I
105TH CONGRESS
1ST SESSION
H. R. 2738
To amend the Agricultural Fair Practices Act of 1967 to provide for the
accreditation of associations of agricultural producers, to promote good
faith bargaining between such accredited associations and the handlers
of agricultural products, and to strengthen the enforcement authorities
to respond to violations of the Act.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 24, 1997
Ms. KAPTUR (for herself, Mr. LIPINSKI, Mr. RUSH, Mr. DELLUMS, and Mr.
HEFNER) introduced the following bill; which was referred to the Com-
mittee on Agriculture
A BILL
To amend the Agricultural Fair Practices Act of 1967 to
provide for the accreditation of associations of agricul-
tural producers, to promote good faith bargaining be-
tween such accredited associations and the handlers of
agricultural products, and to strengthen the enforcement
authorities to respond to violations 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
‘‘Family Farmer Cooperative Marketing Amendments Act
of 1997’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purpose.
Sec. 3. Definitions.
Sec. 4. Prohibited practices.
Sec. 5. Bargaining in good faith.
Sec. 6. Accreditation of associations and designation of handlers.
Sec. 7. Assignment of association dues, fees, or retains.
Sec. 8. Investigative powers of Secretary.
Sec. 9. Administrative proceedings to prevent prohibited practices.
Sec. 10. Other enforcement activities.
Sec. 11. Preemption.
SEC. 2. FINDINGS AND PURPOSE.
Congress finds the following:
(1) The Agricultural Fair Practices Act of 1967
was enacted to establish standards of fair practices
for handlers of agricultural products in order to en-
sure that family farmers could join together in au-
thorized cooperative associations of producers with-
out interference.
(2) Despite the enactment of such Act, many
family farmers do not enjoy full freedom of associa-
tion or real liberty of contract and thus continue to
suffer from an inequality of bargaining power with
the semi-monopolistic agribusiness corporations that
contract for their services, and this inequality of bar-
gaining power substantially burdens interstate com-
merce by driving some farmers from their farms and
depressing the income and purchasing power of
other farmers.
(3) Tens of thousands of family farmers
produce commodities and provide services under con-
tract arrangements with processing firms or han-
dlers. The types of agricultural commodities pro-
duced under such contracts include fruits and vege-
tables, turkeys, chickens, hogs, beef, milk, popcorn,
and genetically engineered plants and animals.
(4) Production of contract commodities usually
requires large fixed investments in highly specialized
equipment, or in the case of many fruit producers,
a long-term commitment of their land to the crop.
Poultry farmers invest more than half of the total
capital in the poultry industry.
(5) On the other hand, processing firms and
handlers are better capitalized than producers and
often have plants located in different production
areas. While processing firms and handlers are not
constrained by growing conditions or producer re-
sistance in any one geographic area, farmers usually
have access to very few processors and are tied to
the family farm by capital investments.
(6) Farmer efforts to advance their own inter-
ests through cooperative marketing associations have
been thwarted by processing firms and handlers that
threaten to terminate contracts with association
members, threaten to move out of their State, or
manipulate the incomes of association members to
disastrously low levels.
(7) Because agricultural products are produced,
and agricultural services are provided, by numerous
individual farmers, their ability to market their
products or services and to bargain effectively for
fair prices and terms of sale of their products or
services is adversely affected unless they are free to
join together in cooperative associations of producers
as authorized by law. Interference with this right, or
the failure of any handler of agricultural products to
bargain in good faith with a cooperative association
of producers as the representative and agent of such
producers, is contrary to the public interest and ad-
versely affects the free and orderly flow of goods in
interstate and foreign commerce.
(b) PURPOSE.—It is the purpose of this Act to rein-
force the Agricultural Fair Practices Act of 1967 by—
(1) establishing standards of fair practices for
the handlers of agricultural products and for asso-
ciations of producers in their dealings in agricultural
products or services;
(2) providing standards for the accreditation of
cooperative associations of producers of agricultural
products or services for the purpose of bargaining;
(3) defining the mutual obligations of handlers
and associations of producers to bargain with re-
spect to the production, sale, and marketing of agri-
cultural products or services; and
(4) providing appropriate mechanisms for the
enforcement of such obligations.
SEC. 3. DEFINITIONS.
(a) PRODUCER.—Subsection (b) of section 3 of the
Agricultural Fair Practices Act of 1967 (7 U.S.C. 2302)
is amended—
(1) by inserting ‘‘poultryman,’’ after ‘‘dairy-
man,’’; and
(2) by adding at the end the following: ‘‘The
term includes a person furnishing labor, production
management, facilities, or other services for the pro-
duction of an agricultural product.’’.
