II

104TH CONGRESS

2D SESSION S. 1758

To amend the Packers and Stockyards Act, 1921, to improve the

administration of the Act, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 15, 1996

Mr. PRESSLER introduced the following bill; which was read twice and referred

to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To amend the Packers and Stockyards Act, 1921, to improve

the administration of the Act, 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 ‘‘Packers and Stock5 yards Improvement Act of 1996’’.

6 SEC 2. LIVESTOCK DEALER TRUST.

7 Title III of the Packers and Stockyards Act, 1921

8 (7 U.S.C. 201 et seq.), is amended by adding at the end

9 the following:
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1 ‘‘SEC. 318. LIVESTOCK DEALER TRUST.

2 ‘‘(a) FINDINGS.—Congress finds that—

3 ‘‘(1) a burden on and obstruction to commerce

4 in livestock is caused by financing arrangements

5 under which dealers and market agencies purchasing

6 livestock on commission encumber, give lenders secu7 rity interests in, or have liens placed on livestock

8 purchased by the dealers and market agencies in

9 cash sales, or on receivables from or proceeds of the

10 sales, when payment is not made for the livestock;

11 and

12 ‘‘(2) the carrying out of the arrangements is

13 contrary to the public interest.

14 ‘‘(b) PURPOSE.—The purpose of this section is to

15 remedy the burden on and obstruction to commerce in live16 stock described in subsection (a)(1) and protect the public

17 interest.

18 ‘‘(c) DEFINITIONS.—In this section:

19 ‘‘(1) CASH SALE.—The term ‘cash sale’ means

20 a sale in which the seller does not expressly extend

21 credit to the buyer.

22 ‘‘(2) TRUST.—The term ‘trust’ means 1 or

23 more assets of a buyer that (subsequent to a cash

24 sale of livestock) constitute the corpus of a trust

25 held for the benefit of a seller and consist of—
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1 ‘‘(A) accounts receivable and proceeds

2 earned from the cash sale of livestock by a deal3 er or market agency buying on a commission

4 basis;

5 ‘‘(B) accounts receivable and proceeds of a

6 marketing agency earned on commission from

7 the cash sale of livestock;

8 ‘‘(C) the inventory of the dealer or market9 ing agency; or

10 ‘‘(D) livestock involved in the cash sale, if

11 the seller has not received payment in full for

12 the livestock and a bona fide third-party pur13 chaser has not purchased the livestock from the

14 dealer or marketing agency.

15 ‘‘(d) HOLDING IN TRUST.—

16 ‘‘(1) IN GENERAL.—The accounts receivable

17 and proceeds generated in a cash sale made by a

18 dealer or a market agency on commission and the

19 inventory of the dealer or market agency shall be

20 held by the dealer or market agency in trust for the

21 benefit of the seller of the livestock until the seller

22 receives payment in full for the livestock.

23 ‘‘(2) EXEMPTION.—Paragraph (1) does not

24 apply in the case of a cash sale made by a dealer

25 or market agency if the total amount of cash sales
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1 made by the dealer or market agency during the pre2 ceding 12 months does not exceed $250,000.

3 ‘‘(3) DISHONOR OF INSTRUMENT OF PAY4 MENT.—A payment in a sale described in paragraph

5 (1) shall not be considered to be made if the instru6 ment by which payment is made is dishonored.

7 ‘‘(4) LOSS OF BENEFIT OF TRUST.—If an in8 strument by which payment is made in a sale de9 scribed in paragraph (1) is dishonored, the seller

10 shall lose the benefit of the trust under paragraph

11 (1) on the earlier of—

12 ‘‘(A) the date that is 15 business days

13 after the date on which the seller receives notice

14 of the dishonor; or

15 ‘‘(B) the date that is 30 days after the

16 final date for making payment under section

17 409;

18 unless the seller gives written notice to the dealer or

19 market agency of the seller’s intention to preserve

20 the trust and submits a copy of the notice to the

21 Secretary.

22 ‘‘(5) RIGHTS OF THIRD-PARTY PURCHASER.—

23 The trust established under paragraph (1) shall have

24 no effect on the rights of a bona fide third-party

25 purchaser of the livestock, without regard to whether
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1 the livestock are delivered to the bona fide pur2 chaser.

3 ‘‘(e) JURISDICTION.—The district courts of the Unit4 ed States shall have jurisdiction in a civil action—

5 ‘‘(1) by the beneficiary of a trust described in

6 subsection (d)(1), to enforce payment of the amount

7 held in trust; and

8 ‘‘(2) by the Secretary, to prevent and restrain

9 dissipation of a trust described in subsection

10 (d)(1).’’.

11 SEC. 3. REPORTS TO SECRETARY.

12 Section 401 of the Packers and Stockyards Act, 1921

13 (7 U.S.C. 221), is amended—

14 (1) by striking ‘‘SEC. 401. Every’’ and inserting

15 the following:

16 ‘‘SEC. 401. ACCOUNTS AND RECORDS OF BUSINESSES; RE17 PORTS TO SECRETARY.

18 ‘‘(a) ACCOUNTS AND RECORDS.—Each’’; and

19 (2) by adding at the end the following:

20 ‘‘(b) REPORTS TO SECRETARY.—Each packer, stock21 yard owner, market agency, and dealer shall report to the

22 Secretary, in a manner determined by the Secretary—

23 ‘‘(1) the quantity of livestock and livestock

24 products exported from, and imported into, the

25 United States; and
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1 ‘‘(2) the price paid for livestock.’’.

2 SEC. 4. INCLUSION OF FORMULA-PRICED CATTLE IN DEFI3 NITION OF CAPTIVE SUPPLY.

4 Section 407 of the Packers and Stockyards Act, 1921

5 (7 U.S.C. 228), is amended by adding at the end the fol6 lowing:

7 ‘‘(e) INCLUSION OF FORMULA-PRICED CATTLE IN

8 DEFINITION OF CAPTIVE SUPPLY.—The Secretary shall

9 include all formula-priced cattle in the definition of captive

10 supply for purposes of collecting data to carry out this

11 Act.’’.

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