Federal Register / Vol. 62, No. 44 / Thursday, March 6, 1997 / Proposed Rules 10249

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Part 600

[Docket No. 970213030–7030–01; I.D.

020597B]

RIN: 0648–AJ77

Central Title and Lien Registry for

Limited Access Permits

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Advance notice of proposed

rulemaking; request for comments.

SUMMARY: NMFS requests comments

about a central registry (Registry) for

limited access permits (LAPs). The

Magnuson-Stevens Fishery

Conservation and Management Act

(Magnuson-Stevens Act) requires us to

establish the Registry. The Registry will

be the exclusive means of perfecting

title to LAPs. It will also be the

exclusive means of perfecting security

interests in, assignments of, and liens

and other encumbrances (collectively

Liens) against LAPs.

We want the public’s guidance before

proposing regulations.

DATES: Comments must be submitted by

April 7, 1997.

ADDRESSES: Send comments to: Michael

L. Grable, Chief, Financial Services

Division, NMFS, 1315 East West

Highway, Silver Spring, MD 20910.

FOR FURTHER INFORMATION CONTACT:

Michael L. Grable at (301) 713–2390.

SUPPLEMENTARY INFORMATION:

Conservation and management

sometimes requires limiting access to

Federally-managed fisheries. Only

parties with LAPs can fish in these

fisheries. Some LAPs are transferable

independently of fishing vessels

(Transferable). Others are not.

The Sustainable Fisheries Act of 1996

(SFA) is Public Law 104–297. The SFA

amended the Magnuson-Stevens Act.

One SFA provision requires NMFS to

establish the Registry:

* * * the Secretary [of Commerce] shall

establish an exclusive central registry system

(which may be administered on a regional

basis) for limited access system permits

established under section 303(b)(6) or other

Federal law, including individual fishing

quotas, which shall provide for the

registration of title to, and interests in, such

permits * * *.

Section 110(d) of the SFA makes the

Registry the legally exclusive means of

perfecting LAP titles and Liens (except

Federal tax Liens).

Before establishing the Registry,

NMFS wants the public’s guidance. We

welcome comments from anyone, but

particularly want guidance from:

1. Fisheries parties who will buy and

sell LAPs,

2. Creditors and other parties who

will file Liens for registration against

LAPs, and

3. The Regional Fishery Management

Councils.

We welcome comments about any

Registry aspect, but particularly want

guidance about the following:

1. Who should administer the

Registry?

The SFA allows us either to

administer the Registry or contract for

its administration. We are considering

the former alternative because:

a. The Registry’s perpetual nature

requires continuity,

b. Similar functions often appear to be

governmentally administered, and

c. Many Registry title aspects involve

LAP administration functions we

already perform.

Should we administer the Registry, or

should we contract for its

administration? Which is the better

alternative, and why?

2. Where should we locate the

Registry?

Almost 90 per cent of all Transferable

LAPs involve Alaska’s fisheries. NMFS’

Regional Office in Juneau, AK,

administers these through its Restricted

Access Management (RAM) Division.

If we administer the Registry, Juneau,

AK, could be the most efficient and

effective Registry location and the RAM

Division the Registry’s most suitable

manager. A comparable example of a

centralized national registry is the U.S.

Coast Guard’s National Vessel

Documentation Center (NVDC) in

Falling Waters, WV.

A centralized Registry could consider

ways to facilitate filings from all parts

of the country. One alternative could be

similar to a NVDC approach that allows

facsimile filings contingent upon

receiving original documentation within

10 calendar days. If we adopted this

approach, a facsimile’s date and time

could be the date and time of perfection

if the original documentation were

timely received. Otherwise, the date and

time the Registry received the original

documentation would be the date and

time of perfection.

The centralization alternative

includes only the Registry portion of

LAP functions. Regular LAP

administrative functions (issuance,

renewal, transfer approval, etc.) would

remain in their present regional

locations.

3. Should the Registry register LAPs

that are not Transferable?

About 60 per cent of all LAPs are

Transferable. They can be bought and

sold. They have market value. They can

be pledged as collateral.

