I

106TH CONGRESS

2D SESSION H. R. 5169

To reenact the United States Warehouse Act to require the licensing and

inspection of warehouses and other structures used to store agricultural

products, to provide for the issuance of receipts, including electronic

receipts, for agricultural products stored or handled in licensed warehouses, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 13, 2000

Mr. LAHOOD (for himself and Mr. GOODLATTE) introduced the following bill;

which was referred to the Committee on Agriculture

A BILL

To reenact the United States Warehouse Act to require

the licensing and inspection of warehouses and other

structures used to store agricultural products, to provide

for the issuance of receipts, including electronic receipts,

for agricultural products stored or handled in licensed

warehouses, and for other purposes.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Warehouse Improve5 ment Act of 2000’’.
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1 SEC. 2. STORAGE OF AGRICULTURAL PRODUCTS IN WARE2 HOUSES.

3 The United States Warehouse Act (7 U.S.C. 241 et

4 seq.) is amended to read as follows:

5 ‘‘SECTION 1. SHORT TITLE.

6 ‘‘This Act may be cited as the ‘United States Ware7 house Act’.

8 ‘‘SEC. 2. DEFINITIONS.

9 ‘‘In this Act:

10 ‘‘(1) AGRICULTURAL PRODUCT.—The term ‘ag11 ricultural product’ means an agricultural commodity,

12 as determined by the Secretary, including a proc13 essed product of an agricultural commodity.

14 ‘‘(2) APPROVAL.—The term ‘approval’ means

15 the consent provided by the Secretary for a person

16 to engage in an activity authorized by this Act.

17 ‘‘(3) DEPARTMENT.—The term ‘Department’

18 means the Department of Agriculture.

19 ‘‘(4) ELECTRONIC DOCUMENT.—The term ‘elec20 tronic document’ means a document that is gen21 erated, sent, received, or stored by electronic, opti22 cal, or similar means, including electronic data inter23 change, electronic mail, telegram, telex, or telecopy.

24 ‘‘(5) ELECTRONIC RECEIPT.—The term ‘elec25 tronic receipt’ means a receipt that is authorized by
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1 the Secretary to be issued or transmitted under this

2 Act in the form of an electronic document.

3 ‘‘(6) HOLDER.—The term ‘holder’ means a per4 son that has possession in fact or by operation of

5 law of a receipt or any electronic document.

6 ‘‘(7) PERSON.—The term ‘person’ means—

7 ‘‘(A) a person (as defined in section 1 of

8 title 1, United States Code);

9 ‘‘(B) a State; and

10 ‘‘(C) a political subdivision of a State.

11 ‘‘(8) RECEIPT.—The term ‘receipt’ means a

12 warehouse receipt issued in accordance with this

13 Act, including an electronic receipt.

14 ‘‘(9) SECRETARY.—The term ‘Secretary’ means

15 the Secretary of Agriculture.

16 ‘‘(10) WAREHOUSE.—The term ‘warehouse’

17 means a structure or other approved storage facility,

18 as determined by the Secretary, in which any agri19 cultural product may be stored or handled for the

20 purposes of interstate or foreign commerce.

21 ‘‘(11) WAREHOUSE OPERATOR.—The term

22 ‘warehouse operator’ means a person that is lawfully

23 engaged in the business of storing or handling agri24 cultural products.
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1 ‘‘SEC. 3. POWERS OF SECRETARY.

2 ‘‘(a) IN GENERAL.—The Secretary shall have exclu3 sive power, jurisdiction, and authority, to the extent that

4 this Act applies, with respect to—

5 ‘‘(1) each warehouse operator licensed under

6 this Act;

7 ‘‘(2) each person that has obtained an approval

8 to engage in an activity under this Act; and

9 ‘‘(3) each person claiming an interest in an ag10 ricultural product by means of a document or receipt

11 subject to this Act.

12 ‘‘(b) COVERED AGRICULTURAL PRODUCTS.—The

13 Secretary shall specify, after an opportunity for notice and

14 comment, those agricultural products for which a ware15 house license may be issued under this Act.

16 ‘‘(c) INVESTIGATIONS.—The Secretary may inves17 tigate the storing, warehousing, classifying according to

18 grade and otherwise, weighing, and certifying of agricul19 tural products.

