II

106TH CONGRESS

2D SESSION S. 2411

To enhance competition in the agricultural sector and to protect family

farms and ranches and rural communities from unfair, unjustly discriminatory, or deceptive practices by agribusinesses, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 12, 2000

Mr. DASCHLE (for himself, Mr. LEAHY, Mr. HARKIN, Mr. CONRAD, Mr. DORGAN, Mr. JOHNSON, Mr. FEINGOLD, Mr. KOHL, Mr. KERREY, Mr. BAUCUS, Mr. ROCKEFELLER, Mr. WELLSTONE, Mr. LEVIN, and Mr. JEFFORDS) introduced the following bill; which was read twice and referred

to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To enhance competition in the agricultural sector and to

protect family farms and ranches and rural communities

from unfair, unjustly discriminatory, or deceptive practices by agribusinesses, 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; TABLE OF CONTENTS.

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

5 ‘‘Farmers and Ranchers Fair Competition Act of 2000’’.

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

7 this Act is as follows:
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Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

Sec. 3. Definitions.

Sec. 4. Prohibitions against unfair practices in transactions involving agricultural commodities.

Sec. 5. Reports of the Secretary on potential unfair practices.

Sec. 6. Plain language and disclosure requirements for contracts.

Sec. 7. Report on corporate structure.

Sec. 8. Mandatory funding for staff.

Sec. 9. General Accounting Office study.

Sec. 10. Authority to promulgate regulations.

1 SEC. 2. FINDINGS AND PURPOSES.

2 (a) FINDINGS.—Congress makes the following find3 ings:

4 (1) Congressional Joint Economic Committee

5 data suggests that over the last 15 years, agri6 business profits have come almost exclusively out of

7 producer income, rather than from increased retail

8 prices. Given the lack of market power of producers,

9 this data raises the question of whether the trend

10 has been a natural market development or is instead

11 a sign of market failure.

12 (2) Most economists agree that in the last 15

13 years the real market price for a market basket of

14 food has increased by approximately 3 percent, while

15 the farm value of that food has fallen by approxi16 mately 38 percent. Over that period, marketing costs

17 have decreased by 15 percent, which should have

18 narrowed rather than widened the gap.

19 (3) There is significant concern that increas20 ingly vertically integrated multinational corporations,
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1 especially those that own broad biotechnology pat2 ents, may be able to exert unreasonable and exces3 sive market power in the future by acquiring compa4 nies that own other broad biotechnology patents.

5 (4) The National Association of Attorneys Gen6 eral is very concerned with the high degree of eco7 nomic concentration in the agricultural sector and

8 the great potential for anticompetitive practices and

9 behavior. They estimate the top 4 meat packing

10 firms control over 80 percent of steer and heifer

11 slaughter, over 55 percent of hog slaughter, and over

12 65 percent of sheep slaughter. Increased concentra13 tion in the dairy procurement and processing sector

14 is also raising significant concerns.

15 (5) In the grain industry, United States De16 partment of Agriculture reports that the top 4 firms

17 controlled 56 percent of flour milling, 73 percent of

18 wet corn milling, 71 percent of soybean milling, and

19 62 percent of cotton seed oil milling.

20 (6) Moreover, the figures in paragraphs (4) and

21 (5) underestimate true levels of concentration and

22 potential market power because they fail to reflect

23 the web of unreported and difficult to trace joint

24 ventures, strategic alliances, interlocking direc-
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1 torates, and other partial ownership arrangements

2 that link many large corporations.

3 (7) Concentration of market power also has the

4 effect of increasing the transfer of investment, cap5 ital, jobs, and necessary social services out of rural

6 areas to business centers throughout the world.

7 Many individuals representing a wide range of ex8 pertise have expressed concern with the potential im9 plications of this trend for the greater public good.

10 (8) The recent increase in contracting for the

11 production or sale of agricultural commodities, such

12 as livestock and poultry, is a cause for concern be13 cause of the significant bargaining power the buyers

14 of these products or services wield over individual

15 farmers and ranchers.

16 (9) Transparent, freely accessible, and competi17 tive markets are being supplanted by transfer prices

18 set within vertically integrated firms and by the in19 creasing use of private contracts.

