HR 230 IH

To amend the Agricultural Fair Practices Act of 1967 to provide for the accreditation of associations of agricultural producers, to promote good faith bargaining between such accredited associations and the handlers of agricultural products, and to strengthen the enforcement authorities to respond to violations of the Act.

January 6, 2001

Ms. KAPTUR (for herself, Mr. HINCHEY, Mr. LEWIS of Georgia, and Mr. BOSWELL) introduced the following bill; which was referred to the Committee on Agriculture

To amend the Agricultural Fair Practices Act of 1967 to provide for the accreditation of associations of agricultural producers, to promote good faith bargaining between such accredited associations and the handlers of agricultural products, and to strengthen the enforcement authorities to respond to violations of the Act.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Family Farmer Cooperative Marketing Amendments Act of 2001'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purpose.

Sec. 3. Definitions.

Sec. 4. Prohibited practices.

Sec. 5. Bargaining in good faith.

Sec. 6. Accreditation of associations and designation of handlers.

Sec. 7. Assignment of association dues, fees, or retains.

Sec. 8. Investigative powers of Secretary.

Sec. 9. Administrative proceedings to prevent prohibited practices.

Sec. 10. Other enforcement activities.

Sec. 11. Preemption.

SEC. 2. FINDINGS AND PURPOSE.

Congress finds the following:

(1) The Agricultural Fair Practices Act of 1967 was enacted to establish standards of fair practices for handlers of agricultural products in order to ensure that family farmers could join together in authorized cooperative associations of producers without interference.

(2) Despite the enactment of such Act, many family farmers do not enjoy full freedom of association or real liberty of contract and thus continue to suffer from an inequality of bargaining power with the semi-monopolistic agribusiness corporations that contract for their services, and this inequality of bargaining power substantially burdens interstate commerce by driving some farmers from their farms and depressing the income and purchasing power of other farmers.

(3) Tens of thousands of family farmers produce commodities and provide services under contract arrangements with processing firms or handlers. The types of agricultural commodities produced under such contracts include fruits and vegetables, turkeys, chickens, hogs, beef, milk, popcorn, and genetically engineered plants and animals.

(4) Production of contract commodities usually requires large fixed investments in highly specialized equipment, or in the case of many fruit producers, a long-term commitment of their land to the crop. Poultry farmers invest more than half of the total capital in the poultry industry.

(5) On the other hand, processing firms and handlers are better capitalized than producers and often have plants located in different production areas. While processing firms and handlers are not constrained by growing conditions or producer resistance in any one geographic area, farmers usually have access to very few processors and are tied to the family farm by capital investments.

(6) Farmer efforts to advance their own interests through cooperative marketing associations have been thwarted by processing firms and handlers that threaten to terminate contracts with association members, threaten to move out of their State, or manipulate the incomes of association members to disastrously low levels.

(7) Because agricultural products are produced, and agricultural services are provided, by numerous individual farmers, their ability to market their products or services and to bargain effectively for fair prices and terms of sale of their products or services is adversely affected unless they are free to join together in cooperative associations of producers as authorized by law. Interference with this right, or the failure of any handler of agricultural products to bargain in good faith with a cooperative association of producers as the representative and agent of such producers, is contrary to the public interest and adversely affects the free and orderly flow of goods in interstate and foreign commerce.

(b) PURPOSE- It is the purpose of this Act to reinforce the Agricultural Fair Practices Act of 1967 by--

(1) establishing standards of fair practices for the handlers of agricultural products and for associations of producers in their dealings in agricultural products or services;

(2) providing standards for the accreditation of cooperative associations of producers of agricultural products or services for the purpose of bargaining;

(3) defining the mutual obligations of handlers and associations of producers to bargain with respect to the production, sale, and marketing of agricultural products or services; and

(4) providing appropriate mechanisms for the enforcement of such obligations.

SEC. 3. DEFINITIONS.

(a) PRODUCER- Subsection (b) of section 3 of the Agricultural Fair Practices Act of 1967 (7 U.S.C. 2302) is amended--

(1) by inserting `poultryman,' after `dairyman,'; and

(2) by adding at the end the following: `The term includes a person furnishing labor, production management, facilities, or other services for the production of an agricultural product.'.