20 ‘‘(d) INSPECTIONS.—The Secretary may inspect or

21 cause to be inspected any person or warehouse licensed

22 under this Act and any warehouse for which a license is

23 applied for under this Act.

24 ‘‘(e) SUITABILITY FOR STORAGE.—The Secretary

25 may determine whether a licensed warehouse, or a ware26 house for which a license is applied for under this Act,
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1 is suitable for the proper storage of the agricultural prod2 uct or products stored or proposed for storage in the ware3 house.

4 ‘‘(f) CLASSIFICATION.—The Secretary may classify a

5 licensed warehouse, or a warehouse for which a license is

6 applied for under this Act, in accordance with the owner7 ship, location, surroundings, capacity, conditions, and

8 other qualities of the warehouse and as to the kinds of

9 licenses issued or that may be issued for the warehouse

10 under this Act.

11 ‘‘(g) WAREHOUSE OPERATOR’S DUTIES.—Subject to

12 the other provisions of this Act, the Secretary may pre13 scribe the duties of a warehouse operator operating a

14 warehouse licensed under this Act with respect to the

15 warehouse operator’s care of and responsibility for agricul16 tural products stored or handled by the warehouse oper17 ator.

18 ‘‘(h) SYSTEMS FOR ELECTRONIC CONVEYANCE.—

19 ‘‘(1) REGULATIONS GOVERNING ELECTRONIC

20 SYSTEMS.—Except as provided in paragraph (2), the

21 Secretary may promulgate regulations governing 1

22 or more electronic systems under which electronic

23 receipts may be issued and transferred and other

24 electronic documents relating to the shipment, pay-
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1 ment, and financing of the sale of agricultural prod2 ucts may be issued or transferred.

3 ‘‘(2) LIMITATIONS.—The Secretary shall not

4 have the authority under this Act to establish—

5 ‘‘(A) 1 or more central filing systems for

6 the filing of financing statements or the filing

7 of the notice of financing statements; or

8 ‘‘(B) rules to determine security interests

9 of persons affected by this Act.

10 ‘‘(i) EXAMINATION AND AUDITS.—In addition to the

11 authority provided under subsection (l), on request of the

12 person, State agency, or commodity exchange, the Sec13 retary may conduct an examination, audit, or similar ac14 tivity with respect to—

15 ‘‘(1) any person that is engaged in the business

16 of storing an agricultural product that is subject to

17 this Act;

18 ‘‘(2) any State agency that regulates the stor19 age of an agricultural product by such a person; or

20 ‘‘(3) any commodity exchange with regulatory

21 authority over the storage of agricultural products

22 that are subject to this Act.

23 ‘‘(j) LICENSES FOR OPERATION OF WAREHOUSES.—

24 The Secretary may issue to any warehouse operator a li-
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1 cense for the operation of a warehouse in accordance with

2 this Act if—

3 ‘‘(1) the Secretary determines that the ware4 house is suitable for the proper storage of the agri5 cultural product or products stored or proposed for

6 storage in the warehouse; and

7 ‘‘(2) the warehouse operator agrees, as a condi8 tion of the license, to comply with this Act (includ9 ing regulations promulgated under this Act).

10 ‘‘(k) LICENSING OF OTHER PERSONS.—

11 ‘‘(1) IN GENERAL.—On presentation of satisfac12 tory proof of competency to carry out the activities

13 described in this paragraph, the Secretary may issue

14 to any person a Federal license—

15 ‘‘(A) to inspect any agricultural product

16 stored or handled in a warehouse subject to this

17 Act;

18 ‘‘(B) to sample such an agricultural prod19 uct;

20 ‘‘(C) to classify such an agricultural prod21 uct according to condition, grade, or other class

22 and certify the condition, grade, or other class

23 of the agricultural product; or
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1 ‘‘(D) to weigh such an agricultural product

2 and certify the weight of the agricultural prod3 uct.

4 ‘‘(2) CONDITION.—As a condition of a license

5 issued under paragraph (1), the licensee shall agree

6 to comply with this Act (including regulations pro7 mulgated under this Act).

