II
109th CONGRESS
2d Session
S. 2307
IN THE SENATE OF THE UNITED STATES
February 16, 2006
Mr. Harkin (for himself, Mr. Enzi, and Mr. Thomas) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry
A BILL
To enhance fair and open competition in the production and sale of agricultural commodities.
Short title; table of contents
Short title
This Act may be cited
as the Competitive and Fair
Agricultural Markets Act of 2006
.
Table of contents
The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—Agricultural fair practices
Sec. 101. Agricultural fair practices.
Sec. 102. Application.
TITLE II—Packers and stockyards
Sec. 201. Investigation of live poultry dealers.
Sec. 202. No competitive injury requirement.
Sec. 203. Attorneys fees.
Sec. 204. Appointment of outside counsel.
Sec. 205. Competitive harm.
Sec. 206. Regulations.
Agricultural fair practices
Agricultural fair practices
The Agricultural Fair Practices Act of 1967 (7 U.S.C. 2301 et seq.) is amended to read as follows:
Short title; table of contents
In general
This Act may be cited as the Agricultural Fair
Practices Act of 1967
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I—Agricultural trade practices
Sec. 101. Office of Special Counsel for Competition Matters.
Sec. 102. Report on corporate structure.
TITLE II—Unfair or deceptive acts or practices in agricultural commerce
Sec. 201. Prohibition on unfair or deceptive acts or practices in agricultural commerce.
Sec. 202. Agricultural contracts.
Sec. 203. Production contracts.
Sec. 204. Authority of Secretary to promulgate rules and regulations.
Sec. 205. Enforcement.
Sec. 206. Effect on other laws.
Sec. 207. Assignment of association dues and fees.
Sec. 208. Severability.
Definitions
In this Act:
Agricultural Commodity
The term agricultural commodity has the meaning given the term in section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602).
Agricultural contract
The term agricultural contract means a marketing contract or a production contract.
Agricultural cooperative
The term agricultural cooperative means
an association of persons engaged in the production, marketing, or processing
of an agricultural commodity that meets the requirements of the Act entitled
An Act to authorize association of producers of agricultural
products
(commonly known as the Capper-Volstead Act
)
(7 U.S.C.
291 et seq.).
Association of producers
In general
The term association of producers means an association of producers of agricultural commodities that engages in the marketing, bargaining, shipping, or processing of agricultural commodities or of agricultural services.
Inclusions
The term association of producers includes—
an organization dedicated to promoting the common interest and general welfare of producers of agricultural commodities;
a cooperative association (as defined in section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a))); and
an association
described in the first section of the Act entitled An Act to authorize
association of producers of agricultural products
(commonly known as
the Capper-Volstead Act
) (7 U.S.C. 291).
Capital investment
The term capital investment means an investment in—
a structure, such as a building or manure storage structure; or
machinery or equipment associated with producing an agricultural commodity that has a useful life of more than 1 year.
Commission merchant
The term commission merchant means any person engaged in the business of receiving in interstate or foreign commerce any agricultural commodity for sale on commission.
Contract livestock facility
The term contract livestock facility means a facility in which livestock or a product of live livestock is produced under a production contract by a contract producer.
Contractor
The term contractor means a person that, in accordance with a production contract, owns, or will own, an agricultural commodity that is produced by a contract producer.
Contract producer
The term contract producer means a producer that produces an agricultural commodity under a production contract.
Covered person
The term covered person means a dealer, handler, contractor, processor, or commission merchant.
Crop
The term crop means an agricultural commodity produced from a plant.
Dealer
The term dealer means any person engaged in the business of buying, selling, or marketing agricultural commodities in interstate or foreign commerce.
Department
The term Department means the Department of Agriculture.
Handler
The term handler means any person engaged in the business or practice of—
acquiring agricultural commodities from producers or associations of producers for processing or sale;
grading, packaging, handling, storing, or processing agricultural commodities received from producers or associations of producers;
contracting or negotiating contracts or other arrangements, written or oral, with or on behalf of producers or associations of producers with respect to the production or marketing of any agricultural commodity; or
acting as an agent or broker for a handler in the performance of any function or act described in subparagraph (A), (B), or (C).
Investment requirement
The term investment requirement means a provision in a production contract that requires a contract producer to make a capital investment associated with producing an agricultural commodity that, but for the production contract, the contract producer would not have made.
Livestock
The term livestock means beef cattle, dairy cattle, swine, sheep, or poultry.
