II

106TH CONGRESS

2D SESSION S. 3243

To enhance fair and open competition in the production and sale of

agricultural commodities.

IN THE SENATE OF THE UNITED STATES

OCTOBER 26, (legislative day, SEPTEMBER 22), 2000

Mr. MR. HARKIN introduced the following bill; which was read twice and

referred to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To enhance fair and open competition in the production

and sale of agricultural commodities.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Agricultural Producer Protection Act of 2000’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

TITLE I—AGRICULTURAL PRODUCER PROTECTIONS

Sec. 101. Definitions.

Sec. 102. Applicability to production contracts.
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Sec. 103. Obligation of good faith.

Sec. 104. Disclosure of risks and readability requirements under agricultural

contracts.

Sec. 105. Right of contract producers to cancel production contracts.

Sec. 106. Prohibition of confidentiality provisions.

Sec. 107. Production contract lien.

Sec. 108. Production contracts involving investment requirements.

Sec. 109. Prohibitions against unfair practices involving agricultural contracts.

Sec. 110. Violations.

Sec. 111. Private cause of action.

Sec. 112. Prohibition of waivers.

Sec. 113. Mediation.

Sec. 114. Relationship to State law.

Sec. 115. Regulations.

Sec. 116. Applicability.

TITLE II—AGRICULTURAL FAIR PRACTICES

Sec. 201. Agricultural fair practices.

TITLE III—INVESTIGATION OF LIVE POULTRY DEALERS

Sec. 301. Investigation of live poultry dealers.

1 SEC. 2. FINDINGS AND PURPOSES.

2 (a) FINDINGS.—Congress finds that—

3 (1)(A) while the market basket of food has in4 creased in retail price by only 3 percent since 1984,

5 the farm value of the market basket has decreased

6 38 percent;

7 (B) the farm-to-wholesale price spreads for ag8 riculture commodities have significantly widened in

9 the last few years, with the price spread for beef in10 creasing by 23.6 percent, and the price spread for

11 pork increasing by 52.1 percent, in the past 5 years;

12 and

13 (C) most economists agree that widening price

14 spreads are an indication that agricultural proc15 essors are exerting their raw economic power to
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1 maximize profits at the expense of agricultural pro2 ducers of the United States by paying lower prices

3 for agricultural commodities;

4 (2) the Secretary of Agriculture has concluded

5 that concentration in the meat packing industry has

6 increased markedly over the last 2 decades, esti7 mating that the top 4 meat packing firms control

8 over 81 percent of steer and heifer slaughter, over

9 56 percent of hog slaughter, and over 70 percent of

10 sheep slaughter;

11 (3) in the grain industry, the Secretary reports

12 that the top 4 firms control 56 percent of flour mill13 ing, 73 percent of wet corn milling, 71 percent of

14 soybean milling, and 62 percent of cotton seed oil

15 milling;

16 (4)(A) agricultural producers have fewer op17 tions when marketing agricultural commodities be18 cause, as data of the Secretary indicate, the number

19 of slaughtering plants for cattle, hogs, and sheep

20 continues to decline as a result consolidation; and

21 (B) the loss of marketing options exacerbates

22 the disparity in bargaining power between agricul23 tural producers and large agribusinesses;

24 (5) increasing numbers of family farmers

25 produce agricultural commodities and provide serv-
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1 ices under agricultural contract arrangements with

2 processing firms or handlers for fruits and vegeta3 bles, turkeys, chickens, hogs, beef, milk, popcorn,

4 and genetically engineered plants and animals;

5 (6)(A) the rapid increase in the use of agricul6 tural contracts by large agribusinesses has dramati7 cally increased vertical integration in United States

8 agriculture; and

9 (B) this is a concern for agricultural producers

10 because of the huge disparity in bargaining power

11 between agricultural producers and contract compa12 nies that can result in the unfair shifting of eco13 nomic risk to agricultural producers, unfair contract

14 terms, anticompetitive behavior, and retaliation;

15 (7) transparent, freely accessible, and competi16 tive markets are being supplanted by transfer prices

17 set within vertically integrated firms and by the in18 creasing use of private agricultural contracts;

19 (8) efforts by agricultural producers to advance

20 their own interests through agricultural cooperatives

21 have been thwarted by processing firms and handlers

22 that threaten to terminate agricultural contracts

23 with association members, threaten to move out of

24 their State, or manipulate the incomes of association

25 members to disastrously low levels; and
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1 (9)(A) because agricultural products are pro2 duced, and agricultural services are provided, by nu3 merous individual agricultural producers, their abil4 ity to market products or services and to bargain ef5 fectively for fair prices and terms of sale of products

6 or services are adversely affected unless the agricul7 tural producers are free to join together in agricul8 tural cooperatives as authorized by law; and

9 (B) interference with the right of agricultural

10 producers to join together in agricultural coopera11 tives, and the failure of a handler of agricultural

12 products to bargain in good faith with an agricul13 tural cooperative as the representative and agent of

14 the agricultural producers, are contrary to the public

15 interest and adversely affect the free and orderly

16 flow of goods in interstate and foreign commerce.

17 (b) PURPOSES.—The purposes of this Act are—

18 (1) to enhance fair and open competition in the

19 production and sale of agricultural commodities;

20 (2) to permit the Secretary to provide reason21 able oversight of agricultural contracts in order to

22 promote meaningful competition in agriculture; and

23 (3) to define mutual obligations for bargaining

24 with respect to the production, sale, and marketing

25 of agricultural products and services.
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1 TITLE I—AGRICULTURAL

2 PRODUCER PROTECTIONS

3 SEC. 101. DEFINITIONS.

4 In this title:

5 (1) ACTIVE CONTRACTOR.—The term ‘‘active

6 contractor’’ means a person that owns an agricul7 tural commodity that is produced by a contract pro8 ducer at the contract operation of the contract pro9 ducer in accordance with a production contract.

10 (2) AGRICULTURAL COMMODITY.—The term

11 ‘‘agricultural commodity’’ has the meaning given the

12 term in section 102 of the Agricultural Trade Act of

13 1978 (7 U.S.C. 5602).

14 (3) AGRICULTURAL CONTRACT.—The term ‘‘ag15 ricultural contract’’ means a marketing contract or

16 a production contract.

17 (4) AGRICULTURAL COOPERATIVE.—The term

18 ‘‘agricultural cooperative’’ means an association of

19 persons engaged in the production, marketing, or

20 processing of an agricultural commodity that meets

21 the requirements of the Act entitled ‘‘An Act to au22 thorize association of producers of agricultural prod23 ucts’’ (commonly known as the ‘‘Capper-Volstead

24 Act’’) (7 U.S.C. 291 et seq).

25 (5) ANIMAL FEEDING OPERATION.—
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1 (A) IN GENERAL.—The term ‘‘animal feed2 ing operation’’ means a lot, corral, building, or

3 other area in which livestock are confined and

4 fed.

5 (B) EXCLUSION.—The term ‘‘animal feed6 ing operation’’ does not include a livestock mar7 ket.

8 (6) CAPITAL INVESTMENT.—The term ‘‘capital

9 investment’’ means an investment in—

10 (A) a structure, such as a building or ma11 nure storage structure; or

12 (B) machinery or equipment associated

13 with producing an agricultural commodity that

14 has a useful life of more than 1 year.

15 (7) CONFINEMENT FEEDING OPERATION.—The

16 term ‘‘confinement feeding operation’’ means an ani17 mal feeding operation in which livestock are confined

18 in an area that is totally roofed.

19 (8) CONTRACT CROP FIELD.—The term ‘‘con20 tract crop field’’ means farmland where a crop is

21 produced under a production contract by a contract

22 producer that owns or leases the farmland.

23 (9) CONTRACT INPUT.—

24 (A) IN GENERAL.—The term ‘‘contract

25 input’’ means an agricultural commodity or an
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1 organic or synthetic substance or compound

2 that is used to produce an agricultural com3 modity.

4 (B) INCLUSIONS.—The term ‘‘contract

5 input’’ includes livestock, plants, agricultural

6 seeds, semen or eggs for breeding stock, fer7 tilizers, soil conditioners, and pesticides.

8 (10) CONTRACT LIVESTOCK FACILITY.—

9 (A) IN GENERAL.—The term ‘‘contract

10 livestock facility’’ means an animal feeding op11 eration in which livestock or raw milk is pro12 duced under a production contract by a con13 tract producer that owns or leases the animal

14 feeding operation.

