IIA
104TH CONGRESS
1ST SESSION
H. R. 1103
IN THE SENATE OF THE UNITED STATES
JULY 31 (legislative day, JULY 10), 1995
Read twice and referred to the Committee on Agriculture, Nutrition, and
Forestry
AN ACT
To amend the Perishable Agricultural Commodities Act,
1930, to modernize, streamline, and strengthen the oper-
ation of the Act.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Perishable Agricultural Commodities Act Amendments of
1995’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Addition of definitions of retailer and grocery wholesaler.
Sec. 3. Gradual elimination of annual license fee for retailers and grocery
wholesalers that are dealers.
Sec. 4. Establishment and alteration of license fees for commission merchants,
dealers (other than retailers and grocery wholesalers), and bro-
kers.
Sec. 5. Increase in penalties for operating without a license and increase in late
renewal fee.
Sec. 6. Statutory trust on commodities and sale proceeds.
Sec. 7. Authority of Department of Agriculture regarding possible violations.
Sec. 8. Filing and handling fees for reparation complaints.
Sec. 9. Consideration of collateral fees and expenses.
Sec. 10. Clarification of misbranding prohibition.
Sec. 11. Imposition of civil penalty in lieu of license suspension or revocation.
Sec. 12. Extension of sanctions to persons responsibly connected to a commis-
sion merchant, dealer, or broker.
SEC. 2. ADDITION OF DEFINITIONS OF RETAILER AND GRO-
CERY WHOLESALER.
Section 1(b) of the Perishable Agricultural Commod-
ities Act, 1930 (7 U.S.C. 499a(b)), is amended by adding
at the end the following new paragraphs:
‘‘(11) The term ‘retailer’ means a person that is a
dealer engaged in the business of selling any perishable
agricultural commodity at retail.
‘‘(12) The term ‘grocery wholesaler’ means a person
that is a dealer primarily engaged in the full-line wholesale
distribution and resale of grocery and related nonfood
items (such as perishable agricultural commodities, dry
groceries, general merchandise, meat, poultry, and sea-
food, and health and beauty care items) to retailers. How-
ever, such term does not include a person described in the
preceding sentence if the person is primarily engaged in
the wholesale distribution and resale of perishable agricul-
tural commodities rather than other grocery and related
nonfood items.’’.
SEC. 3. GRADUAL ELIMINATION OF ANNUAL LICENSE FEE
FOR 
RETAILERS 
AND 
GROCERY 
WHOLE-
SALERS THAT ARE DEALERS.
(a) ELIMINATION OF ANNUAL FEES OVER THREE-
YEAR PERIOD.—Subsection (b) of section 3 of the Perish-
able Agricultural Commodities Act, 1930 (7 U.S.C. 499c),
is amended—
(1) by inserting ‘‘(1) APPLICATION
FOR
LI-
CENSE.—’’ before the start of the first sentence and
adjusting the margin to conform to paragraph (3);
(2) by striking the third and fourth sentences;
(3) by inserting ‘‘(5) PERISHABLE
AGRICUL-
TURAL COMMODITIES ACT FUND.—’’ before the start
of the fifth sentence and adjusting the margin to
conform to paragraph (3);
(4) by striking the last sentence; and
(5) by inserting before paragraph (5) (as so
designated) the following new paragraphs:
‘‘(3) ONE-TIME FEE FOR RETAILERS AND GRO-
CERY WHOLESALERS THAT ARE DEALERS.—During
the three-year period beginning on the date of the
enactment of the Perishable Agricultural Commod-
ities Act Amendments of 1995, a retailer or grocery
wholesaler making an initial application for a license
under this section shall pay the license fee required
under subparagraph (A), (B), or (C) of paragraph
(4) for license renewals in the year in which the ini-
tial application is made. After the end of such pe-
riod, a retailer or grocery wholesaler making an ini-
tial application for a license under this section shall
pay an administrative fee equal to $100. In either
case, a retailer or grocery wholesaler paying a fee
under this paragraph shall not be required to pay
any fee for renewal of the license for subsequent
years.
