[Federal Register Volume 63, Number 109 (Monday, June 8, 1998)]
[Proposed Rules]
[Pages 31130-31131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15112]
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Proposed Rules
Federal Register
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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.
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Federal Register / Vol. 63, No. 109 / Monday, June 8, 1998 / Proposed
Rules
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DEPARTMENT OF AGRICULTURE
Grain Inspection, Packers and Stockyards Administration
9 CFR Part 205
RIN 0580-AA63
Clear Title--Protection for Purchasers of Farm Products
AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.
ACTION: Proposed rule.
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SUMMARY: This document amends 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), to allow a continuation of an effective
financing statement to be filed without the signature of the debtor
provided State law authorizes such a filing. This proposal responds to
comments received when the regulations were previously amended by a
final rule published on April 1, 1997 (62 FR 15363) that brought the
regulations into conformity with statutory amendments found in Sections
662 and 663 of the Federal Agriculture Improvement and Reform Act of
1996.
DATES: Comments must be submitted on or before August 7, 1998.
ADDRESSES: To help ensure that comments are considered, send them to:
Economic/ Statistical Support, Packers and Stockyards Programs, Grain
Inspection, Packers and Stockyards Administration, STOP 3647, Room
3052, South Building, 1400 Independence Avenue SW, Washington, D.C.
20250-3647. Comments may also be sent via fax at (202) 690-1266 or via
e-mail at GG[email protected]. Please state that your comments refer to
the clear title regulations. Comments received may be inspected at the
above address during regular office hours, except holidays.
FOR FURTHER INFORMATION CONTACT: Gerald E. Grinnell, Director,
Economic/Statistical Support, Grain Inspection, Packers and Stockyards
Administration, (202) 720-7455. Kimberly D. Hart, Esquire, Trade
Practices Division, Office of the General Counsel, (202) 720-8160.
SUPPLEMENTARY INFORMATION:
Background
Section 1324 of the Food Security Act of 1985 (7 U.S.C. 1631) (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 that 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.''
Final regulations were published on August 18, 1986 (51 FR 29450).
The Secretary's authority and responsibility under the Act is
limited to certification of the State central filing systems and to
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.
Prior to the 1996 amendment of the Act, lenders could not file
effective financing statements or amendments to those statements
electronically with State certified central filing systems because such
statements were required to bear the signature of the debtor, which
could not be transmitted electronically. Commercial lenders also
expressed concern and confusion due to the vagueness of the provisions
for effective financing and continuation statements contained in the
Act and the inconsistency between the Act and the Uniform Commercial
Code.
Section 662 of the Federal Agriculture Improvement and Reform Act
of 1996 (Pub. L. 104-127) (hereinafter the ``FAIR Act'') amended the
Act to allow lenders to file ``effective financing statements'' by
electronic transmission without the necessity of obtaining the
signature of the debtor provided State law authorizes such a filing.
The Department published interim and final rules in the Federal
Register to implement the FAIR Act amendments (61 FR 54727 and 62 FR
15363, respectively). The rule allows electronic filing of amendments
to effective financing statements without the signature of the debtor.
Comments received in response to the rule encouraged the Department to
further amend the regulations to allow the filing of paper continuation
statements without the signature of the debtor as well. Section
205.209(d) of the regulations (9 CFR 205.209(d)) currently provides
that continuation statements are to be treated in the same manner as
amendments to effective financing statements. Therefore, the rule
implementing the 1996 FAIR Act amendments allows continuation
statements to be filed electronically, without the signature of the
debtor as well. However, because the purpose of that rule was to bring
the regulations into conformity with the 1996 amendment (which
addressed electronic filings), the final rule did not address the
commentors' request to eliminate the signature requirement for paper
continuation statements.
This proposed rule would remove the requirement from the
regulations that a filing of a continuation to an effective financing
statement bear the signature of the debtor. Section 1324 of the Food
Security Act of 1985 does not require that continuation statements be
signed. The proposed rule would make it easier for lenders to file
continuation statements because lenders would no longer be required to
obtain the signature of the debtor. The proposed rule would also
simplify the filing of lien notices by bringing the regulations for
central filing systems into conformity with Article 9 of the Uniform
Commercial Code, which covers non-farm products.
Executive Order 12866
This rule has been determined to be nonsignificant for the purpose
of Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget.
Executive Order 12988
This proposal has been reviewed under Executive Order 12988, Civil
Justice Reform. This action is not
[[Page 31131]]
intended to have retroactive effect. This rule would not preempt any
State or local laws, regulations, or policies, unless they present an
irreconcilable conflict with this rule. There are no administrative
procedures which must be exhausted prior to any judicial challenge to
the provisions of this rule.
Regulatory Flexibility Act and Information Collection
The Administrator, Grain Inspection, Packers and Stockyards
Administration (GIPSA) has determined that this action will not have a
significant economic impact on a substantial number of small entities,
as defined in the Regulatory Flexibility Act (5 U.S.C. 601). Few small
entities would be affected. The proposed rule would remove the
requirement from the regulations that a filing of a continuation to an
effective financing statement contain the signature of the debtor. The
proposed rule would make it easier for lenders, few of which are small
entities, to file continuation statements because lenders would no
longer be required to obtain the signature of the debtor. Lenders would
have the option of filing effective financing continuation statements
electronically or in paper form, either without the signature of the
debtor. Furthermore, the proposed rule would also simplify the filing
of lien notices by bringing the regulations for central filing systems
into conformity with Article 9 of the Uniform Commercial Code, which
covers non-farm products. The Administrator has determined that this
rule will not have a significant economic impact on a substantial
number of small entities.
In compliance with the Paperwork Reduction Act (44 U.S.C. 35), the
information collection and recordkeeping requirements for 9 CFR part
205 have previously been 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.
For reasons set out in the preamble, the Grain Inspection, Packers
and Stockyards Administration proposes to amend 9 CFR part 205 as set
forth below.
PART 205--CLEAR TITLE--PROTECTION FOR PURCHASERS OF FARM PRODUCTS
1. The authority citation for Part 205 is revised to read as
follows:
Authority: 7 U.S.C. 1631 and 7 CFR 2.22, 2.81.
2. Section 205.209 is amended by revising paragraph (d) to read as
follows:
Sec. 205.209 Amendment or continuation of EFS.
* * * * *
(d) An effective financing statement remains effective for a period
of 5 years from the date of filing and may be continued in increments
of 5-year periods beyond the initial 5-year filing period by refiling
an effective financing statement or by filing a continuation statement
within 6 months before expiration of the effective financing statement.
A continuation statement may be filed electronically or as a paper
document, and need not contain the signature of the debtor.
Dated: June 1, 1998.
James R. Baker,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. 98-15112 Filed 6-5-98; 8:45 am]
BILLING CODE 3410-EN-P