15 (B) INCLUSIONS.—The term ‘‘contract

16 livestock facility’’ includes—

17 (i) a confinement feeding operation;

18 (ii) an open feedlot; and

19 (iii) an area—

20 (I) that is used for the raising of

21 crops or other vegetation; and

22 (II) on which livestock are—

23 (aa) fed for slaughter; or

24 (bb) allowed to graze or

25 feed.
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1 (11) CONTRACT OPERATION.—The term ‘‘con2 tract operation’’ means a contract livestock facility

3 or a contract crop field.

4 (12) CONTRACT PRODUCER.—The term ‘‘con5 tract producer’’ means a producer that holds a legal

6 interest in a contract operation and that produces

7 an agricultural commodity under a production con8 tract.

9 (13) CONTRACTOR.—The term ‘‘contractor’’

10 means a person that is an active contractor or a pas11 sive contractor.

12 (14) CROP.—The term ‘‘crop’’ means a plant

13 used for food, feed, fiber, oil, a pharmaceutical or

14 nutriceutical purpose, or seed.

15 (15) FARMLAND.—The term ‘‘farmland’’ means

16 agricultural land that is suitable for use in farming.

17 (16) INVESTMENT REQUIREMENT.—The term

18 ‘‘investment requirement’’ means a provision in a

19 production contract that requires a contract pro20 ducer to make a capital investment associated with

21 producing an agricultural commodity subject to the

22 production contract.

23 (17) LIVESTOCK.—The term ‘‘livestock’’ means

24 beef cattle, dairy cattle, swine, sheep, or poultry.
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1 (18) MARKETING CONTRACT.—The term ‘‘mar2 keting contract’’ means an oral or written agreement

3 between a processor and a producer for the purchase

4 of an agricultural commodity grown or raised by the

5 producer.

6 (19) OPEN FEEDLOT.—The term ‘‘open feed7 lot’’ means an unroofed or partially roofed animal

8 feeding operation in which no crop, vegetation, or

9 forage growth or residue cover is maintained during

10 the period when livestock are confined in the animal

11 feeding operation.

12 (20) PASSIVE CONTRACTOR.—The term ‘‘pas13 sive contractor’’ means a person that—

14 (A) furnishes a management service to a

15 contract producer; and

16 (B) does not own an agricultural com17 modity that is produced by the contract pro18 ducer at the contract operation of the contract

19 producer under a production contract.

20 (21) PROCESSOR.—

21 (A) IN GENERAL.—The term ‘‘processor’’

22 means—

23 (i) any person (other than an agricul24 tural cooperative) engaged in the business

25 of handling, preparing, or manufacturing
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1 (including slaughtering) an agricultural

2 commodity or the products of an agricul3 tural commodity for sale or marketing in

4 interstate or foreign commerce for human

5 consumption; and

6 (ii) an agricultural cooperative that

7 handles, prepares, or manufactures (in8 cluding slaughtering) agricultural commod9 ities of its members’ own production.

10 (B) EXCLUSIONS.—The term ‘‘processor’’

11 does not include—

12 (i) any person (other than an agricul13 tural cooperative) with respect to the han14 dling, preparing, or manufacturing (includ15 ing slaughtering) of an agricultural com16 modity that was produced by the person if

17 the gross revenue derived by the person

18 from the sales or marketing of the agricul19 tural commodity is less than $10,000,000

20 per year; and

21 (ii) any agricultural cooperative that

22 handles, prepares, or manufactures (in23 cluding slaughtering) an agricultural com24 modity if the gross revenue derived by the

25 person from the sales or marketing of the
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1 agricultural commodity is less than

2 $1,000,000 per year.

3 (22) PRODUCE.—The term ‘‘produce’’ means—

4 (A) to provide feed or services relating to

5 the care and feeding of livestock, including

6 milking dairy cattle and storing raw milk; and

7 (B) to provide for planting, raising, har8 vesting, and storing a crop, including preparing

9 soil for planting and applying a fertilizer, soil

10 conditioner, or pesticide to a crop.

11 (23) PRODUCER.—

12 (A) IN GENERAL.—The term ‘‘producer’’

13 means a person that produces an agricultural

14 commodity.

15 (B) EXCLUSIONS.—The term ‘‘producer’’

16 does not include—

17 (i) a commercial fertilizer or pesticide

18 applicator;

19 (ii) a feed supplier; or

20 (iii) a veterinarian.

21 (24) PRODUCER RIGHT.—The term ‘‘producer

22 right’’ means—

23 (A) the right of a producer—

24 (i) to enter into a membership agree25 ment or marketing contract with an agri-
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1 cultural cooperative, a processor, or an2 other producer; and

3 (ii) to exercise contractual rights

4 under the membership agreement or mar5 keting contract;

6 (B) the right of a producer to lawfully pro7 vide statements or information to the Secretary,

8 a Federal or State law enforcement agency, or

9 other entity or person regarding alleged im10 proper actions or violations of law by a con11 tractor or processor under this title, unless the

12 statements or information are determined to be

13 libelous or slanderous under applicable State

14 law;

15 (C) the right of a contract producer to

16 cancel a production contract in accordance with

17 section 105;

18 (D) the right of a producer to disclose the

19 terms of an agricultural contract under section

20 106;

21 (E) the right of a producer to file, con22 tinue, terminate, or enforce a lien under section

23 107; and
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1 (F) the right of a producer to enforce

2 other protections provided by this title or other

3 Federal or State law (including regulations).

4 (25) PRODUCTION CONTRACT.—The term ‘‘pro5 duction contract’’ means an oral or written agree6 ment that provides for—

7 (A) the production of an agricultural com8 modity by a contract producer; or

9 (B) the provision of a management service

10 relating to the production of an agricultural

11 commodity by a contract producer.

12 (26) SECRETARY.—The term ‘‘Secretary’’

13 means the Secretary of Agriculture.

14 SEC. 102. APPLICABILITY TO PRODUCTION CONTRACTS.

15 This title applies to —

16 (1) a production contract between an active

17 contractor and a contract producer for the produc18 tion of an agricultural commodity;

19 (2) a production contract between an active

20 contractor and a passive contractor for the provision

21 of a management service to a contract producer in

22 the production of an agricultural commodity; and

23 (3) a production contract between a passive

24 contractor and a contract producer if—
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1 (A) the production contract provides for a

2 management service furnished by the passive

3 contractor to the contract producer in the pro4 duction of an agricultural commodity; and

5 (B) the passive contractor has a contrac6 tual relationship with the active contractor in7 volving the production of the agricultural com8 modity.

9 SEC. 103. OBLIGATION OF GOOD FAITH.

10 An agricultural contract shall carry an obligation of

11 good faith (as defined in applicable State law provisions

12 of the Uniform Commercial Code) on all parties to the

13 agricultural contract with respect to the performance and

14 enforcement of the agricultural contract.

15 SEC. 104. DISCLOSURE OF RISKS AND READABILITY RE16 QUIREMENTS UNDER AGRICULTURAL CON17 TRACTS.

18 (a) READABILITY AND UNDERSTANDABILITY.—

19 (1) IN GENERAL.—An agricultural contract

20 shall be readable and understandable, in that the ag21 ricultural contract—

22 (A) is printed in legible type;

23 (B) is appropriately divided into captioned

24 sections; and
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1 (C) is written in clear and coherent lan2 guage using words and grammar that are un3 derstandable by a person of average intel4 ligence, education, and experience within the

5 agricultural industry.

6 (2) EFFECT.—Paragraph (1) does not preclude

7 the use of—

8 (A) a particular word, phrase, provision, or

9 form of agreement that is specifically required,

10 recommended, or endorsed by a Federal or

11 State law (including a regulation); or

12 (B) a technical term that is used to de13 scribe the service or property that is the subject

14 of the agricultural contract, if the term is cus15 tomarily used by producers in the ordinary

16 course of business in connection with the serv17 ice or property described.

18 (b) DISCLOSURE STATEMENT REQUIREMENT.—An

19 agricultural contract shall—

20 (1) be accompanied by a clear written disclo21 sure statement describing the material risks faced by

22 the producer if the producer enters into the agricul23 tural contract; and
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1 (2) disclose (in a manner consistent with sub2 section (a)), provisions of the agricultural contract

3 relating to—

4 (A) duration;

5 (B) termination;

6 (C) renegotiation standards;

7 (D) responsibility for environmental dam8 age;

9 (E) factors to be used in determining pay10 ment;

11 (F) responsibility for obtaining and com12 plying with Federal, State, and local permits;

13 (G) in the case of a production contract,

14 the right of the producer to cancel the produc15 tion contract in accordance with section 105;

16 and

17 (H) any other terms that the Secretary de18 termines are appropriate for disclosure.

