[Code of Federal Regulations]
[Title 7, Volume 2]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR46.2]

[Page 255-260]
 
                          TITLE 7--AGRICULTURE
 
                        DEPARTMENT OF AGRICULTURE
 
PART 46_REGULATIONS (OTHER THAN RULES OF PRACTICE) UNDER THE 
PERISHABLE AGRICULTURAL COMMODITIES ACT, 1930--Table of Contents
 
Sec. 46.2  Definitions.

    The terms defined in the first section of the Act shall have the 
same meaning as stated therein. Unless otherwise defined, the following 
terms whether used in the regulations, in the Act, or in the trade shall 
be construed as follows:
    (a) Act means the Perishable Agricultural Commodities Act, 1930, 
approved June 10, 1930, and legislation supplementary thereto and 
amendatory thereof (46 Stat. 531; 7 U.S.C. 499a-499r).

    Cross Reference: For Rules of Practice under the Act, see Part 47 of 
this chapter.
    (b) Department means the United States Department of Agriculture.
    (c) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in his stead.
    (d) Service means the Agricultural Marketing Service, United States 
Department of Agriculture.
    (e) Deputy Administrator means the Deputy Administrator, Regulatory 
Programs, of the Consumer and Marketing Service, or any officer or 
employee of the Service, to whom authority has heretofore lawfully been 
delegated, or to whom authority may hereafter lawfully be delegated, to 
act in his stead.
    (f) Division means the Fruit and Vegetable Division of the Service.
    (g) Director means the Director of the Division or any officer or 
employee of the Division to whom authority has heretofore lawfully been 
delegated, or to whom authority may hereafter lawfully be delegated, by 
the Director to act in his stead.
    (h) In commerce means interstate or foreign commerce as defined in 
paragraphs (3) and (8) of the first section of the Act.
    (i) Person means any individual, partnership, limited liability 
company, corporation, association, or separate legal entity.
    (j) Retailer is a dealer engaged in the business of selling any 
perishable agricultural commodity at retail; Provided, That occasional 
sales at wholesale shall not be deemed to remove a dealer from the 
category of retailer if less than 5 percent of annual gross sales is 
derived from wholesale transactions.
    (k) Firm means any person engaged in business as a commission 
merchant, dealer, or broker.
    (l) Licensee means any firm who holds an unrevoked and valid unsus-
pended license issued under the Act.
    (m) Dealer means any person engaged in the business of buying or 
selling in wholesale or jobbing quantities in commerce and includes:
    (1) Jobbers, distributors and other wholesalers;
    (2) Retailers, when the invoice cost of all purchases of produce 
exceeds $230,000 during a calendar year. In computing dollar volume, all 
purchases of fresh and frozen fruits and vegetables are to be counted, 
without regard to quantity involved in a transaction or whether the 
transaction was intrastate, interstate or foreign commerce;
    (3) Growers who market produce grown by others.
    (4) The term ``dealer'' does not include persons buying produce, 
other than potatoes, for canning and/or processing within the State 
where grown, whether or not the canned or processed product is to be 
shipped in interstate or foreign commerce, unless such product is 
frozen, or packed in ice, or consists of cherries in brine.
    (n) Broker means any person engaged in the business of negotiating 
sales and purchases of produce in commerce for or on behalf of the 
vendor or the purchaser, respectively, except that no person shall be 
deemed to be a ``broker'' within the meaning of the Act if such person 
is an independent agent negotiating sales for or on behalf of the vendor 
and if the only sales of such commodities negotiated by such

[[Page 256]]