‘‘(4) GRADUAL ELIMINATION OF ANNUAL FEES
FOR RETAILERS AND GROCERY WHOLESALERS THAT
ARE DEALERS.—In the case of a retailer or grocery
wholesaler that holds a license under this section as
of the date of the enactment of the Perishable Agri-
cultural Commodities Act Amendments of 1995,
payments for the renewal of the license shall be
made pursuant to the following schedule:
‘‘(A) For anniversary dates occurring dur-
ing the one-year period beginning on the date
of the enactment of the Perishable Agricultural
Commodities Act Amendments of 1995, the li-
censee shall pay a renewal fee in an amount
equal to 100 percent of the applicable renewal
fee (subject to the $4,000 aggregate limit on
such payments) in effect under this subsection
on the day before such enactment date.
‘‘(B) For anniversary dates occurring dur-
ing the one-year period beginning at the end of
the period in subparagraph (A), the licensee
shall pay a renewal fee in an amount equal to
75 percent of the amount paid by the licensee
under subparagraph (A).
‘‘(C) For anniversary dates occurring dur-
ing the one-year period beginning at the end of
the period in subparagraph (B), the licensee
shall pay a renewal fee in an amount equal to
50 percent of the amount paid by the licensee
under subparagraph (A).
‘‘(D) After the end of the three-year period
beginning on the date of the enactment of the
Perishable 
Agricultural 
Commodities 
Act
Amendments of 1995, the licensee shall not be
required to pay any fee if the licensee seeks re-
newal of the license.’’.
(b) STYLISTIC AMENDMENTS.—Such section is fur-
ther amended—
(1) by striking the section heading and ‘‘SEC.
3. (a)’’ and inserting the following:
‘‘SEC. 3. LICENSES.
‘‘(a) LICENSE REQUIRED; PENALTIES FOR VIOLA-
TIONS.—’’;
(2) in subsection (b), by inserting ‘‘APPLICA-
TION AND FEES FOR LICENSES.—’’ after ‘‘(b)’’; and
(3) in subsection (c), by inserting ‘‘USE
OF
TRADE NAMES.—’’ after ‘‘(c)’’.
SEC. 4. ESTABLISHMENT AND ALTERATION OF LICENSE
FEES FOR COMMISSION MERCHANTS, DEAL-
ERS (OTHER THAN RETAILERS AND GROCERY
WHOLESALERS), AND BROKERS.
(a) DISCRETION OF SECRETARY TO ESTABLISH AND
ALTER FEES.—Section 3(b) of the Perishable Agricul-
tural Commodities Act, 1930 (7 U.S.C. 499c(b)), is
amended by inserting after paragraph (1), as designated
by section 3(a)(1), the following new paragraph:
‘‘(2) LICENSE FEES.—Upon the filing of an ap-
plication under paragraph (1), the applicant shall
pay such license fees, both individually and in the
aggregate, as the Secretary determines necessary to
meet the reasonably anticipated expenses for admin-
istering this Act and the Act to prevent the destruc-
tion or dumping of farm produce, approved March
3, 1927 (7 U.S.C. 491–497). Thereafter, the li-
censee shall pay such license fees annually or at
such longer interval as the Secretary may prescribe.
The Secretary shall take due account of savings to
the program when determining an appropriate inter-
val for renewal of licenses. The Secretary shall es-
tablish and alter license fees only by rulemaking
under section 553 of title 5, United States Code, ex-
cept that the Secretary may not alter the fees re-
quired under paragraph (3) or (4) for retailers and
grocery wholesalers that are dealers. Effective on the
date of the enactment of the Perishable Agricultural
Commodities Act Amendments of 1995 and until
such time as the Secretary alters such fees by rule,
an individual license fee shall equal $550 per year,
plus $200 for each branch or additional business fa-
cility operated by the applicant in excess of nine
such facilities, as determined by the Secretary, sub-
ject to an annual aggregate limit of $4,000 per li-
censee. Any increase in license fees prescribed by the
Secretary under this paragraph shall not take effect
unless the Secretary determines that, without such
increase, the funds on hand as of the end of the fis-
cal year in which the increase takes effect will be
less than 25 percent of the projected budget to ad-
minister such Acts for the next fiscal year. In no
case may a license fee increase by the Secretary take
effect before the end of the three-year period begin-
ning on the date of the enactment of the Perishable
Agricultural Commodities Act Amendments of
1995.’’.