19 (c) COVER SHEET REQUIREMENT.—An agricultural

20 contract entered into, amended, or renewed after the date

21 of enactment of this Act shall contain as the first page,

22 or first page of text if it is preceded by a title page, a

23 cover sheet that complies with subsection (a) and contains

24 the following:
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1 (1) A brief statement that the agricultural con2 tract is a legal contract between the parties to the

3 agricultural contract.

4 (2) The following statement: ‘‘READ YOUR

5 CONTRACT CAREFULLY. This cover sheet pro6 vides only a brief summary of your contract. This

7 cover sheet is not the contract, and only the terms

8 of the actual contract are legally binding. The con9 tract itself sets forth, in detail, the rights and obli10 gations of both you and the contractor or processor.

11 IT IS THEREFORE IMPORTANT THAT YOU

12 READ YOUR CONTRACT CAREFULLY.’’.

13 (3) A written disclosure of risks in accordance

14 with subsection (b).

15 (4) In the case of a production contract, a

16 statement describing, in plain language, the right of

17 the producer to cancel the production contract in ac18 cordance with section 105.

19 (5) An index of the major provisions of the ag20 ricultural contract and the pages on which the provi21 sions appear, including—

22 (A) the name of each party to the agricul23 tural contract;

24 (B) the definitions section of the agricul25 tural contract;
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1 (C) the provisions governing termination,

2 cancellation, renewal, and amendment of the

3 agricultural contract by either party;

4 (D) the duties and obligations of each

5 party; and

6 (E) provisions subject to change in the ag7 ricultural contract.

8 (d) REVIEW BY SECRETARY.—

9 (1) SUBMISSION TO SECRETARY.—A contractor

10 or processor may submit an agricultural contract to

11 the Secretary for review to determine whether the

12 agricultural contract complies with this section.

13 (2) ACTION BY SECRETARY.—The Secretary

14 shall—

15 (A) in determining whether an agricultural

16 contract or cover sheet is readable, in accord17 ance with subsection (a), consider—

18 (i) the simplicity of the sentence

19 structure;

20 (ii) the extent to which commonly

21 used and understood words are employed;

22 (iii) the extent to which esoteric legal

23 terms are avoided;
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1 (iv) the extent to which references to

2 other sections or provisions of the agricul3 tural contract are minimized;

4 (v) the extent to which clear defini5 tions are used; and

6 (vi) any additional factors relevant to

7 the readability or understandability of the

8 agricultural contract; and

9 (B) after reviewing the agricultural

10 contract—

11 (i) certify that the agricultural con12 tract complies with this section;

13 (ii) decline to certify that the agricul14 tural contract complies with this section

15 and provide specific reasons for declining

16 to certify the agricultural contract; or

17 (iii) decline to review the agricultural

18 contract because—

19 (I) the compliance of the agricul20 tural contract with this section is sub21 ject to pending litigation; or

22 (II) the agricultural contract is

23 not subject to this section.
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1 (3) JUDICIAL REVIEW.—An action of the Sec2 retary under this subsection shall not be subject to

3 judicial review.

4 (4) CERTIFICATION.—

5 (A) IN GENERAL.—An agricultural con6 tract certified under this subsection shall be

7 considered to comply with subsections (a), (b),

8 and (c).

9 (B) NO APPROVAL OF LEGALITY OR LEGAL

10 EFFECT.—Certification of an agricultural con11 tract under this subsection shall not constitute

12 an approval of the legality or legal effect of the

13 agricultural contract.

14 (C) EFFECT OF APPROVAL; CONSTRUCTIVE

15 APPROVAL.—If the Secretary certifies an agri16 cultural contract or fails to respond to a re17 quest to certify an agricultural within 30 days

18 after receipt of an agricultural contract—

19 (i) the agricultural contract shall be

20 considered to be in compliance with sub21 sections (a), (b), and (c); and

22 (ii) the remedies provided under sub23 section (e) and section 110 shall not be

24 available.
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1 (5) EFFECT OF DISAPPROVAL.—If the Sec2 retary disapproves the certification of an agricultural

3 contract, the agricultural contract shall be void.

4 (6) EFFECT OF FAILURE TO SUBMIT AGRICUL5 TURAL CONTRACT.—The failure to submit an agri6 cultural contract to the Secretary for review under

7 this subsection shall not be considered to be a lack

8 of good faith or to raise a presumption that the agri9 cultural contract violates this section.

10 (e) REMEDIES FOR VIOLATIONS.—In addition to the

11 remedies provided under section 110, a court reviewing an

12 agricultural contract may change the terms of an agricul13 tural contract, or limit a provision of an agricultural con14 tract, to avoid an unfair result if—

15 (1) the court finds—

16 (A) a material provision of the agricultural

17 contract violates subsection (a), (b), or (c);

18 (B) the violation reasonably caused the

19 producer to be substantially confused about any

20 of the rights, obligations, or remedies of any

21 party to the agricultural contract; and

22 (C) the violation has caused or is likely to

23 cause financial detriment to the producer; and
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1 (2) the claim is brought before the obligations

2 of any party to the agricultural contract have been

3 fully performed.

4 (f) LIMITATIONS ON PRODUCER ACTIONS.—

5 (1) IN GENERAL.—A violation of this section—

6 (A) shall not entitle a producer to withhold

7 performance of an otherwise valid contractual

8 obligation when bringing a claim for relief

9 under this section; and

10 (B) is not a defense to a claim arising

11 from the breach of an agricultural contract by

12 a producer.

13 (2) ACTUAL DAMAGES.—A producer may re14 cover actual damages caused by a violation of this

15 section only if the violation reasonably caused the

16 producer to fail to understand a right, obligation, or

17 remedy under the agricultural contract.

18 (g) STATUTE OF LIMITATIONS.—A claim that an ag19 ricultural contract violates this section shall be made not

20 later than 6 years after the date on which the agricultural

21 contract is executed by the producer.
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1 SEC. 105. RIGHT OF CONTRACT PRODUCERS TO CANCEL

2 PRODUCTION CONTRACTS.

3 (a) IN GENERAL.—A contract producer may cancel

4 a production contract by mailing a cancellation notice to

5 the contractor not later than the later of—

6 (1) the date that is 3 business days after the

7 date on which the production contract is executed;

8 or

9 (2) any cancellation date specified in the pro10 duction contract.

11 (b) DISCLOSURE.—A production contract shall clear12 ly disclose—

13 (1) the right of the contract producer to cancel

14 the production contract;

15 (2) the method by which the contract producer

16 may cancel the production contract; and

17 (3) the deadline for canceling the production

18 contract.

19 SEC. 106. PROHIBITION OF CONFIDENTIALITY PROVISIONS.

20 (a) PROHIBITION.—Any provision of an agricultural

21 contract that provides that information contained in the

22 agricultural contract (other than a trade secret to which

23 section 552 of title 5, United States Code, applies) is con24 fidential shall be void.
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1 (b) FORM.—A confidentiality provision described in

2 subsection (a) shall be void regardless of whether the pro3 vision is—

4 (1) express or implied;

5 (2) oral or written;

6 (3) required or conditional; or

7 (4) contained in the agricultural contract, an8 other agricultural contract, or in a related document,

9 policy, or agreement.

10 (c) OTHER PROVISIONS.—This section shall not af11 fect other provisions of an agricultural contract or a re12 lated document, policy, or agreement that can be given

13 effect without the voided provision.

14 (d) DISCLOSURE OF INFORMATION.—This subsection

15 does not require a party to an agricultural contract to dis16 close information in the agricultural contract to any other

17 person.

18 SEC. 107. PRODUCTION CONTRACT LIEN.

19 (a) IN GENERAL.—In the case of a production con20 tract that provides for producing an agricultural com21 modity by a contract producer at the contract operation

22 of the contract producer, the contract producer shall have

23 a lien in the amount owed to the contract producer under

24 the production contract on—
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1 (1)(A) the agricultural commodity until the ag2 ricultural commodity is sold or processed (including

3 slaughtered) by the contractor; or

4 (B) the cash proceeds of the sale of the agricul5 tural commodity, including any cash provided as

6 part of the sale; and

7 (2) any property of the contractor that may be

8 subject to a security interest as provided in applica9 ble State law provisions based on section 9–102 of

10 the Uniform Commercial Code.

