IB
Union Calendar No. 106
104TH CONGRESS
1ST SESSION
H. R. 1103
[Report No. 104–207]
Entitled ‘‘Amendments to the Perishable Agricultural Commodities Act,
1930’’.
IN THE HOUSE OF REPRESENTATIVES
MARCH 1, 1995
Mr. POMBO (for himself, Mr. DOOLITTLE, Mr. FOLEY, Mrs. THURMAN, Mr.
PASTOR, and Mr. FARR) introduced the following bill; which was referred
to the Committee on Agriculture
JULY 26, 1995
Additional sponsors: Mr. GALLEGLY, Mr. HOLDEN, Mr. EHLERS, Mr.
CHAMBLISS, Mr. WELDON of Florida, Mr. GORDON, Mr. UPTON, Mr.
DOOLEY, Mrs. CLAYTON, Mr. MCHUGH, Mr. HERGER, Mr. HASTINGS of
Washington, Mr. JONES, Mr. RADANOVICH, Mr. HASTINGS of Florida,
Mrs. SEASTRAND, Mr. COOLEY, Mr. FOGLIETTA, Mr. EVERETT, Mr.
FAZIO of California, Mr. CRAPO, Mr. CALVERT, Mr. GEKAS, and Mr.
BOEHNER
JULY 26, 1995
Reported with amendments, committed to the Committee of the Whole House
on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on March 1, 1995]
A BILL
Entitled ‘‘Amendments to the Perishable Agricultural
Commodities Act, 1930’’.
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 whole-
salers 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 commission
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 deal-
er engaged in the business of selling any perishable agricul-
tural 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 seafood, and health
and beauty care items) to retailers. However, such term does
not include a person described in the preceding sentence if
the person is primarily engaged in the wholesale distribu-
tion and resale of perishable agricultural commodities rath-
er 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 con-
form to paragraph (3);
(4) by striking the last sentence; and
(5) by inserting before paragraph (5) (as so des-
ignated) 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 en-
actment of the Perishable Agricultural Commodities
Act Amendments of 1995, a retailer or grocery whole-
saler 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 initial
application is made. After the end of such period, a
retailer or grocery wholesaler making an initial ap-
plication for a license under this section shall pay an
administrative fee equal to $100. In either case, a re-
tailer or grocery wholesaler paying a fee under this
paragraph shall not be required to pay any fee for re-
newal 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 Agricul-
tural Commodities Act Amendments of 1995, pay-
ments 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 per-
cent 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 re-
quired to pay any fee if the licensee seeks re-
newal of the license.’’.
(b) STYLISTIC AMENDMENTS.—Such section is further
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 ‘‘APPLICATION
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 Agricultural
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 ag-
gregate, as the Secretary determines necessary to meet
the reasonably anticipated expenses for administering
this Act and the Act to prevent the destruction or
dumping of farm produce, approved March 3, 1927 (7
U.S.C. 491–497). Thereafter, the licensee 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 de-
termining an appropriate interval for renewal of li-
censes. The Secretary shall establish and alter license
fees only by rulemaking under section 553 of title 5,
United States Code, except that the Secretary may
not alter the fees required under paragraph (3) or (4)
for retailers and grocery wholesalers that are dealers.
Effective on the date of the enactment of the Perish-
able 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 facility operated by the applicant in excess
of nine such facilities, as determined by the Secretary,
subject 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 in-
crease, the funds on hand as of the end of the fiscal
year in which the increase takes effect will be less
than 25 percent of the projected budget to administer
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 beginning on the date
of the enactment of the Perishable Agricultural Com-
modities 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 re-
quired)’’;
(2) in the first proviso, by striking ‘‘the necessity
of paying the annual fee’’ and inserting ‘‘the necessity
of renewing the license and of paying the renewal 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 WITHOUT
A LICENSE AND INCREASE IN LATE RENEWAL
FEE.
(a) LICENSE PENALTIES.—Section 3(a) of the Perish-
able Agricultural Commodities Act, 1930 (7 U.S.C.
499c(a)), as amended by section 3(b)(1), is further amend-
ed—
(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’’.
SEC. 6. STATUTORY TRUST ON COMMODITIES AND SALE
PROCEEDS.
(a) REPEAL
OF SECRETARIAL NOTIFICATION RE-
QUIREMENT.—Paragraph (3) of section 5(c) of the Perish-
able Agricultural Commodities Act, 1930 (7 U.S.C.
