PROPOSED RULEMAKING
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[52 PA. CODE CHS. 1 AND 74]
[L-970122]
Perfection of Security Interests in Intangible Transition Property
[27 Pa.B. 2134] The Pennsylvania Public Utility Commission (Commission) on April 10, 1997, adopted a proposed rulemaking to establish processes necessary for the perfection of security interests in intangible transition property required by 66 Pa.C.S. § 2812(d) (relating to approval of transition bonds). These proposed regulations are necessary to guarantee investors that they will have first priority in the money being collected to pay off any security bonds issued under 66 Pa.C.S. § 2812(d). These bonds may be necessary to help electric utilities manage the transition to electric competition in this Commonwealth. The bonds would help retire the stranded costs a utility faces. Stranded costs represent the expenses a utility incurred to provide electricity before competition, which expenses may not be recovered now that competition is going to be implemented in this Commonwealth.
Executive Summary
At its public meeting of April 10, 1997, the Commission adopted an order establishing proposed ministerial requirements for the perfection of security interests in intangible transition property pursuant to 66 Pa.C.S. § 2812(d) of the Electric Generation Customer Choice Act of 1996 (act). Final regulations are necessary to facilitate the issuance of the transition bonds allowed under 66 Pa.C.S. § 2812.
A public comment period of 20 days will be provided for good cause under 45 P. S. § 1204(1)(iii). This is being done for several reasons. First, regulations should be in place, near the time the Commission takes action on a qualified rate order under 66 Pa.C.S. § 2812, so that transition bonds can be issued. Second, final regulations should be in place so that petitioners can avail themselves of the review options provided for in the act without adverse consequences on plans for the issuance of transition bonds. Finally, the absence of these ministerial regulations, which only establish agency process or procedure for securing perfection, might delay the issuance of transition bonds. The resulting loss of marketing opportunities and higher costs might be contrary to those reasonably intended by the act.
The Commission contacts are Joseph K. Witmer, Assistant Counsel, Law Bureau (717) 787-3663 and Shirley M. Leming, Regulatory Coordinator, Law Bureau (717) 772-4597.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 21, 1997, the Commission submitted a copy of these proposed regulations to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Consumer Affairs and the Senate Committee on Consumer Protection and Professional Licensure. In addition to submitting the proposed regulations, the Commission has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Commission in compliance with Executive Order 1996-1. A copy of this material is available to the public upon request.
If the Legislative Committees have objection to any portion of the proposed regulations, they will notify the Commission within 20 days of the close of the public comment period. If IRRC has objections to any portion of the proposed regulations, it will notify the Commission within 30 days of the close of the public comment period. The notification shall specify the regulatory review criteria which have not been met by that portion. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the regulations, by the Commission, the General Assembly and the Governor of objections raised.
Public meeting
held April 10, 1997Commissioners Present: John M. Quain, Chairperson; Lisa Crutchfield, Vice-Chairperson; John Hanger; David W. Rolka; and Robert K. Bloom
Proposed Rulemaking Order (Corrected) By the Commission:
Before the Commission for disposition today is a proposed rulemaking required under 66 Pa.C.S. § 2812(d) of the Electricity Generation Customer Choice and Competition Act.
Background On December 3, 1996, Governor Tom Ridge signed into law the Electricity Generation Customer Choice and Competition Act (act). The act revised the Public Utility Code, 66 Pa.C.S. § 101 et seq., by, inter alia, adding Chapter 28 (relating to restructuring of the electric utility industry).
The purpose of the act is to provide for an orderly transition of the Pennsylvania electric industry from a vertically integrated monopoly to a structure which would support the development of a competitive retail electric generation market while retaining a natural monopoly in the transmission and distribution markets. The ultimate goal is to permit all Pennsylvania retail electricity customers to have direct access to a competitive generation market while simultaneously enjoying the continued reliability and safety of existing transmission and distribution services.
One component of the transition to a competitive generation market involves the issuance of Qualified Rate Orders (QROs) to facilitate the recovery or financing of certain qualified transition expenses of an electric utility or assignee as part of the restructuring contemplated under the act. 66 Pa.C.S. § 2812(a).