11 (b) LIEN PERIOD.—The lien shall apply—

12 (1) in the case of livestock or milk, during the

13 period—

14 (A) beginning on the date on which the

15 livestock arrive at the contract livestock facility;

16 and

17 (B) ending 1 year after the livestock or

18 milk is no longer under the control of the con19 tract producer; and

20 (2) in the case of a crop, during the period—

21 (A) beginning on the date on which the

22 crop is planted; and

23 (B) ending 1 year after the crop is no

24 longer under the control of the contract pro25 ducer.
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1 (c) FILING REQUIREMENTS FOR PRESERVING THE

2 LIEN.—To preserve a lien under this section, a contract

3 producer shall—

4 (1) file with the Secretary a lien statement on

5 a form prescribed by the Secretary that includes—

6 (A) an estimate of the amount owed under

7 the production contract;

8 (B)(i) in the case of livestock or milk, the

9 date on which the livestock arrived at the con10 tract livestock facility; and

11 (ii) in the case of a crop, the date on which

12 the crop was planted;

13 (C) the estimated duration of the period

14 when the agricultural commodity will be under

15 the control of the contract producer;

16 (D) the name of the party to the produc17 tion contract whose agricultural commodity is

18 produced under the production contract;

19 (E) the description of the location of the

20 contract operation, by State, county, and town21 ship; and

22 (F) the printed name and signature of the

23 person filing the form;

24 (2) file the lien statement not later than—
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1 (A) in the case of livestock, 45 days after

2 the date on which the livestock first arrive at

3 the contract livestock facility; or

4 (B) in the case of a crop, 45 days after the

5 date on which the crop is first planted; and

6 (3) pay a filing fee in an amount determined by

7 the Secretary, not to exceed $10.00.

8 (d) PRIORITY OF LIEN.—A lien created under this

9 section shall be superior to, and have priority over, any

10 conflicting lien or security interest in the agricultural com11 modity, including a lien or security interest that was per12 fected prior to the creation of the lien under this section.

13 (e) ENFORCEMENT.—

14 (1) CONTROL.—Before an agricultural com15 modity leaves the control of a contract producer, the

16 contract producer may foreclose a lien created under

17 this section in the manner provided for the fore18 closure of a secured transaction under applicable

19 State law provisions based on sections 9–504, 9–

20 506, and 9–507 of the Uniform Commercial Code.

21 (2) POST-CONTROL.—After an agricultural

22 commodity leaves the control of the contract pro23 ducer, the contract producer may enforce the lien in

24 the manner provided under applicable State law pro-
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1 visions based article 9 of part 5 of the Uniform

2 Commercial Code.

3 SEC. 108. PRODUCTION CONTRACTS INVOLVING INVEST4 MENT REQUIREMENTS.

5 (a) APPLICABILITY.—This section applies only to a

6 production contract between a contract producer and a

7 contractor if the production contract requires the contract

8 producer, together with any other production contract be9 tween the same parties, to make a capital investment of

10 $100,000 or more.

11 (b) RESTRICTIONS ON CONTRACT TERMINATION.—

12 Except as provided in subsection (d), a contractor shall

13 not terminate or fail to renew a production contract until

14 the contractor—

15 (1) provides the contract producer with written

16 notice of the intention of the contractor to terminate

17 or not renew the production contract at least 90

18 days before the effective date of the termination or

19 nonrenewal; and

20 (2) reimburses the contract producer for dam21 ages (based on the value of the remaining useful life

22 of the structures, machinery, equipment, or other

23 capital investment items) incurred due to the termi24 nation, cancellation, or nonrenewal of the production

25 contract.
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1 (c) BREACH OF INVESTMENT REQUIREMENTS.—

2 (1) IN GENERAL.—Except as provided in sub3 section (d), a contractor shall not terminate or fail

4 to renew a production contract with a contract pro5 ducer that materially breaches a production con6 tract, including the investment requirements of a

7 production contract, until—

8 (A) the contractor provides the contract

9 producer with a written notice of termination or

10 nonrenewal, including a list of complaints alleg11 ing causes for the breach, at least 45 days be12 fore the effective date of the termination or

13 nonrenewal; and

14 (B) the contract producer fails to remedy

15 each cause of the breach alleged in the list of

16 complaints provided in the notice not later than

17 30 days after receipt of the notice.

18 (2) CIVIL ACTIONS.—An effort by a contract

19 producer to remedy a cause of an alleged breach

20 shall not be considered to be an admission of a

21 breach in a civil action.

22 (d) EXCEPTIONS.—A contractor may terminate or

23 decline to renew a production contract in accordance with

24 applicable law without notice or remedy as required in
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1 subsections (b) and (c) if the basis for the termination

2 or nonrenewal is—

3 (1) a voluntary abandonment of the contractual

4 relationship by the contract producer, such as a

5 complete failure of the performance of a contract

6 producer under the production contract; or

7 (2) the conviction of a contract producer of an

8 offense of fraud or theft committed against the con9 tractor.

10 (e) PENALTY.—If a contractor terminates or fails to

11 renew a production contract other than as provided in this

12 section, the contractor shall pay the contract producer the

13 value of the remaining useful life of the structures, ma14 chinery, equipment, or other capital investment items.

15 SEC. 109. PROHIBITIONS AGAINST UNFAIR PRACTICES IN16 VOLVING AGRICULTURAL CONTRACTS.

17 It shall be unlawful, in or in connection with any

18 transaction in interstate or foreign commerce, for any con19 tractor or processor to knowingly engage or permit any

20 employee or agent—

21 (1) to take an action to coerce, intimidate, dis22 advantage, retaliate against, or discriminate against

23 any producer because the producer exercises, or at24 tempts to exercise, any producer right, including an

25 action affecting—
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1 (A) the execution, termination, extension,

2 or renewal of an agricultural contract;

3 (B) the treatment of a producer, which

4 may include providing discriminatory or pref5 erential terms in an agricultural contract or in6 terpreting terms of an agricultural contract in

7 a discriminatory or preferential manner,

8 including—

9 (i) the price paid for an agricultural

10 commodity;

11 (ii) the quality or the quantity of an

12 agricultural commodity demanded; or

13 (iii) financing, including investment

14 requirements;

15 (C) the grant of a reward or imposition of

16 a penalty, including the denial of reward (in17 cluding a financial reward or penalty that re18 lates to a loan, bonus, or inducement); or

19 (D) the quality, quantity, or delivery times

20 of contract inputs provided to the producer;

21 (2) to provide false information relating to—

22 (A) a producer with whom the producer as23 sociates or an association of producers or an

24 agricultural organization with which the pro-
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1 ducer is affiliated, including false information

2 relating to—

3 (i) the character of the producer; or

4 (ii) the condition of the finances or

5 management of the association of pro6 ducers or agricultural organization; or

7 (B) producer rights provided by this title

8 or other provisions of Federal or State law;

9 (3) to refuse to provide a contract producer on

10 request the statistical information and data used to

11 determine compensation paid to the contract pro12 ducer under a production contract, including feed

13 conversion rates, feed analyses, and origination and

14 breeder history;

15 (4) to refuse to allow a contract producer or a

16 representative of the contract producer to observe,

17 by actual observation at the time of weighing, the

18 weights and measures used to determine the com19 pensation of the contract producer under a produc20 tion contract;

21 (5) to use the performance of any other con22 tract producer to determine the compensation of a

23 contract producer under a production contract or as

24 the basis of the termination or renewal of a produc25 tion contract;
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1 (6) to require a contract producer to make new

2 or additional capital investments in connection with

3 a production contract that are beyond the invest4 ment requirements of the production contract unless

5 the new or additional capital investments are—

6 (A) partially paid for by the contractor; or

7 (B) offset by other compensation or modi8 fications to contract terms, in a manner that

9 the contract producer agrees to in writing as

10 constituting acceptable and satisfactory consid11 eration for the new capital investment;

12 (7)(A) to include as part of any new or renewed

13 agreement or contract a right of first refusal; or

14 (B) to make any sale or transaction contingent

15 on the granting of a right of first refusal;

16 (8) to execute an agricultural contract in viola17 tion of this title; or

18 (9) to execute an agricultural contract that in19 cludes a waiver of any producer right or obligation

20 of a contractor or processor established under this

21 title.

22 SEC. 110. VIOLATIONS.

23 (a) COMPLAINTS.—If the Secretary has reason to be24 lieve (through investigation based on the Secretary’s ini25 tiative or on petition by any person) that any contractor
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1 or processor has violated this title, the Secretary shall

2 cause a complaint in writing to be served on the contractor

3 or processor—

4 (1) describing the charges involved in the viola5 tion; and

6 (2) requiring the contractor or processor to at7 tend and testify at a hearing to be held not earlier

8 than 30 days after the service of the complaint.