20 (10) Agribusiness firms are showing record

21 profits at the same time that farmers and ranchers

22 are struggling to survive an ongoing price collapse

23 and erratic price trends.

24 (11) The efforts of farmers and ranchers to im25 prove their market position is hampered by—
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1 (A) extreme disparities in bargaining

2 power between agribusiness firms and the hun3 dreds of thousands of individual farmers and

4 ranchers that sell products to them;

5 (B) the rapid increase in the use of private

6 contracts that disrupt price discovery and can

7 unfairly disadvantage producers;

8 (C) the extreme market power of agri9 business firms and alleged anticompetitive prac10 tices in the industry;

11 (D) shrinking opportunities for market ac12 cess by producers; and

13 (E) the direct and indirect impact these

14 factors have on the continuing viability of thou15 sands of rural communities across the country.

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

17 (1) enhance fair and open competition in rural

18 America, thereby fostering innovation and economic

19 growth;

20 (2) permit the Secretary to take actions to en21 hance the bargaining position of family farmers and

22 ranchers, and to promote the viability of rural com23 munities nationwide;

24 (3) protect family farms and ranches from—
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1 (A) unfair, unjustly discriminatory, or de2 ceptive practices or devices;

3 (B) false or misleading statements;

4 (C) retaliation related to statements law5 fully provided; and

6 (D) other unfair trade practices employed

7 by processors and other agribusinesses; and

8 (4) permit the Secretary to take actions to en9 hance the viability of rural communities nationwide.

10 SEC. 3. DEFINITIONS.

11 In this Act:

12 (1) AGRICULTURAL COMMODITY.—The term

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

14 term in section 102 of the Agricultural Trade Act of

15 1978 (7 U.S.C. 5602).

16 (2) AGRICULTURAL COOPERATIVE.—The term

17 ‘‘agricultural cooperative’’ means an association of

18 persons engaged in the production, marketing, or

19 processing of an agricultural commodity that meets

20 the requirements of the Act of February 18, 1922,

21 ‘‘An Act to authorize association of producers of ag22 ricultural products’’ (7 U.S.C. 291 et seq.; 42 Stat.

23 388) (commonly known as the ‘‘Capper-Volstead

24 Act’’).
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1 (3) BROKER.—The term ‘‘broker’’ means any

2 person engaged in the business of negotiating sales

3 and purchases of any agricultural commodity in

4 interstate or foreign commerce for or on behalf of

5 the vendor or the purchaser, except that no person

6 shall be considered a broker if the person’s sales of

7 such commodities are not in excess of $1,000,000

8 per year.

9 (4) COMMISSION MERCHANT.—The term ‘‘com10 mission merchant’’ means any person engaged in the

11 business of receiving in interstate or foreign com12 merce any agricultural commodity for sale, on com13 mission, or for or on behalf of another, except that

14 no person shall be considered a commission mer15 chant if the person’s sales of such commodities are

16 not in excess of $1,000,000 per year.

17 (5) DEALER.—The term ‘‘dealer’’ means—

18 (A) any person (except an agricultural co19 operative) engaged in the business of buying,

20 selling, or marketing agricultural commodities

21 in wholesale or jobbing quantities, as deter22 mined by the Secretary, in interstate or foreign

23 commerce, except—

24 (i) no person shall be considered a

25 dealer with respect to sales or marketing of
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1 any agricultural commodity of that per2 son’s own raising provided such sales or

3 marketing of such agricultural commodities

4 do not exceed $10,000,000 per year; and

5 (ii) no person shall be considered a

6 dealer who buys, sells, or markets less than

7 $1,000,000 per year of such commodities;

8 and

9 (B) an agricultural cooperative which sells

10 or markets agricultural commodities of its

11 members’ own production if such agricultural

12 cooperative sells or markets more than

13 $1,000,000 of its members’ production per year

14 of such commodities.