QROs may issue upon application of an electric utility either concurrently with, prior to, during or following the filing of an electric utility's restructuring plan and, in certain instances, an electric utility may also seek expedited review of a QRO application. 66 Pa.C.S. §§ 2812(a)(2)(ii); 2812(b).
The general requirements governing the QRO applications are set forth in the act. Each application for a QRO shall contain a complete accounting of the utility's transition or stranded costs, detailed information regarding the utility's proposal for the sale of intangible transition property or the issuance of transition bonds and information regarding the electric utility's planned use of the proceeds of the sale or issuance. 66 Pa.C.S. § 2812(a)(2)(i). After notice and opportunity to be heard, the Commission may issue a final QRO for all or a portion of the amount of transition or stranded costs that it finds would be just and reasonable for the utility to recover from ratepayers under sections 2804 and 2808 (relating to standards; and competitive transition charge) of the act. The Commission will issue a final QRO only for the amounts found to be in the public interest. 66 Pa.C.S. § 2812(a)(2)(iii).
The Commission is required to complete its review of the application and issue its final determination by the later of 9 months from the filing, unless the electric utility requests expedited treatment under 66 Pa.C.S. § 2812(b), or 15 days following the filing of the electric utility's restructuring plan under 66 Pa.C.S. § 2806. 66 Pa.C.S. § 2812(a)(2)(iii). In the case of expedited review under 66 Pa.C.S. § 2812(b), the Commission is required to complete its review of the application and issue its final determination within 120 days after the request for expedited review, but, in no event, earlier than 15 days after the utility has filed its restructuring plan under section 2806 of the act. 66 Pa.C.S. § 2812(b)(1)(i).
The granting, perfection and enforcement of security interests in intangible transition property is necessary before the issuance of transition bonds issued under the Commission's determination regarding a petitioner's stranded costs. The perfection is governed by the act instead of Title 13 of Pennsylvania's Uniform Consolidated Statutes. 66 Pa.C.S. § 2812(d)(2).
Discussion The Commission is required under 66 Pa.C.S. § 2812(d)(3) to promulgate regulations governing the perfection of security interests arising under any Commission-issued QRO. 66 Pa.C.S. § 2812(d)(3). The Commission is also required by 66 Pa.C.S. § 2812(d)(4) to establish and maintain a separate system of records to reflect the date and time of receipt of all filings. The Commission may also provide for the transfer of intangible transition property to an assignee in accordance with such a system. Consequently, the Commission must adopt regulations to fulfill these statutory requirements. The Commission is required to act in an extremely abbreviated time frame.
The regulations developed by the Commission in furtherance of section 2812's requirements, attached to this order as Annex A, are ministerial in nature. The proposed regulations will establish agency process or procedures for securing perfection. The regulations would be located in Chapter 74. The regulations are entitled ''Perfection of Security Interests in Intangible Transition Property.''
This rulemaking will facilitate the timely and cost-effective perfection of security interests in intangible transition property as required by section 2812(d) of the act. Regulations for the perfection of security interests are critical to the bond closing that precedes the sale of issued transition bonds.
The Commission currently has before it one petition for expedited issuance of a QRO. The Commission could issue a QRO as early as May 1997.
In addition, the Commission has several restructuring filings pending before it. See PP&L Petition, Docket No. R-00973954; PECO Petition, Docket No. R-00973953. The Commission expects additional restructuring filings and more petitions for QROs during or after review of the restructuring filings.
The absence of regulations, given these developments, could delay the implementation of section 2812(d) of the act and result in higher-than-necessary costs for Pennsylvania's ratepayers. That is because the absence of regulations necessarily delays the issuance of transition bonds by Pennsylvania's utilities. The failure to be able to expeditiously market transition bonds, backed by security interests perfected under these regulations, could result in the loss of an opportunity for Pennsylvania utilities to lower transition costs. The later issuance of transition bonds, especially if coupled with changes in the interest rate, would result in higher costs. Those additional costs could frustrate the act's goal of reducing electric costs with adverse economic consequences for Pennsylvania.
