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[104th Congress Public Law 48]
[From the U.S. Government Printing Office]

<DOC>
[DOCID: f:publ48.104]

       PERISHABLE AGRICULTURAL COMMODITIES ACT AMENDMENTS OF 1995

[[Page 109 STAT. 424]]

Public Law 104-48
104th Congress

                                 An Act

 
      To amend the Perishable Agricultural Commodities Act, 1930, to 
                              modernize,   
 streamline, and strengthen the operation of the Act. <<NOTE: Nov. 15, 
                         1995 -  [H.R. 1103]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Perishable 
Agricultural Commodities Act Amendments of 1995.>> 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) <<NOTE: 7 USC 499a note.>>  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.''.

[[Page 109 STAT. 425]]

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

[[Page 109 STAT. 426]]

                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. <<NOTE: Effective 
        date.>> 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''.

[[Page 109 STAT. 427]]

    (c) Conforming Amendments Regarding This Section and Section 3.--
Section 4(a) of such Act (7 U.S.C. 499d(a)) is
amended--
            (1) in the matter preceding the provisos, by striking ``any 
        anniversary date thereof unless the annual fee has been paid'' 
        and inserting ``the anniversary date of the license at the end 
        of the annual or multiyear period covered by the license fee 
        unless the licensee submits the required renewal application and 
        pays the applicable renewal fee (if such fee is required)'';
            (2) in the first proviso, by striking ``the necessity of 
        paying the annual fee'' and inserting ``the necessity
of renewing the license and of paying the renewal fee (if such fee is 
required)''; and
            (3) in the second proviso, by striking ``annual fee'' and 
        inserting ``renewal fee (if required)''.

SEC. 5. INCREASE IN PENALTIES FOR OPERATING WITHOUT A LICENSE AND 
            INCREASE IN LATE RENEWAL FEE.

    (a) License Penalties.--Section 3(a) of the Perishable Agricultural 
Commodities Act, 1930 (7 U.S.C. 499c(a)), as amended by section 3(b)(1), 
is further amended--
            (1) by striking ``$500'' and inserting ``$1,000''; and
            (2) by striking ``$25'' both places it appears and inserting 
        ``$250''.

    (b) Late Filing Fees.--Section 4(a) of the Perishable Agricultural 
Commodities Act, 1930 (7 U.S.C. 499d(a)), as amended by section 4(c), is 
further amended in the second proviso by striking ``plus $5'' and 
inserting ``plus $50''.

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

    (a) Repeal of Secretarial Notification Requirement.--Paragraph (3) 
of section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 
U.S.C. 499e(c)), is amended in the first sentence by striking ``and has 
filed such notice with the Secretary''.
    (b) Clarification of Content of Notification.--Such paragraph is 
further amended by inserting after the first sentence the following new 
sentence: ``The written notice to the commission merchant, dealer, or 
broker shall set forth information in sufficient detail to identify the 
transaction subject to the trust.''.
    (c) Additional Method of Notification for Licensees.--Such section 
is further amended--
            (1) by redesignating paragraph (4) as paragraph (5); and
            (2) by inserting after paragraph (3) the following new 
        paragraph:

    ``(4) In addition to the method of preserving the benefits of the 
trust specified in paragraph (3), a licensee may use ordinary and usual 
billing or invoice statements to provide notice of the licensee's intent 
to preserve the trust. The bill or invoice statement must include the 
information required by the last sentence of paragraph (3) and contain 
on the face of the statement the following: `The perishable agricultural 
commodities listed on this invoice are sold subject to the statutory 
trust authorized by section 5(c) of the Perishable Agricultural 
Commodities Act, 1930 (7 U.S.C. 499e(c)). The seller of these 
commodities retains a trust claim over these commodities, all 
inventories of food or other products derived from these commodities, 
and any receivables or proceeds from the sale of these commodities until 
full payment is received.'.''.

[[Page 109 STAT. 428]]

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) <<NOTE: Rules.>>  Disciplinary Violations.--Any officer or 
agency of any State or Territory having jurisdiction over commission 
merchants, dealers, or brokers in such State or Territory and any other 
interested person (other than an employee of an agency of the Department 
of Agriculture administering this Act) may file, in accordance with 
rules prescribed by the Secretary, a written notification of any alleged 
violation of this Act by any commission merchant, dealer, or broker. In 
addition, any official certificates of the United States Government or 
States or Territories of the United States and trust notices filed 
pursuant to section 5 shall constitute written notification for the 
purposes of conducting an investigation under subsection (c). The 
identity of any person filing a written notification under this 
subsection shall be considered to be confidential information. The 
identity of such person, and any portion of the notification to the 
extent that it would indicate the identity of such person, are 
specifically exempt from disclosure under section 552 of title 5, United 
States Code (commonly known as the Freedom of Information Act), as 
provided in subsection (b)(3) of such section.''.

    (b) Grounds and Process of Investigations.--Subsection (c) of such 
section is amended to read as follows:
    ``(c) Investigation of Complaints and Notifications.--
            ``(1) Commencing or expanding an investigation.--If there 
        appears to be, in the opinion of the Secretary, reasonable 
        grounds for investigating a complaint made under subsection (a) 
        or a written notification made under subsection (b), the 
        Secretary shall investigate such complaint or notification. In 
        the course of the investigation, if the Secretary determines 
        that violations of this Act are indicated other than the alleged 
        violations specified in the complaint or notification that 
        served as the basis for the investigation, the Secretary may 
        expand the investigation to include such additional violations.
            ``(2) Issuance of complaint by secretary; process.--In the 
        opinion of the Secretary, if an investigation under this 
        subsection substantiates the existence of violations of this 
        Act, the Secretary may
cause a complaint to be issued. The Secretary shall have the complaint 
served by registered mail or certified mail or otherwise on the person 
concerned and afford such person an opportunity for a hearing thereon 
before a duly authorized examiner of the Secretary in any place in which 
the subject of the complaint is engaged in business. However, in 
complaints wherein the amount claimed as damages does not exceed 
$30,000, a hearing need not be held and proof in support of the 
complaint and in support of respondent's answer may be supplied in the 
form of depositions or verified statements of fact.
            ``(3) Special notification requirements for certain 
        investigations.--Whenever the Secretary initiates an 
        investigation on the basis of a written notification made under 
        subsection (b) or expands such an investigation, the Secretary 
        shall promptly notify the subject of the investigation of the 
        existence of the investigation and the nature of the alleged

[[Page 109 STAT. 429]]

        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

[[Page 109 STAT. 430]]

 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

[[Page 109 STAT. 431]]

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).''.

    Approved November 15, 1995.

LEGISLATIVE HISTORY--H.R. 1103:
---------------------------------------------------------------------------

HOUSE REPORTS: No. 104-207 (Comm. on Agriculture).
CONGRESSIONAL RECORD, Vol. 141 (1995):
            July 28, considered and passed House.
            Nov. 7, considered and passed Senate.

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