15 (6) PROCESSOR.—The term ‘‘processor’’

16 means—

17 (A) any person (except an agricultural co18 operative) engaged in the business of handling,

19 preparing, or manufacturing (including slaugh20 tering) of an agricultural commodity or the

21 products of such agricultural commodity for

22 sale or marketing in interstate or foreign com23 merce for human consumption except—

24 (i) no person shall be considered a

25 processor with respect to the handling, pre-
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1 paring, or manufacturing (including

2 slaughtering) of an agricultural commodity

3 of that person’s own raising provided such

4 sales or marketing of such agricultural

5 commodities do not exceed $10,000,000

6 per year; and

7 (ii) no person who handles, prepares,

8 or manufactures (including slaughtering)

9 an agricultural commodity in an amount

10 less than $1,000,000 per year shall be con11 sidered a processor; and

12 (B) an agricultural cooperative which proc13 esses agricultural commodities of its members’

14 own production if such agricultural cooperative

15 processes more than $1,000,000 of its mem16 bers’ production of such commodities per year.

17 (7) SECRETARY.—The term ‘‘Secretary’’ means

18 the Secretary of Agriculture.

19 SEC. 4. PROHIBITIONS AGAINST UNFAIR PRACTICES IN

20 TRANSACTIONS INVOLVING AGRICULTURAL

21 COMMODITIES.

22 (a) PROHIBITIONS.—It shall be unlawful in, or in

23 connection with, any transaction in interstate or foreign

24 commerce for any dealer, processor, commission merchant,

25 or broker—
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1 (1) to engage in or use any unfair, unreason2 able, unjustly discriminatory, or deceptive practice

3 or device in the marketing, receiving, purchasing,

4 sale, or contracting for the production of any agri5 cultural commodity;

6 (2) to make or give any undue or unreasonable

7 preference or advantage to any particular person or

8 locality or subject any particular person or locality

9 to any undue or unreasonable disadvantage in con10 nection with any transaction involving any agricul11 tural commodity;

12 (3) to make any false or misleading statement

13 in connection with any transaction involving any ag14 ricultural commodity that is purchased or received in

15 interstate or foreign commerce, or involving any pro16 duction contract, or to fail, without reasonable

17 cause, to perform any specification or duty, express

18 or implied, arising out of any undertaking in connec19 tion with any such transaction or production con20 tract;

21 (4) to retaliate against or disadvantage, or to

22 conspire to retaliate against or disadvantage, any

23 person because of statements or information lawfully

24 provided by such person to any person (including to

25 the Secretary or to a law enforcement agency) re-
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1 garding alleged improper actions or violations of law

2 by such dealer, processor, commission merchant, or

3 broker (unless such statements or information are

4 determined to be libelous or slanderous under appli5 cable State law);

6 (5) to include as part of any new or renewed

7 agreement or contract a right of first refusal, or to

8 make any sale or transaction contingent upon the

9 granting of a right of first refusal, until 180 days

10 after the General Accounting Office study under sec11 tion 8 is complete; or

12 (6) to offer different prices contemporaneously

13 for agricultural commodities of like grade and qual14 ity (except commodities regulated by the Perishable

15 Agricultural Commodities Act (7 U.S.C. 181 et

16 seq.)) unless—

17 (A) the commodity is purchased in a public

18 market through a competitive bidding process

19 or under similar conditions which provide op20 portunities for multiple competitors to seek to

21 acquire the commodity;

22 (B) the premium or discount reflects the

23 actual cost of acquiring a commodity prior to

24 processing; or
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1 (C) the Secretary has determined that

2 such types of offers do not have a discrimina3 tory impact against small volume producers.

4 (b) VIOLATIONS.—

5 (1) COMPLAINTS.—Whenever the Secretary has

6 reason to believe that any dealer, processor, commis7 sion merchant, or broker has violated any provision

8 of subsection (a), the Secretary shall cause a com9 plaint in writing to be served on that person or per10 sons, stating the charges in that respect, and requir11 ing the dealer, processor, commission merchant, or

12 broker to attend and testify at a hearing to be held

13 not sooner than 30 days after the service of such

14 complaint.

