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104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-207
_______________________________________________________________________


 
       PERISHABLE AGRICULTURAL COMMODITIES ACT AMENDMENTS OF 1995

_______________________________________________________________________


 July 26, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


    Mr. Roberts, from the Committee on Agriculture, submitted the  
                               following

                              R E P O R T

                        [To accompany H.R. 1103]

      [Including cost estimate of the Congressional Budget Office]
  The Committee on Agriculture, to whom was referred the bill 
(H.R. 1103) entitled, ``Amendments to the Perishable 
Agricultural Commodities Act, 1930'', having considered the 
same, report favorably thereon with amendments and recommend 
that the bill as amended do pass.

  The amendments are as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:
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).''.

  Amend the title so as to read:

      A bill to amend the Perishable Agricultural Commodities 
Act, 1930, to modernize, streamline, and strengthen the 
operation of the Act.
                             Brief Summary

    H.R. 1103 amends the Perishable Agricultural Commodities 
Act (PACA) to modernize, streamline and strengthen the 
operation of the Act. Specifically, the legislation phases 
retailers and grocery wholesalers out of license fee payment in 
three years, establishes a one-time administrative fee for new 
retailers and grocery wholesalers entering the program after 
the three-year phase-out, increases license fees for those 
remaining in the program from $400 to $550 each year, allows 
the U.S. Department of Agriculture (USDA) to adjust future 
license fees under rulemaking authority, implements a paperless 
system to administer the PACA trust, requires USDA to receive a 
written complaint before pursuing an investigation, requires 
additional USDA investigation notification procedures, 
increases current administrative penalties, establishes civil 
penalties, continues current filing fees for formal and 
informal reparation complaints, clarifies the status of 
collateral fees and expenses, clarifies misbranding 
prohibitions, and amends responsibly connected provisions of 
PACA. Other than the changes summarized above, current law 
remains intact.

                      Section-by-Section Analysis

Section 1--Short title, table of contents

    Section 1 states that this Act may be cited by its short 
title as the ``Perishable Agricultural Commodities Act 
Amendment of 1995'', and provides a table of contents.

Section 2--Addition of definitions of retailer and grocery wholesaler

    This section adds retailers and grocery wholesalers, who 
will be phased-out of the license fees requirement under the 
Perishable Agricultural Commodities Act, to the definition 
section of current statute. Each of these entities operate as a 
dealer within the program and are therefore defined as a person 
that is a dealer engaged in their respective operations.

Section 3--Gradual elimination of annual license fee for retailers and 
        grocery wholesalers that are dealers

    Section 3 eliminates annual license fees for retailers and 
grocery wholesalers over a period of three years. The phase-out 
begins on the first renewal date upon enactment of the 
legislation. In year one, 100% of the license fee will be paid. 
In year two, 75% of the licensee fee will be paid. In year 
three, 50% of the license fee will be paid. In the fourth year, 
no license fee is required.
    Although retailers and grocery wholesalers will not be 
required to pay a license fee after three years, they are still 
required to obtain a PACA license and will remain subject to 
provisions of the PACA program.
    New retailers and grocery wholesalers entering the program 
within the three-years of enactment of the legislation are 
required to pay the license fee established under the 
applicable phase-out year. After the third year, new retailers 
and grocery wholesalers will be required to pay a one-time 
administrative fee of $100.
    Section 3 phases out license fees for retailers and grocery 
wholesalers. It defines the term ``retailer'' as a person who 
is a dealer engaged in the business of selling any perishable 
commodity at retail. Approximately 4,000 retailers are 
currently estimated to be licensed under PACA. Those businesses 
such as grocery stores and other like businesses that 
predominantly serve those consumers purchasing food for 
consumption at home or off the premises of the retail 
establishment are considered to be included in the definition 
of retailer. It is not the intent of the Committee that the 
definition of retailer be construed to include foodservice 
establishments such as restaurants, or schools, hospitals and 
other institutional cafeterias. Further, the definition of 
retailer is not intended to include those businesses primarily 
engaged in the wholesaling or distributing of perishable 
agricultural commodities, but that occasionally sell directly 
to consumers. The term grocery wholesaler is defined to mean a 
person who 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, seafood, and 
health and beauty care items) to retailers. The Committee 
established specific types of products typically distributed by 
grocery wholesalers to provide the Secretary the means by which 
to discriminate between grocery wholesalers and other persons 
engaged in the business of wholesaling or distributing 
perishable agricultural commodities in wholesale or jobbing 
quantities. Wholesaling and jobbing quantities are considered 
the aggregate quantities of all types of produce totaling one 
ton or more in weight in any day, shipped, received, or 
contracted to be shipped or received.
    At the end of the three year phase out period, retailers 
and grocery wholesalers currently paying annual license fees 
will not be required to pay any fee for renewal of the license. 
During the phase out period, new retailer and grocery 
wholesaler applicants will pay the specified fee established 
under the applicable phase-out year. After the phase out, new 
retailer and grocery wholesaler applicants will pay a one-time 
administrative fee of $100 for their license.
    The Committee expects that licenses for retailers and 
grocery wholesalers will be renewed utilizing a simplified 
process. The Secretary shall mail to each licensed retailer and 
grocery wholesaler, at least 30 days before the anniversary 
date, a notice of the necessity of renewing the license and a 
copy of the ownership information currently on file. If there 
are no changes to this information, the licensee shall sign the 
renewal form and return it to the Secretary. If changes have 
occurred the licensee shall note these changes and return the 
signed form. The license will then be automatically renewed.

Section 4--Establishment and alteration of license fees for commission 
        merchants, dealers (other than retailers and grocery 
        wholesalers), and brokers

    Section 4 addresses how license fees will be handled for 
other entities remaining under the PACA program. This Section 
strikes the current license fee cap of $400 and increases fees 
to $550. After three years, the Secretary will have the 
authority to adjust license fee caps pursuant to rulemaking 
authority only when the PACA operating reserve reaches 25 
percent or less. Under current law, the license fee cap can 
only be changed through legislation. In addition, Section 4 
repeals the current 25 percent cap on the operating reserve.
    Section 4 gives the Secretary the discretion to issue 
licenses for periods of more than a year. In an effort to 
achieve cost effectiveness and efficiency within PACA, the 
Committee strongly urges the Secretary to move to issuance of 
multi-year licenses. The USDA shall promptly examine the 
necessity for a yearly renewal requirement for retailers and 
grocery wholesalers in an effort to move toward multi-year 
licenses. Section 4 also gives the Secretary the authority to 
increase license fees under rulemaking authority, except that 
the Secretary may not increase the license fee for retailers 
and grocery wholesalers.
Section 5--Increase in penalties for operating without a license and 
        increase in late renewal fee

    Section 5 increases penalties for operating without a 
license, inadvertent operation without a license, and for late 
renewals. The penalty for operating without a license is 
increased from $500 to $1000. The $25 daily penalty for 
operation without a license is increased to $250 a day. The 
fine for inadvertent operation without a license is increased 
from $25 to $250. The late renewal fee is increased from $5 to 
$50.

