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.

Proposed Rules Federal Register

32306 

Vol. 75, No. 109 

Tuesday, June 8, 2010 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

[Document Number AMS–FV–09–0047] 

7 CFR Part 46 

Perishable Agricultural Commodities 

Act: Impact of Post-Default 

Agreements on Trust Protection 

Eligibility 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule. 

SUMMARY: The Department of 

Agriculture (USDA) is proposing to 

amend the regulations under the 

Perishable Agricultural Commodities 

Act (PACA) in response to concerns 

raised by the industry that sellers may 

lose their status as trust creditors when 

they agree orally or in writing, after 

default on payment, to accept payments 

over time from financially troubled 

buyers. The amendment’s purpose is to 

provide greater direction to the industry 

on maintaining trust protection after a 

buyer has made or is attempting to make 

partial payments. 

Specifically, if there is a default in 

payment as defined in the reguations, 

the amendment would allow a seller, 

supplier, or agent who has met the 

eligibility requirements to enter into a 

written scheduled payment agreement 

for payment of the past due amount 

while maintaining its trust eligibility. 

The length of such an agreement for 

payment of the past due amount, while 

still maintaining eligibility for trust 

protection, could not extend beyond 180 

days from the default date. In addition, 

the unpaid seller, supplier, or agent 

would be required to cease all collection 

of past due amounts under a written 

scheduled payment agreement if the 

buyer enters into bankruptcy or if the 

buyer is the respondent in a civil trust 

action. Any remaining unpaid amounts 

subject to the scheduled payment 

agreement would continue to qualify for 

trust protection. 

DATES: Written or electronic comments 

received by August 9, 2010 will be 

considered prior to issuance of a final 

rule. 

Additional Information or Comments: 

You may submit written or electronic 

comments to PACA Trust Post-Default 

Comments, AMS, F&V Programs, PACA 

Branch, 1400 Independence Avenue 

SW., Room 2095–S, Stop 0242, 

Washington, DC 20250–0242; fax: 202– 

720–8868; or Internet: http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Phyllis L. Hall or Josephine E. Jenkins, 

Trade Practices Section, 202–720–6873. 

SUPPLEMENTARY INFORMATION: 

Background of PACA and Trust 

Provisions 

The Perishable Agricultural 

Commodities Act (PACA) was enacted 

in 1930 to promote fair trading in the 

marketing of fresh and frozen fruits and 

vegetables in interstate and foreign 

commerce. It 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 or mediate commercial 

disputes. Licensees who violate the 

PACA may have their license suspended 

or revoked, and individuals determined 

to be responsibly connected to such 

licensees are restricted from 

employment or operating in the produce 

industry for a period of time. 

Growing, harvesting, packing, and 

shipping perishables involve risk: Costs 

are high, capital is tied up in farmland 

and machinery, and returns are delayed 

until the crop is sold. Because of the 

highly perishable nature of the 

commodities and distance from selling 

markets, produce trading is fast moving 

and often informal. Transactions are 

consummated in a matter of minutes, 

frequently while the commodities are en 

route to their destination. Under such 

conditions, it is often difficult to check 

the credit rating of the buyer. 

Congress examined the sufficiency of 

the PACA provisions fifty years after its 

inception and determined that prevalent 

financing practices in the perishable 

agricultural commodities industry were 

placing the industry in jeopardy. 

Particularly, Congress focused on the 

increase in the number of buyers who 

failed to pay, or were slow in paying 

their suppliers and the impact of such 

payment practices on small suppliers 

who could not withstand a significant 

loss or delay in receipt of monies owed. 

Congress was also troubled by the 

common practice of produce buyers 

granting liens on their inventories to 

their lenders, which covered all 

proceeds and receivables from the sales 

of perishable agricultural commodities, 

while the produce suppliers remained 

unpaid. This practice elevated the 

lenders to a secured creditor position in 

the case of the buyer’s insolvency, while 

the sellers of perishable agricultural 

commodities remained unsecured 

creditors with little or no legal 

protection or means of recovery in a suit 

for damages. 

