Many shippers believe that produce must cross State lines (Interstate Commerce) in order for the PACA to have jurisdiction. So, are shippers responsible for establishing definitive proof that the produce they are selling will be moving in interstate commerce? Furthermore, if the produce does not move in interstate commerce, will the shipper still be able to pursue a formal claim under the PACA? To answer these questions I have attached a PACA Decision and Order which was issued in July, 2006 addressing this point. Click to see Order
The Decision and Order in part states:
“While the interstate nature of the transaction itself triggers Departmental interstate commerce jurisdiction, there are a number of other elements of this transaction that cause this shipment to come under PACA jurisdiction.
It is reasonable to conclude that the shipment in this case was made in the course of interstate commerce. The Respondent is a PACA licensee and appears to regularly conduct business in interstate commerce. This transaction was arranged between offices in California and Oregon, and the record indicates that a subsequent transaction between the Complainant and Respondent involved a shipment to Saskatchewan, Canada. (Answer ex.5) Additionally, this transaction involves onions, a commodity that regularly moves in interstate commerce. These factors, combined with the fact the Respondent has business locations in three different states, reasonably indicates that the Respondent does a significant part of its business in interstate commerce. Under the D.C. Circuit court’s decision in The Produce Place vs. United States Department of Agriculture. 319 U.S. App. D.C. 369 (1996), to establish jurisdiction over a transaction, the Department need only show that the commodity was of the type that regularly moves in interstate commerce and was shipped to or from a dealer that does a substantial portion of its business in interstate commerce. The transaction between Complainant and Respondent satisfies both of these jurisdictional elements and, thus, properly falls within the Department’s jurisdiction under the Act……..
As noted above, in The Produce Place, the U.S. Court of Appeals for the D.C. Circuit made it quite clear that actual movement between states is not required for PACA jurisdiction to exist. Likewise, the notion that “limiting the provisions of PACA to commodities that have physically crossed state lines, or to situations where the parties specifically envisioned such a crossing” has been soundly rejected. Fishgold v. Onbank & Trust Co., 43 F.Supp. 2d 346 (1999).
As this Decision and Order highlights, produce does not have to physically cross a state line for the PACA to have jurisdiction. There are exceptions of course, however, the PACA is generally amenable to handling most produce contract disputes based on the premise that the sales transaction was in contemplation of interstate commerce.
As always, every transaction has it own nuance and special circumstances, and if you are wondering whether or not your transaction falls under the jurisdiction of the PACA and wish to explore your options, contact me to discuss your remedies, thus providing you with information with which to make an informed business decision. My direct line is 949 885-2269.