Regulations Under the Perishable Agricultural Commodities Act (PACA), 4831-4832 [E6-1090]

Download as PDF 4831 Proposed Rules Federal Register Vol. 71, No. 19 Monday, January 30, 2006 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. FOR FURTHER INFORMATION CONTACT: Karla Whalen, Section Head, Trade Practice Section, or Phyllis Hall, Senior Marketing Specialist, Trade Practice Section, 202–720–6873. SUPPLEMENTARY INFORMATION: Background DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 46 [Docket No. FV05–373] Regulations Under the Perishable Agricultural Commodities Act (PACA) Agricultural Marketing Service, USDA. ACTION: Advance notice of proposed rulemaking. cprice-sewell on PROD1PC66 with PROPOSALS AGENCY: SUMMARY: The Agricultural Marketing Service (AMS) is issuing this advance notice of proposed rulemaking in response to concerns raised by the industry that sellers may lose their status as trust creditors when using electronic data interchange (EDI) for invoicing. Comments are being sought from the public, but in particular, buyers and sellers of fruit and vegetables and vendors/software developers of EDI systems, as to whether to issue new or amended regulations and if so, the substance of such regulations. DATES: Submit written or electronic comments on or before March 16, 2006. ADDRESSES: You may submit written comments to: (1) EDI Comments, AMS, F&V, PACA BRANCH, 1400 Independence Avenue SW., Room 2095–S, Washington, DC 20250–0242. (2) Fax: 202–720–8868. (3) E-mail comments to Dexter.Thomas@usda.gov. (4) Internet: http:// www.regulations.gov. Instructions: All comments will become a matter of public record and should be identified as EDI Comments. Comments will be available for public inspection from the Agricultural Marketing Service at the above address or over the Agency’s Web site at: http://www.ams.usda.gov/fv/paca.htm. Web site questions can be addressed to the PACA Webmaster, Dexter.Thomas@usda.gov. VerDate Aug<31>2005 14:05 Jan 27, 2006 Jkt 208001 The Perishable Agricultural Commodities Act (PACA) establishes a code of fair trading practices in the marketing of fresh and frozen fruits and vegetables in interstate and foreign commerce. The PACA protects growers, shippers, distributors, and retailers dealing in those commodities by prohibiting unfair and fraudulent trade practices. The PACA also provides a forum to adjudicate private disputes, with awards against a licensee who fails to meet contractual obligations in violation of the PACA. Additionally, the law imposes a statutory trust on perishable agricultural commodities received and accepted but not yet paid for, products derived from those commodities, and any receivables or proceeds due from the sale of those commodities or products for the benefit of unpaid suppliers or sellers. In the case of a business failure or bankruptcy of an entity subject to PACA, the debtor’s inventory and receivables (PACA trust assets) are not property of the estate and are not available for general distribution to creditors other than PACA creditors who have preserved their trust rights until all valid PACA trust claims have been satisfied. Because of the statutory trust provision, PACA trust creditors who have preserved their trust rights, including sellers outside of the United States, have a far greater chance of recovering the money owed them when an entity subject to PACA goes out of business. The PACA trust provisions protect producers and all other firms trading in fruits and vegetables as each buyer of perishable agricultural commodities in the marketing chain becomes a seller in its own turn. In 1995, the PACA was amended to provide that licensed sellers of fresh and frozen fruits and vegetables may provide notice to buyers of their intention to preserve trust benefits by including specific language on invoice and billing documentation. The required language reads: ‘‘The perishable agricultural commodities listed on this invoice are sold subject to the statutory trust PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 authorized by section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)). The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.’’ (7 U.S.C. 499e(c)(4)). The PACA regulations were amended in 1997 to state that electronic transmissions are considered ‘‘ordinary and usual billing and invoicing statements’’ within the meaning of section 5(c)(4) of the PACA. (7 CFR 46.46(5)). Under current regulations, PACA licensed unpaid sellers or suppliers of fresh and frozen fruits and vegetables may provide notice to buyers of their intention to preserve their trust rights by including the specified language contained in section 5(c)(4) of the PACA on their billing or invoicing statements, whether paper documentation or electronic transmissions (including electronic data interchange or EDI). Alternatively, as provided in the PACA and regulations, sellers (licensed or non-licensed) may satisfy the notice requirement by sending the buyer a separate detailed notice by mail of their intent to preserve trust benefits within thirty (30) days of payment default. Whichever method of notice is used, in order to preserve trust benefits, payment terms may not exceed 30 days. Since the amendment to the regulations, a number of produce sellers have voiced concern that their PACA trust rights may not be preserved if: (1) The buyer/buyer’s agent either willfully or through oversight does not receive the entire electronic transmission (i.e., EDI invoice); (2) the buyer/buyer’s agent does not download the trust information; (3) the buyer/buyer’s agent does not opt to receive the information; (4) the buyer/buyer’s agent does not buy the data field that allows the inclusion of the trust language; or (5) the EDI service provider does not translate the field that contains the trust language. Additional concerns have been expressed that the alternate method of trust notice (i.e., separate trust notice letter) is not being accepted by some buyers who require EDI invoicing. These are of grave concern since a seller may not know if the required trust E:\FR\FM\30JAP1.SGM 30JAP1 4832 Federal Register / Vol. 71, No. 19 / Monday, January 30, 2006 / Proposed Rules notice has been transmitted