Deeming this situation a ‘‘burden on 

commerce,’’ Congress amended the 

PACA in 1984 to include a statutory 

trust provision, which provides 

increased credit security in the absence 

of prompt payment for perishable 

agricultural commodities. The 1984 

amendment to the PACA states in 

relevant part: 

It is hereby found that a burden on 

commerce in perishable agricultural 

commodities is caused by financing 

arrangements under which commission 

merchants, dealers, or brokers, who have not 

made payment for perishable agricultural 

commodities purchased, contracted to be 

purchased, or otherwise handled by them on 

behalf of another person, encumber or give 

lenders a security interest in such 

commodities, or on inventories of food or 

other products derived from such 

commodities, and any receivables or 

proceeds from the sale of such commodities 

or products, and that such arrangements are 

contrary to the public interest. This 

subsection is intended to remedy such 

burden on commerce in perishable 

agricultural commodities and to protect the 

public interest. 

(7 U.S.C. 499e(c)(1)). 

Under the 1984 amendment, 

perishable agricultural commodities, 

inventories of food or other derivative 

products, and any receivables or 

proceeds from the sale of such 

commodities or products, are to be held 

in a non-segregated floating trust for the 

benefit of unpaid sellers. This trust is 

created by operation of law upon the 

purchase of such goods, and the 

produce buyer is the statutory trustee 

for the benefit of the produce seller. To 

preserve its trust benefits, the unpaid 

supplier, seller or agent must give the 

buyer written notice of intent to 

preserve its rights under the trust within 


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Federal Register / Vol. 75, No. 109 / Tuesday, June 8, 2010 / Proposed Rules 32307 

1See, Paris Foods Corp. v. Foresite Foods, Inc., 

No. 1:05–cv–610–WSD, 2007 WL 568841 (N.D. Ga. 

Feb. 20, 2007); Bocchi Americas Assoc. v. 

Commerce Fresh Mktg., Inc., No. Civ. A. H0402411, 

2005 WL 3164240 (S.D. Tex. Nov. 28, 2005); 

American Banana Co. v. Republic Nat. Bank of 

N.Y., 362 F.3d 33 (2nd Cir. 2004); Patterson Frozen 

Foods, Inc. v. Crown Foods, Int’l, 307 F.3d 666, 667 

(7th Cir. 2002); Greg Orchards Produce, Inc. v. P. 

Roncone J., 180 F.3d 888, 892 (7th Cir. 1999); 

Idahoan Fresh v. Advantage Produce, Inc., 157 F.3d 

197, 205 (3d Cir. 1998); In re Lombardo Fruit and 

Produce Co., 12 F.3d 806, 809 (8th Cir. 1993); and 

Hull v. Hauser’s Foods, Inc., 924 F.2d 777, 781–82 

(8th Cir. 1991). 

30 calendar days after payment was due. 

Alternatively, as provided in the 1995 

amendments to the PACA, a PACA 

licensee may provide notice of intent to 

preserve its trust rights by including 

specific language as part of its ordinary 

and usual billing or invoice statements. 

The trust is a non-segregated ‘‘floating 

trust’’ made up of all of a buyer’s 

commodity-related assets, under which 

there may be a commingling of trust 

assets. There is no need to identify 

specific trust assets through each step of 

the accrual and disposal process. Since 

commingling is contemplated, all trust 

assets would be subject to the claims of 

unpaid sellers, suppliers and agents to 

the extent of the amount owed them. As 

each supplier gives ownership, 

possession, or control of perishable 

agricultural commodities to a buyer, and 

preserves its trust rights, that supplier 

becomes a participant in the trust. 

Section 5(c)(2) of the PACA states in 

relevant part: 

Perishable agricultural commodities 

received by a commission merchant, dealer, 

or broker in all transactions, and all 

inventories of food or other products derived 

from perishable agricultural commodities, 

and any receivables or proceeds from the sale 

of such commodities or products, shall be 

held by such commission merchant, dealer, 

or broker in trust for the benefit of all unpaid 

suppliers or sellers of such commodities or 

agents involved in the transaction, until full 

payment of the sums owing in connection 

with such transactions has been received by 

such unpaid suppliers, sellers, or agents. 

(7 U.S.C. 499e(c)(2)). Thus, trust 

participants remain trust beneficiaries 

until they have been paid in full. 

Under the statute, the District Courts 

of the United States are vested with 

jurisdiction to entertain actions by trust 

beneficiaries to enforce payment from 

the trust. Thus, in the event of business 

failure, produce creditors may enforce 

their rights by suing the buyer in federal 

district court. It is common in this type 

of trust enforcement action for unpaid 

sellers to seek a temporary restraining 

order (TRO) that freezes the bank 

accounts of a buyer until the trust 

creditors are paid. Many unpaid sellers 

have found this a very effective tool to 

recover payment for produce. Often, a 

trust enforcement action with a TRO 

will be the defining moment for the 

future of a debtor firm. As the TRO 

freezes the bank accounts of the debtor, 

the debtor must either pay the trust 

creditors or attempt to operate a 

business without access to its bank 

accounts. This aggressive course of 

action by unpaid sellers is generally 

pursued when the sellers are concerned 

that trust assets are being dissipated. 

