[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]
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DEPARTMENT OF THE TREASURY
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.
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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.
SUPPLEMENTARY INFORMATION:
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.
Background
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
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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.
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\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.
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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\
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\2\ 61 FR 43627, August 23, 1996, FN 4.
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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
rules.
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\3\ For example, Revised Sec. 8-110(e)(1)
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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]
BILLING CODE 4810-39-P