The other 40 per cent are not

Transferable. They cannot be

independently bought and sold. They

have no independent market value.

They are not useful as collateral. Most

of them generally follow the titles of the

fishing vessels to which they relate.

They have no commercial significance

apart from those vessels.

Although the SFA does not limit

registration to Transferable LAPs, we

question whether there is a practical

reason to register LAPs that are not

Transferable. The Registry’s purpose is

perfecting title to, and Liens against,

LAPs. This benefits LAP buyers, sellers,

lenders, and other lienholders. LAPs

that are not Transferable do not

separately involve any of these parties.

4. Should initial title registration be

voluntary or mandatory for all

Transferable LAPs?

In the first alternative, registration

would be voluntary for all Transferable

LAPs, except those to which title

transfers, or against which Liens, were

filed for registration. Registration would

be mandatory for the excepted LAPs.

The Registry would, without LAP

holder requests, register these LAPs and

bill LAP holders for the registration fees.

In the second alternative, registration

of all Transferable LAPS would be

mandatory. This might produce a more

stable and dependable Registry that

affords all LAP holders, buyers, lenders,

and other lienholders greater security

and assurance. Potential objections to

mandatory registration, however,

include:

a. Those planning neither to sell nor

pledge their LAPs might object to

mandatory registration’s time and cost,

b. Mandatory registration could be

burdensome for seasonal LAPs, and

c. Registering all LAPs might cause

unnecessary Government work.

Regular LAP administration records

disclose the authorized holders of all

LAPs. We could automatically register

title in the names of the authorized

holders and charge a moderate fee for it

(the SFA requires a fee). This would

minimize the time and cost of

mandatory registration. The alternative

in question No. 5 might minimize the

seasonal LAP problem.

5. How should the Registry treat

seasonal LAPs that merely allocate

periodic catch quantities for continuous

LAPs?

The Pacific halibut and sablefish

fishery, for example, has two types of

LAPs. The first type is Quota Share

(Access) permits. These are continuous
10250 Federal Register / Vol. 62, No. 44 / Thursday, March 6, 1997 / Proposed Rules

LAPs allowing access to the fishery. The

second type is Individual Fishing Quota

(Allocation) permits. These are seasonal

LAPs that annually allocate the amount

of fish each Access permit holder may

catch that season. Allocation permit

holders may transfer only 10 per cent of

allocated catch quantity.

Separately including this fishery’s

Allocation permits in the Registry

would be burdensome and complicated

for everyone. Excluding Allocation

permits could compromise minor

commercial interests in the Allocation

permit’s limited transferability, but the

time and expense of doing otherwise

might not be worth the limited benefit.

One alternative we are considering

would be for initial title registration of

this fishery’s Access permits (and

payment of the registration fee) to

include automatic registration of all

subsequent Allocation permits (in the

name of the LAP title holders of record

and without payment of additional

registration fees). This would prevent

Access permit holders from having each

year to register their seasonal Allocation

permits and pay annual registration

fees. Under this alternative, Liens

against the Access permits would also

encumber the corresponding Allocation

permits.

6. How should we determine LAP

‘‘value’’?

The SFA limits Registry fees to

amounts not exceeding 0.5 per cent of

LAP ‘‘value.’’ Fees may be less, but not

more, than this. We must determine the

‘‘value’’ of all LAPs included in the

Registry.

Some LAPs have commonly known

market values. We have market-value

ranges for other LAPs because buyers

and sellers have disclosed purchase

prices to us. There may, however, be

little or no market-value data for some

LAPs.

Valuation problems should mostly be

limited to initial title registration. The

registration of subsequent title transfers

should involve purchase prices or other

consideration that we can objectively

value. Where known, we could apply

market values to LAPs transferred by

gift, trade, or inheritance.

If initial registration fees are a modest

flat fee for all, the valuation problem

might be mostly limited to determining

that the fee does not exceed 0.5 per cent

of the ‘‘value’’ of LAPs for which little

or no market data exists. We are unsure

how to establish the ‘‘value’’ of these

LAPs.