or received through EDI. Others in the industry have expressed concern about being charged a fee by the buyer to accept the notice to preserve their trust benefits through EDI or, about being charged a fee if they send a paper invoice or separate trust notice. cprice-sewell on PROD1PC66 with PROPOSALS Agency Request for Information AMS is soliciting comments on PACA trust rights in connection with EDI invoicing so that the Agency will be able to provide greater direction to the industry of how PACA trust rights can be preserved when invoicing electronically. In particular, AMS invites comments and information regarding how the Agency may best provide regulatory clarification or direction. Comments are specifically invited on: (1) The types of problems that may need to be addressed by new regulatory language; (2) any technological barriers and solutions; (3) any additional costs likely to be associated with appropriate regulations, and opinions regarding who should bear such costs; (4) whether the Agency should by regulation define EDI methods that must be made available by licensed buyers, (i.e., creating a separate field for trust notice in EDI); (5) should buyers be required to accept separate notices (i.e., electronic or paper PACA trust) without restriction or charge; and (6) other related issues and suggestions. This notice provides a 45-day comment period for interested parties to comment on the need for amending the regulations. Should AMS conclude, based on the comments received, that the purposes of the PACA would be advanced through new or revised regulations, the Agency will develop a notice of proposed rulemaking that will be published in the Federal Register with a request for comments in accordance with 5 U.S.C. 553. Executive Orders 12866 and 12988 This advance notice of proposed rulemaking has been determined to be not significant for the purposes of Executive Order 12866, and therefore, has not been reviewed by the Office of Management and Budget. This advance notice of proposed rulemaking has been reviewed under Executive Order 12988, Civil Justice Reform, and is not intended to have retroactive effect. This proposed rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this advance notice of proposed rulemaking. VerDate Aug<31>2005 14:05 Jan 27, 2006 Jkt 208001 Effects on Small Business Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), AMS has considered the economic impact on this proposed rule on small entities. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Small agricultural service firms have been defined by the Small Business Administration (SBA) (13 CFR 121.601) as those whose annual receipts are less than $5,000,000. There are approximately 15,000 firms licensed under the PACA, many of which could be classified as small entities. The proposed regulations, if found to be necessary, would clarify how to preserve the trust benefit when using EDI. The use of EDI would provide companies an electronic alternative to paper documentation to give notice of intent to preserve trust rights, thereby reducing the time and expense associated with preserving trust rights under the PACA. Authority: 7 U.S.C. 499o. Dated: January 24, 2006. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E6–1090 Filed 1–27–06; 8:45 am] BILLING CODE 3410–02–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. 2000–NE–62–AD] RIN 2120–AA64 Airworthiness Directives; Rolls-Royce plc RB211 Series Turbofan Engines Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). AGENCY: SUMMARY: The FAA proposes to supersede an existing airworthiness directive (AD) for Rolls-Royce plc (RR) models RB211–535E4–37, RB211– 535E4–B–37, RB211–535C–37, RB211– 535E4–B–75, RB211–535E4–C, and RB211–22B–02 turbofan engines. That AD currently requires inspecting certain high pressure (HP) turbine discs, manufactured between 1989 and 1999, for cracks in the rim cooling air holes, and, if necessary, replacing the discs with serviceable parts. This proposed PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 AD would require the same inspections, and would reduce the compliance times for eddy current inspection (ECI) for the RR RB211–22B–02 engines. This proposed AD results from the manufacturer reducing their recommended compliance times for inspections on RB211–22B–02 engines. We are proposing this AD to prevent possible disc failure, which could result in an uncontained engine failure and damage to the airplane. DATES: We must receive any comments on this proposed AD by March 31, 2006. ADDRESSES: Use one of the following addresses to comment on this proposed AD: • By mail: Federal Aviation Administration (FAA), New England Region, Office of the Regional Counsel, Attention: Rules Docket No. 2000–NE– 62–AD, 12 New England Executive Park, Burlington, MA 01803–5299. • By fax: (781) 238–7055. • By e-mail: 9-aneadcomment@faa.gov. You can get the service information identified in this proposed AD from Rolls-Royce plc, PO Box 31, Derby, England; telephone: 011 44 1332– 249428, fax: 011 44 1332–249223. You may examine the AD docket, by appointment, at the FAA, New England Region, Office of the Regional Counsel, 12 New England Executive Park, Burlington, MA. FOR FURTHER INFORMATION CONTACT: Ian Dargin, Aerospace Engineer, Engine Certification Office, FAA, Engine and Propeller Directorate, 12 New England Executive Park, Burlington, MA 01803– 5299; telephone (781) 238–7178, fax (781) 238–7199. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to send any written relevant data, views, or arguments regarding this proposal. Send your comments to an address listed under ADDRESSES. Include ‘‘AD Docket No. 2000–NE–62–AD’’ in the subject line of your comments. If you want us to acknowledge receipt of your mailed comments, send us a self-addressed, stamped postcard with the docket number written on it; we will datestamp your postcard and mail it back to you. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. If a person contacts us verbally, and that contact relates to a substantive part of this proposed AD, we will summarize the contact and place the summary in the docket. We will consider all comments received by the closing date and may amend the E:\FR\FM\30JAP1.SGM 30JAP1