9 (b) HEARING.—

10 (1) IN GENERAL.—The Secretary may hold

11 hearings, sign and issue subpoenas, administer

12 oaths, examine witnesses, receive evidence, and re13 quire the attendance and testimony of witnesses and

14 the production of such accounts, records, and memo15 randa, as the Secretary considers necessary to deter16 mine whether a contractor or processor has violated

17 this title.

18 (2) RIGHT TO HEARING.—A contractor or proc19 essor may request a hearing if the contractor or

20 processor is subject to penalty for unfair conduct

21 under this title.

22 (3) RESPONDENTS RIGHTS.—During a hearing,

23 under regulations promulgated by the Secretary, the

24 contractor or processor shall be given the

25 opportunity—
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1 (A) to be informed of the evidence against

2 the contractor or processor;

3 (B) to cross-examine witnesses; and

4 (C) to present evidence.

5 (4) HEARING LIMITATION.—The issues at any

6 hearing held or requested under this subsection shall

7 be limited in scope to matters directly related to the

8 purpose for which the hearing is held or requested.

9 (c) REPORT OF FINDING AND PENALTIES.—

10 (1) IN GENERAL.—If, after a hearing, the Sec11 retary finds that the contractor or processor has vio12 lated this title, the Secretary shall—

13 (A) prepare a written report that—

14 (i) provides the findings of fact; and

15 (ii) includes an order requiring the

16 contractor or processor to cease and desist

17 from committing the violation; and

18 (B) provide the report to the contractor or

19 processor and to the affected producer.

20 (2) CIVIL PENALTY.—The Secretary may assess

21 a civil penalty of not more than $100,000 for each

22 violation of this title.

23 (d) INJUNCTIONS; FINALITY AND APPEALABILITY OF

24 AN ORDER.—
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1 (1) INJUNCTIONS.—At any time after a com2 plaint is filed under subsection (a), a court, on appli3 cation of the Secretary, may issue an injunction, re4 straining to the extent the court considers appro5 priate, the contractor or processor (including offi6 cers, directors, agents, and employees of the con7 tractor or processor) from violating this title.

8 (2) APPEALABILITY OF AN ORDER.—An order

9 issued under this section shall be final and conclu10 sive unless, not later than 30 days after service of

11 the order, the contractor or processor petitions to

12 appeal the order to—

13 (A) the United States court of appeals for

14 the circuit in which the contractor or processor

15 resides or has its principal place of business; or

16 (B) the United States Court of Appeals for

17 the District of Columbia Circuit.

18 (3) DELIVERY OF PETITION.—

19 (A) COPY TO SECRETARY.—The clerk of

20 the court shall cause a copy of the petition filed

21 under paragraph (2) to be delivered to the Sec22 retary.

23 (B) RECORD.—The Secretary shall file in

24 the court the record of the proceedings under

25 this section.
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1 (4) PENALTY FOR FAILURE TO OBEY AN

2 ORDER.—

3 (A) IN GENERAL.—Any contractor or proc4 essor that fails to obey an order of the Sec5 retary issued under this section after the order

6 has become final shall be fined not less than

7 $5,000 nor more than $100,000 for each of8 fense.

9 (B) SEPARATE OFFENSES.—Each day dur10 ing which the failure continues shall be consid11 ered a separate offense.

12 (e) AUTHORITY OF THE SECRETARY.—Not later than

13 180 days after the date of enactment of this Act, the Sec14 retary and the Attorney General shall develop and imple15 ment a plan to enable the Secretary, where appropriate,

16 to bring civil actions, including petitions for temporary in17 junctions, to enforce orders issued by the Secretary under

18 this title.

19 (f) LIMITATION ON PENALTIES.—

20 (1) GOOD FAITH DEFENSE.—Notwithstanding

21 any other provision of this section, in a proceeding

22 in which a civil penalty is sought against a party for

23 a violation of section 104, it shall be a defense to

24 the claim that the party made a good faith and rea25 sonable effort to comply with this section.
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1 (2) ATTORNEY’S FEES AND COSTS.—Notwith2 standing any other provision of this section, a party

3 that makes a good faith and reasonable effort to

4 comply with section 104 may not be assessed attor5 ney’s fees or costs of investigation in an action for

6 violation of section 104.

7 SEC. 111. PRIVATE CAUSE OF ACTION.

8 (a) IN GENERAL.—Notwithstanding any action by

9 the Secretary under section 110, a producer that suffers

10 damage because of the violation of this title by a con11 tractor or processor may obtain appropriate legal and eq12 uitable relief in a civil action in United States district

13 court.

14 (b) ATTORNEY’S FEES AND COSTS.—In a civil action

15 under this section, the court shall award the producer that

16 is the prevailing party reasonable attorney’s fees and

17 costs.

18 (c) INJUNCTIVE RELIEF.—In a civil action under this

19 section, the producer shall not be required to post a bond,

20 prove the absence of an adequate remedy at law, or show

21 the existence of special circumstances when seeking in22 junctive relief, unless the court for good cause orders oth23 erwise.

24 (d) RELIEF.—In a civil action under this section, in

25 addition to damages, the court may order any form of pro-
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1 hibitory or mandatory relief that is appropriate under

2 principles of equity, including issuing a temporary or per3 manent injunction.

4 SEC. 112. PROHIBITION OF WAIVERS.

5 Any provision of an agricultural contract that waives

6 a producer right or an obligation of a contractor or proc7 essor established by this title shall be void and unenforce8 able.

9 SEC. 113. MEDIATION.

10 (a) MEDIATION.—

11 (1) IN GENERAL.—An agricultural contract

12 shall provide for resolution of disputes concerning

13 the agricultural contract by mediation.

14 (2) MEDIATION BY SECRETARY OR STATE ME15 DIATION SERVICE.—If there is a dispute involving

16 an agricultural contract, either party to the agricul17 tural contract may make a written request to the

18 Secretary for mediation services by the Secretary or

19 by a designated State mediation service to facilitate

20 resolution of the dispute.

21 (3) HEARING.—The parties to the agricultural

22 contract shall receive a release from the mediation

23 services described in paragraph (2) before the dis24 pute may be heard by a court.
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1 (b) NO ARBITRATION OF FUTURE CONTROVERSY.—

2 A provision in an agricultural contract submitting to arbi3 tration a future controversy arising between a producer

4 and a contractor or processor shall be void.

5 SEC. 114. RELATIONSHIP TO STATE LAW.

6 (a) IN GENERAL.—This title does not invalidate any

7 provision of State law dealing with the same subjects as

8 this title, except that the State law may not permit any

9 action that is prohibited by this title.

10 (b) STATE COURTS.—This title does not deprive a

11 State court of jurisdiction under a State law dealing with

12 the same subject as this title.

13 SEC. 115. REGULATIONS.

14 The Secretary shall promulgate such regulations as

15 are appropriate to carry out this title.

16 SEC. 116. APPLICABILITY.

17 (a) IN GENERAL.—Except as provided in subsection

18 (b), this title applies to an agricultural contracts in force

19 on or after the date of enactment of this Act, regardless

20 of the date on which the agricultural contract is executed.

21 (b) EXCEPTIONS.—Sections 104, 105, 108, 109(5),

22 and 113(a) shall apply only to an agricultural contract

23 that is executed or substantively amended after the date

24 of enactment of this Act.
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1 TITLE II—AGRICULTURAL FAIR

2 PRACTICES

3 SEC. 201. AGRICULTURAL FAIR PRACTICES.

4 The Agricultural Fair Practices Act of 1967 (7

5 U.S.C. 2301 et seq.) is amended to read as follows:

6 ‘‘SECTION 1. SHORT TITLE.

7 ‘‘This Act may be cited as the ‘Agricultural Fair

8 Practices Act of 1967’.

9 ‘‘SEC. 2. FINDINGS AND PURPOSE.