7. What fees should the Registry

charge?

The SFA requires fees for initial title

registration (Initial Fee) and subsequent

title-transfer registration (Transfer Fee).

It does not authorize fees for registering

Liens (or their renewal, release,

assumption, assignment, etc.) or for any

other Registry service.

Presumably, Registry fees should

offset Registry expenses.

Unless fees other than the specifically

authorized ones are possible, title and

title-transfer registrants will have to bear

the cost of all Registry services.

Although it might be more equitable if

the Registry could also charge the cost

of Lien or other services to those seeking

them, the SFA does not authorize this.

How should we determine the Initial

Fee? Should it be a modest flat fee or 0.5

per cent of market value, whichever is

less? If so, what should control the flat

fee’s amount? Should it, instead, be a

specified percentage (not exceeding

0.5%) of market value? If so, what

should control the percentage’s amount?

Should we publish a schedule of

average market values representative of

various LAPs and base the percentage

on those values?

Under the mandatory title-registration

alternative, the Initial Fee could be

moderate. There are about 23,000

Transferable LAPs, if Pacific halibut and

sablefish Allocation permits are

included. If not, there are about 14,500.

Under the voluntary title-registration

alternative, however, the Initial Fee may

have to be substantially higher.

How should we determine the

Transfer fee, and what should control its

amount? Should it be a specified

percentage (within the statutory

maximum) of LAP purchase price? If so,

what should control the percentage’s

amount? This alternative could include

provisions to determine market value

for LAP gifts, inheritances, trades, and

other title transfers involving

considerations other than market value.

Recent title-transfer activity for

Transferable LAPs indicates about 2,300

title transfers annually.

8. How should we respond when LAP

holders required to register LAP titles

and pay registration fees do not do so?

This would apply to all LAP holders

included in a mandatory Registry. In a

voluntary Registry, it would apply only

to those who sell or pledge their LAPs

or whose LAPs are otherwise subjected

to Liens. The Registry must be able to

compel appropriate performance. How

should it do this? What should the

penalties be?

9. What Lien registrations should the

Registry allow?

One alternative we are considering

would limit registerable Liens to:

a. Secured interests in LAPs to which

the LAPs’ holders have, by their

signatures, consented,

b. Liens authorized or constituted by

the judgments or orders of duly

constituted courts of competent

jurisdiction, and

c. Other Liens authorized by State or

Federal statute.

Should the Registry allow other types

of Liens to be registered? Why? Could

this create problems or be burdensome?

10. Should the Registry attempt to

validate any title or Lien?

One alternative we are considering is

to accept the validity of title or Lien

filings that meet the Registry’s minimal

filing requirements. Under this

alternative, the Registry would not

attempt to determine the completeness,

accuracy, or validity of any documents

filed.

11. Should the Registry do anything to

help prevent unauthorized signatures?

One alternative might be requiring

signatures to be notarized. Would this

be useful? Is there a better approach?

12. Should the Registry require using

a standard form for filing Liens for

registration?

One alternative we are considering is

to require using a form fulfilling the

Registry’s minimum filing requirements.

This seems to be the practice under the

Uniform Commercial Code (UCC). For

consensual Liens, the Registry could

require both the lienholder and the LAP

holder to sign this form. Nonconsensual

Liens would not require the LAP

holder’s signature, but could require

specifying the nature of, and authority

for, the nonconsensual Liens. All forms

could identify: the name and address of

the LAP holder, the name and address

of the lienholder, the LAP against which

the Lien is to be registered, and the

effective date of the Lien.

Would the use of a standard form

expedite registration or make it more

reliable? If so, what should the form

require?

13. Should Lien filing forms be

accompanied by the Lien

documentation upon which the filings

are based?

If the Registry were to register all

Liens that met its minimal filing

requirements, should Lien

documentation accompany Lien filing

forms? If so, why, and what should the

Registry do with this documentation?

14. Should Lien registrations require

periodic renewal?

One alternative we are considering is

for Lien registrations to expire if

lienholders do not renew them within a

certain time. This seems to be the UCC

practice. If we should adopt this

alternative, what should the periodic

renewal period be?