15 (2) HEARING.—

16 (A) IN GENERAL.—The Secretary may

17 hold hearings, sign and issue subpoenas, admin18 ister oaths, examine witnesses, receive evidence,

19 and require the attendance and testimony of

20 witnesses and the production of such accounts,

21 records, and memoranda, as the Secretary

22 deems necessary, for the determination of the

23 existence of any violation of this subsection.

24 (B) RIGHT TO HEARING.—A dealer, proc25 essor, commission merchant, or broker may re-
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1 quest a hearing if the dealer, processor, com2 mission merchant, or broker is subject to pen3 alty for unfair conduct, under this subsection.

4 (C) RESPONDENTS RIGHTS.—During a

5 hearing the dealer, processor, commission mer6 chant, or broker shall be given, pursuant to reg7 ulations issued by the Secretary, the

8 opportunity—

9 (i) to be informed of the evidence

10 against such person;

11 (ii) to cross-examine witnesses; and

12 (iii) to present evidence.

13 (D) HEARING LIMITATION.—The issues of

14 any hearing held or requested under this sec15 tion shall be limited in scope to matters directly

16 related to the purpose for which such hearing

17 was held or requested.

18 (3) REPORT OF FINDING AND PENALTIES.—

19 (A) IN GENERAL.—If, after a hearing, the

20 Secretary finds that the dealer, processor, com21 mission merchant, or broker has violated any

22 provisions of subsection (a), the Secretary shall

23 make a report in writing which states the find24 ings of fact and includes an order requiring the

25 dealer, processor, commission merchant, or
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1 broker to cease and desist from continuing such

2 violation.

3 (B) CIVIL PENALTY.—The Secretary may

4 assess a civil penalty not to exceed $100,000

5 for each such violation of subsection (a).

6 (4) TEMPORARY INJUNCTION AND FINALITY

7 AND APPEALABILITY OF AN ORDER.—

8 (A) TEMPORARY INJUNCTION.—At any

9 time after a complaint is filed under paragraph

10 (1), the court, on application of the Secretary,

11 may issue a temporary injunction, restraining

12 to the extent it deems proper, the dealer, proc13 essor, commission merchant, or broker and such

14 person’s officers, directors, agents, and employ15 ees from violating any of the provisions of sub16 section (a).

17 (B) APPEALABILITY OF AN ORDER.—An

18 order issued pursuant to this subsection shall

19 be final and conclusive unless within 30 days

20 after service of the order, the dealer, processor,

21 commission merchant, or broker petitions to ap22 peal the order to the court of appeals for the

23 circuit in which such person resides or has its

24 principal place of business or the District of Co25 lumbia Circuit Court of Appeals.
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1 (C) DELIVERY OF PETITION.—The clerk of

2 the court shall immediately cause a copy of the

3 petition filed under subparagraph (B) to be de4 livered to the Secretary and the Secretary shall

5 thereupon file in the court the record of the

6 proceedings under this subsection.

7 (D) PENALTY FOR FAILURE TO OBEY AN

8 ORDER.—Any dealer, processor, commission

9 merchant, or broker which fails to obey any

10 order of the Secretary issued under the provi11 sions of this section after such order or such

12 order as modified has been sustained by the

13 court or has otherwise become final, shall be

14 fined not less than $5,000 and not more than

15 $100,000 for each offense. Each day during

16 which such failure continues shall be deemed a

17 separate offense.

18 (5) RECORDS.—

19 (A) IN GENERAL.—Every dealer, proc20 essor, commission merchant, and broker shall

21 keep for a period of not less than 5 years such

22 accounts, records, and memoranda (including

23 marketing agreements, forward contracts, and

24 formula pricing arrangements) and fully and

25 correctly disclose all transactions involved in the
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1 business of such person, including the true own2 ership of the business.

3 (B) FAILURE TO KEEP RECORDS OR

4 ALLOW THE SECRETARY TO INSPECT

5 RECORDS.—Failure to keep, or allow the Sec6 retary to inspect records as required by this

7 paragraph shall constitute an unfair practice in

8 violation of subsection (a)(1).