Section 6--Statutory trust on commodities and sale proceeds

    Section 6 implements the paperless trust provisions of the 
PACA agreement. Currently, those who wish to protect their 
trust benefits must notify USDA within 30 days after final 
payment was due. This provision removes the filing requirement 
with USDA. Instead, transaction terms set forth in sufficient 
detail must be submitted by the unpaid supplier, seller and 
agent to the commission merchant, dealer or broker. Section 6 
establishes that a licensee may also preserve trust benefits 
through the use of ordinary and usual billing or invoice 
practices as long as a statement indicating that the 
commodities listed on the invoice are subject to trust claims.
    Section 6 implements new provisions regarding the PACA 
trust. The amendments to the PACA trust provisions contained in 
this legislation are intended to strengthen and improve the 
operation of the trust and eliminate the expense to USDA in 
administering these provisions. Despite the changes to the 
trust embodied in this legislation certain procedures, 
obligations and activities must be followed: proper notice must 
be provided by the supplier to the buyer under the trust 
provisions, persons within the industry must properly account 
for assets preserved by the trust. In addition, USDA retains 
authority to prevent and restrain dissipation of trust assets.
    To enhance the operation of the trust, an alternative 
method of preserving trust benefits has been included in the 
bill. The current requirement to file a trust notice with USDA 
is eliminated. Instead, the legislation makes clear that a 
licensee may use standard invoices or other billing statements 
to provide notice to the buyer of intent to preserve trust 
benefits in the event that payment is late or the payment 
instrument is not honored. For the purposes of preserving the 
trust, the following notice will meet the requirement of this 
section if conspicuously placed on invoices or other billing 
statements: ``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.''
    Under current law, the trust is in effect at the time of 
shipment of the perishable commodity. The unpaid supplier, 
seller, or agent must provide notice of trust coverage to the 
buyer in order to preserve these trust benefits. Consistent 
with this principle, this legislation, under paragraph 4 of 
section 5(c) of PACA, provides that the supplier, seller, or 
agent may perfect its trust claim by giving notice to the buyer 
on the invoice or billing statement. This change to the Act 
provides both a convenience and cost savings to the unpaid 
supplier, seller or agent. The Committee intends the effect of 
notice provided through the use of usual billing or invoice 
statements to be the legal equivalent to the current practice 
of providing notice subsequent to the payment date by means 
independent of the billing statement or invoice.

Section 7--Authority of Department of Agriculture regarding possible 
        violations

    Section 7 outlines new requirements for USDA when pursuing 
a PACA investigation. USDA must have a written complaint in 
hand before pursuing and/or expanding a PACA investigation. The 
Secretary may expand an investigation if additional violations 
are discovered while investigating a complaint based on 
reasonable grounds. The identity of any person filing written 
notification is considered confidential. USDA is also required 
to inform the subject of an investigation about the status of 
USDA's actions no later than 180 days after initial 
notification. Section 7 also increases the damage threshold 
required to receive an expedited review (shortened procedure) 
of the complaint from $15,000 to $30,000.
    Section 7 amends PACA to provide special notification 
requirements for certain investigations. When the Secretary 
requires production of certain documents or records for the 
purpose of investigating a written notification, the Secretary 
shall notify the subject of the investigation of the existence 
of the written notification and the nature of the alleged 
violations of PACA.

Section 8--Filing and handling fees for reparation complaints

    Section 8 extends current provisions adopted last year that 
establish filing fees for informal and formal reparation 
complaints. The $60 fee for an informal reparation complaint 
and the $300 fee for a formal reparation complaint are retained 
and become subject to rulemaking authority of the Secretary 
wishes to adjust the level in the future.
Section 9--Consideration of collateral fees and expenses

    Section 9 establishes clarification of the status of 
collateral fees and expenses. Collateral fees refer to 
promotional allowances, rebates, service or material fees paid 
or provided, directly or indirectly, in connection with the 
distribution or marketing of perishable agricultural 
commodities. They are fees considered separate from invoice 
fees. Section 9 clarifies that a collateral fee is lawful in 
and of itself.

Section 10--Clarification of misbranding prohibition

    In the cases of misbranding, when produce grade, quality, 
quantity, weight or origin is misrepresented, persons other 
than the first licensee handling the misbranded commodities are 
not held liable for the violation 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.

Section 11--Imposition of civil penalty in lieu of license suspension 
        or revocation

    Section 11 authorizes USDA to assess civil monetary 
penalties not to exceed $2000 for violation of Section 2 in 
lieu of license suspension or revocation for each violation or 
each day it continues. Currently, if an entity operating within 
PACA is found to employ a person responsibly connected with a 
violating entity the only recourse available to USDA is to 
initiate a revocation hearing for the entity's license. This 
provision allows USDA to take a less stringent step by 
assessing a civil penalty on the entity in lieu of license 
revocation in cases where entities are found employing a person 
responsibly connected with a violating entity. However, USDA is 
required to give consideration to the business size, number of 
employees, seriousness, nature and amount of the violation when 
assessing the amount of the penalty.

Section 12--Extension of sanctions to persons responsibly connected to 
        a commission merchant, dealer, or broker

    Section 12 addresses two separate issues concerning 
``responsibly connected''. Regarding the first issue, this 
section amends the current definition to permit individuals, 
who are responsibly connected to a company in violation of 
PACA, the opportunity to demonstrate that they were not 
responsible for the specific violation.
    The second issue concerns extension of employment 
sanctions. Under current law, an individual found to be 
responsibly connected to a company in violation of PACA can be 
banned from working (employment sanction) within the industry 
for a year. However, under current law if such individual is 
found to be working in the industry while under an employment 
sanction, USDA can bring enforcement action only against the 
company employing the individual. Section 12 permits USDA to 
extend the employment sanction to such individual for an 
additional year under such circumstances.
    In addition to forgoing, the Committee also provided for 
certain instructions and directions that it intended that the 
Secretary of Agriculture should comply with as part of this 
bill.
    The Committee instructs the Secretary of the Department of 
Agriculture to conduct a study and report to the Chairman of 
the House Committee on Agriculture and to the Chairman of the 
Senate Committee on Agriculture, Nutrition, and Forestry, 
within one year of the date of enactment, a study regarding the 
feasibility of regulating the sale and marketing of fresh-cut 
flowers under PACA. The report shall include other potential 
solutions to payment problems that may impact fresh-cut flower 
producers.
    The Committee further instructs the Secretary to conduct 
and report to the Chairmen of the House and Senate Committees 
within one year a study regarding options for including 
carriers and transporters of perishable commodities under PACA. 
The study shall include recommendations regarding the impact of 
trust provisions on, and protection available to truckers and 
carriers under, bankruptcy proceedings.
    In order to accurately reflect an increased role as a 
purchaser's agent, the Committee directs USDA to review and 
revise, to the extent practicable, the category or broker and 
buying broker.

                            Purpose and Need

    The Perishable Agricultural Commodities Act is a $7.4 
million industry financed user fee program administered by USDA 
to establish and enforce fair trading practices in the 
marketing of fresh and frozen fruits and vegetables.
    Unlike other user fee programs which set license fees 
through rulemaking procedures, PACA license fee limits are 
currently set by law. On September 24, 1993, USDA transmitted 
legislation to Congress to increase the PACA statutory license 
fee limit. USDA cited increased cost pressures to the program 
primarily resulting from payment of fees to the Office of 
General Counsel (OGC) to pay for services that had previously 
been covered through appropriated funds. Instead of 
implementing USDA's request to increase PACA license fees, the 
103rd Congress implemented temporary filing fees for reparation 
complaints that are scheduled to expire at the end of fiscal 
year 1996. In order to prevent potential program disruptions 
resulting after the expiration of temporary filing fees and to 
maintain financial stability of the program, the Committee 
reported H.R. 1103 to modify, reform, and strengthen PACA.
                       current program operation

