price: Provided further, That if the seller or his 
duly authorized representative is not present to receive 
payment at the point of transfer of possession, as herein 
provided, the packer, market agency [or dealer shall wire 
transfer funds] or dealer shall transfer funds for the full 
amount of the purchase price by wire, electronic funds 
transfer, or any other expeditious method determined 
appropriate by the Secretary or place a check in the United 
States mail for the full amount of the purchase price, properly 
addressed to the seller, within the time limits specified in 
this subsection, such action being deemed compliance with the 
requirement for prompt payment.
  (b) Notwithstanding the provisions of subsection (a) of this 
section and subject to such terms and conditions as the 
Secretary may prescribe, the parties to the purchase and sale 
of livestock may expressly agree in writing, before such 
purchase or sale, to effect payment in a manner other than that 
required in subsection (a). Any such agreement shall be 
disclosed in the records of any market agency or dealer selling 
the livestock, and in the purchaser's records and on the 
accounts or other documents issued by the purchaser relating to 
the transaction.
  (c) Any delay or attempt to delay by a market agency, dealer, 
or packer purchasing livestock, the collection of funds as 
herein provided, or otherwise for the purpose of or resulting 
in extending the normal period of payment for such livestock 
shall be considered an ``unfair practice'' or violation of this 
Act. Nothing in this section shall be deemed to limit the 
meaning of the term ``unfair practice'' as used in this Act.

           *       *       *       *       *       *       *

                                  [all]
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