(b) REPEAL
OF
CURRENT
CAP
ON
RESERVE
FUNDS.—Paragraph (5) of such section, as designated by
section 3(a)(3), is amended by striking the sentence that
begins with ‘‘The amount of money’’.
(c) CONFORMING AMENDMENTS REGARDING THIS
SECTION AND SECTION 3.—Section 4(a) of such Act (7
U.S.C. 499d(a)) is amended—
(1) in the matter preceding the provisos, by
striking ‘‘any anniversary date thereof unless the an-
nual fee has been paid’’ and inserting ‘‘the anniver-
sary date of the license at the end of the annual or
multiyear period covered by the license fee unless
the licensee submits the required renewal application
and pays the applicable renewal fee (if such fee is
required)’’;
(2) in the first proviso, by striking ‘‘the neces-
sity of paying the annual fee’’ and inserting ‘‘the ne-
cessity of renewing the license and of paying the re-
newal fee (if such fee is required)’’; and
(3) in the second proviso, by striking ‘‘annual
fee’’ and inserting ‘‘renewal fee (if required)’’.
SEC. 5. INCREASE IN PENALTIES FOR OPERATING WITH-
OUT A LICENSE AND INCREASE IN LATE RE-
NEWAL FEE.
(a) LICENSE PENALTIES.—Section 3(a) of the Per-
ishable Agricultural Commodities Act, 1930 (7 U.S.C.
499c(a)), as amended by section 3(b)(1), is further
amended—
(1) by striking ‘‘$500’’ and inserting ‘‘$1,000’’;
and
(2) by striking ‘‘$25’’ both places it appears
and inserting ‘‘$250’’.
(b) LATE FILING FEES.—Section 4(a) of the Perish-
able Agricultural Commodities Act, 1930 (7 U.S.C.
499d(a)), as amended by section 4(c), is further amended
in the second proviso by striking ‘‘plus $5’’ and inserting
‘‘plus $50’’.
agricultural commodities listed on this invoice are sold
subject to the statutory trust authorized by section 5(c)
of the Perishable Agricultural Commodities Act, 1930 (7
U.S.C. 499e(c)). The seller of these commodities retains
a trust claim over these commodities, all inventories of
food or other products derived from these commodities,
and any receivables or proceeds from the sale of these
commodities until full payment is received.’.’’.
SEC. 7. AUTHORITY OF DEPARTMENT OF AGRICULTURE
REGARDING POSSIBLE VIOLATIONS.
(a) DISCIPLINARY VIOLATIONS.—Subsection (b) of
section 6 of the Perishable Agricultural Commodities Act,
1930 (7 U.S.C. 499f), is amended to read as follows:
‘‘(b) DISCIPLINARY VIOLATIONS.—Any officer or
agency of any State or Territory having jurisdiction over
commission merchants, dealers, or brokers in such State
or Territory and any other interested person (other than
an employee of an agency of the Department of Agri-
culture administering this Act) may file, in accordance
with rules prescribed by the Secretary, a written notifica-
tion of any alleged violation of this Act by any commission
merchant, dealer, or broker. In addition, any official cer-
tificates of the United States Government or States or
Territories of the United States and trust notices filed
pursuant to section 5 shall constitute written notification
for the investigation, the Secretary may expand the
investigation to include such additional violations.
‘‘(2) ISSUANCE OF COMPLAINT BY SECRETARY;
PROCESS.—In the opinion of the Secretary, if an in-
vestigation under this subsection substantiates the
existence of violations of this Act, the Secretary may
cause a complaint to be issued. The Secretary shall
have the complaint served by registered mail or cer-
tified mail or otherwise on the person concerned and
afford such person an opportunity for a hearing
thereon before a duly authorized examiner of the
Secretary in any place in which the subject of the
complaint is engaged in business. However, in com-
plaints wherein the amount claimed as damages does
not exceed $30,000, a hearing need not be held and
proof in support of the complaint and in support of
respondent’s answer may be supplied in the form of
depositions or verified statements of fact.