9 (C) INSPECTION OF RECORDS.—The Sec10 retary shall have the right to inspect such ac11 counts, records, and memoranda (including

12 marketing agreements, forward contracts, and

13 formula pricing arrangements) of any dealer,

14 processor, commission merchant, and broker as

15 may be material to the investigation of any al16 leged violation of this section or for the purpose

17 of investigating the business conduct or prac18 tices of an organization with respect to such

19 dealer, processor, commission merchant or

20 broker.

21 (c) COMPENSATION FOR INJURY.—

22 (1) ESTABLISHMENT OF THE FAMILY FARMER

23 AND RANCHER CLAIMS COMMISSION.—

24 (A) IN GENERAL.—The Secretary shall ap25 point 3 individuals to a commission to be
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1 known as the ‘‘Family Farmer and Rancher

2 Claims Commission’’ (in this subsection re3 ferred to as the ‘‘Commission’’) to review claims

4 of family farmers and ranchers who have suf5 fered financial damages as a result of any viola6 tion of this section as determined by the Sec7 retary pursuant to subsection (b)(3).

8 (B) TERM OF SERVICE.—The member of

9 the Commission shall serve 3-year terms which

10 may be renewed. The initial members of the

11 Commission may be appointed for a period of

12 less than 3 years, as determined by the Sec13 retary.

14 (2) REVIEW OF CLAIMS.—

15 (A) SUBMISSION OF CLAIMS.—Family

16 farmers and ranchers damaged as a result of a

17 violation of this section as determined by the

18 Secretary, pursuant to subsection (c)(3) may

19 preserve the right to claim financial damages

20 under this section by filing a claim pursuant to

21 regulations promulgated by the Secretary.

22 (B) DETERMINATION.—Based on a review

23 of such claims, the Commission shall determine

24 the amount of damages to be paid, if any, as

25 a result of the violation.
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1 (C) REVIEW.—The decisions of the Com2 mission under this paragraph shall not be sub3 ject to judicial review except to determine that

4 the amount of damages to be paid is consistent

5 with the published regulations of the Secretary

6 that establish the criteria for implementing this

7 subsection.

8 (3) FUNDING.—

9 (A) IN GENERAL.—Funds collected from

10 civil penalties pursuant to this section shall be

11 transferred to a special fund in the Treasury,

12 shall be made available to the Secretary without

13 further appropriation, and shall remain avail14 able until expended to pay the expenses of the

15 Commission and the claims described in this

16 subsection.

17 (B) AUTHORIZATION OF APPROPRIA18 TION.—In addition to the funds described in

19 subparagraph (A), there are authorized to be

20 appropriated such sums as may be necessary to

21 carry out this section.

22 (4) NO PRECLUSION OF PRIVATE CLAIMS.—By

23 filing an action under this subsection, a family farm24 er or rancher is not precluded from bringing a cause

25 of action against a dealer, processor, commission,
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1 merchant, or broker in any court of appropriate ju2 risdiction.

3 (d) AUTHORITY OF THE SECRETARY.—Not later

4 than 180 days after the date of enactment of this section,

5 the Secretary and the Attorney General shall develop and

6 implement a plan to enable, where appropriate, the Sec7 retary to file civil actions, including temporary injunctions,

8 to enforce orders issued by the Secretary under this Act.

9 SEC. 5. REPORTS OF THE SECRETARY ON POTENTIAL UN10 FAIR PRACTICES.

11 (a) FILING PREMERGER NOTICES WITH THE SEC12 RETARY.—No dealer, processor, commission merchant,

13 broker, operator of a warehouse of agricultural commod14 ities, or other agricultural related business shall merge or

15 acquire, directly or indirectly, any voting securities or as16 sets of any other dealer, processor, commission merchant,

17 broker, operator of a warehouse of agricultural commod18 ities, or other agricultural related business unless both

19 persons (or in the case of a tender offer, the acquiring

20 person) file notification pursuant to rules promulgated by

21 the Secretary if—

22 (1) any voting securities or assets of the dealer,

23 processor, commission merchant, broker, operator of

24 a warehouse of agricultural commodities or other ag25 ricultural related business with annual net sales or
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1 total assets of $10,000,000 or more are being ac2 quired by a dealer, processor, commission merchant,