    License Fees--PACA is funded and enforced through a license 
fee and licensing system. Annual license fees are $400. If the 
applicant operates more than nine branches or additional 
business facilities they are required to pay an additional $200 
for each branch. Aggregate annual fees are capped at $4000 for 
each applicant. Almost everyone who operates in the fresh and 
frozen fruit and vegetable industry is required to hold a PACA 
license. Exemptions are allowed for: (1) growers who sell their 
own products, (2) retailers and frozen food brokers who 
purchase or negotiate less than 230,000 in annual produce 
sales, and (3) restaurants and truckers who are contract 
carrier.
    Violations--The PACA program provides entities operating 
within the fruit and vegetable trade certain protection. A 
party found to have committed unfair trading practices under 
PACA faces license suspension or revocation. Some of the most 
common PACA violations the program is designed to protect 
suppliers and sellers of perishable agricultural commodities 
against include: Prompt Payment--failure to pay the agreed 
price of produce within 10 days (unless a different agreement 
is arranged between the buyer and seller), Nonpayment--failure 
to pay for shipments of produce purchased, Misbranding--
misrepresentation of grade, quality, quantity, weight or origin 
of produce, Discarding--dumping or destroying produce without 
reasonable cause, or Rejection--of produce without reasonable 
cause.
    Trust--The PACA trust is another form of protection under 
PACA which was established in 1984 to protect unpaid produce 
suppliers and sellers in the case of bankruptcy. The statutory 
trust consists of a buyer's produce-related assets which are 
held for produce suppliers in the case of a business failure. 
Technically, the trust goes into effect at the time the buyer 
receives the goods. However, produce sellers must preserve 
their rights to access the trust by filing a trust notice with 
the Department of Agriculture within 30 days of the date that 
the payment is past due. During bankruptcy, the buyers produce 
related assets are not distributed to other creditors until 
claims for unpaid produce sellers are satisfied. A company's 
PACA trust assets consist of fruit and vegetable inventory, 
products derived from fruits and vegetables, and all 
receivables or proceeds from the sale of fruits and vegetables.
    Reparation Complaints--Reparation complaints are actions 
filed to make amends for injury. Informal and formal reparation 
complaints can be filed under PACA against a licensee if a 
trader suffers damages from a violation. The complaint must be 
filed within nine months of the payment due date. Most 
complaints are resolved informally with USDA acting as a 
mediator. If the complaint is not settled at the informal level 
a formal reparation complaint may be filed. Based on evidence 
in the case, an award plus interest may be issued. If the award 
is not paid in a timely fashion or is appealed the firm's 
license is automatically suspended until the award is paid. A 
$60 fee is charged for filing informal complaints and a $300 
fee is charged for formal complaints.
    Industry Entities--Entities comprising the fruit and 
vegetable marketing chain are numerous. The chain begins with 
the grower who raises produce for marketing and ends with a 
retailer defined as a business that exclusively sells to 
consumers. Multiple entities operate as middlemen within the 
industry. Grower: producer who raises produce for marketing. 
Shipper: buys produce from growers and ships the produce to 
other buyers. Broker: middleman negotiating a sale on behalf of 
a seller or buyer never taking title to goods. Distributor: 
middleman who buys truckload or railcar lots of produce from 
growing areas, transports the product to market areas and 
resells the product to wholesalers or retail chains. Commission 
Merchant: (Grower-agent) entity who sells fruits and vegetables 
in its own name on behalf of another. At a shipping point this 
entity is referred to as a grower-agent who may also perform 
other services such as harvesting and grading and packing. In a 
receiving market, this entity is known as a commission 
merchant. Dealer: anyone buying or selling more than a ton of 
fruits and vegetables in any one day. Unlike commission 
merchants and brokers, dealers have an ownership interest in 
the goods. Wholesale Market Receiver: a fruit and vegetable 
wholesaler operating at a receiving market selling to small 
retailers, food service dealers and restaurants. Wholesale 
Grocers: a full line wholesaler selling to affiliated or 
independent retailers. Food Service: a business selling to 
restaurants, hospitals and schools. Trucker: a business hauling 
freight for hire. Truckers are subject to PACA because they 
occasionally buy and resell produce. Retailer: a business only 
selling to consumers; includes retail grocery chain stores, 
independent retailers, institutions and restaurants, and 
sometimes growers.
                          legislative history

    100th Congress--Legislation to increase PACA license fees 
was enacted by Congress in 1988 (P.L. 100-414). License fees 
under this legislation were increased from $300 to $400 for 
annual fees, from $150 to $200 for branch operations in excess 
of nine, and aggregate annual ceilings from $3,000 to $4,000. 
This legislation also established a PACA Advisory Committee 
charged with reviewing the administration, operations and 
funding of the program. The PACA Advisory Commission issued its 
recommendations in May of 1990 regarding licensing, PACA trust, 
prompt pay and misbranding issues.
    102d Congress--The House Agriculture Subcommittee on 
Domestic Marketing, Consumer Relations, and Nutrition convened 
a hearing on October 3, 1991 (Serial No. 102-39) for the 
purposes of reviewing the PACA Advisory Committee 
recommendations.
    H.R. 5741, the Perishable Agricultural Commodities Act 
Technical Amendments of 1992, was introduced on July 31, 1992. 
The legislation clarified the intent and purpose of the PACA 
trust in protecting unpaid sellers. The legislation was 
introduced in response to the C.H. Robinson Co. v. Trust 
Company Bank, N.A., 952 F. 2d 1311 (11th Cir. 1992) decision 
which held that an unpaid seller could not recover trust assets 
transferred by the buyer to the buyer's lender if the lender 
did not have actual notice of the breach of trust. H.R. 5741 
attempted to ensure that lender did not circumvent the trust 
through certain financial arrangements. The legislation was 
reported by the House Agriculture Committee, subsequently 
passed the House but was not enacted into law.
    103d Congress--USDA transmitted draft legislation to the 
Congress in late 1993 that provided for an increase in the 
license fee ceiling to raise additional revenue for the program 
thus avoiding insolvency of PACA. USDA requested the 
legislation due to increased cost pressures resulting in rent, 
communication charges and OGC legal fees. Beginning in fiscal 
year 1993, USDA's Office of General Counsel (OGC) began 
charging the PACA program for legal fees based on an initiative 
by the Office of Management and Budget. Previously, OGC had 
received a direct appropriation for their services. OGC costs 
of $321,000 for FY 1993 put a strain on the program and its 
operating reserves. Language to temporarily increase the 
license fees was included in the FY 1995 agriculture 
appropriations bill. A compromise position acceptable to 
growers and retailers to impose filing fees for informal and 
formal reparation complaints through FY 1996 was signed into 
law on July 5, 1994, P.L. 103-276. The appropriations language 
was subsequently deleted prior to enactment.
    104th Congress--Two bills were introduced in 1995 regarding 
the PACA program. On January 25, 1995, Mr. Boehner introduced 
H.R. 669, legislation to repeal PACA. On March 1, 1995, H.R. 
1103 was introduced by Mr. Pombo to reform PACA.

                       Subcommittee Consideration

                                hearing

    On March 16, 1995, the Risk Management and Specialty Crops 
Subcommittee conducted a hearing for the purposes of reviewing 
the Perishable Agricultural Commodities Act. (Serial No. 104-7) 
The Subcommittee received testimony from the following 
witnesses: USDA, General Accounting Office, National American 
Wholesale Grocers-International Foodservice Distributors 
Association, Florida Fruit and Vegetable Association, Food 
Marketing Institute, National Grocers Association, Produce 
Marketing Association, United Fresh Fruit and Vegetable 
Association, American Farm Bureau Federation, American Frozen 
Food Institute, National Association of Perishable Agricultural 
Receivers, National Association of State Departments of 
Agriculture, Western Growers Association, and the California 
Cut Flower Commission.