‘‘(3) SPECIAL
NOTIFICATION
REQUIREMENTS
FOR CERTAIN INVESTIGATIONS.—Whenever the Sec-
retary initiates an investigation on the basis of a
written notification made under subsection (b) or ex-
pands such an investigation, the Secretary shall
promptly notify the subject of the investigation of
the existence of the investigation and the nature of
the alleged violations of this Act to be investigated.
Not later than 180 days after providing the initial
notification, the Secretary shall provide the subject
of the investigation with notice of the status of the
investigation, including whether the Secretary in-
tends to issue a complaint under paragraph (2), ter-
minate the investigation, or continue or expand the
investigation. The Secretary shall provide additional
status reports at the request of the subject of the in-
vestigation and shall promptly notify the subject of
the investigation whenever the Secretary terminates
the investigation.’’.
(c) INCREASE IN THRESHOLD FOR SHORTENED PRO-
CEDURE CASES.—Subsection (d) of such section is amend-
ed by striking ‘‘$15,000’’ both places it appears and in-
serting ‘‘$30,000’’.
(d) STYLISTIC AMENDMENTS.—Such section is fur-
ther amended—
(1) by striking the section heading and ‘‘SEC.
6.’’ and inserting the following:
‘‘SEC. 6. COMPLAINTS, WRITTEN NOTIFICATIONS, AND IN-
VESTIGATIONS.’’;
(2) in subsection (d), by inserting ‘‘DECISIONS
ON COMPLAINTS.—’’ after ‘‘(d)’’; and
(3) in subsection (e), by inserting ‘‘BOND RE-
QUIRED FOR CERTAIN COMPLAINTS.—’’ after ‘‘(e)’’.
SEC. 8. FILING AND HANDLING FEES FOR REPARATION
COMPLAINTS.
(a) PERMANENT FILING AND HANDLING FEES.—
Section 6(a) of the Perishable Agricultural Commodities
Act, 1930 (7 U.S.C. 499f(a)), is amended—
(1) by striking ‘‘(a)’’ and inserting the follow-
ing:
‘‘(a) REPARATION COMPLAINTS.—
‘‘(1) PETITION; PROCESS.—’’; and
(2) by adding at the end the following new
paragraph:
‘‘(2) FILING AND HANDLING FEES.—A person
submitting a petition to the Secretary under para-
graph (1) shall include a filing fee of $60 per peti-
tion. If the Secretary determines under paragraph
(1) that the facts contained in the petition warrant
further action, the person or persons submitting the
petition shall submit to the Secretary a handling fee
of $300. The Secretary may not forward a copy of
the complaint to the commission merchant, dealer,
or broker involved until after the Secretary receives
the required handling fee. The Secretary shall de-
posit fees submitted under this paragraph into the
Perishable Agricultural Commodities Act Fund pro-
vided for by section 3(b). The Secretary may alter
the fees specified in this paragraph by rulemaking
under section 553 of title 5, United States Code.’’.
(b) INCLUSION OF HANDLING FEE IN CALCULATION
OF DAMAGES.—Section 5(a) of such Act (7 U.S.C.
499e(a)) is amended by inserting after ‘‘damages’’ the fol-
lowing: ‘‘(including any handling fee paid by the injured
person or persons under section 6(a)(2))’’.
(c) CONFORMING AMENDMENT TO TEMPORARY FEE
AUTHORITY.—Public Law 103–276 (7 U.S.C. 499f note)
is repealed.
SEC. 9. CONSIDERATION OF COLLATERAL FEES AND EX-
PENSES.
(a) DEFINITION.—Section 1(b) of the Perishable Ag-
ricultural Commodities Act, 1930 (7 U.S.C. 499a(b)), is
amended by inserting after paragraph (12), as added by
section 2, the following new paragraph:
‘‘(13) The term ‘collateral fees and expenses’ means
any promotional allowances, rebates, service or materials
fees paid or provided, directly or indirectly, in connection
with the distribution or marketing of any perishable agri-
cultural commodity.’’.