499e(c)), is amended in the first sentence by striking ‘‘and
has filed such notice with the Secretary’’.
(b) CLARIFICATION OF CONTENT OF NOTIFICATION.—
Such paragraph is further amended by inserting after the
first sentence the following new sentence: ‘‘The written no-
tice to the commission merchant, dealer, or broker shall set
forth information in sufficient detail to identify the trans-
action subject to the trust.’’.
(c) ADDITIONAL METHOD OF NOTIFICATION FOR LI-
CENSEES.—Such section is further amended—
(1) by redesignating paragraph (4) as para-
graph (5); and
(2) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4) In addition to the method of preserving the bene-
fits of the trust specified in paragraph (3), a licensee may
use ordinary and usual billing or invoice statements to pro-
vide notice of the licensee’s intent to preserve the trust. The
bill or invoice statement must include the information re-
quired by the last sentence of paragraph (3) and contain
on the face of the statement the following: ‘The perishable
agricultural commodities listed on this invoice are sold sub-
ject 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 receiv-
ables or proceeds from the sale of these commodities until
full payment is received.’.’’.
SEC. 7. AUTHORITY OF DEPARTMENT OF AGRICULTURE RE-
GARDING POSSIBLE VIOLATIONS.
(a) DISCIPLINARY VIOLATIONS.—Subsection (b) of sec-
tion 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 agen-
cy of any State or Territory having jurisdiction over com-
mission merchants, dealers, or brokers in such State or Ter-
ritory and any other interested person (other than an em-
ployee of an agency of the Department of Agriculture ad-
ministering this Act) may file, in accordance with rules
prescribed by the Secretary, a written notification of any
alleged violation of this Act by any commission merchant,
dealer, or broker. In addition, any official certificates 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 purposes of
‘‘(2) ISSUANCE OF COMPLAINT BY SECRETARY;
PROCESS.—In the opinion of the Secretary, if an in-
vestigation under this subsection substantiates the ex-
istence 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 Sec-
retary in any place in which the subject of the com-
plaint is engaged in business. However, in complaints
wherein the amount claimed as damages does not ex-
ceed $30,000, a hearing need not be held and proof
in support of the complaint and in support of re-
spondent’s answer may be supplied in the form of
depositions or verified statements of fact.
‘‘(3) SPECIAL NOTIFICATION REQUIREMENTS FOR
CERTAIN
INVESTIGATIONS.—Whenever the Secretary
initiates an investigation on the basis of a written
notification made under subsection (b) or expands
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 vio-
lations 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, includ-
ing whether the Secretary intends to issue a com-
plaint under paragraph (2), terminate the investiga-
tion, or continue or expand the investigation. The
Secretary shall provide additional status reports at
the request of the subject of the investigation and shall
promptly notify the subject of the investigation when-
ever the Secretary terminates the investigation.’’.
(c) INCREASE IN THRESHOLD FOR SHORTENED PRO-
CEDURE CASES.—Subsection (d) of such section is amended
by striking ‘‘$15,000’’ both places it appears and inserting
‘‘$30,000’’.
(d) STYLISTIC AMENDMENTS.—Such section is further
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.—Sec-
tion 6(a) of the Perishable Agricultural Commodities Act,
1930 (7 U.S.C. 499f(a)), is amended—
(1) by striking ‘‘(a)’’ and inserting the following:
‘‘(a) REPARATION COMPLAINTS.—
‘‘(1) PETITION; PROCESS.—’’; and
(2) by adding at the end the following new para-
graph:
‘‘(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 fur-
ther action, the person or persons submitting the peti-
tion 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 deposit fees
submitted under this paragraph into the Perishable
Agricultural Commodities Act Fund provided for by
section 3(b). The Secretary may alter the fees speci-
fied 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 following: ‘‘(in-
cluding any handling fee paid by the injured person or per-
sons 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 Agri-
cultural 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 handling
misbranded perishable agricultural commodities 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 sus-
pending or revoking a license under this section when the
Secretary determines, as provided by section 6, that a com-
mission merchant, dealer, or broker has violated section 2
or subsection (b) of this section, the Secretary may assess
a civil penalty not to exceed $2,000 for each violative trans-
action or each day the violation continues. In assessing 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 sub-
section 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 li-
censee 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.’’.