                         industry negotiations

    An industry briefing session held on May 25, 1995 by the 
Chairman of the Subcommittee on Risk Management and Speciality 
Crops, with industry representatives and Committee Members and 
staff in attendance, discussed a framework for an amendment in 
the nature of a substitute to H.R. 1103. Industry represented 
at the briefing included United Fresh Fruit and Vegetable 
Association, American Frozen Food Institute, National American 
Wholesale Grocers Association, Food Marketing Institute, 
National Grocers Association, Western Growers Association, 
Florida Fruit and Vegetable Association, and the American Farm 
Bureau Federation. USDA representatives were also present. It 
is clearly understood that there is general support by industry 
of the Amendment in the Nature of a Substitute to H.R. 1103 
offered in the Subcommittee and adopted by the Committee on 
June 28, 1995. The industry also agreed to support the 
substitute amendment without further amendment during all house 
senate proceedings
    The following letter to Subcommittee Chairman Ewing sets 
forth the support of industry:
                                                     June 20, 1995.
Hon. Thomas Ewing,
Chairman, Risk Management and Specialty Crops Subcommittee, House of 
        Representatives, Washington, DC.
    Dear Representative Ewing: The undersigned organizations 
are pleased to support the substitute PACA reform legislation 
to be considered by the Risk Management and Specialty Crops 
Subcommittee tomorrow. This bill is the product of a great deal 
of discussion and compromise. It addresses and resolves many 
issues that have divided us for too long.
    We believe this legislation will result in a more 
efficient, effective and equitable PACA program to the benefit 
of the industry and consumers. Therefore, we strongly urge the 
Subcommittee to approve the bill as it is written, without 
amendment, so that this carefully crafted compromise can be 
enacted into law as expeditiously as possible.
            Respectfully,
                    American Farm Bureau Federation; American Frozen 
                            Food Institute; Florida Fruit and Vegetable 
                            Association; Food Marketing Institute; 
                            National-American Wholesale Grocers' 
                            Association/International Foodservice 
                            Distributors Association; National Grocers 
                            Association; United Fresh Fruit and 
                            Vegetable Association; Western Growers 
                            Association.

                            business meeting

    On June 21, 1995, the Risk Management and Specialty Crops 
Subcommittee met, pursuant to notice, to consider H.R. 1103, 
the ``Perishable Agricultural Commodities Act Amendments of 
1995''. Chairman Ewing called the meeting to order for purpose 
of consideration of the bill and asked unanimous consent to 
offer an amendment in the nature of a substitute. Chairman 
Ewing stated the amendment was a collaborative result of 
subcommittee, USDA, and industry meetings. The text of the 
substitute was opened for amendment. Without objection, report 
language to clarify definition of retailer, license renewal 
procedure, multi-year license renewal, investigative authority 
of USDA, operation of trust provisions, definition of broker 
and buying broker, and to study the feasibility of including 
cut flowers, truckers and carriers under PACA was agreed to and 
recommended for adoption by the Full Committee. Mr. Pombo moved 
that the Subcommittee adopt the amendment in the nature of a 
substitute and report it to Full Committee with the 
recommendation that it do pass. H.R. 1103, as amended, was 
unanimously approved by voice vote, a quorum being present, and 
ordered favorably reported to the Full Committee.

                      Full Committee Consideration

    On June 28, 1995, the House Committee on Agriculture met, 
pursuant to a one-third quorum notice, to consider H.R. 1103, 
the ``Perishable Agricultural Commodities Act Amendments of 
1995.'' Chairman Roberts called the meeting to order for 
purpose of consideration of the bill and opened the bill for 
amendment. No amendments being offered, Ranking Minority 
Member, Kika de la Garza, moved the previous question and that 
the Committee report the bill, H.R. 1103, as amended, to the 
House with the recommendation that the bill do pass, which was 
unanimously adopted. The Motion was adopted by voice vote with 
a quorum being present. Mr. Ewing moved that the Committee 
offer such motions as may be necessary in the House to go to 
conference with the Senate on the bill or a similar Senate 
bill. The motion was adopted by voice vote with a quorum being 
present. By voice vote H.R. 1103, as amended, was unanimously 
approved and ordered favorably reported to the House. Chairman 
Roberts asked if any Member planned to give notice of intent to 
file supplemental minority, or additional views. Hearing none, 
Chairman Roberts gave usual instructions to the staff regarding 
technical, clarifying or conforming changes and adjourned the 
meeting.

                   Reporting the Bill--Rollcall Votes

    In compliance with clause 2(l)(2) of rule XI of the House 
of Representatives, H.R. 1103, was reported, as amended, with a 
quorum actually present. There was no motion or request for a 
recorded vote.

                        Administration Position

    The views of the Administration on H.R. 1103, as amended, 
to amend the Perishable Agricultural Commodities Act, 1930, to 
modernize, streamline, and strengthen the operation of the Act, 
are set forth in the following letter to the Chairman of the 
Committee on Agriculture:
                         Department of Agriculture,
                                   Office of the Secretary,
                                      Washington, DC, July 6, 1995.
Hon. Pat Roberts,
Chairman, Committee on Agriculture, House of Representatives, Longworth 
        House Office Building, Washington, DC.
    Dear Pat: We appreciate the opportunity to comment on H.R. 
1103, the proposed ``Perishable Agricultural Commodities Act 
Amendments of 1995'', as amended and ordered to be reported by 
the Subcommittee on Risk Management and Specialty Crops on June 
21, 1995.
    The Department of Agriculture (USDA) supports H.R. 1103, as 
amended.
    H.R. 1103, as amended, is a result of long and strenuous 
negotiations between the representatives of the affected 
industries. As with any compromise, no particular party got 
everything it wanted, but the resulting legislation would 
ensure that the Perishable Agricultural Commodities Act (PACA) 
will continue to provide for the fair trading of fresh and 
frozen fruits and vegetables. While USDA participated in many 
of the discussions relating to these amendments and offered its 
advice, H.R. 1103, as amended, represents the compromise 
reached by the affected industries.
    The PACA program administered by the Agricultural Marketing 
Service (AMS) establishes a code of fair trading practices in 
the marketing of fresh and frozen fruits and vegetables in 
interstate and foreign commerce. For more than 65 years, PACA 
has protected growers, shippers, distributors, retailers, and 
consumers by prohibiting unfair and fraudulent practices such 
as misbranding, mislabeling, and failure to pay promptly.
    Central to enforcing PACA is the law's licensing 
requirement. Individuals and businesses subject to PACA must be 
licensed and pay an annual fee. The persons subject to PACA 
would not change under H.R. 1103, as amended. However, fees 
currently paid by retailers and grocery wholesalers would be 
phased out over a period of three years. New retailers and 
grocery wholesalers required to be licensed during the three-
year phase out period would pay the fee in effect for the year 
in which they are licensed. After the three-year phase out 
period new retailers and wholesale grocers would pay a one-time 
fee of $100. The fee for licensees other than retailers and 
grocery wholesalers would be set at $550 during the three-year 
phase out period. After the three years, the Secretary would 
have the authority to adjust license fees when the PACA 
operating reserve falls to 25 percent or less of the projected 
PACA operating budget for the following fiscal year. The 
current 25 percent cap on an operating reserve would be 
repealed.
    H.R. 1103, as amended, would update the current penalties 
for operating without a license and fees for late renewal. 
Current penalties no longer provide adequate incentive to firms 
to get licensed and renew licenses in a timely manner.
    The PACA currently authorizes imposition of monetary 
penalties in administrative actions only for misbranding 
violations. In all other administrative disciplinary 
proceedings PACA's only sanction against a firm that commits 
repeated and flagrant violations of the law is suspension or 
revocation on the firm's license. H.R. 1103, as amended, would 
better serve the public interest by allowing the Secretary to 
assess a monetary penalty for a violation of Section 2 of the 
PACA (not to exceed $2,000 for each violative transaction or 
each day the violation continues) in lieu of suspension of 
revocation of license. H.R. 1103, as amended, would require 
that the Secretary take into account the size of a business, 
number of employees, and the seriousness, nature and amount of 
the violation when imposing the monetary penalty.
    The PACA currently requires persons who receive produce 
subject to the Act to hold all such produce, inventories of 
produce or products derived from produce, and receivables or 
proceeds, in trust for the benefit of their unpaid suppliers 
until payment is made. Currently, those who wish to protect 
their trust benefits must notify USDA within 30 days after 
final payment was due. H.R. 1103, as amended, would eliminate 
USDA's involvement with the trust by removing the requirement 
that USDA be notified in order for individuals to protect their 
trust benefits. In discussions of this provision, USDA 
expressed concerns regarding the ``paperless'' trust. 
Representatives of the affected industries that benefit from 
the trust considered various alternatives and ultimately agreed 
upon a paperless trust provision. USDA does not oppose this 
provision and supports H.R. 1103, as amended.
    H.R. 1103, as amended, would impose upon USDA new 
requirements for certain investigations. Under H.R. 1103, as 
amended, the Secretary would be required to have a written 
notification of an alleged violation from a person other than 
an employee of the agency administering the Act, in order to 
begin an investigation. Under the Bill when the Secretary 
requires production of certain documents or records for the 
purpose of investigating a violation alleged in a written 
notification, the Secretary would be required to notify the 
subject of the investigation of the existence of the written 
notification and the nature of the alleged violations of PACA. 
The identity of any person filing a written notification would 
remain confidential. USDA would be required to inform the 
subject of an investigation about the status of the 
investigation no later than 180 days after the initial 
notification. The Secretary would be authorized to expand an 
investigation if additional violations were discovered while 
investigating a written notification.
    H.R. 1103, as amended, would extend current provisions 
adopted last year that establish filing fees for informal and 
formal reparation complaints. The current fee rates would be 
retained but new authority to set the fees by rulemaking would 
be provided to the Secretary.
    The PACA currently provides that when an individual is 
found to be responsibly connected to a company in violation of 
PACA, the individual can be banned from working in the industry 
for a year. However, under current law, if such an individual 
is found to be working in the industry while under an 
employment sanction, USDA can bring enforcement action only 
against the company employing the individual. H.R. 1103, as 
amended, would permit the Secretary to extend the employment 
sanction to such individual for an additional year under such 
circumstances. H.R. 1103, as amended, also would amend the 
current definition of ``responsibly connected'' in the Act to 
allow individuals an opportunity to demonstrate that they were 
only nominal officers, directors, or shareholders and that they 
were uninvolved in the violation.
    H.R. 1103, as amended, would define collateral fees and 
expenses and explicitly state that the offer, receipt, or 
acceptance of such fees would not be unlawful in and of itself. 
The amended bill also provides that the first licensee to 
handle misbranded produce will be the only entity liable for a 
misbranding violation unless a subsequent licensee knew of the 
violation or could correct it.
    Estimated revenues for the PACA program upon implementation 
of these provisions would approach $9.4 million in FY 1996, 
$9.0 million in FY 1997, and $8.6 million in FY 1998. During 
this transition period, additional revenues generated would 
restore the reserve to a level that would ensure the financial 
stability of the program. Upon completion of the phaseout of 
the license fee for retailers and grocery wholesalers, license 
fees would be expected to generate revenues of about $6.7 
million in FY 1999 and FY 2000.
    The Office of Management and Budget advises that there is 
no objection to the presentation of this report from the 
standpoint of the Administration's program.
            Sincerely,
                                              Dan Glickman,
                                                         Secretary.