Agencies

[Federal Register Volume 71, Number 19 (Monday, January 30, 2006)]
[Proposed Rules]
[Pages 4831-4832]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-1090]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 71, No. 19 / Monday, January 30, 2006 / 
Proposed Rules

[[Page 4831]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 46

[Docket No. FV05-373]


Regulations Under the Perishable Agricultural Commodities Act 
(PACA)

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Advance notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Agricultural Marketing Service (AMS) is issuing this 
advance notice of proposed rulemaking in response to concerns raised by 
the industry that sellers may lose their status as trust creditors when 
using electronic data interchange (EDI) for invoicing. Comments are 
being sought from the public, but in particular, buyers and sellers of 
fruit and vegetables and vendors/software developers of EDI systems, as 
to whether to issue new or amended regulations and if so, the substance 
of such regulations.

DATES: Submit written or electronic comments on or before March 16, 
2006.

ADDRESSES: You may submit written comments to:
    (1) EDI Comments, AMS, F&V, PACA BRANCH, 1400 Independence Avenue 
SW., Room 2095-S, Washington, DC 20250-0242.
    (2) Fax: 202-720-8868.
    (3) E-mail comments to Dexter.Thomas@usda.gov.
    (4) Internet: http://www.regulations.gov.
    Instructions: All comments will become a matter of public record 
and should be identified as EDI Comments. Comments will be available 
for public inspection from the Agricultural Marketing Service at the 
above address or over the Agency's Web site at: http://
www.ams.usda.gov/fv/paca.htm. Web site questions can be addressed to 
the PACA Webmaster, Dexter.Thomas@usda.gov.

FOR FURTHER INFORMATION CONTACT: Karla Whalen, Section Head, Trade 
Practice Section, or Phyllis Hall, Senior Marketing Specialist, Trade 
Practice Section, 202-720-6873.

SUPPLEMENTARY INFORMATION: 

Background

    The Perishable Agricultural Commodities Act (PACA) establishes a 
code of fair trading practices in the marketing of fresh and frozen 
fruits and vegetables in interstate and foreign commerce. The PACA 
protects growers, shippers, distributors, and retailers dealing in 
those commodities by prohibiting unfair and fraudulent trade practices. 
The PACA also provides a forum to adjudicate private disputes, with 
awards against a licensee who fails to meet contractual obligations in 
violation of the PACA. Additionally, the law imposes a statutory trust 
on perishable agricultural commodities received and accepted but not 
yet paid for, products derived from those commodities, and any 
receivables or proceeds due from the sale of those commodities or 
products for the benefit of unpaid suppliers or sellers.
    In the case of a business failure or bankruptcy of an entity 
subject to PACA, the debtor's inventory and receivables (PACA trust 
assets) are not property of the estate and are not available for 
general distribution to creditors other than PACA creditors who have 
preserved their trust rights until all valid PACA trust claims have 
been satisfied. Because of the statutory trust provision, PACA trust 
creditors who have preserved their trust rights, including sellers 
outside of the United States, have a far greater chance of recovering 
the money owed them when an entity subject to PACA goes out of 
business. The PACA trust provisions protect producers and all other 
firms trading in fruits and vegetables as each buyer of perishable 
agricultural commodities in the marketing chain becomes a seller in its 
own turn.
    In 1995, the PACA was amended to provide that licensed sellers of 
fresh and frozen fruits and vegetables may provide notice to buyers of 
their intention to preserve trust benefits by including specific 
language on invoice and billing documentation. The required language 
reads: ``The perishable agricultural commodities listed on this invoice 
are sold subject to the statutory trust authorized by section 5(c) of 
the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)). 
The seller of these commodities retains a trust claim over these 
commodities, all inventories of food or other products derived from 
these commodities, and any receivables or proceeds from the sale of 
these commodities until full payment is received.'' (7 U.S.C. 
499e(c)(4)).
    The PACA regulations were amended in 1997 to state that electronic 
transmissions are considered ``ordinary and usual billing and invoicing 
statements'' within the meaning of section 5(c)(4) of the PACA. (7 CFR 
46.46(5)). Under current regulations, PACA licensed unpaid sellers or 
suppliers of fresh and frozen fruits and vegetables may provide notice 
to buyers of their intention to preserve their trust rights by 
including the specified language contained in section 5(c)(4) of the 
PACA on their billing or invoicing statements, whether paper 
documentation or electronic transmissions (including electronic data 
interchange or EDI). Alternatively, as provided in the PACA and 
regulations, sellers (licensed or non-licensed) may satisfy the notice 
requirement by sending the buyer a separate detailed notice by mail of 
their intent to preserve trust benefits within thirty (30) days of 
payment default. Whichever method of notice is used, in order to 
preserve trust benefits, payment terms may not exceed 30 days.
    Since the amendment to the regulations, a number of produce sellers 
have voiced concern that their PACA trust rights may not be preserved 
if: (1) The buyer/buyer's agent either willfully or through oversight 
does not receive the entire electronic transmission (i.e., EDI 
invoice); (2) the buyer/buyer's agent does not download the trust 
information; (3) the buyer/buyer's agent does not opt to receive the 
information; (4) the buyer/buyer's agent does not buy the data field 
that allows the inclusion of the trust language; or (5) the EDI service 
provider does not translate the field that contains the trust language. 
Additional concerns have been expressed that the alternate method of 
trust notice (i.e., separate trust notice letter) is not being accepted 
by some buyers who require EDI invoicing. These are of grave concern 
since a seller may not know if the required trust