15. How should the Registry handle

registering Lien releases?
Federal Register / Vol. 62, No. 44 / Thursday, March 6, 1997 / Proposed Rules 10251

The UCC practice seems to involve

release forms signed by lienholders.

16. What Lien data should the

Registry register, and how long should

the Registry maintain them?

Should the Registry register only

lienholders’ names and addresses?

Would registering other Lien

characteristics (e.g., nature, amount, and

maturity) be useful? Should the Registry

perpetually maintain all Lien data or

periodically purge all data about

terminated Liens?

17. Should the Registry require using

a specific form for filing LAP title

transfers for registration and, if so, what

should it include?

We are considering this alternative,

because it might expedite title-transfer

registration or make it more reliable.

For voluntary transfers, the form

could be signed by the LAP seller and

purchaser and could include: the

identity of the LAP whose title seller

transfers to purchaser, the date seller

transfers title to purchaser, and the

accompanying instrument evidencing

seller’s transfer of title to purchaser.

For involuntary transfers, the form

could be signed by the party to whom

title involuntarily transfers and include:

the identity of the LAP interest whose

title involuntarily transfers, the date

title involuntarily transfers, and the

nature of the accompanying instrument

evidencing involuntary title transfer.

18. Should any evidence of title

transfer the Registry might require

contain original signatures or would a

copy of the original evidence be

sufficient?

19. Should the Registry perpetually

maintain any evidence of title transfer it

might require?

20. Should the Registry make

available for public inspection any

evidence of title transfer it might

maintain and, if so, how and under

what circumstances?

21. Should the Registry provide title

abstracts (or any other written record of

LAP title and lien registration)?

The statute does not authorize the

Registry to charge fees for this purpose.

If the Registry provided this, its cost

might have to be recovered primarily

from fees that the statute authorizes the

Registry to collect for title transfers.

What would the effect be if the Registry

did not provide this? If it did, should it

limit provision to certain users for

certain purposes? What data should this

include?

22. How should the Registry best

provide for nonjudicial foreclosure

(NJF)?

The SFA requires the Registry to

provide:

* * * a mechanism for filing notice of a

nonjudicial foreclosure * * * by which the

holder of a senior security interest acquires

or conveys ownership of a permit * * *

[and] the interests of the holders of junior

security interests are released when the

permit is transferred * * *.

How should the Registry best comply?

One alternative we are considering is

adapting the UCC’s NJF procedure.

Under this alternative, we would

register an NJF title transfer only if one

of the following two conditions apply:

a. The LAP holder and all registered

lienholders junior (Junior Lienholders)

to the senior security interest being

foreclosed nonjudicially (NJF Security)

first notify the Registry in writing that

they consent to the recordation of the

NJF title transfer; or

b. Absent such consent:

i. The holder of the NJF Security (NJF

Lienholder) certifies to the Registry that

the NJF Lienholder:

A. Is contractually entitled to NJF,

B. Has, at least 21 calendar days

before such certification, notified the

LAP Holder and all Junior Lienholders

and given the LAP Holder and all Junior

Lienholders the opportunity to object in

writing to the Registry about the NJF

title transfer; and

ii. The Registry has received no such

objection.

If either of these two conditions

apply, the Registry would register NJF

title transfer to the NJF Lienholder.

If neither of these two conditions

applied, the Registry would not register

NJF title transfer.

All NJF title transfers would release

only such registered Liens as are junior

to the NJF Security. The Registry would

not release any registered Liens senior

to the NJF security, and the title

transferred by NJF would continue

subject to the unreleased Liens.

We would not adjudicate conflicting

interests. Conflicting interests would

have either to be settled by the consent

of all relevant parties or by adjudication

in a duly constituted court of competent

jurisdiction.

Are there better ways to implement

the NJF provisions? What are they and

why are they better than the alternative

suggested here?

23. If we adopt the alternative

suggested in question No. 22, what

certification requirements should the

Registry impose?

One alternative we are considering is

a certification, pursuant to 28 U.S.C.

