[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1103 Referred in Senate (RFS)]

  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 operation of the Act.
    Be it enacted by the Senate and House of Representatives 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 brokers.
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 GROCERY WHOLESALER.

    Section 1(b) of the Perishable Agricultural Commodities 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 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 
distribution and resale of perishable agricultural commodities rather 
than other grocery and related nonfood items.''.

SEC. 3. GRADUAL ELIMINATION OF ANNUAL LICENSE FEE FOR RETAILERS AND 
              GROCERY WHOLESALERS THAT ARE DEALERS.

    (a) Elimination of Annual Fees Over Three-Year Period.--Subsection 
(b) of section 3 of the Perishable Agricultural Commodities Act, 1930 
(7 U.S.C. 499c), is amended--
            (1) by inserting ``(1) Application for license.--'' 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 agricultural 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 grocery wholesalers 
        that are dealers.--During the three-year period beginning on 
        the date of the enactment of the Perishable Agricultural 
        Commodities 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 initial application is made. 
        After the end of such period, a retailer or grocery wholesaler 
        making an initial 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 
        Agricultural 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 during the 
                one-year period beginning on the date of the enactment 
                of the Perishable Agricultural Commodities Act 
                Amendments of 1995, the licensee 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 during 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 during 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 renewal 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 Violations.--'';
            (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, DEALERS (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 application 
        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 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 determining an appropriate 
        interval for renewal of licenses. 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 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 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 licensee. 
        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 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 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 annual fee has been paid'' 
        and inserting ``the anniversary 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 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 Perishable 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 Perishable 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 Requirement.--Paragraph (3) 
of section 5(c) of the Perishable 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 notice to the commission merchant, dealer, or 
broker shall set forth information in sufficient detail to identify the 
transaction subject to the trust.''.
    (c) Additional Method of Notification for Licensees.--Such section 
is further amended--
            (1) by redesignating paragraph (4) as paragraph (5); and
            (2) by inserting after paragraph (3) the following new 
        paragraph:
    ``(4) In addition to the method of preserving the benefits of the 
trust specified in paragraph (3), a licensee may use ordinary and usual 
billing or invoice statements to provide notice of the licensee's 
intent to preserve the trust. The bill or invoice statement must 
include the information required 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 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 Agriculture 
administering 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 
conducting an investigation under subsection (c). The identity of any 
person filing a written notification under this subsection shall be 
considered to be confidential information. The identity of such person, 
and any portion of the notification to the extent that it would 
indicate the identity of such person, are specifically exempt from 
disclosure under section 552 of title 5, United States Code (commonly 
known as the Freedom of Information Act), as provided in subsection 
(b)(3) of such section.''.
    (b) Grounds and Process of Investigations.--Subsection (c) of such 
section is amended to read as follows:
    ``(c) Investigation of Complaints and Notifications.--
            ``(1) Commencing or expanding an investigation.--If there 
        appears to be, in the opinion of the Secretary, reasonable 
        grounds for investigating a complaint made under subsection (a) 
        or a written notification made under subsection (b), the 
        Secretary shall investigate such complaint or notification. In 
        the course of the investigation, if the Secretary determines 
        that violations of this Act are indicated other than the 
        alleged violations specified in the complaint or notification 
        that served as the basis 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 investigation 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 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. 
However, in complaints 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 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 
        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 intends to issue a complaint under paragraph (2), 
        terminate the investigation, 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 whenever 
        the Secretary terminates the investigation.''.
    (c) Increase in Threshold for Shortened Procedure 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 INVESTIGATIONS.'';

            (2) in subsection (d), by inserting ``Decisions on 
        Complaints.--'' after ``(d)''; and
            (3) in subsection (e), by inserting ``Bond Required 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 following:
    ``(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 paragraph (1) shall include a 
        filing fee of $60 per petition. 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 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 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 following: ``(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 EXPENSES.

    (a) Definition.--Section 1(b) of the Perishable Agricultural 
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 agricultural commodity.''.
    (b) Use of Definition.--Section 2 of such Act (7 U.S.C. 499b) is 
amended--
            (1) by striking ``commerce--'' in the matter before 
        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 Commodities 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 sentence: ``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 LICENSE 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 section 2 or subsection (b) of this section, the Secretary 
may assess a civil penalty not to exceed $2,000 for each violative 
transaction 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 subsection shall be deposited in the Treasury of the United 
States as miscellaneous receipts.''.

SEC. 12. EXTENSION OF SANCTIONS TO PERSONS RESPONSIBLY CONNECTED TO A 
              COMMISSION MERCHANT, 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 actively 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.--Section 8(b) of such Act (7 
U.S.C. 499h(b)) is amended by adding at the end the following new 
sentence: ``The Secretary 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 Licensing 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 preceding 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 with the applicant is prohibited from 
        employment with a licensee under section 8(b).''.
            Passed the House of Representatives July 28, 1995.

            Attest:

                                                ROBIN H. CARLE,

                                                                 Clerk.