person are sales of frozen fruits and vegetables having an invoice value 
not in excess of $230,000 in any calendar year.
    (o) Shipper means any person operating at shipping point who is 
engaged in the business of purchasing produce from growers or others and 
distributing such produce in commerce by resale or other methods, or who 
handles such produce on joint account with others.
    (p) Grower means any person who raises produce for marketing.
    (q) Growers' agent means any person operating at shipping point who 
sells or distributes produce in commerce for or on behalf of growers or 
others and whose operations may include the planting, harvesting, 
grading, packing, and furnishing containers, supplies, or other 
services.
    (r) Receiving market commission merchant means any person operating 
on a receiving market who is engaged in the business of receiving 
produce in commerce for sale, on commission, for or on behalf of 
another.
    (s) Joint account transaction means a produce transaction in 
commerce in which two or more persons participate under a limited joint 
venture arrangement whereby they agree to share in a prescribed manner 
the costs, profits, or losses resulting from such transaction.
    (t) Produce means any perishable agricultural commodity, as defined 
in paragraph (4) of the first section of the Act.
    (u) Fresh fruits and fresh vegetables include all produce in fresh 
form generally considered as perishable fruits and vegetables, whether 
or not packed in ice or held in common or cold storage, but does not 
include those perishable fruits and vegetables which have been 
manufactured into articles of food of a different kind or character. The 
effects of the following operations shall not be considered as changing 
a commodity into a food of a different kind or character: Water, steam, 
or oil blanching, battering, coating, chopping, color adding, curing, 
cutting, dicing, drying for the removal of surface moisture; fumigating, 
gassing, heating for insect control, ripening and coloring; removal of 
seed, pits, stems, calyx, husk, pods rind, skin, peel, et cetera; 
polishing, precooling, refrigerating, shredding, slicing, trimming, 
washing with or without chemicals; waxing, adding of sugar or other 
sweetening agents; adding ascorbic acid or other agents to retard 
oxidation; mixing of several kinds of sliced, chopped, or diced fruit or 
vegetables for packaging in any type of containers; or comparable 
methods of preparation.
    (v) Frozen fruits and vegetables include all produce defined in 
paragraph (u) of this section when such produce is in frozen form.
    (w) Cherries in brine means cherries packed in an aqueous solution 
containing sulphur dioxide or other bleaching agent of sufficient 
strength to preserve the product, with or without the addition of 
hardening agents.
    (x) Wholesale or jobbing quantities, as used in paragraph (6) of the 
first section of the Act, means aggregate quantities of all types of 
produce totaling one ton (2,000 pounds) or more in weight in any day 
shipped, received, or contracted to be shipped or received.
    (y) Truly and correctly to account means, in connection with:
    (1) Consignments, to account by rendering a true and correct 
statement showing the date of receipt and date of final sale, the 
quantities sold at each price, or other disposition of the produce, and 
the proper, usual or specifically agreed upon selling charges and 
expenses properly incurred or agreed to in the handling thereof, plus 
any other information required by Sec. 46.29;
    (2) Joint account transactions, to account by rendering a true and 
correct statement showing the date of receipt and date of final sale, 
the quantities sold at each price or other disposition of produce, the 
joint account cost of the produce, and the expenses properly incurred or 
other charges specifically agreed to in the handling thereof, plus any 
other information required by Sec. 46.29;
    (3) Buying brokerage transactions, to account by rendering a true 
and correct itemized statement showing the cost of the produce, the 
expenses properly incurred, and the amount of brokerage charged.
    (z) Account promptly, except when otherwise specifically agreed upon 
by

[[Page 257]]

the parties, means rendering to the principal a true and correct 
accounting:
    (1) In connection with buying brokerage transactions, within 24 
hours after the date of shipment;
    (2) In connection with consignment or joint account transactions, 
within 10 days after the date of final sale with respect to each 
shipment, or within 20 days from the date the goods are accepted at 
destination, whichever comes first: Provided, That whenever a grower's 
agent or shipper distributes individual lots of produce for or on behalf 
of others, accounting to the principal shall be made within 30 days 
after receipt of the shipment from the principal for sale or within 5 
days after the date the agent receives payment for the goods, whichever 
comes first. Whenever a grower's agent or shipper harvests, packs, or 
distributes entire crops or multiple lots therefrom for or on behalf of 
others, an accounting on the initial shipment shall be rendered within 
30 days after receipt of the goods for sale. Accountings for subsequent 
shipments shall be made at 10-day intervals from the date of the 
accounting for the initial shipment and a final accounting for the 
season shall be made to each principal within 30 days from the date the 
agent receives the last shipment for the season from that principal: 
Provided further, That whenever the marketing agreement between a 
principal and agent includes a provision for storage of goods prior to 
sale, the agent shall render accountings of inventory and expenses 
incurred to date at 30-day intervals from the date the goods are 
received by the agent until sales from storage begin, And Provided 
further, That nothing in the regulations in this part shall prohibit 
cooperative associations from accounting to their members on the basis 
of seasonal pools or other arrangements provided by their regulations or 
bylaws; and
    (3) In connection with a consignment or joint account transaction, 
within 10 days after the date of receipt of payment of a carrier claim 
filed.
    (aa) Full payment promptly is the term used in the Act in specifying 
the period of time for making payment without committing a violation of 
the Act. ``Full payment promptly,'' for the purpose of determining 
violations of the Act, means:
    (1) Payment of net proceeds for produce received on consignment or 
the pro-rata share of the net profits for produce received on joint 
account, within 10 days after the date of final sale with respect to 
each shipment, or within 20 days from the date the goods are accepted at 
destination, whichever comes first;
    (2) Payment by growers, growers' agents, or shippers of deficits on 
consignments or joint account transactions, within 10 days after the day 
on which the accounting is received;
    (3) Payment of the purchase price, brokerage, and other expenses to 
buying brokers who pay for the produce, within 10 days after the day on 
which the broker's invoice is received by the buyer;
    (4) Payment of brokerage earned and other expenses in connection 
with produce purchased or sold, within 10 days after the day on which 
the broker's invoice is received by the principal;
    (5) Payment for produce purchased by a buyer, within 10 days after 
the day on which the produce is accepted;
    (6) Payment to growers, growers' agents, or shippers by terminal 
market agents or brokers, who are selling for the account of a grower, 
growers' agent, or shipper and are authorized to collect from the buyer 
or receiver, within 5 days after the agent or broker receives payment 
from the buyer or receiver;
    (7) Payment to the principal, within 10 days after receipt, of net 
proceeds realized from a carrier claim in connection with a consignment 
transaction or, in connection with a joint account transaction, payment 
to the joint account partners of their share of the joint account net 
proceeds realized from a carrier claim;
    (8) Payment by growers agents or shippers who distribute individual 
lots of produce for or on behalf of others, within 30 days after receipt 
of the goods from the principal for sale or within 5 days after the date 
the agent receives payment for the goods, whichever comes first;