(b) ASSOCIATION OF PRODUCERS- Subsection (c) of such section is amended by inserting `that engages in the marketing of such agricultural products or of agricultural services described in the second sentence of subsection (b), including associations' before `engaged in'.

(c) ADDITIONAL DEFINITIONS- Such section is further amended by striking subsection (e) and inserting the following new subsections:

`(e) The term `accredited association' means an association of producers accredited by the Secretary of Agriculture in accordance with section 6.

`(f) The term `designated handler' means a handler that is designated pursuant to section 6.

`(g) The terms `bargain' and `bargaining' mean the performance of the mutual obligation of a handler and an accredited association to meet at reasonable times and for reasonable periods of time for the purpose of negotiating in good faith with respect to the price, terms of sale, compensation for products produced or services rendered under contract, or other provisions relating to the products marketed, or the services rendered, by the members of the accredited association or by the accredited association as agent for the members.'.

SEC. 4. PROHIBITED PRACTICES.

Section 4 of the Agricultural Fair Practices Act of 1967 (7 U.S.C. 2303) is amended--

(1) in the matter preceding the subsections, by striking `the following practices;' and inserting `any of the following practices:'

(2) in subsection (a), by inserting `interfere with, restrain, or' before `coerce';

(3) by striking `or' at the end of subsections (a), (b), (c), (d), and (e) and inserting a period; and

(4) by adding at the end the following new subsections:

`(g) To refuse to bargain in good faith with an accredited association, if the handler is designated pursuant to section 6.

`(h) To dominate or interfere with the formation or administration of any association of producers or to contribute financial or other support to an association of producers.'.

SEC. 5. BARGAINING IN GOOD FAITH.

Section 5 of the Agricultural Fair Practices Act of 1967 (7 U.S.C. 2304) is amended to read as follows:

`SEC. 5. BARGAINING IN GOOD FAITH.

`(a) CLARIFICATION OF OBLIGATION- The obligation of a designated handler to bargain in good faith shall apply with respect to an accredited association and the products or services for which the accredited association is accredited to bargain. The good-faith bargaining required between a handler and an accredited association does not require either party to agree to a proposal or to make a concession.

`(b) EXTENSION OF SAME TERMS TO ACCREDITED ASSOCIATION- If a designated handler purchases a product or service from producers under terms more favorable to such producers than the terms negotiated with an accredited association for the same type of product or services, the handler shall offer the same terms to the accredited association. Failure to extend the same terms to the accredited association shall be considered to be a violation of section 4(g). In comparing terms, the Secretary of Agriculture shall take into consideration (in addition to the stipulated purchase price) any bonuses, premiums, hauling or loading allowances, reimbursement of expenses, or payment for special services of any character which may be paid by the handler, and any sums paid or agreed to be paid by the handler for any other designated purpose than payment of the purchase price.

`(c) MEDIATION AND ARBITRATION- The Secretary of Agriculture may provide mediation services with respect to bargaining between an accredited association and a designated handler at the request of either the accredited association or the handler. If an impasse in bargaining has occurred (as determined by the Secretary), the Secretary shall provide assistance in proposing and implementing arbitration agreements between the accredited association and the handler. The Secretary may establish a procedure for compulsory and binding arbitration if the Secretary finds that an impasse in bargaining exists and such impasse will result in a serious interruption in the flow of an agricultural product to consumers or will cause substantial economic hardship to producers or handlers involved in the bargaining.'.

SEC. 6. ACCREDITATION OF ASSOCIATIONS AND DESIGNATION OF HANDLERS.

The Agricultural Fair Practices Act of 1967 is amended--

(1) by redesignating sections 6 and 7 (7 U.S.C. 2305, 2306) as sections 10 and 12, respectively; and

(2) by inserting after section 5 (7 U.S.C. 2304) the following new section:

`SEC. 6. ACCREDITATION OF ASSOCIATIONS AND DESIGNATION OF HANDLERS.

`(a) ACCREDITATION PETITION- An association of producers seeking accreditation to bargain on behalf of producers of an agricultural product or service shall submit to the Secretary of Agriculture a petition for accreditation. The petition shall--

`(1) specify the agricultural product or service (or products or services) for which the association seeks accreditation to bargain on behalf of producers;

`(2) designate the handlers, individually or by production or marketing area or by some other appropriate classification, with whom the association seeks to be accredited to bargain; and

`(3) contain such other information and documents as may be required by the Secretary.