8 ‘‘(l) EXAMINATION OF BOOKS, RECORDS, PAPERS,

9 AND ACCOUNTS.—The Secretary may examine and audit,

10 using designated officers, employees, or agents of the De11 partment, all books, records, papers, and accounts relating

12 to activities subject to this Act of—

13 ‘‘(1) a warehouse operator operating a ware14 house licensed under this Act;

15 ‘‘(2) a person operating a system for the elec16 tronic recording and transfer of receipts and other

17 documents authorized by the Secretary; or

18 ‘‘(3) any other person issuing receipts or elec19 tronic documents authorized by the Secretary under

20 this Act.

21 ‘‘(m) COOPERATION WITH STATES.—The Secretary

22 may—

23 ‘‘(1) cooperate with officers and employees of a

24 State who administer or enforce State laws relating
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1 to warehouses, warehouse operators, weighers, grad2 ers, inspectors, samplers, or classifiers; and

3 ‘‘(2) enter into cooperative agreements with

4 States to perform activities authorized under this

5 Act.

6 ‘‘SEC. 4. IMPOSITION AND COLLECTION OF FEES.

7 ‘‘(a) IN GENERAL.—The Secretary shall assess per8 sons covered by this Act fees to cover the costs of admin9 istering this Act.

10 ‘‘(b) RATES.—The fees under this section shall be set

11 at a rate determined by the Secretary.

12 ‘‘(c) TREATMENT OF FEES.—All fees collected under

13 this section shall be credited to the account that incurs

14 the costs of administering this Act and shall be available

15 to the Secretary without further appropriation and with16 out fiscal year limitation.

17 ‘‘(d) INTEREST.—Funds collected under this section

18 may be deposited in an interest-bearing account with a

19 financial institution, and any interest earned on the ac20 count shall be credited under subsection (c).

21 ‘‘(e) EFFICIENCIES AND COST EFFECTIVENESS.—

22 ‘‘(1) IN GENERAL.—The Secretary shall seek to

23 minimize the fees established under this section by

24 improving efficiencies and reducing costs, including

25 the efficient use of personnel to the extent prac-
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1 ticable and consistent with the effective implementa2 tion of this Act.

3 ‘‘(2) REPORT.—The Secretary shall publish an

4 annual report on the actions taken by the Secretary

5 to comply with paragraph (1).

6 ‘‘SEC. 5. QUALITY AND VALUE STANDARDS.

7 ‘‘If standards for the evaluation or determination of

8 the quality or value of an agricultural product are not es9 tablished under another Federal law, the Secretary may

10 establish standards for the evaluation or determination of

11 the quality or value of the agricultural product under this

12 Act.

13 ‘‘SEC. 6. BONDING AND OTHER FINANCIAL ASSURANCE RE14 QUIREMENTS.

15 ‘‘(a) IN GENERAL.—As a condition of receiving a li16 cense or approval under this Act (including regulations

17 promulgated under this Act), the person applying for the

18 license or approval shall execute and file with the Sec19 retary a bond, or provide such other financial assurance

20 as the Secretary determines appropriate, to secure the per21 son’s performance of the activities so licensed or approved.

22 ‘‘(b) SERVICE OF PROCESS.—To qualify as a suitable

23 bond or other financial assurance under subsection (a),

24 the surety, sureties, or financial institution shall be subject

25 to service of process in suits on the bond or other financial
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1 assurance in the State, district, or territory in which the

2 warehouse is located.

3 ‘‘(c) ADDITIONAL ASSURANCES.—If the Secretary de4 termines that a previously approved bond or other finan5 cial assurance is insufficient, the Secretary may suspend

6 or revoke the license or approval covered by the bond or

7 other financial assurance if the person that filed the bond

8 or other financial assurance does not provide such addi9 tional bond or other financial assurance as the Secretary

10 determines appropriate.

11 ‘‘(d) THIRD PARTY ACTIONS.—Any person injured by

12 the breach of any obligation arising under this Act for

13 which a bond or other financial assurance has been ob14 tained as required by this section may sue with respect

15 to the bond or other financial assurance in a district court

16 of the United States to recover the damages that the per17 son sustained as a result of the breach.

18 ‘‘SEC. 7. MAINTENANCE OF RECORDS.

