USDA may penalize a licensee who repeatedly and flagrantly violates the Act. A disciplinary action may result in a suspension or revocation of the firm's PACA license. In lieu of suspension or revocation, the Secretary of Agriculture may assess a civil penalty of up to $2,000 for each violation or for each day the violation continues. In addition, those who operate without a valid PACA license are subject to fines of up to $1,200 for each offense and $350 each day the offense continues. Court injunctions can be issued against those who persist in operating without a license.
Some examples of unfair conduct include, but are not limited to, the following:
- Rejecting without reasonable cause produce bought or contracted to be handled on consignment;
- Failure to pay promptly the agreed price of produce that complies with contract terms;
- Discarding, dumping, or destroying without reasonable cause any produce received to be sold on behalf of another firm;
- Failure or refusal to account truly and correctly or to make full payment promptly for produce shipped on consignment or on joint account;
- Misbranding or misrepresentation of grade, quality, quantity, weight, state, or country of origin of fruits and vegetables;
- Alteration or forgery of an official USDA inspection certificate;
- Submitting an application for license containing false or misleading information;
- Failure to provide records upon demand to a duly authorized representative of the USDA: and
- Employing any restricted individual without obtaining USDA approval and/or posting a bond.
Any interested person, other than an employee of an agency of the USDA administering PACA, may file a written notification of any violation of the PACA by any commission merchant, dealer, or broker. Official certificates of the United States Government or States or Territories of the United States and trust notices may also constitute written notification for the purpose of conducting an investigation.
The identity of any person filing a written notification as set forth above is confidential information. The identity of such person, and any portion of the notification to the extent that it would indicate the identity of such person, are specifically exempt from disclosure under the Freedom of Information Act.
If the USDA determines that there are sufficient grounds to initiate an investigation of a complaint made through written notification, the subject of the investigation will be given notice of the investigation and of the nature of the alleged violations of the Act.
The law requires that not later than 180 days after providing the initial notification, the USDA will provide the subject of the investigation with notice of the status of the investigation, including whether USDA intends to issue a complaint, terminate the investigation, or continue or expand the investigation.
USDA will provide additional status reports at the request of the subject being investigated and will promptly notify the subject whenever the investigation is terminated.
If an investigation substantiates the existence of violations of the PACA, USDA may choose to file a disciplinary complaint against the alleged violator firm. The firm will be served with the complaint and afforded the opportunity to request a hearing before a USDA administrative law judge. Hearings are usually held near the alleged violator firm's place of business.
In determining the appropriate sanction, USDA considers the seriousness and the nature of the violation(s) along with the number of violations by the firm and the number of times that the firm has been warned about such violations. Revocation of the license is the severest penalty that can be imposed. In this instance, the responsibly connected individuals are totally barred from doing business or being employed by PACA licensees for a 1 year period.
Effects of Sanctions on Responsibly Connected Individuals
When a firm has had its PACA license suspended or revoked, or has been found to have committed repeated and flagrant violations, the responsibly connected persons are automatically subject to employment and relicensing restrictions in the fruit and vegetable industry. The restrictions are mandated by law, and there is no authority to waive the relicensing and employment restrictions or to exempt any person from them.
A responsibly connected determination may be challenged by requesting a review by the PACA Branch Chief. The Chief’s determination can be appealed to an administrative law judge, and then to the Judicial Officer, who issues the agency’s final order on the issue. USDA’s final order can be challenged in the U.S. Court of Appeals.
If you have any questions regarding this course material, please direct them to Karla Whalen, Head of the PACA Branch's Trade Practices Section, Washington DC at 202-720-6873, or via email at email@example.com