USDA Proposes EDI Rules

WASHINGTON - Jan 27/06 - SNS -- The USDA's Agricultural Marketing Service (AMS) has issued an advance notice of proposed rulemaking in response to concerns raised by the industry regarding electronic invoicing. The concern is that sellers may lose their status as trust creditors when using electronic data interchange or electronic invoicing.

The Perishable Agricultural Commodities Act (PACA) imposes a statutory trust on certain assets, including inventory and receivables, of persons or organizations subject to the PACA which have not paid for perishable agricultural commodities. The PACA provides that a creditor may preserve its rights under the trust by including specified language on billing or invoicing statements.

In 1997, the PACA regulations were amended to state that electronic transmissions are considered 'ordinary and usual billing and invoicing statements.' While preserving PACA trust rights on paper invoices is fairly straight forward, due to the nature of technology, preserving trust rights using electronic invoicing is not.

AMS will solicit comments on the preservation of PACA trust rights in connection with electronic invoicing so that USDA will be able to provide greater direction to the industry regarding how PACA trust rights can be preserved when invoicing electronically. The advance notice of proposed rulemaking will be published in the Federal Register on Jan. 30, 2006, with comments due March 16, 2006.