3 broker, or operator of a warehouse of agricultural

4 commodities, or other agricultural related business

5 which has total assets or annual net sales of

6 $100,000,000 or more; and

7 (2) any voting securities or assets of a dealer,

8 processor, commission merchant, broker, operator of

9 a warehouse of agricultural commodities, or other

10 agricultural related business with annual net sales or

11 total assets of $100,000,000 or more are being ac12 quired by any dealer, processor, commission mer13 chant, broker, operator of a warehouse of agricul14 tural commodities, or agriculture related business

15 with annual net sales or total assets of $10,000,000

16 or more and as a result of such acquisition, if the

17 acquiring person would hold—

18 (A) 15 percent or more of the voting secu19 rities or assets of the acquired person; or

20 (B) an aggregate total amount of the vot21 ing securities and assets of the acquired person

22 in excess of $15,000,000.

23 (b) REVIEW OF THE SECRETARY.—

24 (1) IN GENERAL.—Except as provided in para25 graph (2), the Secretary may conduct a review of
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1 any merger or acquisition described in subsection

2 (a).

3 (2) EXCEPTION.—The Secretary shall conduct

4 a review of any merger or acquisition described in

5 subsection (a) upon a request from a member of

6 Congress.

7 (c) ACCESS TO RECORDS.—The Secretary may re8 quest any information including any testimony, documen9 tary material, or related information from a dealer, proc10 essor, commission merchant, broker, or operator of a

11 warehouse of agricultural commodities, or other agricul12 tural related business, pertaining to any merger or acqui13 sition of any agriculture related business.

14 (d) PURPOSE OF REVIEW.—

15 (1) FINDINGS.—The review described in sub16 section (a) shall make findings whether the merger

17 or acquisition could—

18 (A) be significantly detrimental to the

19 present or future viability of family farms or

20 ranches or rural communities in the areas af21 fected by the merger or acquisition, pursuant to

22 standards established by the Secretary; or

23 (B) lead to a violation of section 4(a) of

24 this Act.
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1 (2) REMEDIES.—The review may include a de2 termination of possible remedies regarding how the

3 parties of the merger or acquisition may take steps

4 to modify their operations to address the findings

5 described in paragraph (1).

6 (e) REPORT OF REVIEW.—

7 (1) PRELIMINARY REPORT.—After conducting

8 the review described in this section, the Secretary

9 shall issue a preliminary report to the parties of the

10 merger or acquisition and the Attorney General or

11 the Federal Trade Commission, as appropriate,

12 which shall include findings and any remedies de13 scribed in subsection (d)(2).

14 (2) FINAL REPORT.—After affording the par15 ties described in paragraph (1) an opportunity for a

16 hearing regarding the findings and any proposed

17 remedies in the preliminary report, the Secretary

18 shall issue a final report to the President and Attor19 ney General or the Federal Trade Commission, as

20 appropriate, with respect to the merger or acquisi21 tion.

22 (f) IMPLEMENTATION OF THE REPORT.—Not later

23 than 120 days after the issuance of a final report de24 scribed in subsection (e), the parties of the merger or ac25 quisition affected by such report shall make changes to
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1 their operations or structure to comply with the findings

2 and implement any suggested remedy or any agreed upon

3 alternative remedy and shall file a response demonstrating

4 such compliance or implementation.

5 (g) CONFIDENTIALITY OF INFORMATION.—Informa6 tion used by the Secretary to conduct the review pursuant

7 to this section provided by a party of the merger or acqui8 sition under review or by a government agency shall be

9 treated by the Secretary as confidential information pur10 suant to section 1770 of the Food Security Act of 1985

11 (7 U.S.C. 2276), except that the Secretary may share any

12 information with the Attorney General, the Federal Trade

13 Commission, and a party seeking a hearing pursuant to

14 subsection (e)(2) with respect to information relating to

15 such party. The report issued under subsection (e) shall

16 be available to the public consistent with the confiden17 tiality provisions of this subsection.