19 ‘‘To facilitate the administration of this Act, the fol20 lowing persons shall maintain such records and make such

21 reports, as the Secretary may by regulation require:

22 ‘‘(1) A warehouse operator that is licensed

23 under this Act.
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1 ‘‘(2) A person operating a system for the elec2 tronic recording and transfer of receipts and other

3 documents that are authorized under this Act.

4 ‘‘(3) Any other person engaged in the issuance

5 of electronic receipts or the transfer of documents

6 under this Act.

7 ‘‘SEC. 8. FAIR TREATMENT IN STORAGE OF AGRICULTURAL

8 PRODUCTS.

9 ‘‘(a) IN GENERAL.—Subject to the capacity of a

10 warehouse, a warehouse operator shall deal, in a fair and

11 reasonable manner, with persons storing, or seeking to

12 store, an agricultural product in the warehouse if the agri13 cultural product—

14 ‘‘(1) is of the kind, type, and quality custom15 arily stored or handled in the area in which the

16 warehouse is located;

17 ‘‘(2) is tendered to the warehouse operator in a

18 suitable condition for warehousing; and

19 ‘‘(3) is tendered in a manner that is consistent

20 with the ordinary and usual course of business.

21 ‘‘(b) ALLOCATION.—Nothing in this section prohibits

22 a warehouse operator from entering into an agreement

23 with a depositor of an agricultural product to allocate

24 available storage space.
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1 ‘‘SEC. 9. COMMINGLING OF AGRICULTURAL PRODUCTS.

2 ‘‘(a) IN GENERAL.—A warehouse operator may com3 mingle agricultural products in a manner approved by the

4 Secretary.

5 ‘‘(b) LIABILITY.—A warehouse operator shall be sev6 erally liable to each depositor or holder for the care and

7 redelivery of the share of the depositor and holder of the

8 commingled agricultural product to the same extent and

9 under the same circumstances as if the agricultural prod10 ucts had been stored separately.

11 ‘‘SEC. 10. TRANSFER OF STORED AGRICULTURAL PROD12 UCTS.

13 ‘‘(a) IN GENERAL.—In accordance with regulations

14 promulgated under this Act, a warehouse operator may

15 transfer a stored agricultural product from 1 warehouse

16 to another warehouse for continued storage.

17 ‘‘(b) CONTINUED DUTY.—The warehouse operator

18 from which agricultural products have been transferred

19 under subsection (a) shall deliver to the rightful owner of

20 such products, on request at the original warehouse, such

21 products in the quantity and of the kind, quality, and

22 grade called for by the receipt or other evidence of storage

23 of the owner.

24 ‘‘SEC. 11. WAREHOUSE RECEIPTS.

25 ‘‘(a) IN GENERAL.—At the request of the depositor

26 of an agricultural product stored or handled in a ware-
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1 house licensed under this Act, the warehouse operator

2 shall issue a receipt to the depositor as prescribed by the

3 Secretary.

4 ‘‘(b) ACTUAL STORAGE REQUIRED.—A receipt may

5 not be issued under this section for an agricultural prod6 uct unless the agricultural product is actually stored in

7 the warehouse at the time of the issuance of the receipt.

8 ‘‘(c) CONTENTS.—Each receipt issued for an agricul9 tural product stored or handled in a warehouse licensed

10 under this Act shall contain such information, for each

11 agricultural product covered by the receipt, as the Sec12 retary may require by regulation.

13 ‘‘(d) PROHIBITION ON ADDITIONAL RECEIPTS OR

14 OTHER DOCUMENTS.—

15 ‘‘(1) RECEIPTS.—While a receipt issued under

16 this Act is outstanding and uncanceled by the ware17 house operator, an additional receipt may not be

18 issued for the same agricultural product (or any por19 tion of the same agricultural product) represented

20 by the outstanding receipt, except as authorized by

21 the Secretary.

22 ‘‘(2) OTHER DOCUMENTS.—If a document is

23 transferred under this section, no duplicate docu24 ment in any form may be transferred by any person

25 with respect to the same agricultural product rep-
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1 resented by the document, except as authorized by

2 the Secretary.