1746, that:

a. The NJF Lienholder gave NJF title

transfer notice, at least 21 calendar days

before such certification, to the LAP

holder and all Junior Lienholders,

b. Such notice was in writing and

delivered to the LAP holder and each

Junior Lienholder both at the address of

record maintained at the Registry for the

LAP Holder and each Junior Lienholder

and at such other address as the NJF

Lienholder may have had cause to have

known was a better address,

c. Such notice contained the notice

language required by the Registry’s

regulations,

d. The NJF Lienholder is contractually

entitled to NJF, and

e. Such certification is made in good

faith and without any design to hinder,

delay, or defraud the LAP holder or any

present or future lienholder or creditor

of the LAP holder.

24. When NJF title transfer is based on

consent, should the Registry require

using a standard filing form?

25. When NJF title transfer is based on

certification, should the Registry require

using a standard form of certification?

26. Under what circumstances should

the Registry register title transfer by

judicial foreclosure, as a result of

judgment enforcement, or otherwise by

involuntary transfer?

The SFA provides that the Registry

shall provide:

* * *procedures for changes in the

registration of title to such permits upon the

occurrence of involuntary transfers,

judicial* * * foreclosure of interests,

enforcement of judgments thereon, and

related matters deemed appropriate* * *.

The Registry would register

judgments as Liens against LAP title.

One alternative we are considering,

however, is that the Registry would not

register LAP title transfer by judicial

foreclosure (or as a result of judgment

enforcement or other involuntary

transfer) unless the party judicially

foreclosing (or enforcing a judgment or

causing an involuntary transfer)

presented to the Registry a bill of sale

(or other instrument causing title

transfer) issued pursuant to, or

confirmed by, the order of a duly

constituted court of competent

jurisdiction.

27. How best should the Registry

provide public access to Registry data,

and what Registry data should be

public?

We are considering putting Registry

data on the Internet. Are there

additional or better ways of providing

public access to Registry data?

We are considering making the

following data publicly available

a. LAP fishery;

b. LAP nature;

c. LAP holder’s name and address (tax

identification number and other

protected or confidential data would be

excluded);

d. Chronological listing of all LAP

Lien data (including names and
10252 Federal Register / Vol. 62, No. 44 / Thursday, March 6, 1997 / Proposed Rules

addresses of all lienholders and

recordation dates for: initial recordation,

renewal, expiration, release,

assumptions, assignments, etc.); and

e. Complete chain of post-Registry

LAP title, including the name and

address of each party to whom LAP title

has been registered and the date of each

such title registration.

28. How should the Registry best

provide for the perfection of preRegistry Liens?

The SFA provides that:

Security interests on * * * [LAPs] that are

effective and perfected by otherwise

applicable law on the date of the final

regulations implementing * * * [the

Registry] shall remain effective and perfected

if, within 120 days after such date, the

secured party submits evidence satisfactory

to * * * [the Registry] and in compliance

with such regulations of the perfection of the

security.

The UCC is (in UCC States) the only

‘‘otherwise applicable law’’ known to us

under which pre-Registry Liens against

LAPs could have been ‘‘perfected.’’

Should we give priority to Liens

perfected under the UCC in strict

chronological precedence regardless of

the UCC jurisdiction involved? If so,

what evidence of UCC perfection and its

chronological precedence should we

require?

Are there any other ‘‘otherwise

applicable laws’’ that we should

consider? If so, how would they relate

to perfection under the UCC?

What should the regulations require?

Before the SFA, we had informally

allowed lienholders to register with the

RAM Division their Liens against Alaska

LAPs. These informal filings are not

‘‘perfected by otherwise applicable law’’

and we cannot consider them in

determining pre-Registry Lien priorities.

We welcome all comments on any

other Registry aspects.

This advance notice of proposed

rulemaking has been determined to be

not significant for purposes of E.O.

12866.

Dated: February 28, 1997.

Nancy Foster,

Deputy Assistant Administrator for Fisheries,

National Marine Fisheries Service.

[FR Doc. 97–5540 Filed 3–5–97; 8:45 am]

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