Marketing contract
The term marketing contract means a written agreement between a covered person and a producer for the purchase of an agricultural commodity produced or raised by the producer.
Person
The term person includes an individual, partnership, corporation, limited liability company, limited partnership, or association.
Processor
The term processor means—
any person (other than an agricultural cooperative) engaged in the business of handling, preparing, or manufacturing (including slaughtering) an agricultural commodity or the products of an agricultural commodity for sale or marketing in interstate or foreign commerce; and
an agricultural cooperative that handles, prepares, or manufactures (including slaughtering) agricultural commodities of its members’ own production.
Produce
The term produce means—
to provide feed or services relating to the care and feeding of livestock, including milking dairy cattle and storing raw milk; or
to plant, raise, harvest, and store a crop, including preparing soil for planting and applying a fertilizer, soil conditioner, or pesticide to a crop.
Producer
The term producer means a person engaged in the production of an agricultural commodity as a farmer, planter, rancher, dairyman, poultryman, or fruit, vegetable, or nut grower.
Production contract
In general
The term production contract means a written agreement that provides for—
the production of an agricultural commodity by a contract producer; or
the provision of a management service relating to the production of an agricultural commodity by a contract producer.
Inclusions
The term production contract includes—
a contract between a contractor and a contract producer for the production of an agricultural commodity; and
a contract between a contractor and a contract producer for the provision of a management service in the production of an agricultural commodity.
Secretary
The term Secretary means the Secretary of Agriculture.
Agricultural trade practices
Office of Special Counsel for Competition Matters
Establishment
In general
There is established within the Department an office to
be known as the Office of Special Counsel for Competition
Matters
.
Duties
The Office shall—
investigate and prosecute violations of this Act, the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et seq.), and any other Act that the Secretary determines to be appropriate;
serve as a liaison between the Department and the Department of Justice and the Federal Trade Commission with respect to competition and trade practices in the food and agricultural sector; and
maintain a staff of attorneys and other professionals with the appropriate expertise.
Special Counsel for Competition Matters
In general
The Office shall be headed by the Special Counsel for Competition Matters, who shall be appointed by the President, by and with the advice and consent of the Senate.
Prosecutorial Authority
Notwithstanding title 28, United States Code, the Special Counsel for Competition Matters shall have the authority to bring any civil or administrative action authorized under this Act or any other Act that the Secretary determines to be appropriate.
Report on corporate structure
In general
A covered person with annual sales in excess of $100,000,000 shall annually file with the Secretary a report that describes, with respect to domestic activities and foreign activities, the strategic alliances, ownership in other covered persons, joint ventures, subsidiaries, brand names, and interlocking boards of directors with other covered persons.
Confidentiality
A report filed under subsection (a) shall be confidential commercial or financial information for the purposes of section 552(b)(4) of title 5, United States Code.
Unfair or deceptive acts or practices in agricultural commerce
Prohibition on unfair or deceptive acts or practices in agricultural commerce
Unfair or deceptive acts or practices in agricultural commerce
Any unfair or deceptive act or practice in or affecting the marketing, receiving, purchasing, sale, or contracting for the production of any agricultural commodity by any covered person shall be unlawful.
Unfair or deceptive acts or practices concerning producer associations
Subject to subsection (a), it shall be unlawful for any covered person knowingly—
to interfere with, restrain, or coerce any producer in the exercise of the right of the producer to join and belong to, or to refrain from joining or belonging to, an association of producers; or
to refuse to deal with any producer because of the exercise of the right of the producer to join and belong to the association;
to discriminate against any producer with respect to price, quantity, quality, or other terms of purchase, acquisition, or other handling of an agricultural commodity because of the membership of the producer in, or the contract of the producer with, an association of producers;
to coerce or intimidate any producer to enter into, maintain, breach, cancel, or terminate a membership agreement or marketing contract with an association of producers or a contract with a covered person;
to pay or loan money, give any thing of value, or offer any other inducement or reward to a producer for refusing to or ceasing to belong to an association of producers;
to make false reports about the finances, management, or activities of an association of producers or handlers;
to conspire, combine, agree, or arrange with any other person to do, or aid or abet the performance of, any act made unlawful by this Act;
to interfere with the formation or administration of any association of producers; or
to contribute financial or other support to an association of producers; or
to fail to bargain in good faith.
