USDA Clarifies Grower’s Trust Protection Eligibility & Notification Requirements In Final Rule Amending PACA Regulations
by USDA AMS
Posted: 2018-02-08 09:12:49 EST

The U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) has issued a final rule amending the regulations under the Perishable Agricultural Commodities Act (PACA). The revision will enhance clarity for the produce industry on the administration and enforcement of the PACA regulations.

This rule provides greater direction on how to preserve PACA trust rights for growers and other principals who employ a selling agent. The PACA Trust protects the seller of fresh and frozen fruits and vegetables in the event that the buyer becomes insolvent or files for bankruptcy protection. In the case of a business failure or bankruptcy, other creditors cannot be paid from the indebted buyer’s trust assets until all valid PACA Trust claims have been satisfied.

The rule also clarifies the definition of “written notification” for PACA purposes, and the jurisdiction of USDA to investigate alleged PACA violations. The change makes clear that public filings such as bankruptcy petitions, civil trust actions and judgments constitute written notification. The amended rule ensures that sellers and buyers of produce understand the variety of evidence that could trigger USDA's authority to initiate an investigation of alleged PACA violations.

The final rule was published in the Federal Register on Feb. 6, 2018, and will go into effect 30 days after publication on Mar. 8, 2018.

The proposed rule concerning this action was published in the Federal Register on Dec. 14, 2016. In issuing this final rule, USDA considered public input received during a 60-day comment period that ended on March 15, 2017.

The PACA Division regulates fair trading practices for produce businesses that operate subject to PACA, including buyers, sellers, commission merchants, dealers and brokers within the fruit and vegetable industry. In the past three years, USDA resolved approximately 3,400 PACA claims involving more than $58 million. PACA staff also assisted more than 8,500 callers with issues valued at approximately $151 million.

For more information, contact Travis M. Hubbs, Chief, Investigative Enforcement Branch, at (202) 720-6873, or email PACAInvestigations@ams.usda.gov.

Source: USDA AMS