18 (h) PENALTIES.—

19 (1) IN GENERAL.—After affording the parties

20 an opportunity for a hearing, the Secretary may as21 sess a civil penalty not to exceed $300,000 for the

22 failure of a person to comply with the requirements

23 of subsections (a) and (f). Such hearing shall be lim24 ited to the issue of the amount of the civil penalty.
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1 (2) FAILURE TO FOLLOW AN ORDER.—If after

2 being assessed a civil penalty in accordance with

3 paragraph (1) a person continues to fail to meet the

4 applicable requirements of subsections (a) and (f),

5 the Secretary may, after affording the parties an op6 portunity for a hearing, assess a further civil penalty

7 not to exceed $100,000 for each day such person

8 continues such violation. Such hearing shall be lim9 ited to the issue of the additional civil penalty as10 sessed under this paragraph.

11 SEC. 6. PLAIN LANGUAGE AND DISCLOSURE REQUIRE12 MENTS FOR CONTRACTS.

13 (a) IN GENERAL.—Any contract between a family

14 farmer or rancher and a dealer, processor, commission

15 merchant, broker, operator of a warehouse of agricultural

16 commodities, or other agricultural related business shall—

17 (1) be written in a clear and coherent manner

18 using words with common and everyday meanings

19 and shall be appropriately divided and captioned by

20 various sections;

21 (2) disclose in a manner consistent with para22 graph (1)—

23 (A) contract duration;

24 (B) contract termination;

25 (C) renegotiation standards;
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1 (D) responsibility for environmental dam2 age;

3 (E) factors to be used in determining per4 formance payments;

5 (F) which parties shall be responsible for

6 obtaining and complying with necessary local,

7 State, and Federal government permits; and

8 (G) any other contract terms the Secretary

9 determines is appropriate for disclosure; and

10 (3) not contain a confidentiality requirement

11 barring a party of a contract from sharing terms of

12 such contract (excluding trade secrets as applied in

13 the Freedom of Information Act (5 U.S.C. 552 et

14 seq.)) for the purposes of obtaining legal or financial

15 advice or for the purpose of responding to a request

16 from Federal or State agencies.

17 (b) PENALTIES.—

18 (1) IN GENERAL.—After affording the parties

19 an opportunity for a hearing, the Secretary may as20 sess a civil penalty not to exceed $100,000 for the

21 failure of a person to comply with the requirements

22 of this section. Such hearing shall be limited to the

23 issue of the amount of the civil penalty.

24 (2) FAILURE TO FOLLOW AN ORDER.—If after

25 being assessed a civil penalty in accordance with
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1 paragraph (1), a person continues to fail to meet the

2 applicable requirements of this section, the Secretary

3 may, after affording the parties an opportunity for

4 a hearing, assess a further civil penalty not to ex5 ceed $100,000 for each day such person continues

6 such violation. Such hearing shall be limited to the

7 issue of the amount of the additional civil penalty

8 assessed under this paragraph.

9 (c) IMPLEMENTATION.—The requirements imposed

10 by this section shall be applicable to contracts entered into

11 or renewed 60 days or subsequently after the date of en12 actment of this Act.

13 SEC. 7. REPORT ON CORPORATE STRUCTURE.

14 (a) IN GENERAL.—A dealer, processor, commission

15 merchant, or broker with annual sales in excess of

16 $100,000,000 shall annually file with the Secretary, a re17 port which describes, with respect to both domestic and

18 foreign activities; the strategic alliances; ownership in

19 other agribusiness firms or agribusiness-related firms;

20 joint ventures; subsidiaries; brand names; and interlocking

21 boards of directors with other corporations, representa22 tives, and agents that lobby Congress on behalf of such

23 dealer, processor, commission merchant, or broker, as de24 termined by the Secretary. This subsection shall not be

25 construed to apply to contracts.
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1 (b) PENALTIES.—

2 (1) IN GENERAL.—After affording the parties

3 an opportunity for a hearing, the Secretary may as4 sess a civil penalty not to exceed $100,000 for the

5 failure of a person to comply with the requirements

6 of this section. Such a hearing shall be limited to the

7 issue of the amount of the civil penalty

8 (2) FAILURE TO FOLLOW AN ORDER.—If after

9 being assessed a civil penalty in accordance with

10 paragraph (1) a person continues to fail to meet the

11 applicable requirements of this section, the Secretary

12 may, after affording the parties an opportunity for

13 a hearing, assess a further civil penalty not to ex14 ceed $100,000 for each day such person continues

15 such violation. Such hearing shall be limited to the

16 amount of the additional civil penalty assessed under

17 this paragraph.

