[Federal Register Volume 66, Number 123 (Tuesday, June 26, 2001)]
[Rules and Regulations]
[Pages 33832-33833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-15985]



Fiscal Service

31 CFR Part 357

[Department of the Treasury Circular, Public Debt Series, No. 2-86]

Determination Regarding State Statutes Adopting Revised Article 9 
of the Uniform Commercial Code; Determination Regarding Rhode Island

AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.

ACTION: Determination of substantially identical state statute.


SUMMARY: A number of states have recently enacted laws adopting Revised 
Article 9 of the Uniform Commercial Code--Secured Transactions 
(``Revised Article 9''), which contains amendments to Revised Article 8 
of the Uniform Commercial Code--Investment Securities (``Revised 
Article 8''). Treasury is confirming that for states for which it has 
previously published a determination that their statutes were 
``substantially identical'' to the uniform version of Revised Article 8 
for purposes of interpreting the rules in 31 CFR Part 357, Subpart B 
(the ``TRADES regulations''), such determination is not affected by a 
State's adoption of amendments in Revised Article 9. Treasury has also 
reviewed Rhode Island's enactment of Revised Article 8 and has 
determined that it is ``substantially identical'' to the uniform 
version of Revised Article 8 for purposes of the TRADES regulations.

EFFECTIVE DATE: June 26, 2001.

ADDRESSES: See Supplementary Information section for electronic access.

FOR FURTHER INFORMATION CONTACT: Geraldine J. Porco-Hubenko, Attorney-
Advisor; Sandy Dyson, Attorney-Advisor; or Cynthia E. Reese, Deputy 
Chief Counsel; at (202) 691-3520.


Electronic Access

    Copies of this notice are available for downloading from the Bureau 
of the Public Debt home page at: http://www.publicdebt.treas.gov.


    On August 23, 1996, the Department of the Treasury (``we'') 
published a final rule to govern securities held in the commercial 
book-entry system, also referred to as the Treasury/Reserve Automated 
Debt Entry System (``TRADES''), 61 FR 43626. The regulations specify 
the jurisdiction whose law governs certain matters related to Treasury 
securities in the commercial book-entry system. Sections 357.10(c) and 
357.11(d) of the regulations provide that if the jurisdiction is a 
state that has not adopted Revised Article 8, then the applicable law 
is the law of that state as though Revised Article 8 had been adopted 
by that state. ``Revised Article 8'' is defined in the regulations as 
the Official Text adopted by the National Conference of Commissioners 
on Uniform State Laws and the American Law Institute.
    In the commentary to the final regulations, we stated that for the 

[[Page 33833]]

states that had by then adopted Revised Article 8, the versions enacted 
were ``substantially identical'' to the uniform (official) version for 
purposes of the rule. We also indicated in the commentary that as 
additional states adopted Revised Article 8, we would provide notice in 
the Federal Register as to whether the enactments were substantially 
identical to the uniform version so that the federal application of 
Revised Article 8 would no longer be in effect for those states. We 
adopted this approach in an attempt to provide certainty in application 
of the rule in response to public comments.
    We have subsequently published notices setting forth our 
determination concerning 22 additional states' enactment of Revised 
Article 8. See 62 FR 26, January 2, 1997; 62 FR 34010, June 18, 1997; 
62 FR 61912, November 20, 1997; 63 FR 20099, April 23, 1998; 63 FR 
35807, July 1, 1998; and 63 FR 50159, September 21, 1998. Thus, a total 
of 50 jurisdictions (including the District of Columbia and Puerto 
Rico, which are treated as states), have enacted statutes substantially 
identical to the uniform version of Revised Article 8.

Revised Article 9

    At least 42 states \1\ that were determined by Treasury to have 
statutes ``substantially identical'' to Revised Article 8 for purposes 
of the TRADES regulations, have now enacted Revised Article 9. Revised 
Article 9 includes conforming amendments to Article 8, and also amends 
provisions in Article 9 that were part of the conforming amendments to 
Revised Article 8. Revised Article 9 will become effective on July 1, 
2001, in the vast majority of states that have enacted it.

    \1\ The states are: Alabama, Alaska, Arizona, Arkansas, 
California, Colorado, Delaware, District of Columbia, Florida, 
Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, 
Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, 
Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, 
Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, 
Tennessee, Texas, Utah, Vermont, Virginia, Washington, West 
Virginia, and Wyoming.

    In promulgating the final TRADES regulations, we responded to a 
comment asking about the potential situation where a state, after 
having enacted Revised Article 8 and having it deemed by Treasury as 
``substantially identical'' to the uniform version, then amends its law 
in a manner that results in an unsatisfactory lack of uniformity. We 
stated that once Treasury has announced its determination with respect 
to a state's enactment of Revised Article 8, the market is entitled to 
rely on that decision. We further stated that in such an unlikely event 
as described, Treasury had the authority to take action that would 
result in Secs. 357.10(c) and 357.11(d) being reapplied, and would 
publish such action in the Federal Register. In this context, one 
specific comment was also received concerning the revision of Article 
9, which had begun at that time. The commenter noted that the revision 
process might lead to the result that a state could adopt provisions 
different than those in Revised Article 8. We stated: ``Treasury does 
not anticipate that such an event would result in the need to reapply 
Secs. 357.10(c) and 357.11(d). If that were necessary, Treasury would 
take the same action, after notice, as described herein'' [i.e., 
publish a notice in the Federal Register].'' \2\

    \2\ 61 FR 43627, August 23, 1996, FN 4.

    By this notice, we affirm Treasury's prior determinations that a 
state statute is ``substantially identical'' to the uniform version of 
Revised Article 8, even if that state subsequently enacts the 
provisions of the uniform version of Revised Article 9 (with conforming 
amendments) that amend the uniform version of Article 8 (with 
conforming amendments). After review of these provisions in Revised 
Article 9, we see no need to reapply Secs. 357.10(c) and 357.11(d) to 
any such state. Furthermore, consistent with the discussion above, we 
do not anticipate that a state's non-conforming amendments to other 
parts of Revised Article 9 would result in the need to reapply 
Secs. 357.10(c) and 357.11(d). The market may rely on this 
determination unless Treasury publishes a notice to the contrary in the 
Federal Register.
    We have identified several provisions in Revised Article 9 that may 
require technical or conforming changes to the TRADES regulations. \3\ 
We plan to issue a rule-making document in ``plain language'' format, 
in the near future. We will coordinate with the Government Sponsored 
Enterprises (GSEs) and other agencies having rules modeled on the 
TRADES rules, in an effort to maintain consistency among all these 

    \3\ For example, Revised Sec. 8-110(e)(1)

Rhode Island

    Rhode Island has recently enacted Article 8. We note that Rhode 
Island's enactment of Article 8 includes revisions made by Revised 
Article 9 (1998), which was also enacted. We have reviewed these 
changes, and consistent with the discussion above, conclude that the 
law enacted by Rhode Island is ``substantially identical'' to the 
uniform version of Revised Article 8 for purposes of the TRADES rules. 
Therefore, if either Sec. 357.10(b) or Sec. 357.11(b) directs a person 
to Rhode Island, the provisions of Secs. 357.10(c) and 357.11(d) of the 
TRADES rules are not applicable.

    Dated: June 20, 2001.
Van Zeck,
Commissioner of the Public Debt.
[FR Doc. 01-15985 Filed 6-25-01; 8:45 am]