CONGRESS PERISHABLE AGRICULTURAL COMMODITIES ACT AMENDMENTS SEPTEMBER 17, 1976.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. FOLEY, from the Committee on Agriculture, REPORT [To accompany H.R. 9288] [Including Congressional Budget Office cost estimates and comparison] The Committee on Agriculture, to whom was referred the bill (H.R. 9288), to amend the Perishable Agricultural Commodities Act, 1930, having considered the same, report favorable thereon with an amendment and recommend that the bill as amended do pass. The amendment is as follows: Page 1, line 3, strike all after the enacting clause and insert in lieu thereof the following: That section 3 of the Perishable Agricultural Commodities Act, 1930, as amended (7 U.S.C. 499c), is amended by striking from the third sentence of subsection (b) the figure "$100" and inserting in lieu thereof the figure "$150”. SEC. 2. Section 1 of such Act (7 U.S.C. 499a) is amended by adding to subsection (4) (B) thereof after the phrase "cherries in brine" the phrase, “and frozen potato products,”; and by adding in subsection (6) (C) thereof after the word "commodity" the phrase "other than potatoes". SEC. 3. (a) Section 1 of such Act (7 U.S.C. 499a) is further amended by striking from subsection (6) (B) the figure "$100,000" and inserting in lieu thereof the figure "$150,000"; and by striking from subsection (7) the figure "$100,000" and inserting in lieu thereof the figure "$150,000". (b) The amendments made by this section shall become effective beginning with calendar year 1977. SEC. 4. Section 6 of such Act (7 U.S.C. 499f) is amended by adding at the end of paragraph (a) thereof the following: ": Provided, however, That upon written request of the complainant and upon a determination by the Secretary that disclosure of such information would adversely affect the interest of the complainant and is not required in the public interest, the Secretary may withhold from public disclosure the name, address and other identifying information about the compainant". SEC. 5. Section 13 of such Act (7 U.S.C. 499m) is amended by renumbering paragraphs (b) through (e) as paragraphs (c) through (f) and by adding a new paragraph (b) as follows: "(b) The Secretary or his duly authorized agents, in order to insure that the prompt payment provision of section 2(4) of the Act is being complied with, shall inspect at least once every six months for a period of two years the accounts, records, and memorandums of any commission merchant, dealer, or broker determined pursuant to section 6 of the Act to have violated such provision. The Secretary may also require that any such commission merchant, dealer, or broker furnish and maintain a surety bond in form and amount satisfactory to the Secretary as assurance that such commission merchant's, dealer's or broker's business will be conducted in accordance with this Act and that such commission merchant, dealer, or broker will pay all reparation awards, subject to its right of appeal under section 7(c), which may be issued against it in connection with transactions occurring within two years following determination of the violation.". BRIEF EXPLANATION OF THE LEGISLATION The bill amends the Perishable Agricultural Commodities Act of 1930, as amended, to: (1) Increase from $100 to $150 the statutory ceiling on the license fee assessed annually by the Secretary of Agriculture against handlers subject to the Act. (2) Include frozen potato products as a "perishable agricultural commodity" as defined in the Act, and provide that canners or processors of potatoes are covered by the Act whether or not such potatoes are canned or processed in the State where they were grown. (3) Increase from $100,000 to $150,000 the total annual invoice value of (i) perishable agricultural commodities which may be purchased by a retail establishment or (ii) of frozen fruits and vegetables which may be sold by an independent broker, before such person is covered by the Act as a dealer or broker. (4) Provide that, upon a written request of the complainant, the Secretary of Agriculture may under certain conditions withhold from public disclosure the name, address, and other identifying information about a person who brings a complaint to the Secretary alleging violation of the unfair conduct provisions of the Act. (5) Provide that the Secretary, in order to insure compliance with the provision of the Act which requires prompt payment for perishable agricultural commodities, shall inspect at least once every six months for a period of two years the accounts, records, and memoranda of any commission merchant, broker, or dealer determined to have violated such provision. (6) Provide that the Secretary may also require any commission merchant, broker, or dealer determined to have violated the prompt payment provision of the Act to maintain a surety bond designed to assure that such person will conduct his business in accordance with the Act and will pay all reparation awards which may be issued against such handler in connection with transactions occurring within two years following determination of the violation. PURPOSE AND NEED FOR THE LEGISLATION The Committee is of the view that the basic program which is carried out under the Perishable Agricultural Commodities Act remains a useful one, and therefore that it should be kept intact with adequate funding. The basic objective of the Act is to faster fair trading practices in the marketing of perishable agricultural commodities in interstate and foreign commerce and to aid in the enforcement of contracts for marketing these commodities. There are many opportunities for unethical persons to take advantage of the rather unstructured way in which marketing of perishable commodities is conducted, and to engage in unfair and fraudulent practices. The section of this legislation which authorizes increases, up to $150, in the license fee assessed annually against commission merchants, brokers, and dealers subject to the Act is needed to maintain the financial solvency of the program administered under the Act with the exception of legal services provided by the Office of General Counsel of the U.S. Department of Agriculture and certain other agencies. The administrative costs under the Perishable Agricultural Commodities Act are borne entirely out of license fees. On several previous occasions in order to keep the program financially solvent, Congress has amended the Act to increase the statutory ceiling on the license fee which the Secretary may assess. In 1950, the statutory ceiling on the license fee was increased from $10 to $15; in 1956, from $15 to $25; in 1962, from $25 to $50; and in 1969, from $50 to $100. The need has again arisen to increase the ceiling on the annual fee if the program is to remain solvent. This need has arisen primarily for two reasons: (1) the declining number of firms subject to license and (2) the increasing cost of administering the Act. At present the number of licensees is approximately 16,500, compared with an all-time peak of about 27,000 in 1956. This trend toward fewer licensees is a result of the continuing mergers and consolidations in the industry and the closing of many small firms. During the 1970's, for example, the net annual decline in the number of firms licensed has averaged about 500. At the same time, costs of administering the program 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 the Act has declined somewhat over the past 10 years. In addition, beginning in fiscal year 1975 a charge for rent of Federal office space is being assessed against the regulatory branch of the Fruit and Vegetable Division of the Department of Agriculture which administers the Act. This will result in a 7 percent increase in the cost of administering the program and must be covered out of the license fee receipts. The Department of Agriculture projected that, due to these developments, it would be necessary during fiscal year 1976 to draw upon the reserve of some $650,000 which is held in the Perishable Agricultural Commodities Act Fund. The Department further projected that, by the end of fiscal year 1977, the reserve will be virtually exhausted unless Congress authorizes an increase in the annual license fee. Consequently, an increase in the license fee is needed if the program is to remain solvent beyond fiscal year 1977. The increase from $100,000 to $150,000 in the volume of perishable produce that can be purchased by a retailer or volume of frozen fruits and vegetables which can be sold by a broker before he becomes subject to the license fee appears to be justified in order to maintain roughly |