`(b) NOTICE OF PETITION; PROCEEDINGS- Upon receiving a petition under subsection (a) and any supporting material, the Secretary of Agriculture shall give notice of the petition to all handlers designated in the petition pursuant to subsection (a)(2). Handlers who have been designated individually shall receive personal notice. Handlers who have been designated by production or marketing area or by some other general classification shall be given notice through the Federal Register. Both the association of producers seeking accreditation and the handlers shall have an opportunity to submit written evidence, views, and arguments to the Secretary. The Secretary may conduct an informal proceeding on the petition, except that the Secretary shall hold a formal hearing for the reception of testimony and evidence if the Secretary finds that there are substantial unresolved issues of material fact.

`(c) ISSUANCE ACCREDITATION ORDER- Upon the petition of an association of producers, the Secretary of Agriculture may issue an order designating the association of producers as an accredited association for purposes of this Act if the Secretary determines that--

`(1) under the charter documents or bylaws of the association, it is owned and controlled by producers;

`(2) the association has contracts, binding under State law, with its members empowering the association to sell or negotiate terms of sale of the products or services of its members;

`(3) the association represents a sufficient number of producers, or its members produce a sufficient quantity of agricultural products or render a sufficient level of services, to enable the association to function as an effective agent for producers in bargaining with designated handlers; and

`(4) the functions of the association include acting as principal or agent for its members in negotiations with handlers for prices and other terms of trade with respect to the production, sale, and marketing of their products or services.

`(d) SPECIAL RULE FOR ACCREDITATION- In making the finding required under subsection (c)(3), the Secretary of Agriculture shall exclude any quantity of the agricultural products or services contracted by producers with a producer owned and controlled processing cooperative and any quantity of such products produced or services rendered by a handler.

`(e) NOTIFICATION OF ACCREDITATION ORDER- The Secretary of Agriculture shall notify the petitioning association of producers, and each handler to be designated as part of the petition, of the Secretary's decision regarding the petition, together with a concise statement of basis for the decision. The Secretary shall also give notice of any accreditation to all other associations that have been accredited to bargain with respect to the product or service with any of the designated handlers.

`(f) ANNUAL REPORT- Each accredited association shall submit an annual report to the Secretary of Agriculture in such form and including such information as the Secretary by regulation may require so as to enable the Secretary to determine whether the association continues to meet the standards for accreditation.

`(g) LOSS OF ACCREDITATION- If the Secretary of Agriculture determines that an accredited association has ceased to meet the standards for accreditation set forth in subsection (c), the Secretary shall notify the association of the respects in which it has ceased to maintain such standards and allow it a reasonable time to answer or to correct the deficiencies noted. Thereafter, if the Secretary is not satisfied that the association is then in compliance with subsection (c), the Secretary shall notify the association and hold a hearing to consider the revocation of accreditation. If, based upon the evidence submitted at the hearing, the Secretary finds that the association has ceased to maintain the standards for accreditation, the Secretary shall revoke the accreditation of such association.

`(h) AMENDMENT- At the discretion of the Secretary of Agriculture or upon the petition of an accredited association or a designated handler, the Secretary may amend an accreditation order with respect to the product or service specified in the accreditation order. The Secretary shall give notice of any proposed amendment and the reasons therefor to all accredited associations and handlers that would be directly affected by the amendment and shall provide an opportunity for a public hearing. Thereafter, the Secretary may amend the order if the Secretary finds such amendment will be conducive to more effective bargaining and orderly marketing by the accredited association of the product or services of its members.'.

SEC. 7. ASSIGNMENT OF ASSOCIATION DUES, FEES, OR RETAINS.

The Agricultural Fair Practices Act of 1967 (7 U.S.C. 2301 et seq.) is amended by inserting after section 6 (as added by section 6) the following new section:

`SEC. 7. ASSIGNMENT OF ASSOCIATION DUES, FEES, OR RETAINS.

`(a) ASSIGNMENT AUTHORIZED- A producer of a agricultural product or service may execute, either as a clause in a sales contract or in another written instrument, 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, by which assignment a handler is directed--

`(1) to deduct a portion of the amount to be paid for products or services of the producer under a growing contract; and

`(2) to pay, on behalf of the producer, the portion over to the association as dues or fees or funds to be retained by the association.