(b) ASSOCIATION OF PRODUCERS.—Subsection (c) of
such section is amended by inserting ‘‘that engages in the
marketing of such agricultural products or of agricultural
services described in the second sentence of subsection (b),
including associations’’ before ‘‘engaged in’’.
(c) ADDITIONAL DEFINITIONS.—Such section is fur-
ther amended by striking subsection (e) and inserting the
following new subsections:
‘‘(e) The term ‘accredited association’ means an asso-
ciation of producers accredited by the Secretary of Agri-
culture in accordance with section 6.
‘‘(f) The term ‘designated handler’ means a handler
that is designated pursuant to section 6.
‘‘(g) The terms ‘bargain’ and ‘bargaining’ mean the
performance of the mutual obligation of a handler and an
accredited association to meet at reasonable times and for
reasonable periods of time for the purpose of negotiating
in good faith with respect to the price, terms of sale, com-
pensation for products produced or services rendered
under contract, or other provisions relating to the prod-
ucts marketed, or the services rendered, by the members
of the accredited association or by the accredited associa-
tion as agent for the members.’’.
SEC. 4. PROHIBITED PRACTICES.
Section 4 of the Agricultural Fair Practices Act of
1967 (7 U.S.C. 2303) is amended—
(1) in the matter preceding the subsections, by
striking ‘‘the following practices;’’ and inserting
‘‘any of the following practices:’’
(2) in subsection (a), by inserting ‘‘interfere
with, restrain, or’’ before ‘‘coerce’’;
(3) by striking ‘‘or’’ at the end of subsections
(a), (b), (c), (d), and (e) and inserting a period; and
(4) by adding at the end the following new sub-
sections:
‘‘(g) To refuse to bargain in good faith with an ac-
credited association, if the handler is designated pursuant
to section 6.
‘‘(h) To dominate or interfere with the formation or
administration of any association of producers or to con-
tribute financial or other support to an association of pro-
ducers.’’.
SEC. 5. BARGAINING IN GOOD FAITH.
Section 5 of the Agricultural Fair Practices Act of
1967 (7 U.S.C. 2304) is amended to read as follows:
‘‘SEC. 5. BARGAINING IN GOOD FAITH.
‘‘(a) CLARIFICATION OF OBLIGATION.—The obliga-
tion of a designated handler to bargain in good faith shall
apply with respect to an accredited association and the
products or services for which the accredited association
is accredited to bargain. The good-faith bargaining re-
quired between a handler and an accredited association
does not require either party to agree to a proposal or
to make a concession.
‘‘(b) EXTENSION OF SAME TERMS TO ACCREDITED
ASSOCIATION.—If a designated handler purchases a prod-
uct or service from producers under terms more favorable
to such producers than the terms negotiated with an ac-
credited association for the same type of product or serv-
ices, the handler shall offer the same terms to the accred-
ited association. Failure to extend the same terms to the
accredited association shall be considered to be a violation
of section 4(g). In comparing terms, the Secretary of Agri-
culture shall take into consideration (in addition to the
stipulated purchase price) any bonuses, premiums, hauling
or loading allowances, reimbursement of expenses, or pay-
ment for special services of any character which may be
paid by the handler, and any sums paid or agreed to be
paid by the handler for any other designated purpose than
payment of the purchase price.
‘‘(c) MEDIATION AND ARBITRATION.—The Secretary
of Agriculture may provide mediation services with respect
to bargaining between an accredited association and a des-
ignated handler at the request of either the accredited as-
sociation or the handler. If an impasse in bargaining has
occurred (as determined by the Secretary), the Secretary
‘‘(1) specify the agricultural product or service
(or products or services) for which the association
seeks accreditation to bargain on behalf of produc-
ers;
‘‘(2) designate the handlers, individually or by
production or marketing area or by some other ap-
propriate classification, with whom the association
seeks to be accredited to bargain; and
‘‘(3) contain such other information and docu-
ments as may be required by the Secretary.
‘‘(b) NOTICE OF PETITION; PROCEEDINGS.—Upon
receiving a petition under subsection (a) and any support-
ing material, the Secretary of Agriculture shall give notice
of the petition to all handlers designated in the petition
pursuant to subsection (a)(2). Handlers who have been
designated individually shall receive personal notice. Han-
dlers who have been designated by production or market-
ing area or by some other general classification shall be
given notice through the Federal Register. Both the asso-
ciation of producers seeking accreditation and the han-
dlers shall have an opportunity to submit written evidence,
views, and arguments to the Secretary. The Secretary may
conduct an informal proceeding on the petition, except
that the Secretary shall hold a formal hearing for the re-
ception of testimony and evidence if the Secretary finds
that there are substantial unresolved issues of material
fact.