          Budget Act Compliance (Section 308 and Section 403)

    The provisions of clause 2(l)(3)(B) of rule XI of the Rules 
of the House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974 (relating to estimates of new 
budget authority, new spending authority, or new credit 
authority, or increased or decreased revenues or tax 
expenditures) are not considered applicable. The estimate and 
comparison required to be prepared by the Director of the 
Congressional Budget Office under clause 2(l)(C)(3) of Rule XI 
of the Rules of the House of Representatives and section 403 of 
the Congressional Budget Act of 1974 submitted to the Committee 
prior to the filing of this report are as follows:
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 17, 1995.
Hon. Pat Roberts,
Chairman, Committee on Agriculture,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1103, the 
Perishable Agricultural Commodities Act Amendments of 1995.
    Enacting H.R. 1103 would affect direct spending. Therefore, 
pay-as-you-go procedures would apply to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                         June E. O'Neill, Director.

               congressional budget office cost estimate

    1. Bill number: H.R. 1103.
    2. Bill title: Perishable Agricultural Commodities Act 
Amendments of 1995.
    3. Bill status: As ordered reported by the House Committee 
on Agriculture on June 28, 1995.
    4. Bill purpose: H.R. 1103 would amend several sections of 
the Perishable Agricultural Commodities Act (PACA), 1930, which 
protects producers, shippers, distributors, retailers, and 
consumers of perishable agricultural commodities from unfair 
and fraudulent practices such as misbranding, mislabeling, and 
failure to pay promptly.
    H.R. 1103 would phase out annual license fees for retailers 
and wholesalers of groceries, as well as alter annual license 
fees for other merchants, dealers, and brokers. After three 
years, new retailers and wholesalers of groceries would pay 
only a one-time administrative fee. The cap on other license 
fees would increase from $400 to $550. In addition, the bill 
would remove the ceiling on operating reserves of the PACA 
fund, which currently cannot exceed 25 percent of the projected 
spending needs for the following fiscal year. It also would 
allow Department of Agriculture (USDA) to increase fees when 
the operating reserve falls below 25 percent. Any such increase 
in fees could not occur until three years after the bill is 
enacted.
    The bill also would eliminate the USDA's administrative 
role in preserving the claims of PACA suppliers against assets 
to be held statutorily in trust pending final payment. In 
addition, the bill would:
          Increase the penalties for operating without a 
        license and for renewing a late license;
          Extend the use of filing and handling fees for 
        informal and formal complaints for reparations;
          Allow USDA to impose civil monetary penalties as an 
        alternative to revoking or suspending licenses;
          Require that USDA have a written complaint before 
        pursuing and/or expanding a PACA investigation;
          Raise the minimum threshold for damages necessary to 
        expedite a review from $15,000 to $30,000;
          Clarify the status of collateral fees and the 
        prohibition against misbranding; and
          Provide sanctions against individuals employed in the 
        industry while under PACA suspension.
    5. Estimated cost to the Federal Government: Enacting H.R. 
1103 would increase Federal revenues in fiscal years 1996 
through 1998 and would decrease revenues in fiscal years 1999 
and 2000. Because USDA's spending authority for PACA activities 
is derived from the receipts it collects, and is not subject to 
annual appropriations, H.R. 1103 also would affect direct 
spending. Because several provisions of the bill would result 
in decreased administrative costs, we estimate that USDA's 
total spending for PACA activities would be reduced under H.R. 
1103. The estimated budgetary impacts are summarized in the 
following table:

------------------------------------------------------------------------
                          1996      1997      1998      1999      2000  
------------------------------------------------------------------------
Revenues:                                                               
    Estimated revenues                                                  
     under current law                                                  
     \1\..............         8         8         8         8         8
    Proposed changes..         1         1         1        -1        -1
    Estimated revenues                                                  
     under H.R. 1103..         9         9         9         7         7
Direct spending:                                                        
    Spending under                                                      
     current law:                                                       
        Estimated                                                       
         budget                                                         
         authority....         8         8         8         8         8
        Estimated                                                       
         outlays......         8         8         8         8         8
    Proposed changes:                                                   
        Estimated                                                       
         budget                                                         
         authority....         1         1         1        -1        -1
        Estimated                                                       
         outlays......     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
    Spending under                                                      
     H.R. 1103:                                                         
        Estimated                                                       
         budget                                                         
         authority....         9         9         9         7         7
        Estimated                                                       
         outlays......         7         7         7         7         7
------------------------------------------------------------------------
\1\ These revenues are deposited into the PACA fund. H.R. 1103 also     
  would affect receipts deposited into the general fund. The amount of  
  these receipts is uncertain but would not be significant.             
\2\ Less than $500,000 annually.                                        