In the event of a bankruptcy by a 

produce buyer, that is, the produce 

‘‘debtor,’’ the debtor’s trust assets are not 

property of the bankruptcy estate and 

are not available for distribution to 

secured lenders and other creditors 

until all valid PACA trust claims have 

been satisfied. The trust creditors can 

petition the court for the turnover of the 

debtor’s trust-related assets or 

alternatively request that the court 

oversee the liquidation of the inventory 

and collection of the receivables and 

disburse the trust proceeds to qualified 

PACA trust creditors. 

Because of the statutory trust 

provision, produce creditors, including 

sellers outside the United States, have a 

far greater chance of recovering money 

owed them when a buyer goes out of 

business. However, because attorney’s 

fees are incurred in these kinds of suits 

it is not always practical to pursue small 

claims that remain unpaid. Nonetheless, 

as a result of the PACA trust provisions, 

unpaid sellers, including those outside 

the United States, have recovered 

hundreds of millions of dollars that 

most likely would not otherwise have 

been collected. 

The PACA trust provisions protect not 

only growers, but also other firms 

trading in fruits and vegetables since 

each buyer in the marketing chain 

becomes a seller in its own turn and can 

preserve its own trust assets 

accordingly. Because each creditor that 

buys produce can preserve trust assets 

for the benefit of its own suppliers, any 

money recovered from a buyer that goes 

out of business are passed back through 

preceding sellers until ultimately the 

grower also realizes the financial 

benefits of the trust provisions. This is 

particularly important in the produce 

industry due to the highly perishable 

nature of the commodities as well as the 

many hands such commodities 

customarily pass through to the end 

customer. 

To gain trust protection under the 

PACA, the law offers two approaches to 

unpaid sellers. One option allows PACA 

licensees to declare at the time of sale 

that the produce being sold is subject to 

the PACA trust, providing protection in 

the event that payment is late or the 

payment instrument is not honored. 

This option allows PACA licensees to 

protect their trust rights by including 

the following language on invoices or 

other billing statements: 

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. 499(c)(4)). 

The second option for a PACA 

licensee to preserve its trust rights, and 

the sole method for all non-licensed 

sellers, requires the seller to provide a 

separate, independent notice to the 

buyer of its intent to preserve its trust 

benefits. The notice must include 

sufficient details to indentify each 

transaction and be received by the buyer 

within 30 days after payment becomes 

due. Since the 1995 amendment to the 

PACA, the notice is not required to be 

filed with USDA. 

Under current 7 CFR 46.46(e)(2), only 

transactions with payment terms of 30 

days from receipt and acceptance, or 

less, are eligible for trust protection. 

Section 46.46(e)(1) of the regulations (7 

CFR 46.46(e)(1)) requires that any 

payment terms beyond ‘‘prompt’’ 

payment as defined by the regulations, 

usually 10 days after receipt and 

acceptance in a customary purchase and 

sale transaction, must be expressly 

agreed to before entering into the 

transaction and reduced to writing. A 

copy of the agreement must be retained 

in the files of each party and the 

payment due date must be disclosed on 

the invoice or billing statement. 

Over the past few years, several 

federal courts have invalidated the trust 

rights of unpaid creditors because these 

creditors agreed in writing, and in some 

cases, by oral agreement, after default on 

payment, to accept payments over time 

from financially troubled buyers. In 

general, these courts have invalidated 

the seller’s previously perfected trust 

rights because the agreements were 

deemed to extend payment terms 

beyond 30 days.1

Many within the industry and the 

USDA Fruit and Vegetable Industry 

Advisory Committee have urged the 

Secretary to amend the PACA 

regulations to address the impact of 

post-default agreements on eligibility for 

trust protection. They have voiced 

concern that the uncertainty created by 

court decisions and the silence of the 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
32308 Federal Register / Vol. 75, No. 109 / Tuesday, June 8, 2010 / Proposed Rules 

2See American Banana Co., 362 F.3d at 33; 

Patterson Frozen Foods, 307 F.3d at 669. 