3 ‘‘(e) ELECTRONIC RECEIPTS AND ELECTRONIC DOC4 UMENTS.—Except as provided in section 3(h)(2), notwith5 standing any other provision of Federal or State law:

6 ‘‘(1) IN GENERAL.—The Secretary may promul7 gate regulations that authorize the issuance, record8 ing, and transfer of electronic receipts, and the

9 transfer of other electronic documents, in accordance

10 with this subsection.

11 ‘‘(2) ELECTRONIC RECEIPT OR ELECTRONIC

12 DOCUMENT SYSTEMS.—Electronic receipts may be

13 issued, recorded, and transferred, and electronic doc14 uments may be transferred, under this subsection

15 with respect to an agricultural product under, a sys16 tem or systems maintained in 1 or more locations

17 and approved by the Secretary in accordance with

18 regulations issued under this Act.

19 ‘‘(3) TREATMENT OF HOLDER.—Any person

20 designated as the holder of an electronic receipt or

21 other electronic document issued or transferred

22 under this Act shall, for the purpose of perfecting

23 the security interest of the person under Federal or

24 State law and for all other purposes, be considered
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1 to be in possession of the receipt or other electronic

2 document.

3 ‘‘(4) NONDISCRIMINATION.—An electronic re4 ceipt issued, or other electronic document trans5 ferred, in accordance with this Act shall not be de6 nied legal effect, validity, or enforceability on the

7 ground that the information is generated, sent, re8 ceived, or stored by electronic or similar means.

9 ‘‘(5) SECURITY INTERESTS.—If more than 1 se10 curity interest exists in the agricultural product that

11 is the subject of an electronic receipt or other elec12 tronic document under this Act, the priority of the

13 security interest shall be determined by the applica14 ble Federal or State law.

15 ‘‘(6) NO ELECTRONIC RECEIPT REQUIRED.—A

16 person shall not be required to issue in electronic

17 form a receipt or document with respect to an agri18 cultural product.

19 ‘‘(7) OPTION FOR NON-FEDERALLY LICENSED

20 WAREHOUSE OPERATORS.—Notwithstanding any

21 other provision of this Act, a warehouse operator not

22 licensed under this Act may, at the option of the

23 warehouse operator and in accordance with regula24 tions established by the Secretary, issue electronic
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1 receipts and transfer other electronic documents in

2 accordance with this Act.

3 ‘‘(8) APPLICATION TO STATE-LICENSED WARE4 HOUSE OPERATORS.—This subsection shall not

5 apply to a warehouse operator that is licensed under

6 State law to store agricultural commodities in a

7 warehouse in the State if the warehouse operator

8 elects—

9 ‘‘(A) not to issue electronic receipts au10 thorized under this subsection; or

11 ‘‘(B) to issue electronic receipts authorized

12 under State law.

13 ‘‘SEC. 12. CONDITIONS FOR DELIVERY OF AGRICULTURAL

14 PRODUCTS.

15 ‘‘(a) PROMPT DELIVERY.—In the absence of a lawful

16 excuse, a warehouse operator shall, without unnecessary

17 delay, deliver the agricultural product stored or handled

18 in the warehouse on a demand made by—

19 ‘‘(1) the holder of the receipt for the agricul20 tural product; or

21 ‘‘(2) the person that deposited the product, if

22 no receipt has been issued.

23 ‘‘(b) PAYMENT TO ACCOMPANY DEMAND.—Prior to

24 delivery of the agricultural product, payment of the ac25 crued charges associated with the storage of the agricul-
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1 tural product, including satisfaction of the

2 warehouseman’s lien, shall be made if requested by the

3 warehouse operator.

4 ‘‘(c) SURRENDER OF RECEIPT.—When the holder of

5 a receipt requests delivery of an agricultural product cov6 ered by the receipt, the holder shall surrender the receipt

7 to the warehouse operator, in the manner prescribed by

8 the Secretary, to obtain the agricultural product.

9 ‘‘(d) CANCELLATION OF RECEIPT.—A warehouse op10 erator shall cancel each receipt returned to the warehouse

11 operator upon the delivery of the agricultural product for

12 which the receipt was issued.

13 ‘‘SEC. 13. SUSPENSION OR REVOCATION OF LICENSES.