18 SEC. 8. MANDATORY FUNDING FOR STAFF.

19 Out of the funds in the Treasury not otherwise appro20 priated, the Secretary of Treasury shall provide to the Sec21 retary of Agriculture $7,000,000 in each of fiscal years

22 2002 through 2006, to hire, train, and provide for addi23 tional staff to carry out additional responsibilities under

24 this Act, including a Special Counsel on Fair Markets and

25 Rural Opportunity, additional attorneys for the Office of
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1 General Counsel, investigators, economists, and support

2 staff. Such sums shall be made available to the Secretary

3 without further appropriation and shall be in addition to

4 funds already made available to the Secretary for the pur5 poses of this section.

6 SEC. 9. GENERAL ACCOUNTING OFFICE STUDY.

7 The Comptroller General of the United States, in

8 consultation with the Attorney General, the Secretary, the

9 Federal Trade Commission, the National Association of

10 Attorney’s General, and others, shall—

11 (1) study competition in the domestic farm

12 economy with a special focus on protecting family

13 farms and ranches and rural communities and the

14 potential for monopsonistic and oligopsonistic effects

15 nationally and regionally; and

16 (2) provide a report to the appropriate commit17 tees of Congress not later than 1 year after the date

18 of enactment of this Act on—

19 (A) the correlation between increases in

20 the gap between retail consumer food prices

21 and the prices paid to farmers and ranchers

22 and any increases in concentration among proc23 essors, manufacturers, or other firms that buy

24 from farmers and ranchers;
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1 (B) the extent to which the use of formula

2 pricing, marketing agreements, forward con3 tracting, and production contracts tend to give

4 processors, agribusinesses, and other buyers of

5 agricultural commodities unreasonable market

6 power over their producer/suppliers in the local

7 markets;

8 (C) whether the granting of process pat9 ents relating to biotechnology research affecting

10 agriculture during the past 20 years has tended

11 to overly restrict related biotechnology research

12 or has tended to overly limit competition in the

13 biotechnology industries that affect agriculture

14 in a manner that is contrary to the public inter15 est, or could do either in the future;

16 (D) whether acquisitions of companies that

17 own biotechnology patents and seed patents by

18 multinational companies have the potential for

19 reducing competition in the United States and

20 unduly increasing the market power of such

21 multinational companies;

22 (E) whether existing processors or agri23 business have disproportionate market power

24 and if competition could be increased if such

25 processors or agribusiness were required to di-
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1 vest assets to assure that they do not exert this

2 disproportionate market power over local mar3 kets;

4 (F) the extent of increase in concentration

5 in milk processing, procurement and handling,

6 and the potential risks to the economic well7 being of dairy farmers, and to the National

8 School Lunch program, and other Federal nu9 trition programs of that increase in concentra10 tion;

11 (G) the impact of mergers, acquisitions,

12 and joint ventures among dairy cooperatives on

13 dairy farmers, including impacts on both mem14 bers and nonmembers of the merging coopera15 tives;

16 (H) the impact of the significant increase

17 in the use of stock as the primary means of ef18 fectuating mergers and acquisitions by large

19 companies;

20 (I) the increase in the number and size of

21 mergers or acquisitions in the United States

22 and whether some of such mergers or acquisi23 tions would have taken place if the merger or

24 acquisition had to be consummated primarily

25 with cash, other assets, or borrowing; and
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1 (J) whether agricultural producers typi2 cally appear to derive any benefits (such as

3 higher prices for their products or any other ad4 vantages) from right-of-first-refusal provisions

5 contained in purchase contracts or other deals

6 with agribusiness purchasers of such products.

7 SEC. 10. AUTHORITY TO PROMULGATE REGULATIONS.

8 The Secretary of Agriculture shall have the authority

9 to promulgate regulations to carry out the responsibilities

10 of the Secretary under this Act.

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