[Federal Register Volume 62, Number 62 (Tuesday, April 1, 1997)]
[Rules and Regulations]
[Pages 15363-15364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8093]
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DEPARTMENT OF AGRICULTURE
Grain Inspection, Packers and Stockyards Administration
9 CFR Part 205
RIN 0580-AA50
Clear Title--Protection for Purchasers of Farms Products
AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.
ACTION: Final rule.
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SUMMARY: This document makes final an interim rule amending regulations
relating to the establishment and management of statewide central
filing systems as they pertain specifically to the filing of
``effective financing statements'' for ``farm products'' as defined in
section 1324 of the Food Security Act of 1985 (7 U.S.C. 1631) by
allowing electronic filing of effective financing statements without
the prior signature of the debtor provided State law authorizes such a
filing. The interim rule brought the regulations into conformity with
Sections 662 and 663 of the Federal Agriculture Improvement and Reform
Act of 1996.
EFFECTIVE DATE: October 22, 1996.
FOR FURTHER INFORMATION CONTACT: Gerald E. Grinnell, Industry Analysis
Staff, Packers and Stockyards Programs, Grain Inspection, Packers and
Stockyards Administration, STOP 3647, Room 3052, South Building, 1400
Independence Avenue S.W., Washington, D.C. 20250-3647, (202) 720-7455.
Kimberly D. Hart, Esquire, Trade Practices Division, Office of the
General Counsel, STOP 1413, Room 2430, South Building, 1400
Independence Avenue S.W., Washington, D.C. 20250-1413, (202) 720-8160.
SUPPLEMENTARY INFORMATION:
Background
An interim rule was published in the Federal Register on October
22, 1996 (61 FR 54727) which allows electronic filing of effective
financing statements without the signature of the debtor provided State
law authorizes such a filing. The interim rules also allows States to
distribute the master list by electronic means if requested by
registrants.
Section 1324 of the Food Security Act of 1985 (Pub. L. 99-198) (7
U.S.C. 1631) (hereinafter ``the Act'') provides that certain persons
may be subject to a security interest in a farm product created by the
seller under certain circumstances in which a lender files an
``effective financing statement'' with the ``system operator'' in a
State which has a certified central filing system as defined by the
Act. The Act requires the Secretary of Agriculture to prescribe
regulations ``to aid States in the implementation and management of a
central filing system.'' The Grain Inspection, Packers and Stockyards
Administration was delegated with the Secretary's responsibilities
under the Act. Those regulations (9 CFR 205) were published on August
18, 1986 (51 FR 29450).
The Secretary's authority and responsibility under the Act is
limited to certification and prescribing regulations to aid in the
implementation and management of certified central filing systems. The
Act does not give the Secretary the authority or responsibility for
such matters as direct notification by secured parties, sales of and
payment for products, procedures for payment or procedures for personal
liability protection. Those matters are governed by State law. The Act
does not contain any enforcement mechanism for noncompliance with the
Act or its regulations.
Section 662 of the Federal Agriculture Improvement and Reform Act
of 1996 (hereinafter ``the Statute'') amended the Act and section 663
of the Statute provided that the amendment become effective upon
enactment. The Act was amended because of concerns of States with
certified central filing systems who desired to implement electronic
filing procedures but could not because of the Act's requirement that
the debtor must sign the effective financing statement. Commercial
lenders also expressed concern and confusion due to the vagueness of
the continuation provisions for effective financing statements included
in the Act and its inconsistency with Article IX of the Uniform
Commercial Code.
Prior to the Act's amendment by the Statute, lenders could not
electronically file effective financing statements or amendments to the
effective financing statements with State certified central filing
systems because such statements were required to contain the signature
of the debtor which could not be transmitted electronically. The
amendment contained in the Statute was intended to remedy these
concerns.
Section 662 of the Statute amended the Act. Section 663 of the
Statute provided that the amendment become effective upon enactment. It
is therefore necessary to amend the regulations to conform to the
amendment to the Act.
Since prior notice and other public procedures with respect to the
interim rule were impracticable and contrary to the public interest
under these conditions, and because the rule relieves a regulatory
restriction, there was good cause under 5 U.S.C. 553 to make it
effective upon publication.
Comments Received
Two comments were received in response to the interim rule, one
from a national bankers association and the other from a State bankers
association. The comments support removal of the signature requirement
for effective financing statements and encourage the Department to
remove the signature requirement for paper-based continuation
statements. Section 205.209(d) of the regulations currently
[[Page 15364]]
provides that continuation statements are to be treated in the same
manner as amendments to effective financing statements. The interim
rule amended section 205.209(c) to allow the electronic filing of
amendments to effective financing statements without the signature of
the debtor. Pursuant to section 205.209(d), this change applies to
electronically filed continuation statements as well. Because the
purpose of this rulemaking is to implement the amendments to the Act,
it does not address the commentors' request to eliminate the signature
requirement for the paper-based continuation statements. We plan to
address this request in a separate rulemaking.
After review of the published interim rule and the comments
received, we have determined that the interim rule as published at 61
FR 54727 will be adopted as the final rule.
Compliance With Regulatory Requirements
As set forth in the interim rule published at 61 FR 54727, this
rulemaking was reviewed under and is issued in conformance with
Executive Order 12866, Civil Justice Reform (formerly Executive Order
12778, now Executive Order 12988), and Regulatory Flexibility Act and
Information Collection requirements. The previously approved
information collection and recordkeeping requirements for 9 CFR Part
205 have been previously approved by the Office of Management and
Budget under control number 0580-0016.
List of Subjects in 9 CFR Part 205
Agriculture, Central filing system.
PART 205--CLEAR TITLE--PROTECTION FOR PURCHASERS OF FARM PRODUCTS
Accordingly, the interim rule amending 9 CFR Part 205 which was
published at 61 FR 54727 on October 22, 1996, is adopted as a final
rule without change.
Dated: March 28, 1997.
James R. Baker,
Administrator, Grain Inspection,
Packers and Stockyards Administration.
[FR Doc. 97-8093 Filed 3-31-97; 8:45 am]
BILLING CODE 3410-EN-P