14 ‘‘(a) IN GENERAL.—After providing notice and an

15 opportunity for a hearing in accordance with this section,

16 the Secretary may suspend or revoke any license issued,

17 or approval for an activity provided, under this Act—

18 ‘‘(1) for a material violation of, or failure to

19 comply, with any provision of this Act (including

20 regulations promulgated under this Act); or

21 ‘‘(2) on the ground that unreasonable or exorbi22 tant charges have been imposed for services ren23 dered.

24 ‘‘(b) TEMPORARY SUSPENSION.—The Secretary may

25 temporarily suspend a license or approval for an activity
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1 under this Act prior to an opportunity for a hearing for

2 any violation of, or failure to comply with, any provision

3 of this Act (including regulations promulgated under this

4 Act).

5 ‘‘(c) AUTHORITY TO CONDUCT HEARINGS.—The

6 agency within the Department that is responsible for ad7 ministering regulations promulgated under this Act shall

8 have exclusive authority to conduct any hearing required

9 under this section.

10 ‘‘(d) JUDICIAL REVIEW.—

11 ‘‘(1) JURISDICTION.—A final administrative de12 termination issued subsequent to a hearing may be

13 reviewable only in a district court of the United

14 States.

15 ‘‘(2) PROCEDURE.—The review shall be con16 ducted in accordance with the standards set forth in

17 section 706(2) of title 5, United States Code.

18 ‘‘SEC. 14. PUBLIC INFORMATION.

19 ‘‘(a) IN GENERAL.—The Secretary may release to the

20 public the names, addresses, and locations of all persons—

21 ‘‘(1) that have been licensed under this Act or

22 that have been approved to engage in an activity

23 under this Act; and

24 ‘‘(2) with respect to which a license or approval

25 has been suspended or revoked under section 13, the
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1 results of any investigation made or hearing con2 ducted under this Act, including the reasons for the

3 suspension or revocation.

4 ‘‘(b) CONFIDENTIALITY.—Except as otherwise pro5 vided by law, an officer, employee, or agent of the Depart6 ment shall not divulge confidential business information

7 obtained during a warehouse examination or other func8 tion performed as part of the duties of the officer, em9 ployee, or agent under this Act.

10 ‘‘SEC. 15. PENALTIES FOR NONCOMPLIANCE.

11 ‘‘If a person fails to comply with any requirement of

12 this Act (including regulations promulgated under this

13 Act), the Secretary may assess, on the record after an op14 portunity for a hearing, a civil penalty—

15 ‘‘(1) of not more than $25,000 per violation, if

16 an agricultural product is not involved in the viola17 tion; or

18 ‘‘(2) of not more than 100 percent of the value

19 of the agricultural product, if an agricultural prod20 uct is involved in the violation.

21 ‘‘SEC. 16. JURISDICTION AND ARBITRATION.

22 ‘‘(a) FEDERAL JURISDICTION.—A district court of

23 the United States shall have exclusive jurisdiction over any

24 action brought under this Act without regard to the

25 amount in controversy or the citizenship of the parties.
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1 ‘‘(b) ARBITRATION.—Nothing in this Act prevents

2 the enforceability of an agreement to arbitrate that would

3 otherwise be enforceable under chapter 1 of title 9, United

4 States Code.

5 ‘‘SEC. 17. AUTHORIZATION OF APPROPRIATIONS.

6 ‘‘There are authorized to be appropriated such sums

7 as are necessary to carry out this Act.’’.

8 SEC. 3. REGULATIONS.

9 (a) PROPOSED REGULATIONS.—Not later than 90

10 days after the date of enactment of this Act, the Secretary

11 of Agriculture shall publish in the Federal Register pro12 posed regulations for carrying out the amendment made

13 by section 2.

14 (b) FINAL REGULATIONS.—Not later than 180 days

15 after the date of enactment of this Act, the Secretary shall

16 promulgate final regulations for carrying out the amend17 ment made by section 2.

18 (c) EFFECTIVENESS OF EXISTING ACT.—The United

19 States Warehouse Act (7 U.S.C. 241 et seq.), as it existed

20 before the amendment made by section 2, shall be effective

21 until the earlier of—

22 (1) the date on which final regulations are pro23 mulgated under subsection (b); or

24 (2) August 1, 2001.

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