3American Banana Co., 362 F.3d at 46. 

4See In re: Scamcorp, Inc., 57 Agric. Dec. 527, 

563 (1998). 

5See, e.g., In re Gotham Provision Co., Inc., 669 

F.2d 1000, 1007 (5th Cir. 1982). 

PACA regulations on this matter 

introduce risk, cost, and unnecessary 

litigation to the marketing chain. 

The court decisions at issue have held 

that any post-default agreement, 

whether oral or written, that extends the 

buyer’s obligation to pay the seller’s 

invoices beyond 30 days after receipt 

and acceptance of the produce abrogates 

the produce seller’s PACA trust rights. 

These decisions have held that (1) when 

a seller enters into the post-default 

agreement, the agreement modifies any 

valid payment agreement entered into 

prior to the transaction and therefore 

voids the trust protection,2 and (2) postdefault agreements that allow for 

installment payments exceeding 30 days 

from receipt of produce violate the 

PACA prompt-pay provisions.3

It is our interpretation of the statute 

and regulations that post-default 

agreements are not an extension of the 

30-day maximum time period for pretransaction agreements that would 

result in a waiver of the seller’s trust 

rights; post-default payment agreements 

are an attempt to collect a debt. The 

Secretary has long recognized a 

significant difference between the 

relative positions of buyers and sellers 

before a transaction, versus their 

positions after a buyer defaults on 

payment. The Secretary has observed 

that ‘‘produce sellers are not in an equal 

bargaining position with produce 

purchasers who are in possession of the 

produce seller’s perishable agricultural 

commodities.’’ 4 After a buyer has 

defaulted on payment, the seller is at 

the buyer’s mercy. Any agreement 

reached after default is not an arm’s 

length transaction. The trust is intended 

to provide protection to the unpaid 

seller whose bargaining position has 

changed for the worse after delivering 

its produce to a buyer. We do not 

believe that a seller’s perfected trust 

rights should be lost because the seller 

enters into a payment arrangement, in 

an attempt to collect a debt, after the 

buyer has violated the PACA’s prompt 

payment requirement. 

When a buyer defaults on payment for 

produce, it has committed a violation of 

section 2(4) of the PACA (7 U.S.C. 

499b(4)). The defaulting buyer’s license 

is then subject to suspension or 

revocation, or the buyer may be assessed 

a civil penalty for its violations of the 

PACA. Allowing a seller who has 

perfected its trust rights to enter into a 

post-default payment agreement with 

the defaulting buyer does not negate the 

buyer’s violations of the Act. The trust 

is a means to protect the seller’s right to 

payment for produce, not to enforce the 

prompt payment provisions of the Act. 

The Secretary can still initiate an 

enforcement action against the buyer to 

seek the appropriate sanction for 

violation of the Act without regard to 

any post-default agreement entered into 

between the unpaid seller and the buyer 

in default. 

Many of the court decisions at issue 

have been based on an interpretation of 

§ 46.46(e) of the regulations (7 CFR 

46.46(e)). Section 46.46(e)(1) (7 CFR 

46.46(e)(1)) requires that parties who 

elect to use different times for payment 

must reduce their agreement to writing 

before entering into the transaction. 

Current § 46.46(e)(2) (7 CFR 46.46(e)(2)) 

states that the maximum time for 

payment for a shipment to which a 

seller can agree and still qualify for 

coverage under the trust is 30 days after 

receipt and acceptance of the 

commodities. It is our interpretation 

that § 46.46(e)(2), like (e)(1) of the 

regulations (7 CFR 46.46(e)(1) and(e)(2)), 

addresses pre-transaction agreements 

only. 

This interpretation of our regulations 

is consistent with the Secretary’s 

unwillingness to impute a waiver of 

trust rights as illustrated in the policies 

established by the Secretary and upheld 

by the courts in the context of the trust 

provisions of the Packers and 

Stockyards Act (7 U.S.C. 181 et seq.), 

after which the PACA trust provisions 

are largely modeled.5 In the context of 

the PACA trust, the right to make a 

claim against the trust are vested in the 

seller, supplier, or agent who has met 

the eligibility requirements of 

paragraphs (e)(1) and (2) of § 46.46 (7 

CFR 46.46(e)(1) and (2)). The seller, 

supplier, or agent remains a beneficiary 

of the PACA trust until the debt owed 

is paid in full. An agreement to pay the 

antecedent debt in installments is not 

considered payment in full. Thus, we do 

not believe that a post-default payment 

agreement should constitute a waiver of 

a seller’s previously perfected trust 

rights. 