    The costs of this bill fall within budget function 350.
    6. Basis of estimate: For the purposes of this estimate, 
CBO assumes that H.R. 1103 would be enacted by the end of 
fiscal year 1995.
    Revenues from license fees and fines.--The PACA program is 
financed from license fees and fines, which are deposited into 
a special fund and are spent, without the need for 
appropriations, for administering PACA. Section 3 would affect 
these receipts by providing for the gradual elimination of 
annual licensing fees for retailers and wholesalers of 
groceries only. This provision would affect approximately 25 
percent of the firms covered under PACA. Affected retailers and 
wholesalers would pay 100 percent of the current, applicable 
license fee through the first year. They would pay 75 percent 
of the license fee in year two and 50 percent in year three. In 
the fourth year and thereafter, no annual fee would be 
required. (New retailers and wholesalers would be required to 
pay a one-time administrative fee of $100.)
    For other merchants, dealers, and brokers, section 4 would 
remove the current cap on fees charged for annual license 
renewals and would increase the fee amount to $550 for the next 
three years. After three years, USDA would have the authority 
to raise license fees when the balance on hand in the PACA fund 
falls below 25 percent of the following fiscal year's projected 
spending needs. In addition, section 5 would increase the fine 
for an inadvertent operation without a license from $25 to $250 
and would increase the fine for renewing a license after its 
expiration date from $5 to $50.
    Based on information provided by the USDA, CBO estimates 
that these changes would cause annual receipts from fees and 
fines to increase by about $1 million per year in fiscal years 
1996 through 1998. In fiscal years 1999 and 2000, we estimate 
that annual receipts would be less than under current law by 
about $1 million a year.
    In addition, PACA generates receipts from penalties, which 
are deposited into the general fund of the U.S. Treasury and 
are not available for use under PACA. Section 5 would increase 
the penalty for operating without a license from $500 to $1,000 
and the daily penalty for operating without a license from $25 
to $250. CBO estimates that additional receipts from these 
penalties would not be significant.
    Section 11 would authorize USDA to assess civil monetary 
penalties against firms in violation of PACA, such as for 
fraudulently obtaining a license or for misbranding an item. 
Such penalties would serve as an alternative to suspending or 
revoking a license. Penalties under this provision could not 
exceed $2,000 per violation. We expect that section 11 would 
affect only a few cases per year and that the amount of 
additional receipts would not be significant.
    Besides the increase in revenues to the general fund, 
section 11 also could result in additional income to the PACA 
fund from the collection of annual fees for licenses that 
otherwise would be suspended or revoked. CBO estimates that any 
increase in income from such fees would not be significant.
    Direct spending.--H.R. 1103 also would affect direct 
spending by decreasing USDA's administrative expenses. We 
expect, therefore, that the initial increase in receipts from 
fees and fines would be used to build up the operating reserves 
in the PACA fund, and that USDA would probably not need to 
spend the new budget authority over the next five years. Thus, 
we expect that the reserve balance for the PACA fund would be 
sufficient to prevent an increase in annual fees for licenses.
    Section 6 would eliminate USDA's role in administering 
statutorily required trusts. Businesses or individuals 
receiving items covered under PACA are required to hold these 
items, or any receivables or proceeds from these items, in 
trust until final payment is made to the suppliers. Presently, 
PACA suppliers must notify USDA within 30 days after a late 
final payment was due in order to protect their claims against 
a trust. Section 6 would maintain the trusts and require that 
notification be provided only to the buyers. Based on 
information provided by the USDA, CBO estimates that this 
section would decrease direct spending by approximately 
$350,000 per year.
    Section 7 would change the conditions under which USDA 
could pursue an investigation of possible violations of PACA. 
This section would require that USDA have a written complaint 
in hand before it could pursue and/or expand an investigation. 
Section 7 also would increase the threshold for damages under 
which a shortened review process can take place from $15,000 to 
$30,000. This change would adjust for the increase in the cost 
of perishable agricultural commodities over time and allow USDA 
to forgo formal hearings for cases involving damages not 
greater than $30,000. CBO estimates that the higher threshold 
would affect only a few cases per year and that the decrease in 
direct spending from section 7 would not be significant.
    By allowing USDA to settle violations by assessing 
penalties, section 11 could result in savings in direct 
spending by reducing the number of hearings and appeals. We 
expect that section 11 would affect only a few cases per year 
and that the amount of additional receipts would not be 
significant.
    7. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts through 1998. Because several sections of 
this bill would affect receipts and direct spending, pay-as-
you-go procedures would apply. The following table shows the 
estimated pay-as-you-go impact of this bill.

------------------------------------------------------------------------
                                    1995      1996      1997      1998  
------------------------------------------------------------------------
Change in outlays...............         0         0         0         0
Change in receipts..............         0         1         1         1
------------------------------------------------------------------------

    8. Estimated cost to State and local governments: None.
    9. Estimate comparison: None.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: John R. Righter.
    12. Estimate approved by: Robert A. Sunshine for Paul N. 
Van de Water, Assistant Director for Budget Analysis.

                     Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of Rule XI of the Rules of the 
House of Representatives, the Committee estimates that 
enactment of H.R. 1103, as amended, will have no inflationary 
impact on the national economy.

                          Oversight Statement

    No summary of oversight findings and recommendations made 
by the Committee on Government Reform and Oversight under 
clause 2(l)(3)(D) of Rule XI of the Rules of the House of 
Representatives was available to the Committee with reference 
to the subject matter specifically addressed by H.R. 1103, as 
amended.
    No specific oversight activities other than the hearings 
detailed in this report were conducted by the Committee within 
the definition of clause 2(b)(1) of Rule X of the Rules of the 
House of Representatives.
         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

             PERISHABLE AGRICULTURAL COMMODITIES ACT, 1930

SECTION 1. SHORT TITLE AND DEFINITIONS.

  (a) * * *
  (b) Definitions.--For purposes of this Act.
  (1) * * *
          * * * * * * *
  (9) The term ``responsibly connected'' means affiliated or 
connected with a commission merchant, dealer, or broker as (A) 
partner in a partnership, or (B) officer, director, or holder 
of more than 10 per centum of the outstanding stock of a 
corporation or association. 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.
          * * * * * * *
  (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.
  (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.
                             unfair conduct