[[Page 258]]

    (9) Whenever a grower's agent or shipper harvests, packs, or 
distributes entire crops or multiple lots therefrom for or on behalf of 
others, payment for the initial shipment shall be made within 30 days 
after receipt of the goods for sale or within 5 days after the date the 
agent receives payment for the goods, whichever comes first. Payment for 
subsequent shipments shall be made at 10-day intervals from the date of 
the accounting for the initial shipment or within 5 days after the date 
the agent receives payment for the goods, whichever comes first, and 
final payment for the seasons shall be made to each principal within 30 
days from the date the agent receives the last shipment for the season 
from that principal;
    (10) When contracts are based on terms other than those described in 
these regulations, payment is due the supplier-seller within 20 days 
from the date of acceptance of the shipment under the terms of the 
contract and Sec. 46.2(dd).
    (11) Parties who elect to use different times of payment than those 
set forth in paragraphs (aa) (1) through (10) of this section must 
reduce their agreement to writing before entering into the transaction 
and maintain a copy of the agreement in their records. If they have so 
agreed, then payment within the agreed upon time shall constitute ``full 
payment promptly'': Provided, That the party claiming the existence of 
such an agreement for time of payment shall have the burden of proving 
it.

Nothing in the regulations in this part shall limit the seller's 
privilege of shipping under a closed or advise bill of lading or other 
arrangement requiring cash on delivery unless there has been express 
prior agreement to the contrary between the parties; or prohibit 
cooperative associations from settling with their members on the basis 
of seasonal pools or other arrangements provided by their regulations or 
bylaws. If there is a dispute concerning a transaction, the foregoing 
time periods for prompt payment apply only to payment of the undisputed 
amount.
    (bb) Reject without reasonable cause means in connection with 
purchases, consignments, or joint account transactions: (1) Refusing or 
failing without legal justification to accept produce within a 
reasonable time; (2) advising the seller, shipper, or his agent that 
produce, complying with contract, will not be accepted; (3) indicating 
an intention not to accept produce through an act or failure to act 
inconsistent with the contract; or (4) any rejection following an act of 
acceptance.
    (cc) Reasonable time, as used in paragraph (bb) of this section, 
means:
    (1) For frozen fruits and vegetables with respect to rail shipments, 
48 hours after notice of arrival and the produce is made accessible for 
inspection, and with respect to truck shipments, not to exceed 12 hours 
after the receiver or a responsible representative is given notice of 
arrival and the produce is made accessible for inspection;
    (2) For fresh fruits and vegetables with respect to rail shipments, 
not to exceed 24 hours after notice of arrival and the car has been 
placed in a location where the produce is made accessible for 
inspection; and with respect to truck shipments, not to exceed 8 hours 
after the receiver or a responsible representative is given notice of 
arrival and the produce is made accessible for inspection; and, with 
respect to boat shipments, not to exceed 24 hours after the produce is 
unloaded and made accessible for inspection and the receiver is given 
notice thereof;
    (3) If, within the applicable period, the receiver cannot make a 
thorough inspection due to adverse weather condition or applies for but 
cannot obtain Federal inspection before the end of this period, and so 
notifies the consignor within the applicable period, the period shall be 
extended until weather conditions permit inspection or until Federal 
inspection is made, as the case may be, plus two hours after either an 
oral or written report of the results of such inspection is made 
available to the receiver; and
    (4) In computing the time periods specified above, (i) for shipments 
arriving on non-work days or after the close of regular business hours 
on work days when a representative of the receiver having authority to 
reject shipments is not present, non-working hours preceding the start 
of regular business hours on the next working day shall