`(b) DUTY OF HANDLER- After a handler receives notice from a producer of an assignment under subsection (a), the handler shall deduct the amount authorized by the assignment from the amount paid for any agricultural product being sold by the producer or for any service rendered under any growing contract and, upon payment to producers for such product or service, pay the amount over to the association or its assignee.'.

SEC. 8. INVESTIGATIVE POWERS OF SECRETARY.

The Agricultural Fair Practices Act of 1967 (7 U.S.C. 2301 et seq.) is amended by inserting after section 7 (as added by section 7) the following new section:

`SEC. 8. INVESTIGATIVE POWERS OF SECRETARY.

`(a) INVESTIGATIVE POWERS- The Secretary of Agriculture shall have the following powers to carry out the objectives of this Act, including the conduct of any investigations or hearings:

`(1) The Secretary may require any person to establish and maintain such records, make such reports, and provide such other information as the Secretary may reasonably require.

`(2) The Secretary and any officer or employee of the Department of Agriculture, upon presentation of credentials and a warrant or such other order of a court as may be required by the Constitution--

`(A) shall have a right of entry to, upon, or through any premises in which records required to be maintained under paragraph (1) are located, and

`(B) may at reasonable times have access to and copy any records, which any person is required to maintain or which relate to any matter under investigation or in question.

`(b) TREATMENT OF RECORDS-

`(1) IN GENERAL- Except as provided in paragraph (2), any records, reports, or information obtained under this section shall be available to the public.

`(2) EXCEPTION- Upon a showing satisfactory to the Secretary of Agriculture that records, reports, or information acquired under this section, if made public, would divulge confidential business information, the Secretary shall consider such record, report, or information or particular portion thereof confidential in accordance with section 1905 of title 18, United States Code, except that the Secretary may disclose such record, report, or information to other officers, employees, or authorized representatives of the United States concerned with carrying out this Act or when relevant in any proceeding under this Act.

`(c) POWERS RELATED TO HEARINGS-

`(1) ATTENDANCE OF WITNESSES- In making inspections and investigations under this Act, the Secretary of Agriculture may require the attendance and testimony of witnesses and the production of evidence under oath.

`(2) SUBPOENA POWER- The Secretary, upon application of any party to a hearing held under section 9, shall forthwith issue to such party subpoenas requiring the attendance and testimony of witnesses or the production of evidence requested in such application. Within five days after the service of a subpoena on any person requiring the production of any evidence in the possession of the person or under the control of the person, the person may petition the Secretary to revoke such subpoena. The Secretary shall revoke such subpoena if in the opinion of the Secretary the evidence whose production is required does not relate to any matter in question, or if such subpoena does not describe with sufficient particularity the evidence whose production is required.

`(3) OATHS AND OTHER MATTERS- The Secretary, or any officer or employee of the Department of Agriculture designated for such purpose, shall have power to administer oaths, sign and issue subpoenas, examine witnesses, and receive evidence. Witnesses shall be paid the same fees and mileage allowance as are paid witnesses in the courts of the United States.

`(d) FAILURE TO COMPLY- In the case of any failure or refusal of any person to obey a subpoena or order of the Secretary of Agriculture under this section, any district court of the United States, within the jurisdiction of which such person is found or resides or transacts business, upon the application by the Secretary shall have jurisdiction to issue to such person an order requiring such person to appear to produce evidence if, as, and when so ordered to give testimony relating to the matter under investigation or in question. Any failure to obey such order of the court may be punished by the court as a contempt of court.'.

SEC. 9. ADMINISTRATIVE PROCEEDINGS TO PREVENT PROHIBITED PRACTICES.

The Agricultural Fair Practices Act of 1967 (7 U.S.C. 2301 et seq.) is amended by inserting after section 8 (as added by section 8) the following new section:

`SEC. 9. ADMINISTRATIVE PROCEEDINGS TO PREVENT PROHIBITED PRACTICES.

`(a) PETITION- Any person complaining of any violation of section 4 or other provision of this Act may apply to the Secretary of Agriculture by petition, which shall briefly state the facts serving as the basis for the complaint. If, in the opinion of the Secretary, the facts contained in the petition warrant further action, the Secretary shall forward a copy of the petition to the accredited association or handler named in the petition, 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.