Unfair or deceptive acts or practices in agricultural contracts
It shall be unlawful for a covered person that is a party to an agricultural contract—
to fail to act in good faith (as defined in applicable State law provisions of the Uniform Commercial Code) with respect to the performance and enforcement of the agricultural contract;
to fail to include 1 or more cover pages that disclose provisions of the agricultural contract relating to—
duration;
termination;
renewal and renegotiation standards;
responsibility for environmental damage;
factors to be used in determining payment;
responsibility for obtaining and complying with Federal, State, and local permits;
assignability;
the applicable State law and venue;
the effect of oral modifications;
remedies for breach;
in the case of a livestock or poultry production contract, the minimum number of animals subject to the contract;
other rules or provisions incorporated in the contract by reference; and
any other terms that the Secretary determines to be appropriate for disclosure; or
to violate any of the requirements relating to production contracts under section 203.
Public policy considerations
In general
In determining whether an act or practice is unfair, a court may consider established public policies as evidence to be considered with all other evidence.
Limitation
Notwithstanding paragraph (1), public policy considerations may not serve as a primary basis for the determination.
Agricultural contracts
Confidentiality
Any provision of an agricultural contract that requires that the agricultural contract remain confidential is void, except as the provision applies to a trade secret to which section 552 of title 5, United States Code, applies.
Arbitration
If a livestock or poultry contract provides for the use of arbitration to resolve a controversy under the livestock or poultry contract, arbitration may be used to settle the controversy only if, after the controversy arises, both parties consent in writing to use arbitration to settle the controversy.
Production contracts
Right of contract producers to cancel production contracts
In general
A contract producer may cancel a production contract by mailing a cancellation notice to the contractor not later than the later of—
the date that is 3 business days after the date on which the production contract is executed; or
any cancellation date specified in the production contract.
Disclosure
A production contract shall clearly disclose—
the right of the contract producer to cancel the production contract;
the method by which the contract producer may cancel the production contract; and
the deadline for canceling the production contract.
Production contract liens
Definition of lien starting date
In this subsection, the term lien starting date means—
in the case of an annual crop, the date on which the annual crop is planted;
in the case of a perennial crop, the starting date on which the perennial crop is subject to a production contract;
in the case of livestock, the date on which the livestock arrive at the contract livestock facility; and
in the case of milk or any other product of live livestock, the date on which the milk or other product is produced.
Liens
Except as provided in paragraph (8), in the case of a production contract that provides for the production of an agricultural commodity by a contract producer, the contract producer shall have a lien in the amount owed to the contract producer under the production contract on—
the agricultural commodity until the agricultural commodity is sold or processed (including slaughtered) by the contractor; and
the cash proceeds of the sale of the agricultural commodity, including any cash provided as part of the sale; and
any property of the contractor that may be subject to a security interest.
Lien period
A lien for the production of an agricultural commodity under this subsection shall apply during the period—
beginning on the lien starting date; and
ending 1 year after the agricultural commodity is no longer under the control of the contract producer.
Perfecting of liens
To perfect a lien for the production of an agricultural commodity under this subsection, a contract producer shall file a lien statement under applicable State law provisions based on Article 9 of the Uniform Commercial Code.
Priority of liens
A lien created under this subsection shall be superior to, and have priority over, any conflicting lien or security interest in the agricultural commodity, including a lien or security interest that was perfected prior to the creation of the lien under this subsection.
Enforcement
Control
Before an agricultural commodity leaves the control of a contract producer, the contract producer may foreclose a lien created under this subsection in the manner provided for the foreclosure of a secured transaction under applicable State law provisions based on Article 9 of the Uniform Commercial Code.
Post-control
After an agricultural commodity leaves the control of the contract producer, the contract producer may enforce the lien in the manner provided under applicable State law provisions based on Article 9 of the Uniform Commercial Code.
Election of other remedies
In lieu of obtaining a lien under this subsection, a contract producer described in paragraph (2) may seek to collect funds due under a production contract in accordance with—
the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et seq.); or
the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499a et seq.).
Exemption
This subsection does not apply to a contract producer that is an agricultural cooperative, at least 50 percent of the ownership interests of which are held by producers.
Production contracts involving investment requirements
Applicability
This subsection applies only to a production contract between a contract producer and a contractor if, but for the production contract, the contract producer would not have made a capital investment of $100,000 or more.
Restrictions on contract termination
Notice of termination
Except as provided in subparagraph (C), a contractor shall not terminate or cancel a production contract unless the contractor provides the contract producer with written notice of the intention of the contractor to terminate or cancel the production contract at least 180 days before the effective date of the termination or cancellation.