‘‘(c) ISSUANCE ACCREDITATION ORDER.—Upon the
petition of an association of producers, the Secretary of
Agriculture may issue an order designating the association
of producers as an accredited association for purposes of
this Act if the Secretary determines that—
‘‘(1) under the charter documents or bylaws of
the association, it is owned and controlled by pro-
ducers;
‘‘(2) the association has contracts, binding
under State law, with its members empowering the
association to sell or negotiate terms of sale of the
products or services of its members;
‘‘(3) the association represents a sufficient
number of producers, or its members produce a suf-
ficient quantity of agricultural products or render a
sufficient level of services, to enable the association
to function as an effective agent for producers in
bargaining with designated handlers; and
‘‘(4) the functions of the association include
acting as principal or agent for its members in nego-
tiations with handlers for prices and other terms of
trade with respect to the production, sale, and mar-
keting of their products or services.
‘‘(d) SPECIAL RULE FOR ACCREDITATION.—In mak-
ing the finding required under subsection (c)(3), the Sec-
retary of Agriculture shall exclude any quantity of the ag-
ricultural products or services contracted by producers
with a producer owned and controlled processing coopera-
tive and any quantity of such products produced or serv-
ices rendered by a handler.
‘‘(e) NOTIFICATION OF ACCREDITATION ORDER.—
The Secretary of Agriculture shall notify the petitioning
association of producers, and each handler to be des-
ignated as part of the petition, of the Secretary’s decision
regarding the petition, together with a concise statement
of basis for the decision. The Secretary shall also give no-
tice of any accreditation to all other associations that have
been accredited to bargain with respect to the product or
service with any of the designated handlers.
‘‘(f) ANNUAL REPORT.—Each accredited association
shall submit an annual report to the Secretary of Agri-
culture in such form and including such information as
the Secretary by regulation may require so as to enable
the Secretary to determine whether the association contin-
ues to meet the standards for accreditation.
‘‘(g) LOSS OF ACCREDITATION.—If the Secretary of
Agriculture determines that an accredited association has
ceased to meet the standards for accreditation set forth
in subsection (c), the Secretary shall notify the association
of the respects in which it has ceased to maintain such
standards and allow it a reasonable time to answer or to
correct the deficiencies noted. Thereafter, if the Secretary
is not satisfied that the association is then in compliance
with subsection (c), the Secretary shall notify the associa-
tion and hold a hearing to consider the revocation of ac-
creditation. If, based upon the evidence submitted at the
hearing, the Secretary finds that the association has
ceased to maintain the standards for accreditation, the
Secretary shall revoke the accreditation of such associa-
tion.
‘‘(h) AMENDMENT.—At the discretion of the Sec-
retary of Agriculture or upon the petition of an accredited
association or a designated handler, the Secretary may
amend an accreditation order with respect to the product
or service specified in the accreditation order. The Sec-
retary shall give notice of any proposed amendment and
the reasons therefor to all accredited associations and han-
dlers that would be directly affected by the amendment
and shall provide an opportunity for a public hearing.
Thereafter, the Secretary may amend the order if the Sec-
retary finds such amendment will be conducive to more
effective bargaining and orderly marketing by the accred-
ited association of the product or services of its mem-
bers.’’.
SEC. 7. ASSIGNMENT OF ASSOCIATION DUES, FEES, OR RE-
TAINS.
The Agricultural Fair Practices Act of 1967 (7
U.S.C. 2301 et seq.) is amended by inserting after section
6 (as added by section 6) the following new section:
‘‘SEC. 7. ASSIGNMENT OF ASSOCIATION DUES, FEES, OR RE-
TAINS.
‘‘(a) ASSIGNMENT AUTHORIZED.—A producer of a
agricultural product or service may execute, either as a
clause in a sales contract or in another written instrument,
an assignment of dues or fees to, or the deduction of a
sum to be retained by, an association of producers author-
ized by contract to represent the producer, by which as-
signment a handler is directed—
‘‘(1) to deduct a portion of the amount to be
paid for products or services of the producer under
a growing contract; and
‘‘(2) to pay, on behalf of the producer, the por-
tion over to the association as dues or fees or funds
to be retained by the association.