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

11 ‘‘(1) agricultural products are produced in the

12 United States by many individual farmers and

13 ranchers scattered throughout the various States of

14 the United States;

15 ‘‘(2) agricultural products in fresh or processed

16 form move in large part in the channels of interstate

17 and foreign commerce, and agricultural products

18 that do not move in the channels directly burden or

19 affect interstate commerce;

20 ‘‘(3) the efficient production and marketing of

21 agricultural products by farmers and ranchers is of

22 vital concern to the welfare of farmers and ranchers

23 and to the general economy of the United States;

24 ‘‘(4) because agricultural products are produced

25 by numerous individual farmers and ranchers, the
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1 marketing and bargaining position of individual

2 farmers and ranchers will be adversely affected un3 less farmers and ranchers are free to join together

4 voluntarily in cooperative organizations as author5 ized by law; and

6 ‘‘(5) interference with the right described in

7 paragraph (4) is contrary to the public interest and

8 adversely affects the free and orderly flow of goods

9 in interstate and foreign commerce.

10 ‘‘(b) PURPOSE.—The purpose of this Act is to estab11 lish standards of fair practices required of handlers for

12 dealings in agricultural products.

13 ‘‘SEC. 3. DEFINITIONS.

14 ‘‘In this Act:

15 ‘‘(1) ACCREDITED ASSOCIATION.—The term

16 ‘accredited association’ means an association of pro17 ducers accredited by the Secretary in accordance

18 with section 6.

19 ‘‘(2) ASSOCIATION OF PRODUCERS.—

20 ‘‘(A) IN GENERAL.—The term ‘association

21 of producers’ means an association of producers

22 of agricultural products that engages in the

23 marketing of agricultural products or of agri24 cultural services described in paragraph (6)(B).
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1 ‘‘(B) INCLUSIONS.—The term ‘association

2 of producers’ includes—

3 ‘‘(i) a cooperative association (as de4 fined in section 15(a) of the Agricultural

5 Marketing Act (12 U.S.C. 1141j(a)); and

6 ‘‘(ii) an association described in the

7 first section of the Act entitled ‘An Act to

8 authorize association of producers of agri9 cultural products’ (commonly known as the

10 ‘Capper-Volstead Act’) (7 U.S.C. 291).

11 ‘‘(3) BARGAIN; BARGAINING.—The terms ‘bar12 gain’ and ‘bargaining’ refers to the performance of

13 the mutual obligation of a handler and an accredited

14 association to meet at reasonable times and for rea15 sonable periods of time for the purpose of negoti16 ating in good faith with respect to the price, terms

17 of sale, compensation for products produced or serv18 ices rendered under contract, or other provisions re19 lating to the products marketed, or the services ren20 dered, by the members of the accredited association

21 or by the accredited association as agent for the

22 members.

23 ‘‘(4) DESIGNATED HANDLER.—The term ‘des24 ignated handler’ means a handler that is designated

25 in accordance with section 6.
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1 ‘‘(5) HANDLER.—

2 ‘‘(A) IN GENERAL.—The term ‘handler’

3 means any person engaged in the business or

4 practice of—

5 ‘‘(i) acquiring agricultural products

6 from producers or associations of pro7 ducers for processing or sale;

8 ‘‘(ii) grading, packaging, handling,

9 storing, or processing agricultural products

10 received from producers or associations of

11 producers;

12 ‘‘(iii) contracting or negotiating con13 tracts or other arrangements, written or

14 oral, with or on behalf of producers or as15 sociations of producers with respect to the

16 production or marketing of any agricul17 tural product; or

18 ‘‘(iv) acting as an agent or broker for

19 a handler in the performance of any func20 tion or act described in clause (i), (ii), or

21 (iii).

22 ‘‘(B) EXCLUSIONS.—The term ‘‘handler’’

23 does not include—

24 ‘‘(i) any person (other than an agri25 cultural cooperative) engaged in a business
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1 or practice described in subparagraph (A)

2 if the gross revenue derived by the person

3 from the business or activity is less than

4 $10,000,000 per year; or

5 ‘‘(ii) any agricultural cooperative en6 gaged in a business or practice described

7 in subparagraph (A) if the gross revenue

8 derived by the person from the business or

9 activity is less than $1,000,000 per year.

10 ‘‘(6) PRODUCER.—

11 ‘‘(A) IN GENERAL.—The term ‘producer’

12 means a person engaged in the production of

13 agricultural products as a farmer, planter,

14 rancher, dairyman, poultryman, or fruit, vege15 table, or nut grower.

16 ‘‘(B) INCLUSIONS.—The term ‘producer’

17 includes a person that provides labor, produc18 tion management, facilities, or other services

19 for the production of an agricultural product.

20 ‘‘(7) PERSON.—The term ‘person’ includes an

21 individual, partnership, corporation, and association.

22 ‘‘(8) SECRETARY.—The term ‘Secretary’ means

23 the Secretary of Agriculture.
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1 ‘‘SEC. 4. PROHIBITED PRACTICES.

2 ‘‘It shall be unlawful for any handler knowingly to,

3 or knowingly to permit any employee or agent to—

4 ‘‘(1) interfere with, restrain, or coerce any pro5 ducer in the exercise of the right of the producer to

6 join and belong to, or to refrain from joining or be7 longing to, an association of producers, or to refuse

8 to deal with any producer because of the exercise of

9 the right of the producer to join and belong to the

10 association;

11 ‘‘(2) discriminate against any producer with re12 spect to price, quantity, quality, or other terms of

13 purchase, acquisition, or other handling of an agri14 cultural product because of the membership of the

15 producer in, or the contract of the producer with, an

16 association of producers;

17 ‘‘(3) coerce or intimidate any producer to enter

18 into, maintain, breach, cancel, or terminate a mem19 bership agreement or marketing contract with an as20 sociation of producers or a contract with a handler;

21 ‘‘(4) pay or loan money, give any thing of value,

22 or offer any other inducement or reward to a pro23 ducer for refusing to or ceasing to belong to an asso24 ciation of producers;
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1 ‘‘(5) make false reports about the finances,

2 management, or activities of an association of pro3 ducers or handlers;

4 ‘‘(6) conspire, combine, agree, or arrange with

5 any other person to do, or aid or abet the perform6 ance of, any act made unlawful by this Act;

7 ‘‘(7) refuse to bargain in good faith with an ac8 credited association, if the handler is a designated

9 handler; or

10 ‘‘(8) dominate or interfere with the formation

11 or administration of any association of producers or

12 to contribute financial or other support to an asso13 ciation of producers.

14 ‘‘SEC. 5. BARGAINING IN GOOD FAITH.

15 ‘‘(a) CLARIFICATION OF OBLIGATION.—

16 ‘‘(1) IN GENERAL.—The obligation of a des17 ignated handler to bargain in good faith shall apply

18 with respect to an accredited association and the

19 products or services for which the accredited associa20 tion is accredited to bargain.

21 ‘‘(2) AGREEMENTS OR CONCESSIONS.—The

22 good faith bargaining required between a handler

23 and an accredited association shall not require either

24 party to agree to a proposal or to make a conces25 sion.
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1 ‘‘(b) EXTENSION OF SAME TERMS TO ACCREDITED

2 ASSOCIATION.—

3 ‘‘(1) IN GENERAL.—If a designated handler

4 purchases a product or service from producers under

5 terms more favorable to the producers than the

6 terms negotiated with an accredited association for

7 the same type of product or service, the handler

8 shall offer the same terms to the accredited associa9 tion.

10 ‘‘(2) VIOLATIONS.—Failure to extend the same

11 terms to the accredited association shall be consid12 ered to be a violation of section 4(g).

13 ‘‘(3) FACTORS.—In comparing terms, the Sec14 retary shall consider—

15 ‘‘(A) the stipulated purchase price;

16 ‘‘(B) any bonuses, premiums, hauling, or

17 loading allowances;

18 ‘‘(C) reimbursement of expenses;

19 ‘‘(D) payment for special services of any

20 character that may be paid by the handler; and

21 ‘‘(E) any amounts paid or agreed to be

22 paid by the handler for any designated purpose

23 other than payment of the purchase price.

24 ‘‘(c) MEDIATION.—The Secretary may provide medi25 ation services with respect to bargaining between an ac-
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1 credited association and a designated handler at the re2 quest of the accredited association or designated handler.

3 ‘‘SEC. 6. ACCREDITATION OF ASSOCIATIONS AND DESIGNA4 TION OF HANDLERS.

5 ‘‘(a) ACCREDITATION PETITION.—

6 ‘‘(1) IN GENERAL.—An association of producers

7 seeking accreditation to bargain on behalf of pro8 ducers of an agricultural product or service shall

9 submit to the Secretary a petition for accreditation.