Requirements
The written notice required under subparagraph (A) shall include alleged causes of the termination.
Exceptions
A contractor may terminate or cancel a production contract without notice as required under subparagraph (A) if the basis for the termination or cancellation is—
a voluntary abandonment of the contractual relationship by the contract producer, such as a complete failure of the contract producer to perform under the production contract;
the conviction of the contract producer of an offense of fraud or theft committed against the contractor; or
the natural end of the production contract in accordance with the terms of the production contract.
Right to cure
In general
If, not later than 180 days after the date on which the contract producer receives written notice under subparagraph (A), the contract producer remedies each cause of the breach of contract alleged in the written notice, the contractor may not terminate or cancel a production contract under this paragraph.
No admission of breach
The remedy or attempt to remedy the causes for the breach of contract by the contract producer under clause (i) does not constitute an admission of breach of contract.
Additional capital investments in production contracts
In general
A covered person shall not require a contract producer to make additional capital investments in connection with a production contract that exceed the initial investment requirements of the production contract.
Exceptions
Notwithstanding paragraph (1), a covered person may require additional capital investments if—
the additional capital investments are offset by reasonable additional consideration, including compensation or a modification to the terms of the production contract; and
the contract producer agrees in writing that there is acceptable and satisfactory consideration for the additional capital investment.
Authority of Secretary to promulgate rules and regulations
The Secretary, acting through the Special Counsel for Competition Matters, may promulgate such rules and regulations as are necessary to carry out this Act and the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et seq.), including rules and regulations—
relating to unfair or deceptive acts or practices in agriculture;
that define with specificity acts or practices that are to be prohibited as unfair or deceptive acts or practices in agriculture under section 201; and
to prevent unfair or deceptive acts or practices from occurring in agriculture.
Enforcement
Civil actions by the Secretary against covered persons
In any case in which the Secretary has reasonable cause to believe that any covered person has engaged in any act or practice that violates this Act, the Secretary may bring a civil action in the United States district court of the jurisdiction of residence of the covered person by filing a complaint requesting preventive relief, including an application for a permanent or temporary injunction, restraining order, or other order, against the covered person.
Civil actions against covered persons
Preventive relief
In general
In any case in which any covered person has engaged, or there are reasonable grounds to believe that any covered person is about to engage, in any act or practice prohibited by this Act, a civil action for preventive relief, including an application for a permanent or temporary injunction, restraining order, or other order, may be instituted by the person aggrieved in the United States district court of the jurisdiction of residence of the aggrieved person.
Security
The court may provide that no restraining order or preliminary injunction shall issue unless security is provided by the applicant, in such sum as the court determines to be appropriate, for the payment of such costs and damages as may be incurred or suffered by any party that is found to have been wrongfully enjoined or restrained.
Damages
In general
Any person injured in the business or property of the person by reason of any violation of, or combination or conspiracy to violate, this Act may bring a civil action in the United States district court of the jurisdiction of residence of the injured person or any State court of competent jurisdiction to recover—
damages sustained by the person as a result of the violation; and
any additional penalty that the court may allow, but not more than $1,000 per violation.
Limitation on actions
A civil action under subparagraph (A) shall be barred unless commenced within 2 years after the cause of action accrues.
Attorney’s fees
In any action commenced under paragraph (1) or (2), the court may allow the prevailing party a reasonable attorney’s fee as part of the costs.
Jurisdiction of district courts
Not later than 2 years after the date on which a violation of this Act occurs, an action to enforce this Act may be brought in—
the United States district court of the jurisdiction of residence of the aggrieved person, notwithstanding the fact that an aggrieved person has not exhausted all administrative or other remedies provided by law; or
any other court of competent jurisdiction in the State of residence of the aggrieved person.
Choice of law, jurisdiction, and venue
Choice of law
Any provision in an agricultural contract requiring the application of the law of a State other than the State in which the producer resides is void and unenforceable.
Jurisdiction
A covered person that enters into an agricultural contract with a producer shall be subject to personal jurisdiction in the State in which the producer resides.
Venue
Venue shall be determined on the basis of the residence of the producer.
Liability for acts of agents
In the construction and enforcement of this Act, the act, omission, or failure of any officer, agent, or person acting for or employed by any other person within the scope of the employment or office of the officer, agent, or person, shall be considered to be the act, omission, or failure of the other person.
Effect on other laws
State laws
In general
Subject to paragraph (2), this Act does not annul, alter, or affect, or exempt any person subject to this Act from complying with, the law of any State with respect to trade practices in agriculture.
