The Perishable Agricultural Commodities Act (PACA) is a federal law that regulates the produce industry.
        The PACA sets rules of fair dealing for produce companies that go beyond the normal rules governing other businesses due to the extreme perishability of the product. The PACA ensures that produce merchants follow these rules through a system of licensing. Anyone who buys or sells large quantities of produce must have a PACA license to operate. Such persons are subject to penalties, such as loss of license or fines, for violating the rules established by the PACA. The fair dealing rules are further detailed in regulations published by USDA which have the force of law.
        The law is enforced by USDA through the PACA Branch. The PACA Branch is headed by a Chief who oversees three sections in Washington, D.C. (Trade Practices, Dispute Resolution and Licensing), and five regional offices. Each Regional Office is staffed with persons available to answer questions about the law or contract disputes and to investigate violations of the law. The PACA Branch is assisted by USDA attorneys who act as presiding officers in deciding contract disputes and who advise the PACA Branch on all legal questions.
        USDA enforces the PACA by first investigating a complaint against a produce company. If the investigation shows that a violation has been committed, USDA will begin formal proceedings against the company. If the matter is not settled, the company is entitled to a hearing before an Administrative Law Judge. If the company is found to have violated the rules, it can be fined, or have its license suspended or revoked. A license suspension or revocation prohibits the officers, directors and shareholders of the company from obtaining a license or working in the industry. The PACA also provides a very strong collection remedy in the form of the PACA trust. This remedy allows a produce supplier to file suit immediately in federal court to freeze the assets of a buyer who has not paid. It also requires that produce suppliers be paid before anyone else in a bankruptcy.
        The PACA also provides a method of resolving disputes outside the court system. A produce company can file a complaint against another produce company, and USDA will resolve the dispute. The case can be resolved either informally by agreement between the parties, or formally by dismissing the complaint or requiring the produce company to pay reparations, i.e. money damages. If payment is not made, then the PACA license of the company is suspended.
        If you have a question about the PACA, your first resource is to call the PACA Regional Office for your state. Regional Office personnel will be able to answer many questions about the PACA. However, when you are involved in a dispute, an investigation, an enforcement proceeding or a trust action, you should seek the advice of a knowledgeable attorney.