10 ‘‘(2) CONTENT.—The petition shall—

11 ‘‘(A) specify each agricultural product or

12 service for which the association seeks accredi13 tation to bargain on behalf of producers;

14 ‘‘(B) designate the handlers, individually,

15 by production or marketing area, or by some

16 other appropriate general classification, with

17 whom the association seeks to be accredited to

18 bargain; and

19 ‘‘(C) contain such other information and

20 documents as may be required by the Secretary.

21 ‘‘(b) NOTICE OF PETITION; PROCEEDINGS.—

22 ‘‘(1) IN GENERAL.—On receiving a petition

23 under subsection (a) and any supporting material,

24 the Secretary shall provide notice of the petition to
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1 all handlers designated in the petition under sub2 section (a)(2)(B).

3 ‘‘(2) INDIVIDUAL HANDLERS.—The Secretary

4 shall provide personal notice under this subsection to

5 a handler that has been designated individually.

6 ‘‘(3) GENERAL CLASSIFICATIONS.—The Sec7 retary shall provide notice through the Federal Reg8 ister to handlers that have been designated by pro9 duction or marketing area or by some other general

10 classification.

11 ‘‘(4) OPPORTUNITY TO RESPOND.—The associa12 tion of producers seeking accreditation and the han13 dlers shall have an opportunity to submit written

14 evidence, views, and arguments to the Secretary.

15 ‘‘(5) PROCEEDINGS.—

16 ‘‘(A) IN GENERAL.—Except as provided in

17 subparagraph (B), the Secretary may conduct

18 an informal proceeding on the petition.

19 ‘‘(B) FORMAL HEARINGS.—The Secretary

20 shall hold a formal hearing for the reception of

21 testimony and evidence if the Secretary finds

22 that there are substantial unresolved issues of

23 material fact.

24 ‘‘(c) ISSUANCE OF ACCREDITATION ORDER.—On the

25 petition of an association of producers, the Secretary may
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1 issue an order designating the association of producers as

2 an accredited association for the purposes of this Act if

3 the Secretary determines that—

4 ‘‘(1) under the charter documents or bylaws of

5 the association, the accredited association is owned

6 and controlled by producers;

7 ‘‘(2) the association has contracts, binding

8 under State law, with the members of the associa9 tion empowering the association to sell or negotiate

10 terms of sale of the products or services of the mem11 bers;

12 ‘‘(3) the association represents a sufficient

13 number of producers, or the members of the associa14 tion produce a sufficient quantity of agricultural

15 products or render a sufficient level of services, to

16 enable the association to function as an effective

17 agent for producers in bargaining with designated

18 handlers; and

19 ‘‘(4) the functions of the association include

20 acting as principal or agent for the members of the

21 association in negotiations with handlers for prices

22 and other terms of trade with respect to the produc23 tion, sale, and marketing of products or services of

24 the members.

25 ‘‘(d) NOTIFICATION OF ACCREDITATION ORDER.—
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1 ‘‘(1) IN GENERAL.—The Secretary shall notify

2 the petitioning association of producers, and each

3 handler to be designated as part of the petition, of

4 the decision of the Secretary regarding the petition

5 and provide a concise statement of the basis for the

6 decision.

7 ‘‘(2) OTHER ASSOCIATIONS.—The Secretary

8 shall provide notice of an accreditation of an associa9 tion to all other associations that have been accred10 ited to bargain with respect to the product or service

11 with any of the designated handlers of the associa12 tion.

13 ‘‘(e) ANNUAL REPORT.—Each accredited association

14 shall submit to the Secretary an annual report in such

15 form and including such information as the Secretary by

16 regulation may require to enable the Secretary to deter17 mine whether the association is meeting the standards for

18 accreditation.

19 ‘‘(f) LOSS OF ACCREDITATION.—

20 ‘‘(1) IN GENERAL.—If the Secretary determines

21 that an accredited association has ceased to meet

22 the standards for accreditation under subsection (c),

23 the Secretary shall—
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1 ‘‘(A) notify the association of the manner

2 in which the association is deficient in main3 taining the standards; and

4 ‘‘(B) allow the association a reasonable pe5 riod of time to answer or correct the defi6 ciencies.

7 ‘‘(2) HEARING.—After providing notice and a

8 corrective period in accordance with paragraph (1),

9 if the Secretary is not satisfied that the association

10 is in compliance with subsection (c), the Secretary

11 shall—

12 ‘‘(A) notify the association of the contin13 ued deficiencies; and

14 ‘‘(B) hold a hearing to consider the revoca15 tion of accreditation.

16 ‘‘(3) REVOCATION.—If, based on the evidence

17 submitted at the hearing, the Secretary finds that

18 the association has ceased to maintain the standards

19 for accreditation, the Secretary shall revoke the ac20 creditation of the association.

21 ‘‘(g) AMENDMENT.—

22 ‘‘(1) IN GENERAL.—At the option of the Sec23 retary or on the petition of an accredited association

24 or a designated handler, the Secretary may amend
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1 an accreditation order with respect to the product or

2 service specified in the accreditation order.

3 ‘‘(2) NOTICE.—The Secretary shall provide—

4 ‘‘(A) notice of any proposed amendment

5 and the reasons for the amendment to all ac6 credited associations and handlers that would

7 be directly affected by the amendment; and

8 ‘‘(B) an opportunity for a public hearing.

9 ‘‘(3) AUTHORITY.—After providing notice and

10 an opportunity for a hearing in accordance with

11 paragraph (2), the Secretary may amend the accred12 itation order if the Secretary finds that the amend13 ment will be conducive to more effective bargaining

14 and orderly marketing by the accredited association

15 of the product or services of the members of the ac16 credited association.

17 ‘‘SEC. 7. ASSIGNMENT OF ASSOCIATION DUES AND FEES.

18 ‘‘(a) IN GENERAL.—A producer of an agricultural

19 product or service may execute, as a clause in a sales con20 tract or in another written instrument, an assignment of

21 dues or fees to, or the deduction of a sum to be retained

22 by, an association of producers authorized by contract to

23 represent the producer, under which assignment a handler

24 shall—
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1 ‘‘(1) deduct a portion of the amount to be paid

2 for products or services of the producer under a

3 growing contract; and

4 ‘‘(2) pay, on behalf of the producer, the portion

5 over to the association as dues or fees or a sum to

6 be retained by the association.

7 ‘‘(b) DUTY OF HANDLER.—After a handler receives

8 notice from a producer of an assignment under subsection

9 (a), the handler shall—

10 ‘‘(1) deduct the amount authorized by the as11 signment from the amount paid for any agricultural

12 product sold by the producer or for any service ren13 dered under any growing contract; and

14 ‘‘(2) on payment to producers for the product

15 or service, pay the amount over to the association or

16 the assignee of the association.

17 ‘‘SEC. 8. POWERS OF SECRETARY.

18 ‘‘(a) RECORDS AND INFORMATION.—

19 ‘‘(1) MAINTENANCE.—The Secretary may re20 quire any person covered by this Act to establish and

21 maintain such records, make such reports, and pro22 vide such other information as the Secretary may

23 reasonably require to carry out this Act.

24 ‘‘(2) ACCESS.—The Secretary and any officer

25 or employee of the Department of Agriculture, on
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1 presentation of credentials and a warrant or such

2 other order of a court as may be required by the

3 Constitution—

4 ‘‘(A) shall have a right of entry to, on, or

5 through any premises in which records required

6 to be maintained under paragraph (1) are lo7 cated; and

8 ‘‘(B) may at reasonable times have access

9 to and copy any records that any person is re10 quired to maintain or that relate to any matter

11 under this Act under investigation or in ques12 tion.

13 ‘‘(b) COMPLAINTS.—If the Secretary has reason to

14 believe (whether through investigation or petition by any

15 person) that any person has violated section 4, the Sec16 retary shall cause a complaint to be served on the

17 person—

18 ‘‘(1) stating the reasons for the alleged violation

19 of section 4; and

20 ‘‘(2) requiring the person to attend and testify

21 at a hearing to be held not earlier than 30 days

22 after the date of service of the complaint.

23 ‘‘(c) HEARING.—

24 ‘‘(1) IN GENERAL.—The Secretary may hold

25 hearings, sign and issue subpoenas, administer
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1 oaths, examine witnesses, receive evidence, and re2 quire the attendance and testimony of witnesses and

3 the production of such accounts, records, and memo4 randa, as the Secretary considers necessary to deter5 mine whether a violation of this Act has occurred.

6 ‘‘(2) RIGHT TO HEARING.—A person may re7 quest a hearing if the person is subject to a penalty

8 under this Act.