  Sec. 2. It shall be unlawful in or in connection with any 
transaction in interstate or foreign [commerce--] commerce:
  (1) For any commission merchant, dealer, or broker to engage 
in or use any unfair, unreasonable, discriminatory, or 
deceptive practice in connection with the weighing, counting, 
or in any way determining the quantity of any perishable 
agricultural commodity received, bought, sold, shipped, or 
handled in interstate or foreign commerce[;].
  (2) For any dealer to reject or fail to deliver in accordance 
with the terms of the contract without reasonable cause any 
perishable agricultural commodity bought or sold or contracted 
to be bought, sold, or consigned in interstate or foreign 
commerce by such dealer[;].
  (3) For any commission merchant to discard, dump, or destroy 
without reasonable cause any perishable agricultural commodity 
received by such commission merchant in interstate or foreign 
commerce[;].
  (4) For any commission merchant, dealer, or broker to make, 
for a fraudulent purpose, any false or misleading statement in 
connection with any transaction involving any perishable 
agricultural commodity which is received in interstate or 
foreign commerce by such commission merchant, or bought or 
sold, or contracted to be bought, sold, or consigned, in such 
commerce by such dealer, or the purchase or sale of which in 
such commerce is negotiated by such broker; or to fail or 
refuse truly and correctly to account and make full payment 
promptly in respect of any transaction in any such commodity to 
the person with whom such transaction is had; or to fail, 
without reasonable cause, to perform any specification or duty, 
expressed or implied, arising out of any undertaking in 
connection with any such transaction; or to fail to maintain 
the trust as required under section 5(c)[;]. 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.
  (5) For any commission merchant, dealer, or broker to 
misrepresent by word, act, mark, stencil, label, statement, or 
deed, the character, kind, grade, quality, quantity, size, 
pack, weight, condition, degree of maturity, or State, country, 
or region of origin of any perishable agricultural commodity 
received, shipped, sold, or offered to be sold in interstate or 
foreign [commerce: Provided, That] commerce. However, any 
commission merchant, dealer, or broker who has violated--
          (A) any provision of this paragraph may, with the 
        consent of the Secretary, admit the violation or 
        violations; or
          (B) any provision of this paragraph relating to a 
        misrepresentation by mark, stencil, or label shall be 
        permitted by the Secretary to admit the violation or 
        violations if such violation or violations are not 
        repeated or flagrant;
and pay, in the case of a violation under either clause (A) or 
(B) of this paragraph, a monetary penalty not to exceed $2,000 
in lieu of a formal proceeding for the suspension or revocation 
of license, any payment so made to be deposited in the Treasury 
of the United States as miscellaneous receipts[;]. 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.
          * * * * * * *
                               [licenses

  [Sec. 3. (a)]

SEC. 3. LICENSES.

  (a) License Required; Penalties for Violations.--After the 
expiration of six months after the approval of this Act no 
person shall at any time carry on the business of a commission 
merchant, dealer, or broker without a license valid and 
effective at such time. Any person who violates any provision 
of this subdivision shall be liable to a penalty of not more 
than [$500] $1,000 for each such offense and not more than 
[$25] $250 for each day it continues, which shall accrue to the 
United States and may be recovered in a civil suit brought by 
the United States.
  Any person violating this provision may, upon a showing 
satisfactory to the Secretary of Agriculture, or his authorized 
representative, that such violation was not willful but was due 
to inadvertence, be permitted by the Secretary, or such 
representative, to settle his liability in the matter by the 
payment of the fees due for the period covered by such 
violation and an additional sum, not in excess of [$25] $250, 
to be fixed by the Secretary of Agriculture or his authorized 
representative. Such payment shall be deposited in the Treasury 
of the United States in the same manner as regular license 
fees.
  (b) Application and Fees for Licenses.--
          (1) Application for license.--Any person desiring any 
        such license shall make application to the Secretary. 
        The Secretary may by regulation prescribe the 
        information to be contained in such application and to 
        be furnished thereafter. [Upon the filing of the 
        application, and annually thereafter, the applicant 
        shall pay such fee 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), but in no event shall such 
        fee exceed $400, plus $200 for each branch or 
        additional business facility operated by the applicant 
        in excess of nine such facilities, as determined by the 
        Secretary. Total annual fees for any applicant shall 
        not exceed $4,000 in the aggregate.]
          (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.
          (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.
          (5) Perishable agricultural commodities act fund.--
        Such fee, when collected, shall be deposited in the 
        Treasury of the United States as a special fund, 
        without fiscal year limitation, to be designated as the 
        ``Perishable Agricultural Commodities Act Fund'', which 
        shall be available for all expenses necessary to the 
        administration of this Act and the Act approved March 
        3, 1927, referred to above. Any reserve funds in the 
        Perishable Agricultural Commodities Act Fund may be 
        invested by the Secretary in insured or fully-
        collateralized interest-bearing accounts or, at the 
        discretion of the Secretary, by the Secretary of the 
        Treasury in United States Government debt instruments. 
        Any interest earned on such reserve funds shall be 
        credited to the Perishable Agricultural Commodities Act 
        Fund and shall be available for the same purposes as 
        the fees deposited in such fund. [The amount of money 
        accumulated and on hand in the special fund at the end 
        of any fiscal year shall not exceed 25 percent of the 
        projected budget for the next following fiscal year.] 
        Financial statements prescribed by the Director of the 
        Bureau of the Budget for the last completed fiscal 
        year, and as estimated for the current and ensuing 
        fiscal years, shall be included in the budget as 
        submitted to the Congress annually. [The Secretary 
        shall give public notice of any increase to be made in 
        the annual fee prescribed by him hereunder and shall 
        allow a reasonable time prior to the effective date of 
        such increase for interested persons to file their 
        views on or objections to such increase.]
  (c) Use of Trade Names.--A licensee may conduct business in 
more than one trade name or change the name under which 
business is conducted without requiring an additional or new 
license. The Secretary may disapprove the use of a trade name 
if, in his opinion, the use of the trade name by the licensee 
would be deceptive, misleading, or confusing to the trade, and 
the Secretary may, after notice and opportunity for a hearing, 
suspend for a period not to exceed ninety days the license of 
any licensee who continues to use a trade name which the 
Secretary has disapproved for use by such licensee. The 
Secretary may refuse to issue a license to an applicant if he 
finds that the trade name in which the applicant proposes to do 
business would be deceptive, misleading, or confusing to the 
trade if used by such applicant.
  Sec. 4. (a) Whenever an applicant has paid the prescribed fee 
the Secretary, except as provided elsewhere in this Act, shall 
issue to such applicant a license, which shall entitle the 
licensee to do business as a commission merchant and/or dealer 
and/or broker unless and until it is suspended or revoked by 
the Secretary in accordance with the provisions of this Act, or 
is automatically suspended under section 7(d) of this Act, but 
said license shall automatically terminate on [any anniversary 
date thereof unless the annual fee has been paid] 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): Provided, 
That notice of [the necessity of paying the annual fee] the 
necessity of renewing the license and of paying the renewal fee 
(if such fee is required) shall be mailed at least thirty days 
before the anniversary date: Provided, further, That if the 
[annual fee] renewal fee (if required) is not paid by the 
anniversary date the licensee may obtain a renewal of that 
license at any time within thirty days by paying the fee 
provided in section 3(b), plus [$5] $50, which shall be 
deposited in the Perishable Agricultural Commodities Act fund 
provided for by section 3(b): And provided further, That the 
license of any licensee shall terminate upon said licensee, or 
in case the licensee is a partnership, any partner, being 
discharged as a bankrupt, unless the Secretary finds upon 
examination of the circumstances of such bankruptcy, which he 
shall examine if requested to do so by said licensee, that such 
circumstances do not warrant such termination.
  (b) The Secretary shall refuse to issue a license to an 
applicant if he finds that the applicant, or any person 
responsibly connected with the applicant, is prohibited from 
employment with a licensee under section 8(b) or is a person 
who, or is or was responsibly connected with a person who--
          (A) * * *
          * * * * * * *
  (c) Any applicant ineligible for a license by reason of the 
provisions of subsection (b) of this section may, upon the 
expiration of the two-year period applicable to him, be issued 
a license by the Secretary if such applicant furnishes a surety 
bond in the form and amount satisfactory to the Secretary as 
assurance that his business will be conducted in accordance 
with this Act and that he will pay all reparation orders which 
may be issued against him in connection with transactions 
occurring within four years following the issuance of the 
license, subject to his right of appeal under section 7(c). In 
the event such applicant does not furnish such a surety bond, 
the Secretary shall not issue a license to him until three 
years have elapsed after the date of the applicable order of 
the Secretary or decision of the court on appeal. If the surety 
bond so furnished is terminated for any reason without the 
approval of the Secretary the license shall be automatically 
canceled as of the date of such termination and no new license 
shall be issued to such person during the four-year period 
without a new surety bond covering the remainder of such 
period. The Secretary, based on changes in the nature and 
volume of business conducted by a bonded licensee, may require 
an increase or authorize a reduction in the amount of the bond. 
A bonded licensee who is notified by the Secretary to provide a 
bond in an increased amount shall do so within a reasonable 
time to be specified by the Secretary, and upon failure of the 
licensee to provide such bond his license shall be 
automatically suspended until such bond is provided. 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).
          * * * * * * *
                      liability to person damaged