Post-default agreements are often the 

result of a reasonable effort by an 

unpaid seller, supplier, or agent to 

recover at least some of the debt owed 

to it without incurring the risks and 

expense of protracted litigation. Such 

agreements should be viewed as a useful 

tool for recovery of unpaid debts, 

allowing for cure of a temporary 

payment delay as can occur in the 

produce industry due to the perishable 

nature of the product being bought and 

sold as well as the often fast-paced and 

short-term fluctuations in market price 

due to weather, pests, transportation, 

and seasonality of supply and demand. 

While the potential benefits of postdefault agreements are real, we believe 

such agreements should be subject to 

regulatory requirements. To ensure that 

the post-default payment arrangement 

does not extend beyond a reasonable 

period, the maximum length of an 

agreement to accept scheduled 

payments on the past due amount and 

maintain eligibility for trust protection 

could not extend beyond 180 days from 

the default date. We believe that one 

hundred eighty days is a reasonable 

time period during which a firm 

experiencing minor financial troubles 

can work out delinquent accounts with 

its suppliers. Such an arrangement 

lessens the financial problems that often 

beset an unpaid produce seller whose 

market, by its nature, precludes taking 

the normal steps to secure credit sales. 

If a seller who has met the requirements 

of paragraphs (e)(1) and (2) of § 46.46 (7 

CFR 46.46)(e)(1) and (2)), is not allowed 

to enter into a post-default agreement 

and still maintain its trust protection, 

the seller is penalized. In such 

circumstances, the produce debtor is 

permitted to use the seller for financing 

and at the same time avoid the impact 

of the statutory trust. Post-default 

agreements that allow payments to be 

made within 180 days following the 

default on the original payment due 

date pose no significant risk to the 

produce industry, but they may allow 

buyers and sellers more flexibility. Postdefault payment agreements can be a 

practical approach to getting 

outstanding debts paid without 

jeopardizing the seller’s trust rights, 

thereby serving to protect the interests 

of the supplier, buyer, and the fruit and 

vegetable industry. 

In order to maintain trust eligibility, 

the post-default payment agreement 

should be in writing. A written 

agreement, rather than a verbal 

agreement or course of dealing claim, 

would constitute a valid post-default 

agreement. Parties to a written 

agreement would have material 

evidence to prove the actual terms of the 

agreement should litigation become 

necessary. 

When a produce debtor files 

bankruptcy or if a trust action is filed 

against the produce debtor, all unpaid 

sellers of produce should be treated 

equally. Therefore, an unpaid seller who 

has entered into a post-default payment 

agreement must stop accepting 

payments from the debtor once a 


emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 109 / Tuesday, June 8, 2010 / Proposed Rules 32309 

bankruptcy or trust action is filed. Any 

amount still due under the payment 

agreement would be subject to the trust. 

Section 46.46(e)(1) and (2) of the 

regulations (7 CFR 46.46(e)(1) and (2)) 

speak only to the effect of a pretransaction agreement on the ability of 

a seller, supplier, or agent to qualify for 

trust protection. Neither the statute nor 

current regulation address post-default 

agreements, nor do they specify any 

maximum payment terms for postdefault agreements. The issuance of a 

regulation clarifying that post-default 

agreements do not waive trust rights is 

within the Secretary’s delegated 

authority (7 U.S.C. 499o), and would be 

consistent with PACA’s purpose and 

legislative history. Failure to do so may 

harm interstate commerce in produce 

that the PACA was enacted to protect. 

Therefore, we propose to amend PACA 

regulations as described below. 

We propose to amend 7 CFR 

46.46(e)(2) by adding the words ‘‘prior to 

the transaction’’. This change would 

clarify that the 30-day maximum time 

period for payment for a shipment to 

which a seller can agree and still qualify 

for coverage under the trust relates back 

to paragraph (e)(1) which refers to pretransaction agreements. 

We also propose to add a new 

paragraph (e)(3) to 7 CFR 46.46. The 

new paragraph would provide that in 

circumstances of a default in payment 

as defined in § 46.46(a)(3), a seller, 

supplier, or agent who has met the 

eligibility requirements of § 46.46 

paragraphs (e)(1) and (2) could agree in 

writing to a schedule for payment of the 

past due amount and still remain 

eligible under the trust. The post-default 

payment agreement could not extend 

beyond 180 days from the default date. 