‘‘(b) DUTY OF HANDLER.—After a handler receives
notice from a producer of an assignment under subsection
(a), the handler shall deduct the amount authorized by
the assignment from the amount paid for any agricultural
product being sold by any the producer or for any service
rendered under any growing contract and, upon payment
to producers for such product or service, pay the amount
over to the association or its assignee.’’.
SEC. 8. INVESTIGATIVE POWERS OF SECRETARY.
The Agricultural Fair Practices Act of 1967 (7
U.S.C. 2301 et seq.) is amended by inserting after section
7 (as added by section 7) the following new section:
‘‘SEC. 8. INVESTIGATIVE POWERS OF SECRETARY.
‘‘(a) INVESTIGATIVE POWERS.—The Secretary of Ag-
riculture shall have the following powers to carry out the
objectives of this Act, including the conduct of any inves-
tigations or hearings:
‘‘(1) The Secretary may require any person to
establish and maintain such records, make such re-
ports, and provide such other information as the
Secretary may reasonably require.
‘‘(2) The Secretary and any officer or employee
of the Department of Agriculture, upon presentation
of credentials and a warrant or such other order of
a court as may be required by the Constitution—
‘‘(A) shall have a right of entry to, upon,
or through any premises in which records re-
quired to be maintained under paragraph (1)
are located, and
‘‘(B) may at reasonable times have access
to and copy any records, which any person is
required to maintain or which relate to any
matter under investigation or in question.
‘‘(b) TREATMENT OF RECORDS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), any records, reports, or information ob-
tained under this section shall be available to the
public.
‘‘(2) EXCEPTION.—Upon a showing satisfactory
to the Secretary of Agriculture that records, reports,
or information acquired under this section, if made
public, would divulge confidential business informa-
tion, the Secretary shall consider such record, re-
port, or information or particular portion thereof
confidential in accordance with section 1905 of title
18, United States Code, except that the Secretary
may disclose such record, report, or information to
other officers, employees, or authorized representa-
tives of the United States concerned with carrying
out this Act or when relevant in any proceeding
under this Act.
‘‘(c) POWERS RELATED TO HEARINGS.—
‘‘(1) ATTENDANCE OF WITNESSES.—In making
inspections and investigations under this Act, the
Secretary of Agriculture may require the attendance
and testimony of witnesses and the production of
evidence under oath.
‘‘(2) SUBPOENA POWER.—The Secretary, upon
application of any party to a hearing held under sec-
tion 9, shall forthwith issue to such party subpoenas
requiring the attendance and testimony of witnesses
or the production of evidence requested in such ap-
plication. Within five days after the service of a sub-
poena on any person requiring the production of any
evidence in the possession of the person or under the
control of the person, the person may petition the
Secretary to revoke such subpoena. The Secretary
shall revoke such subpoena if in the opinion of the
Secretary the evidence whose production is required
does not relate to any matter in question, or if such
subpoena does not describe with sufficient particu-
larity the evidence whose production is required.
‘‘(3) OATHS AND OTHER MATTERS.—The Sec-
retary, or any officer or employee of the Department
of Agriculture designated for such purpose, shall
have power to administer oaths, sign and issue sub-
poenas, examine witnesses, and receive evidence.
Witnesses shall be paid the same fees and mileage
allowance as are paid witnesses in the courts of the
United States.
‘‘(d) FAILURE TO COMPLY.—In the case of any fail-
ure or refusal of any person to obey a subpoena or order
of the Secretary of Agriculture under this section, any dis-
trict court of the United States, within the jurisdiction of
which such person is found or resides or transacts busi-
ness, upon the application by the Secretary shall have ju-
risdiction to issue to such person an order requiring such
person to appear to produce evidence if, as, and when so
ordered to give testimony relating to the matter under in-
vestigation or in question. Any failure to obey such order
of the court may be punished by the court as a contempt
of court.’’.
SEC. 9. ADMINISTRATIVE PROCEEDINGS TO PREVENT PRO-
HIBITED PRACTICES.
The Agricultural Fair Practices Act of 1967 (7
U.S.C. 2301 et seq.) is amended by inserting after section
8 (as added by section 8) the following new section:
‘‘SEC. 9. ADMINISTRATIVE PROCEEDINGS TO PREVENT
PROHIBITED PRACTICES.