[[Page 259]]

not be included; and (ii) for shipments arriving during regular business 
hours when a representative of the receiver having authority to reject 
shipments customarily is present, the period shall run without 
interruption except that, for shipments arriving less than two hours 
before the close of regular business hours, the unexpired balance of the 
time period shall be extended and run from the start of regular business 
hours on the next working day.
    (dd) Acceptance means:
    (1) Any act by the consignee signifying acceptance of the shipment, 
including diversion or unloading;
    (2) Any act by the consignee which is inconsistent with the 
consignor's ownership, but if such act is wrongful against the consignor 
it is acceptance only if ratified by him; or
    (3) Failure of the consignee to give notice of rejection to the 
consignor within a reasonable time as defined in paragraph (cc) of this 
section: Provided, That acceptance shall not affect any claim for 
damages because of failure of the produce to meet the terms of the 
contract.
    (ee) Employ and employment mean any affiliation of any person with 
the business operations of a licensee, with or without compensation, 
including ownership or self-employment.
    (ff) Responsibly connected means affiliation as individual owner, 
partner in a partnership, member, manager, officer, director or holder 
of more than a 10 percent ownership stake in a limited liability 
company, or officer, director or holder of more than 10 percent of the 
outstanding stock of a corporation or association.
    (gg) Branch or additional business facility, as used in section 3(b) 
of the Act, means an office or outlet in a location other than that of 
the principal or main office of a firm, out of which or through which 
the firm purchases, sells, negotiates contracts, solicits, or handles 
consignments, or otherwise contracts in perishable agricultural 
commodities including seasonal, part-time and full-time operations. As 
used in this paragraph, ``branch or additional business facility'' 
includes, but is not limited to, the following:
    (1) Jobbers, wholesalers, distributors--each location through which 
commodities are bought, sold or otherwise contracted;
    (2) Retailers--each outlet through which retail sales of commodities 
are made and each office which purchases commodities;
    (3) Trucker/dealer--a truck is a ``branch'' office if the driver is 
authorized to buy, sell or otherwise contract for commodities on behalf 
of the firm;
    (4) Shippers--on-the-ground representatives making purchases, sales 
or otherwise contracting for commodities;
    (5) Brokers--each office conducting contract negotiations including 
on-the-ground representatives negotiating contracts for commodities;
    (6) Processors--each location at which commodities are purchased, 
sold or contracted to be purchased or sold;
    (7) Cooperatives--each operation away from the main office that has 
responsibility to account for proceeds received from sales of 
commodities; or
    (8) Seasonal/part-time operations--any facility with on-the-ground 
representatives making purchases, sales, or otherwise contracting for 
commodities.
    (hh) Good faith means honesty in fact and the observance of 
reasonable commercial standards of fair dealing in the trade. The 
principle of good faith requires that a party to a transaction disclose 
in writing the existence of any collateral fees and expenses to all 
other parties to the transaction where the collateral fees and expenses 
affect a material term of the agreement.
    (ii) Grocery wholesaler is a dealer primarily engaged in the full-
line wholesale distribution and resale of grocery and related nonfood 
items (such as perishable agricultural commodities, dry groceries, 
general merchandise, meat, poultry, and seafood, and health and beauty 
care items) to retailers. This term does not include persons primarily 
engaged in the wholesale distribution and resale of perishable 
agricultural commodities rather than other grocery and related nonfood 
items. Specifically, for an entity to be considered a grocery 
wholesaler, 50 percent or more of its annual gross sales must be from 
the full-line distribution and resale of grocery and related nonfood 
items, and it cannot have

[[Page 260]]

more than 50 percent of its sales in perishable agricultural 
commodities. ``Full line'' means that an entity must be supplying the 
retailer with a wide range of products such as the grocery and related 
nonfood items specified.

(Sec. 1, 46 Stat. 531, as amended; 7 U.S.C. 499a et seq.)

[28 FR 7067, July 11, 1963, as amended at 37 FR 14561, July 21, 1972; 44 
FR 50575, Aug. 29, 1979; 47 FR 21234, May 18, 1982; 47 FR 47802, Oct. 
28, 1982; 49 FR 45739, Nov. 20, 1984; 61 FR 13386, Mar. 27, 1996; 62 FR 
15086, Mar. 31, 1997; 65 FR 24854, Apr. 28, 2000; 68 FR 23378, May 2, 
2003]

                                Licenses