The bill raises the authorized ceiling on the annual license fee required under the Perishable Agricultural Commodities Act to $100 from the present maximum of $50. It also broadens the exemption from license now provided in the act for certain retailers and frozen food brokers by raising the level of the exemption from $90,000 to $100,000. The Perishable Agricultural Commodities Act was enacted in 1930 under the sponsorship and unanimous support of the leading trade associations in the fresh fruit and vegetable industry. It establishes a code of fair trading practices in the marketing of fresh and frozen fruits and vegetables in interstate and foreign commerce. It also provides a method of settlement of the contractual disputes of those handling these commodities. During the past fiscal year, for example, a total of 2,272 such reparation complaints were handled by the Department. Informal amicable settlements were arranged in 930 cases resulting in payments to the parties of approximately $2.3 million. In addition, 341 formal orders were issued awarding reparations amounting to over $777,000. No fees are assessed for the handling of these complaints. Commission merchants, brokers, and dealers, including certain retailers and processors, operating subject to the act are required to be licensed. These licenses can be suspended or revoked for violations of the act. Financing of the administration of this act is self-supporting from annual license fees. These fees are deposited in a special PACA fund and all costs of administration of the act (except the Office of General Counsel) are financed from these fees. The Secretary is 'authorized to established the annual license fee, within the maximum provided in the act, at an amount sufficient to provide the revenue to meet anticipated expenses for administering the act. The present maximum fee authorization of $50 was set in the amendment of October 1, 1962, to the Perishable Agricultural Commodities Act. Under this authorization, the annual license fee was increased to $36 on January 1, 1963, to $42 on January 1, 1965, and to $50 on January 1, 1969. There is need to raise the statutory ceiling on license fees because of two factors: (a) the declining number of firms subject to license, and (b) the increasing cost of administering the act. At present the number of licensees is approximately 19,350, compared with an alltime peak of about 27,000 in 1956. This trend toward fewer licenses results from the continuing mergers and consolidations in the industry and the closing of many small firms. During the past 5 years, for example, the net decline in number of firms licensed has averaged over 670 per year. Nevertheless, the number of complaints filed under the act and the requests for advice and assistance have remained relatively constant. At the same time, costs of administration have been higher each year, largely because of adjustments in salary scales and fringe benefits which together account for over 80 percent of the expenditures under this act. These increases have taken place even though the number of employees engaged in the administration of this act is at the lowest level in over 10 years. The PACA fund incurred a deficit of over $12,000 in fiscal year 1968 and a deficit of approximately $58,000 during the first 6 months of S. Rept. 91-490 fiscal year 1969. With continued decline in numbers of licensees, it is likely that further deficits will occur in fiscal years 1970 and 1971. The broadening of the exemption from license for certain retailers and frozen food brokers from $90,000 to $100,000, as provided in H. R. 9857, will provide relief from the licensing provisions of the act for an enlarged number of the smaller operators in these two groups. Exempt at present are (a) retailers whose purchases of perishable agricultural commodities amount to $90,000 or less per year, and (b) frozen food brokers negotiating sales for and on behalf of vendors and whose sales of frozen fruits and vegetables have an invoice value. of $90,000 or less per year. There are approximately 4,000 retail firms licensed under the Perishable Agricultural Commodities Act, based on the current exemption of $90,000. An increase in the retailer exemption to $100,000, as proposed in this bill, would approximate the increase in the index of wholesale food prices that has taken place since 1962 when the $90,000 exemption was established. Since fresh and frozen fruits and vegetables account, on the average, for about 8 to 9 percent of retail foodstore sales, this means that an exemption set at $100,000 would exclude most retailers with gross sales of less than $1.5 million. Based on these data, it is estimated that fewer than 2 percent of the food retailing firms would be subject to license. The Department's records indicate that there are fewer than 300 frozen food brokers currently subject to license under PACA. Consequently, an increase in the exemption to $100,000 will affect a relatively small number of such firms. The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely, J. PHIL CAMPBELL, CHANGES IN EXISTING LAW In compliance with subsection (4) of rule XXIX of the Standing Rules of the Senate, 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, AS AMENDED AN ACT To suppress unfair and fraudulent practices in the marketing of perishable agricultural commodities in interstate and foreign commerce Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That when used in this Act(1) The term "person" includes individuals, partnerships, corporations, and associations; (2) The term "Secretary" means the Secretary of Agriculture; (3) The term "interstate or foreign commerce" means commerce between any State or Territory, or the District of Columbia S. Rept. 91-490 and any place outside thereof; or between points within the same State or Territory, or the District of Columbia but through any place outside thereof; or within the District of Columbia; (4) The term "perishable agricultural commodity" (A) means any of the following, whether or not frozen or packed in ice: Fresh fruits and fresh vegetables of every kind and character; and (B) includes cherries in brine as defined by the Secretary in accordance with trade usages; (5) The term "commission merchant" means any person engaged in the business of receiving in interstate or foreign commerce any perishable agricultural commodity for sale, on commission, or for or on behalf of another; (6) The term "dealer" means any person engaged in the business of buying or selling in wholesale or jobbing quantities, as defined by the Secretary, any perishable agricultural commodity in interstate or foreign commerce, except that (A) no producer shall be considered as a "dealer" in respect to sales of any such commodity of his own raising; (B) no person buying any such commodity solely for sale at retail shall be considered as a "dealer" until the invoice cost of his purchases of perishable agricultural commodities in any calendar year are in excess of [$90,000 $100,000; and (C) no person buying any commodity for canning and/or processing within the State where grown shall be considered a "dealer" whether or not the canned or processed product is to be shipped in interstate or foreign commerce, unless such product is frozen or packed in ice, or consists of cherries in brine, within the meaning of paragraph (4) of this section. Any person not considered as a "dealer" under clauses. (A), (B), and (C) may elect to secure a license under the prosvisions of section 3, and in such case and while the license is in effect such person shall be considered as a "dealer"; (7) The term "broker" means any person engaged in the business of negotiating sales and purchases of any perishable agricultural commodity in interstate or foreign commerce for or on behalf of the vendor or the purchaser, respectively, except that no person shall be deemed to be a "broker" if such person is an independent agent negotiating sales for and on behalf of the vendor and if the only sales of such commodities negotiated by such person are sales of frozen fruits and vegetables having an invoice value not in excess of [$90,000 $100,000 in any calendar year; (8) A transaction in respect of any perishable agricultural commodity shall be considered in interstate or foreign commerce if such commodity is part of that current of commerce usual in the trade in that commodity whereby such commodity and/or the products of such commodity are sent from one State with the expectation that they will end their transit, after purchase, in another, including, in addition to cases within the above general description, all cases where sale is either for shipment to another State, or for processing within the State and the shipment outside the State of the products resulting from such processing. Commodities normally in such current of commerce shall not be con S. Rept. 91-490 sidered out of such commerce through resort being had to any means or device intended to remove transactions in respect thereto from the provisions of this Act; (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; (10) The terms "employ" and "employment" mean any affiliation of any person with the business operations of a licensee, with or without compensation, including ownership or self-employment. LICENSES SEC. 3. (a) 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 for each such offense and not more than $25 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, 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) 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. 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 [$50] $100. 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: Provided, That 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 Secre tary 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. 8. Rept. 91-490 (c) 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. S. Rept. 91-490 |