9 ‘‘(3) RESPONDENTS’ RIGHTS.—During a hear10 ing, the person complained of shall be given, in ac11 cordance with regulations promulgated by the Sec12 retary, the opportunity—

13 ‘‘(A) to be informed of the evidence

14 against the person;

15 ‘‘(B) to cross-examine witnesses; and

16 ‘‘(C) to present evidence.

17 ‘‘(4) HEARING LIMITATION.—The issues at any

18 hearing held or requested under this section shall be

19 limited in scope to matters directly related to the

20 purpose for which the hearing was held or requested.

21 ‘‘(d) REPORT OF FINDING AND PENALTIES.—

22 ‘‘(1) IN GENERAL.—If, after a hearing, the Sec23 retary finds that a person has violated section 4, the

24 Secretary shall make, and provide to the person, a

25 written report that states the findings of fact and in-
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1 cludes an order requiring the person to cease and

2 desist from committing the violation.

3 ‘‘(2) CIVIL PENALTY.—The Secretary may as4 sess a civil penalty not to exceed $100,000 for each

5 violation of section 4.

6 ‘‘(e) INJUNCTIONS; FINALITY AND APPEALABILITY

7 OF AN ORDER.—

8 ‘‘(1) INJUNCTIONS.—At any time after a com9 plaint is served on a person under subsection (b),

10 the court, on application of the Secretary, may issue

11 an injunction, restraining to the extent the court de12 termines to be appropriate, the person and the offi13 cers, directors, agents, and employees of the person

14 from violating section 4 and other provisions of this

15 Act.

16 ‘‘(2) APPEALABILITY OF AN ORDER.—An order

17 issued under this section shall be final and conclu18 sive unless, within 30 days after service of the order,

19 the affected handler petitions to appeal the order to

20 the United States court of appeals for the circuit in

21 which the handler resides or has its principal place

22 of business or the United States Court of Appeals

23 for the District of Columbia Circuit.

24 ‘‘(3) DELIVERY OF PETITION.—
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1 ‘‘(A) IN GENERAL.—The clerk of the court

2 shall immediately cause a copy of any petition

3 filed under paragraph (2) to be delivered to the

4 Secretary.

5 ‘‘(B) RECORD.—On receipt of the petition,

6 the Secretary shall file in the court the record

7 of the proceedings under this section.

8 ‘‘(4) PENALTY FOR FAILURE TO OBEY AN

9 ORDER.—

10 ‘‘(A) IN GENERAL.—Any person that fails

11 to obey an order of the Secretary issued under

12 this section after the order becomes final shall

13 be fined not less than $5,000 and not more

14 than $100,000 for each offense.

15 ‘‘(B) SEPARATE OFFENSES.—Each day

16 during which the failure continues shall be con17 sidered to be a separate offense.

18 ‘‘(5) AUTHORITY OF THE SECRETARY.—Not

19 later than 180 days after the date of enactment of

20 this section, the Secretary and the Attorney General

21 shall develop and implement a plan to enable, when

22 appropriate, the Secretary to bring civil actions, in23 cluding actions for an injunction, to enforce orders

24 issued by the Secretary under this Act.
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1 ‘‘SEC. 9. ENFORCEMENT.

2 ‘‘(a) CIVIL ACTIONS BY AGGRIEVED PERSONS.—

3 ‘‘(1) PREVENTIVE RELIEF.—Whenever any

4 handler has engaged or there are reasonable grounds

5 to believe that any handler is about to engage in any

6 act or practice prohibited by section 4, a civil action

7 for preventive relief, including an application for a

8 permanent or temporary injunction, restraining

9 order, or other order, may be instituted by the per10 son aggrieved.

11 ‘‘(2) ATTORNEY’S FEES.—In any action com12 menced under paragraph (1), the court may allow

13 the prevailing party a reasonable attorney’s fee as

14 part of the costs.

15 ‘‘(3) SECURITY.—The court may provide that

16 no restraining order or preliminary injunction shall

17 issue unless security is provided by the applicant, in

18 such sum as the court determines to be appropriate,

19 for the payment of such costs and damages as may

20 be incurred or suffered by any party that is found

21 to have been wrongfully enjoined or restrained.

22 ‘‘(b) CIVIL ACTIONS BY INJURED PERSONS.—

23 ‘‘(1) IN GENERAL.—Any person injured in the

24 business or property of the person by reason of any

25 violation of, or combination or conspiracy to violate,

26 section 4 may—
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1 ‘‘(A) sue for the violation in the appro2 priate United States district court without re3 spect to the amount in controversy; and

4 ‘‘(B) recover damages sustained.

5 ‘‘(2) ATTORNEY’S FEES.—In any action com6 menced under paragraph (1), the court may allow

7 the prevailing party a reasonable attorney’s fee as

8 part of the costs.

9 ‘‘(3) LIMITATION ON ACTIONS.—Any action to

10 enforce any cause of action under this subsection

11 shall be barred unless commenced within 2 years

12 after the cause of action occurred.

13 ‘‘(c) JURISDICTION OF DISTRICT COURTS.—

14 ‘‘(1) IN GENERAL.—A United States district

15 court shall have jurisdiction over an action brought

16 under this section.

17 ‘‘(2) LIMITATIONS.—No action may be com18 menced under subsection (a) or (b)—

19 ‘‘(A) prior to 60 days after the plaintiff

20 has given notice of the alleged violation to the

21 Secretary through a petition under section 8(b);

22 or

23 ‘‘(B) if the Secretary has commenced and

24 is diligently prosecuting an action (administra-
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1 tive or judicial) dealing with the same violation

2 to require compliance with the Act.

3 ‘‘(d) JUDICIAL REVIEW.—An order of the Secretary

4 with respect to which review could have been obtained

5 under section 8(e)(2) shall not be subject to judicial review

6 in any proceeding for enforcement under this section.

7 ‘‘SEC. 10. PREEMPTION.

8 ‘‘(a) IN GENERAL.—This Act shall not invalidate the

9 provisions of any State law dealing with the same subject

10 as this Act, except that the State law may not permit any

11 action that is prohibited by this Act.

12 ‘‘(b) STATE COURTS.—This Act shall not deprive a

13 State court of jurisdiction under a State law dealing with

14 the same subject as this Act.’’.

15 TITLE III—INVESTIGATION OF

16 LIVE POULTRY DEALERS

17 SEC. 301. INVESTIGATION OF LIVE POULTRY DEALERS.

18 (a) REMOVAL OF POULTRY SLAUGHTER REQUIRE19 MENT FROM DEFINITIONS.—Section 2(a) of the Packers

20 and Stockyards Act, 1921 (7 U.S.C. 182), is amended—

21 (1) by striking paragraph (8) and inserting the

22 following:

23 ‘‘(8) POULTRY GROWER.—The term ‘poultry

24 grower’ means any person engaged in the business

25 of raising or caring for live poultry under a poultry
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1 growing arrangement, whether the poultry is owned

2 by the person or by another person;’’;

3 (2) in paragraph (9), by striking ‘‘and cares for

4 live poultry for delivery, in accord with another’s in5 structions, for slaughter’’ and inserting ‘‘or cares for

6 live poultry in accordance with the instructions of

7 another person’’; and

8 (3) in paragraph (10), by striking ‘‘for the pur9 pose of either slaughtering it or selling it for slaugh10 ter by another’’.

11 (b) ADMINISTRATIVE ENFORCEMENT AUTHORITY

12 OVER LIVE POULTRY DEALERS.—Sections 203, 204, and

13 205 of the Packers and Stockyards Act, 1921 (7 U.S.C.

14 193, 194, 195), are amended by inserting ‘‘or live poultry

15 dealer’’ after ‘‘packer’’ each place it appears.

16 (c) AUTHORITY TO REQUEST TEMPORARY INJUNC17 TION OR RESTRAINING ORDER.—Section 408 of the Pack18 ers and Stockyards Act, 1921 (7 U.S.C. 228a), is amend19 ed in the first sentence by striking ‘‘on account of poultry’’

20 and inserting ‘‘on account of poultry or poultry care’’.

21 (d) VIOLATIONS BY LIVE POULTRY DEALERS.—Sec22 tion 411 of the Packers and Stockyards Act, 1921 (7

23 U.S.C. 228b–2), is amended—
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1 (1) in the first sentence of subsection (a), by

2 striking ‘‘any provision of section 207 or section 410

3 of’’; and

4 (2) in the first sentence of subsection (b), by

5 striking ‘‘any provisions of section 207 or section

6 410’’ and inserting ‘‘any provision’’.

Æ