New paragraph (e)(3) would require a 

seller, supplier or agent who enters into 

a post-default payment agreement to 

stop accepting payments under the 

agreement if the buyer declares 

bankruptcy or if a temporary restraining 

order is issued by a district court in a 

trust action. The remaining outstanding 

debt would qualify for trust protection. 

Current 7 CFR 46.46(e)(3) and (4) would 

be redesignated as (e)(4) and (5). 

Executive Orders 12866 and 12988 

This proposed rule 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 

proposed rule 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 proposed rule. 

Effects on Small Businesses 

Pursuant to requirements set forth in 

the Regulatory Flexibility Act (RFA) (5 

U.S.C. 601 et seq.), USDA has 

considered the economic impact of 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. The Small 

Business Administration (SBA) has 

defined small agricultural service firms 

(13 CFR 121.601) as those whose annual 

receipts are less than $7,000,000. There 

are approximately 14,400 firms licensed 

under the PACA, a majority of which 

could be classified as small entities. 

The proposed regulations would 

clarify that a trust beneficiary who has 

perfected its trust rights does not forfeit 

those rights by entering into a postdefault agreement to accept partial or 

installment payments on the amount 

due. This language would provide 

companies of all sizes with clear 

regulatory guidance on this matter, 

thereby reducing the time and expense 

associated with litigating matters 

involving post-default agreements and 

trust right preservation under the PACA. 

Therefore, we believe that this proposed 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Paperwork Reduction Act 

In accordance with OMB regulations 

(5 CFR part 1320) that implement the 

Paperwork Reduction Act of 1995 (44 

U.S.C. Chapter 35), the information 

collection and recordkeeping 

requirements that are covered by this 

proposed rule are currently approved 

under OMB number 0581–0031. 

E-Government Act Compliance 

AMS is committed to complying with 

the E-Government Act, which requires 

Government agencies in general to 

provide the public the option of 

submitting information or transacting 

business electronically to the maximum 

extent possible. Forms are available on 

our PACA Web site at http:// 

www.ams.usda.gov/paca and can be 

printed, completed, and faxed. 

Currently, forms are transmitted by fax 

machine and postal delivery. 

List of Subjects in 7 CFR Part 46 

Definitions, Accounts and records, 

Duties of licensees, Statutory trust. 

For the reasons set forth in the 

preamble, AMS proposes to amend 7 

CFR part 46 as follows: 

PART 46—[AMENDED] 

1. The authority citation for part 46 

continues to read as follows: 

Authority: 7 U.S.C. 499a–499t. 

2. In § 46.46, paragraph (e)(2) is 

revised, paragraphs (e)(3) and (4) are 

redesignated as paragraphs (e)(4) and 

(5), and a new paragraph (e)(3) is added 

as follows: 

§ 46.46 Statutory trust 

* * * * * 

(e) * * * 

(2) The maximum time for payment 

for a shipment to which a seller, 

supplier, or agent can agree, prior to the 

transaction, and still be eligible for 

benefits under the trust is 30 days after 

receipt and acceptance of the 

commodities as defined in § 46.2(dd) 

and paragraph (a)(1) of this section. 

(3) If there is a default in payment as 

defined in § 46.46(a)(3), the seller, 

supplier, or agent who has met the 

eligibility requirements of paragraphs 

(e)(1) and (2) of this section will not 

forfeit eligibility under the trust by 

agreeing in writing to a schedule for 

payment of the past due amount. The 

maximum time for payment of a past 

due amount to which a seller, supplier, 

or agent can agree, after a default, and 

still be eligible for benefits under the 

trust is 180 days from the default date, 

that is, the original payment due date of 

the transaction. The seller, supplier, or 

agent must cease all collections of past 

due amounts under a scheduled 

payment agreement if the buyer enters 

into bankruptcy or if the buyer is 

ordered to hold its inventory, accounts 

receivable, and proceeds intact until a 

determination of trust interest in a civil 

action. The remaining unpaid amount 

under the scheduled payment 

agreement will continue to qualify for 

trust protection. 

* * * * * 

Dated: June 2, 2010. 

David R. Shipman, 

Acting Administrator, Agricultural Marketing. 

[FR Doc. 2010–13634 Filed 6–7–10; 8:45 am] 

BILLING CODE P 


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