‘‘(a) PETITION.—Any person complaining of any vio-
lation of section 4 or other provision of this Act may apply
to the Secretary of Agriculture by petition, which shall
briefly state the facts serving as the basis for the com-
plaint. If, in the opinion of the Secretary, the facts con-
tained in the petition warrant further action, the Secretary
shall forward a copy of the petition to the accredited asso-
ciation or handler named in the petition, who shall be
called upon to satisfy the complaint, or to answer it in
writing, within a reasonable time to be prescribed by the
Secretary.
‘‘(b) INVESTIGATION AND COMPLAINT.—If there ap-
pears to be, in the opinion of the Secretary, reasonable
grounds for investigating a complaint made under sub-
section (a), the Secretary of Agriculture shall investigate
such complaint or notification. In the opinion of the Sec-
retary, if the investigation substantiates the existence of
a violation of section 4 or other provision of this Act, the
Secretary may cause a complaint to be issued. The Sec-
retary shall have the complaint served by registered mail
or certified mail or otherwise on the person concerned and
afford such person an opportunity for a hearing thereon
before a duly authorized examiner of the Secretary in any
place in which the subject of the complaint is engaged in
business.
‘‘(c) HEARING.—The person complained of shall have
the right to file an answer to the original and any amend-
ed complaint and to appear in person or otherwise and
give testimony. The person who filed the charge shall also
have the right to appear in person or otherwise and give
testimony. Any such proceeding shall, as far as prac-
ticable, be conducted in accordance with the rules of evi-
dence and the rules of civil procedure applicable in the
district courts of the United States.
‘‘(d) ORDERS.—If, upon a preponderance of the evi-
dence, the Secretary of Agriculture is of the opinion that
the person subject to the complaint has violated section
4 or other provision of this Act, the Secretary shall issue
an order containing the Secretary’s findings of fact and
requiring the person to cease and desist from such viola-
tion. The Secretary may order such further affirmative ac-
tion, including an award of damages to compensate the
person filing the petition for the damages sustained, as
will effectuate the policies of this Act and make the person
filing the petition whole.
‘‘(e) COMPLAINTS INSTITUTED BY SECRETARY.—The
Secretary of Agriculture may at any time institute an in-
vestigation under subsection (b) if there appears to be,
in the opinion of the Secretary, reasonable grounds for
the investigation and the matter to be investigated is such
that a petition is authorized to be made to the Secretary.
The Secretary shall have the same power and authority
to proceed with any investigation instituted under this
subsection as though a petition had been filed under sub-
section (a), including the power to make and enforce any
order.
‘‘(f) JUDICIAL REVIEW.—
‘‘(1) OBTAINING
REVIEW.—Any person ag-
grieved by a final order of the Secretary of Agri-
culture issued under subsection (d) may obtain re-
view of such order in the United States Court of Ap-
peals for the District of Columbia by submitting to
such court within 30 days from the date of such
order a written petition praying that such order be
modified or set aside.
‘‘(2) TREATMENT OF FINDINGS.—The findings
of the Secretary with respect to questions of fact, if
supported by substantial evidence on the record,
shall be conclusive.
‘‘(3) EFFECT OF FAILURE TO SEEK TIMELY RE-
VIEW.—If no petition for review, as provided in
paragraph (1), is filed within 30 days after service
of the Secretary’s order, the order shall not be sub-
ject to review in any civil or criminal proceeding for
enforcement, and the findings of fact and order of
the Secretary shall be conclusive in connection with
any petition for enforcement which is filed by the
Secretary after the expiration of such period. In any
such case, the clerk of the court, unless otherwise
ordered by the court, shall forthwith enter a decree
enforcing the order and shall transmit a copy of
such decree to the Secretary and the person named
in the complaint.
‘‘(4) EFFECT
ON
ORDERS
OF
THE
SEC-
RETARY.—The commencement of proceedings under
this section shall not operate as a stay of an order
of the Secretary under subsection (d), unless specifi-
cally ordered by the court.’’.
SEC. 10. OTHER ENFORCEMENT ACTIVITIES.
Section 10 of the Agricultural Fair Practices Act of
1967 (7 U.S.C. 2305), as redesignated by section 6(1),
is amended—
(1) by striking the undesignated paragraph at
the end of the section;
(2) in subsection (d), by striking ‘‘and shall ex-
ercise’’ and all that follows through the period and
inserting a period and the following: ‘‘No action may
be commenced under subsection (a) or (c)—
‘‘(1) prior to 60 days after the plaintiff has
given notice of the alleged violation to the Secretary
of Agriculture under section 9(a); or
‘‘(2) if the Secretary has commenced and is
diligently prosecuting an action (administrative or