If PACA decides there is enough evidence to prove a company committed a violation, PACA can begin formal disciplinary action. This proceeding is similar to the filing of a criminal charge in a court, and requires representation by a lawyer.
If the offense is minor, and the company agrees to make changes, PACA usually just issues a warning letter. However, if the violations are more serious, or repeated, PACA will file a disciplinary complaint against the company. Below is a brief explanation of how such a case proceeds
A PACA enforcement case begins when PACA files a disciplinary complaint with USDA’s judicial branch. In the complaint, PACA describes the facts of the violation and the sanction it seeks against the company. The possible sanctions are license revocation, license suspension, a fine, publication of the offense.
After the complaint is filed, it is served on the company accused of the violation. The company has 20 days to answer the complaint, but can usually obtain an extension. The company can also request an oral hearing. The case is then referred to an Administrative Law Judge (ALJ) who oversees further proceedings and decides the case.
After the ALJ receives the case, a telephone scheduling conference is arranged to set dates for a hearing and the exchange of documents and witness lists.
At the hearing, witnesses testify and are cross-examined, and documents can be submitted by the parties. At the end of the hearing, the ALJ gives each party time to file a brief, which is a legal memorandum summarizing the facts and explaining how the case should be decided.
The ALJ issues a written decision and order, usually in three (3) to six (6) months after receiving the briefs. In the decision, the ALJ states findings of facts, conclusions and an order. The order dismisses the complaint or levies a sanction against the violating company.
The possible sanctions are license revocation, license suspension, a fine and publication.
Revocation of license ends the business, and results in licensing and employment restrictions for responsibly connected individuals. See Responsibly Connected Cases. Revocation is usually imposed for: repeated failures to pay; chronic slow pay which is not corrected by the time of the hearing; commercial bribery; and repeated, intentional fraudulent accountings.
If the company is not licensed at the time it is found to have committed violations, usually because it has let its license lapse, its license cannot be revoked. Instead, the sanction is a finding of repeated and flagrant violations, which has the same effect as a license revocation.
License suspension results in a temporary loss of license, anywhere from 1 to 90 days, during which time the company cannot operate. A suspension can have a devastating effect on a business because even a short closure can result in a significant loss of business.
A suspension also results in licensing and employment restrictions on responsibly connected persons. See Responsibly Connected Cases. Suspensions are usually imposed for: slow pay violations which have been corrected; employment of restricted individuals; alteration of inspections; and serious, intentional misbrandings.
PACA can also impose fines for violations. Fines are assessed in those cases in which suspensions could be ordered, and in misbranding cases which are settled informally.
Whenever a sanction is levied against a produce company, PACA issues a press release identifying the violator and explaining the offense and the sanction. The press release is sent to the produce trade press and published. The only exception to publication is when misbranding violations are settled informally.
If PACA or the produce company is dissatisfied with the ALJ’s decision, either can appeal to the Judicial Officer, who is the final USDA judge in these cases. The Judicial Officer reviews the record and receives briefs from the parties, and then either affirms, modifies or reverses the ALJ’s order. This takes about six (6) to 12 months. During this appeal, the order is usually stayed, meaning it is not in effect, and the company can continue to operate.
After the Judicial Officer’s decision, only the produce company can appeal to a federal court of appeal. This appeal proceeding takes about a year, and the order is usually stayed during this appeal.
If the agency decision is upheld after all appeals are exhausted, then the sanction goes into effect.