Exception
In general
This Act annuls, alters, or affects, or exempts a person from, a State law referred to in paragraph (1) to the extent the State law is inconsistent with this Act.
Inconsistency
For the purposes of this paragraph, a State law is not inconsistent with this Act if the protection that the law affords any producer is greater than the protection provided to a producer by this Act.
State courts
This Act does not deprive a State court of jurisdiction under a State law dealing with the same subject as this Act.
Assignment of association dues and fees
In general
A producer of an agricultural commodity or service may execute, as a clause in an agricultural contract, an assignment of dues or fees to, or the deduction of a sum to be retained by, an association of producers authorized by contract to represent the producer, under which assignment a covered person shall—
deduct a portion of the amount to be paid for products or services of the producer under a production contract; and
pay, on behalf of the producer, the portion over to the association as dues or fees or a sum to be retained by the association.
Duty of covered person
After a covered person receives notice from a producer of an assignment under subsection (a), the covered person shall—
deduct the amount authorized by the assignment from the amount paid for any agricultural commodity sold by the producer or for any service rendered under any production contract; and
on payment to producers for the product or service, pay the amount over to the association or the assignee of the association.
Severability
If any provision of this Act or application of any provision of this Act is held invalid, the remainder of this Act and the application of the provision to other persons and circumstances shall not be affected by the invalidity.
.
Application
The amendment made by section 101 applies to any contract entered into on or after the date of enactment of this Act.
Packers and stockyards
Investigation of live poultry dealers
Removal of poultry slaughter requirement from definitions
Section 2(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 182), is amended—
by striking paragraph (8) and inserting the following:
Poultry grower
The term poultry grower means any person engaged in the business of raising or caring for live poultry under a poultry growing arrangement, regardless of whether the poultry is owned by the person or by another person;
;
in paragraph (9),
by striking and cares for live poultry for delivery, in accord with
another’s instructions, for slaughter
and inserting or cares for
live poultry in accordance with the instructions of another person
;
and
in paragraph
(10), by striking for the purpose of either slaughtering it or selling
it for slaughter by another
.
Administrative enforcement Authority over live poultry dealers
Sections 203,
204, and 205 of the Packers and Stockyards Act, 1921 (7 U.S.C. 193, 194,
195), are amended by inserting or live poultry dealer
after
packer
each place it appears.
Authority to request temporary injunction or restraining order
Section 408 of
the Packers and Stockyards Act, 1921 (7 U.S.C. 228a), is amended in the
first sentence by striking on account of poultry
and inserting
on account of poultry or poultry care
.
Violations by live poultry dealers
Section 411 of the Packers and Stockyards Act, 1921 (7 U.S.C. 228b–2), is amended—
in the first
sentence of subsection (a), by striking any provision of section 207 or
section 410 of
; and
in the first
sentence of subsection (b), by striking any provisions of section 207 or
section 410
and inserting any provision
.
No competitive injury requirement
Section
202(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 192), is amended by
inserting after device
the following: , regardless of
whether the practice or device causes a competitive injury or otherwise
adversely affects competition
.
Attorneys fees
Section 308(a) of the
Packers and Stockyards Act, 1921 (7 U.S.C. 209(a)) is amended by inserting
before the period at the end the following: and for the cost of the
litigation, including reasonable attorneys' fees
.
Appointment of outside counsel
Section 407(a)
of the Packers and Stockyards Act, 1921 (7 U.S.C. 228(a)), is amended by
inserting obtain the services of attorneys who are not employees of the
Federal Government,
before and make such
expenditures
.
Competitive harm
Title IV of the Packers and Stockyards Act, 1921 (7 U.S.C. 221 et seq.), is amended by adding at the end the following:
Competitive harm
A person affected by an unfair practice under section 202(a) or 312(a) shall not be required to prove predatory intent, competitive injury, or likelihood of injury.
.
Regulations
In general
Not later than 180 days after the date of enactment of this Act, the Secretary of Agriculture shall promulgate regulations to implement the amendments made by this Act, including providing a definition of the term unreasonable preference or advantage for purposes of section 202(b) of the Packers and Stockyards Act, 1921 (7 U.S.C. 192(b)).
Requirements
Regulations promulgated under subsection (a) shall strictly prohibit any preferences or price differences based on volume except for preferences or price differences that reflect actual, verifiable lower costs of acquiring livestock from larger volume producers.