`(b) INVESTIGATION AND COMPLAINT- If there appears to be, in the opinion of the Secretary, reasonable grounds for investigating a complaint made under subsection (a), the Secretary of Agriculture shall investigate such complaint or notification. In the opinion of the Secretary, if the investigation substantiates the existence of a violation of section 4 or other provision 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.

`(c) HEARING- The person complained of shall have the right to file an answer to the original and any amended complaint and to appear in person or otherwise and give testimony. The person who filed the charge shall also have the right to appear in person or otherwise and give testimony. Any such proceeding shall, as far as practicable, be conducted in accordance with the rules of evidence and the rules of civil procedure applicable in the district courts of the United States.

`(d) ORDERS- If, upon a preponderance of the evidence, the Secretary of Agriculture is of the opinion that the person subject to the complaint has violated section 4 or other provision of this Act, the Secretary shall issue an order containing the Secretary's findings of fact and requiring the person to cease and desist from such violation. The Secretary may order such further affirmative action, including an award of damages to compensate the person filing the petition for the damages sustained, as will effectuate the policies of this Act and make the person filing the petition whole.

`(e) COMPLAINTS INSTITUTED BY SECRETARY- The Secretary of Agriculture may at any time institute an investigation under subsection (b) if there appears to be, in the opinion of the Secretary, reasonable grounds for the investigation and the matter to be investigated is such that a petition is authorized to be made to the Secretary. The Secretary shall have the same power and authority to proceed with any investigation instituted under this

subsection as though a petition had been filed under subsection (a), including the power to make and enforce any order.

`(f) JUDICIAL REVIEW-

`(1) OBTAINING REVIEW- Any person aggrieved by a final order of the Secretary of Agriculture issued under subsection (d) may obtain review of such order in the United States Court of Appeals for the District of Columbia by submitting to such court within 30 days from the date of such order a written petition praying that such order be modified or set aside.

`(2) TREATMENT OF FINDINGS- The findings of the Secretary with respect to questions of fact, if supported by substantial evidence on the record, shall be conclusive.

`(3) EFFECT OF FAILURE TO SEEK TIMELY REVIEW- If no petition for review, as provided in paragraph (1), is filed within 30 days after service of the Secretary's order, the order shall not be subject to review in any civil or criminal proceeding for enforcement, and the findings of fact and order of the Secretary shall be conclusive in connection with any petition for enforcement which is filed by the Secretary after the expiration of such period. In any such case, the clerk of the court, unless otherwise ordered by the court, shall forthwith enter a decree enforcing the order and shall transmit a copy of such decree to the Secretary and the person named in the complaint.

`(4) EFFECT ON ORDERS OF THE SECRETARY- The commencement of proceedings under this section shall not operate as a stay of an order of the Secretary under subsection (d), unless specifically ordered by the court.'.

SEC. 10. OTHER ENFORCEMENT ACTIVITIES.

Section 10 of the Agricultural Fair Practices Act of 1967 (7 U.S.C. 2305), as redesignated by section 6(1), is amended--

(1) by striking the undesignated paragraph at the end of the section;

(2) in subsection (d), by striking `and shall exercise' and all that follows through the period and inserting a period and the following: `No action may be commenced under subsection (a) or (c)--

`(1) prior to 60 days after the plaintiff has given notice of the alleged violation to the Secretary of Agriculture under section 9(a); or

`(2) if the Secretary has commenced and is diligently prosecuting an action (administrative or judicial) dealing with the same violation to require compliance with the Act.'; and

(3) by adding at the end the following new subsection:

`(e) Orders of the Secretary of Agriculture with respect to which review could have been obtained under section 9(f) shall not be subject to judicial review in any proceeding for enforcement under this section.'.

SEC. 11. PREEMPTION.

The Agricultural Fair Practices Act of 1967 (7 U.S.C. 2301 et seq.) is amended by inserting after section 10 (as redesignated by section 6(1)) the following new section:

`SEC. 11. PREEMPTION.

`This Act shall not invalidate the provisions of any existing or future State law dealing with the same subjects as this Act, except that such State law may not permit any action that is prohibited by this Act. This Act shall not deprive the proper State courts of jurisdiction under State laws dealing with the same subjects as this Act.'.

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