I
106TH CONGRESS
1ST SESSION
H. R. 2830
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
SEPTEMBER 9, 1999
Ms. KAPTUR (for herself and Mr. BISHOP) introduced the following bill; which
was referred to the Committee 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 1999’’.
(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’’.
‘‘(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
shall provide assistance in proposing and implementing ar-
bitration agreements between the accredited association
and the handler. The Secretary may establish a procedure
for compulsory and binding arbitration if the Secretary
finds that an impasse in bargaining exists and such im-
passe will result in a serious interruption in the flow of
an agricultural product to consumers or will cause sub-
stantial economic hardship to producers or handlers in-
volved in the bargaining.’’.
SEC. 6. ACCREDITATION OF ASSOCIATIONS AND DESIGNA-
TION OF HANDLERS.
The Agricultural Fair Practices Act of 1967 is
amended—
(1) by redesignating sections 6 and 7 (7 U.S.C.
2305, 2306) as sections 10 and 12, respectively; and
(2) by inserting after section 5 (7 U.S.C. 2304)
the following new section:
‘‘SEC. 6. ACCREDITATION OF ASSOCIATIONS AND DESIGNA-
TION OF HANDLERS.
‘‘(a) ACCREDITATION PETITION.—An association of
producers seeking accreditation to bargain on behalf of
producers of an agricultural product or service shall sub-
mit to the Secretary of Agriculture a petition for accredi-
tation. The petition shall—
‘‘(1) specify the agricultural product or service
(or products or services) for which the association
seeks accreditation to bargain on behalf of pro-
ducers;
‘‘(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 sup-
porting material, the Secretary of Agriculture shall give
notice of the petition to all handlers designated in the peti-
tion pursuant to subsection (a)(2). Handlers who have
been designated individually shall receive personal notice.
Handlers who have been designated by production or mar-
keting area or by some other general classification shall
be given notice through the Federal Register. Both the
association of producers seeking accreditation and the
handlers shall have an opportunity to submit written evi-
dence, views, and arguments to the Secretary. The Sec-
retary may conduct an informal proceeding on the peti-
tion, except that the Secretary shall hold a formal hearing
for the reception of testimony and evidence if the Sec-
retary 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 con-
tinues 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 the producer or for any service ren-
dered under any growing contract and, upon payment to