  Sec. 5. (a) If any commission merchant, dealer, or broker 
violates any provision of section 2 he shall be liable to the 
person or persons injured thereby for the full amount of 
damages (including any handling fee paid by the injured person 
or persons under section 6(a)(2)) sustained in consequence of 
such violation.
          * * * * * * *
  (c)(1) * * *
          * * * * * * *
  (3) The unpaid supplier, seller, or agent shall lose the 
benefits of such trust unless such person has given written 
notice of intent to preserve the benefits of the trust to the 
commission merchant, dealer, or broker [and has filed such 
notice with the Secretary] within thirty calendar days (i) 
after expiration of the time prescribed by which payment must 
be made, as set forth in regulations issued by the Secretary, 
(ii) after expiration of such other time by which payment must 
be made, as the parties have expressly agreed to in writing 
before entering into the transaction, or (iii) after the time 
the supplier, seller, or agent has received notice that the 
payment instrument promptly presented for payment has been 
dishonored. 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. When 
the parties expressly agree to a payment time period different 
from that established by the Secretary, a copy of any such 
agreement shall be filed in the records of each party to the 
transaction and the terms of payment shall be disclosed on 
invoices, accountings and other documents relating to the 
transaction.
  (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.''.
  [(4)] (5) The several district courts of the United States 
are vested with jurisdiction specifically to entertain (i) 
actions by trust beneficiaries to enforce payment from the 
trust, and (ii) actions by the Secretary to prevent and 
restrain dissipation of the trust.
          * * * * * * *

                      [complaint and investigation

  [Sec. 6. (a)]

SEC. 6. COMPLAINTS, WRITTEN NOTIFICATIONS, AND INVESTIGATIONS.

  (a) Reparation Complaints.--
          (1) Petition; process.--Any person complaining of any 
        violation of any provision of section 2 by any 
        commission merchant, dealer, or broker may, at any time 
        within nine months after the cause of action accrues, 
        apply to the Secretary by petition, which shall briefly 
        state the facts, whereupon, if, in the opinion of the 
        Secretary, the facts therein contained warrant such 
        action, a copy of the complaint thus made shall be 
        forwarded by the Secretary to the commission merchant, 
        dealer, or broker, 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.
          (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) Any officer or agency of any State or Territory having 
jurisdiction over commission merchants, dealers, or brokers in 
such State or Territory and any employee of the United States 
Department of Agriculture or any interested person may file, in 
accordance with rules and regulations of the Secretary, a 
complaint of any violation of any provisions of this Act by any 
commission merchant, dealer, or broker and may request an 
investigation of such complaint by the Secretary.
  [(c) If there appear to be, in the opinion of the Secretary, 
any reasonable grounds for investigating any complaint made 
under this section, the Secretary shall investigate such 
complaint and may, if in his opinion the facts warrant such 
action, have said complaint served by registered mail or by 
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 
said person is engaged in business: Provided, That in 
complaints wherein the amount claimed as damages does not 
exceed the sum of $15,000 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.]
  (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.
  (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.
  (d) Decisions on Complaints.--After opportunity for hearing 
on complaints where the damages claimed exceed the sum of 
[$15,000] $30,000 has been provided or waived and on complaints 
where damages claimed do not exceed the sum of [$15,000] 
$30,000 not requiring hearing as provided herein, the Secretary 
shall determine whether or not the commission merchant, dealer, 
or broker has violated any provision of section 2.
  (e) Bond Required for Certain Complaints.--In case a 
complaint is made by a nonresident of the United States, or by 
a resident of the United States to whom the claim of a 
nonresident of the United States has been assigned, the 
complainant shall be required, before any formal action is 
taken on his complaint, to furnish a bond in double the amount 
of the claim conditioned upon the payment of costs, including a 
reasonable attorney's fee for the respondent if the respondent 
shall prevail, and any reparation award that may be issued by 
the Secretary of Agriculture against the complainant on any 
counter claim by respondent: Provided, That the Secretary shall 
have authority to waive the furnishing of a bond by a 
complainant who is a resident of a country which permits the 
filing of a complaint by a resident of the United States 
without the furnishing of a bond.
          * * * * * * *
                  suspension and revocation of license

  Sec. 8. (a) * * *
  (b) Except with the approval of the Secretary, no licensee 
shall employ any person, or any person who is or has been 
responsibly connected with any person--
          (1) whose license has been revoked or is currently 
        suspended by order of the Secretary;
          (2) who has been found after notice and opportunity 
        for hearing to have committed any flagrant or repeated 
        violation of section 2, but this provision shall not 
        apply to any case in which the license of the person 
        found to have committed such violation was suspended 
        and the suspension period has expired or is not in 
        effect; or
          (3) against whom there is an unpaid reparation award 
        issued within two years, subject to his right of appeal 
        under section 7(c).
The Secretary may approve such employment at any time following 
nonpayment of a reparation award, or after one year following 
the revocation or finding of flagrant or repeated violation of 
section 2, if the licensee furnishes and maintains a surety 
bond in form and amount satisfactory to the Secretary as 
assurance that such licensee's business will be conducted in 
accordance with this Act and that the licensee will pay all 
reparation awards, subject to its right to appeal under section 
7(c), which may be issued against it in connection with 
transactions occurring within four years following the 
approval. The Secretary may approve employment without a surety 
bond after the expiration of two years from the effective date 
of the applicable disciplinary order. The Secretary, based on 
changes in the nature and volume of business conducted by the 
licensee, may require an increase or authorize a reduction in 
the amount of the bond. A licensee who is notified by the 
Secretary to provide a bond in an increased amount shall do so 
within a reasonable time to be specified by the Secretary, and 
if the licensee fails to do so the approval of employment shall 
automatically terminate. The Secretary may, after thirty days' 
notice and an opportunity for a hearing, suspend or revoke the 
license of any licensee who, after the date given in such 
notice, continues to employ any person in violation of this 
section. 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.
          * * * * * * *
  (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.
          * * * * * * *
                              ----------                              


                          ACT OF JULY 5, 1994

 AN ACT To provide for the imposition of temporary fees in connection 
    with the handling of complaints of violations of the Perishable 
                  Agricultural Commodities Act, 1930.
  Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

[SECTION 1. FILING AND HANDLING FEES FOR COMPLAINTS OF VIOLATIONS OF 
                    PERISHABLE AGRICULTURAL COMMODITIES ACT, 1930.

  [(a) Temporary Filing Fee Required.--During fiscal years 1995 
and 1996, the Secretary of Agriculture shall require persons 
who submit petitions to the Secretary under section 6(a) of the 
Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 
499f(a)), alleging a violation of section 2 of such Act (7 
U.S.C. 499b), to include a filing fee of $60 per petition.
  [(b) Temporary Handling Fee Required.--During fiscal years 
1995 and 1996, if the Secretary determines under section 6(a) 
of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 
499f(a)), that the facts contained in a petition described in 
such section 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. In determining the amount of damages incurred by 
an injured person or persons preparatory to issuing a 
reparation order under section 7 of such Act (7 U.S.C. 499g), 
the Secretary shall include the amount of any handling fee paid 
by the injured person or persons under this subsection.
  [(c) Deposit of Fees.--The Secretary shall deposit fees 
submitted under this section into the Perishable Agricultural 
Commodities Act Fund.]