(b) USE OF DEFINITION.—Section 2 of such Act (7
U.S.C. 499b) is amended—
(1) by striking ‘‘commerce—’’ in the matter be-
fore paragraph (1) and inserting ‘‘commerce:’’;
(2) by striking the semicolon at the end of each
paragraph and inserting a period; and
(3) in paragraph (4), by adding at the end the
following new sentence: ‘‘However, this paragraph
shall not be considered to make the good faith offer,
solicitation, payment, or receipt of collateral fees and
expenses, in and of itself, unlawful under this Act.’’.
SEC. 10. CLARIFICATION OF MISBRANDING PROHIBITION.
Section 2(5) of the Perishable Agricultural Commod-
ities Act, 1930 (7 U.S.C. 499b(5)), is amended—
(1) by striking ‘‘commerce: Provided, That’’
and inserting ‘‘commerce. However,’’; and
(2) by adding at the end the following new sen-
tence: ‘‘A person other than the first licensee han-
dling misbranded perishable agricultural commod-
ities shall not be held liable for a violation of this
paragraph by reason of the conduct of another if the
person did not have knowledge of the violation or
lacked the ability to correct the violation.’’.
SEC. 11. IMPOSITION OF CIVIL PENALTY IN LIEU OF LI-
CENSE SUSPENSION OR REVOCATION.
Section 8 of the Perishable Agricultural Commodities
Act, 1930 (7 U.S.C. 499h), is amended by adding at the
end the following new subsection:
‘‘(e) ALTERNATIVE CIVIL PENALTIES.—In lieu of
suspending or revoking a license under this section when
the Secretary determines, as provided by section 6, that
a commission merchant, dealer, or broker has violated sec-
tion 2 or subsection (b) of this section, the Secretary may
assess a civil penalty not to exceed $2,000 for each viola-
tive transaction or each day the violation continues. In as-
sessing the amount of a penalty under this subsection, the
Secretary shall give due consideration to the size of the
business, the number of employees, and the seriousness,
nature, and amount of the violation. Amounts collected
under this subsection shall be deposited in the Treasury
of the United States as miscellaneous receipts.’’.
SEC. 12. EXTENSION OF SANCTIONS TO PERSONS RESPON-
SIBLY CONNECTED TO A COMMISSION MER-
CHANT, DEALER, OR BROKER.
(a) EXCEPTION TO DEFINITION.—Section 1(b)(9) of
the Perishable Agricultural Commodities Act, 1930 (7
U.S.C. 499a(b)(9)), is amended by adding at the end the
following new sentence: ‘‘A person shall not be deemed to
be responsibly connected if the person demonstrates by a
preponderance of the evidence that the person was not ac-
tively involved in the activities resulting in a violation of
this Act and that the person either was only nominally
a partner, officer, director, or shareholder of a violating
licensee or entity subject to license or was not an owner
of a violating licensee or entity subject to license which
was the alter ego of its owners.’’.
(b) EXTENSION OF EMPLOYMENT SANCTION.—Sec-
tion 8(b) of such Act (7 U.S.C. 499h(b)) is amended by
adding at the end the following new sentence: ‘‘The Sec-
retary may extend the period of employment sanction as
to a responsibly connected person for an additional one-
year period upon the determination that the person has
been unlawfully employed as provided in this subsection.’’.
(c) CONFORMING AMENDMENT REGARDING LICENS-
ING SANCTION.—Section 4 of such Act (7 U.S.C. 499d)
is amended—
(1) in subsection (b), by inserting ‘‘is prohibited
from employment with a licensee under section 8(b)
or’’ after ‘‘with the applicant,’’ in the matter preced-
ing subparagraph (A); and
(2) in subsection (c), by adding at the end the
following new sentence: ‘‘The Secretary may not
issue a license to an applicant under this subsection
if the applicant or any person responsibly connected