[[Page 4832]]

notice has been transmitted or received through EDI. Others in the 
industry have expressed concern about being charged a fee by the buyer 
to accept the notice to preserve their trust benefits through EDI or, 
about being charged a fee if they send a paper invoice or separate 
trust notice.

Agency Request for Information

    AMS is soliciting comments on PACA trust rights in connection with 
EDI invoicing so that the Agency will be able to provide greater 
direction to the industry of how PACA trust rights can be preserved 
when invoicing electronically. In particular, AMS invites comments and 
information regarding how the Agency may best provide regulatory 
clarification or direction. Comments are specifically invited on: (1) 
The types of problems that may need to be addressed by new regulatory 
language; (2) any technological barriers and solutions; (3) any 
additional costs likely to be associated with appropriate regulations, 
and opinions regarding who should bear such costs; (4) whether the 
Agency should by regulation define EDI methods that must be made 
available by licensed buyers, (i.e., creating a separate field for 
trust notice in EDI); (5) should buyers be required to accept separate 
notices (i.e., electronic or paper PACA trust) without restriction or 
charge; and (6) other related issues and suggestions.
    This notice provides a 45-day comment period for interested parties 
to comment on the need for amending the regulations. Should AMS 
conclude, based on the comments received, that the purposes of the PACA 
would be advanced through new or revised regulations, the Agency will 
develop a notice of proposed rulemaking that will be published in the 
Federal Register with a request for comments in accordance with 5 
U.S.C. 553.

Executive Orders 12866 and 12988

    This advance notice of proposed rulemaking has been determined to 
be not significant for the purposes of Executive Order 12866, and 
therefore, has not been reviewed by the Office of Management and 
Budget. This advance notice of proposed rulemaking has been reviewed 
under Executive Order 12988, Civil Justice Reform, and is not intended 
to have retroactive effect. This proposed rule will not preempt any 
State or local laws, regulations, or policies, unless they present an 
irreconcilable conflict with this rule. There are no administrative 
procedures that must be exhausted prior to any judicial challenge to 
the provisions of this advance notice of proposed rulemaking.

Effects on Small Business

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 et seq.), AMS has considered the economic 
impact on this proposed rule on small entities. The purpose of the RFA 
is to fit regulatory actions to the scale of businesses subject to such 
actions in order that small businesses will not be unduly or 
disproportionately burdened. Small agricultural service firms have been 
defined by the Small Business Administration (SBA) (13 CFR 121.601) as 
those whose annual receipts are less than $5,000,000. There are 
approximately 15,000 firms licensed under the PACA, many of which could 
be classified as small entities.
    The proposed regulations, if found to be necessary, would clarify 
how to preserve the trust benefit when using EDI. The use of EDI would 
provide companies an electronic alternative to paper documentation to 
give notice of intent to preserve trust rights, thereby reducing the 
time and expense associated with preserving trust rights under the 
PACA.

    Authority: 7 U.S.C. 499o.

    Dated: January 24, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E6-1090 Filed 1-27-06; 8:45 am]
BILLING CODE 3410-02-P