The Commission developed the proposed regulations after research and consultation with the Department of State's Corporation Bureau and others. The Commission began reviewing the act in January 1997, in conjunction with issuance of its earlier guidelines governing QRO applications under section 2812 of the act, with a view to fashioning the necessary regulations. The Commission consulted with the Department of State's Corporation Bureau on existing procedures used under Pennsylvania law for the perfection of security interests. The Commission also consulted with the Pennsylvania Electric Association (PEA) regarding the procedural devices necessary to perfect a security interest that would support the issuance of transition bonds.
Regulations must be in place for marketable transition bonds to be issued. Absent regulations, a petitioner possessing a QRO will be unable to proceed to bond closing because of the inability to secure perfection of an underlying security interest. With regulations in place, a petitioner can rapidly proceed to perfect a security interest and issue marketable transition bonds sooner than later.
In addition, section 2812(d)(3) of the act requires the Commission to have regulations governing the perfection of security interests without regard to whether or not a petitioner is seeking expedited review under the act. The Commission believes that the necessity of providing the process for security interest perfection under the act, the potentially adverse consequences of not having regulations in place, and the ministerial nature of the regulations, which only establishes the agency procedure or practice for securing perfection, justify a 20-day public comment period under 45 P. S. § 1204(1)(iii).
The Commission is also taking other measures that effectively extends the public comment period beyond 20 days. The Commission is placing the text of the proposed regulations and the public comment deadline on the Commission's publicly available electronic bulletin board. The Commission is also mailing the proposed regulations and public comment deadline to all parties that participated in our earlier implementation orders. The Commission is further providing a copy of the proposed regulations and public comment deadline to the PEA, the Pennsylvania Bankers' Association, the Securities Commission and the Department of State's Corporation Bureau.
Given these considerations, the Commission concludes that the ministerial nature of the regulations, which only establishes the agency procedure or practice for securing perfection, and the exigencies of the act constitute good cause for a 20-day public comment period under 45 P. S. § 1204(1)(iii). That conclusion is bolstered by the additional steps the Commission is taking to expand opportunities for providing public comment during that 20-day period.
Section 74.1 (relating to purpose) sets forth the purpose of the regulations. Section 74.2 (relating to definitions) provides a list of definitions for the regulations. The definition section consists of definitions taken from the act as well as those derived from the comments of others.
Section 74.3 (relating to liberal construction) provides for the liberal construction of the regulations to facilitate perfection of security interests. Section 74.4 (relating to information, filing and hours) sets forth the location for information about the filing and the hours for receipt of filings under the regulations. Section 74.5 (relating to place of filing; informational filing) establishes the place of filing and requires an informational filing be made with the Department of State's Corporation Bureau.
Section 74.6 (relating to intangible transition property notice requirements; amendments; forms; error; recharacterization) sets forth the general rule and requirements for filing an intangible transition property notice under the regulations and the procedures that will govern minor errors, amendments and recharacterizations. Section 74.7 (relating to intangible transition property notice filing; duration lapses; filing officer; fees) governs the filing of notices, the duration of notice, lapses in notice and the role of the filing officer under the regulations. Section 74.8 (relating to termination notice; filing officer; fees) governs termination notices and filing officer duties under the regulations.
Section 74.9 (relating to assignment of security interest; filing officer; fees) establishes procedures for the assignment of security interests and the role of the filing officer in these matters. Section 74.10 (relating to release or retransfer; filing officer; fees) governs the release or retransfer of a security interest. Section 74.11 (relating to information requests; filing officer) establishes procedures for obtaining information requests on a security filing as well as the furnishing of certificates for any security filing.
Section 74.12 (relating to record retention; admissibility; filing officer) establishes the requirements for record retention. Section 74.13 (relating to fees; notice of changes) governs notice changes. Section 74.14 (relating to forms officer) establishes a forms officer and sets forth the forms required to be available for filing under the regulations.
The filing fees for the perfection of security interests under the act are set forth in § 1.43(a) (relating to schedule of fees payable to the Commission). These filing fees are required by the Commission to cover the reasonable costs, including staffing and related infrastructure support and development, needed to establish and operate the perfection processes required by the act. These perfection processes for transition bonds may run as long as 9-years under 66 Pa.C.S. §§ 2808 and 2812. The filing fees imposed by the Commission would facilitate the fair and orderly transition to competition as required by 66 Pa.C.S. § 2802(13) (relating to declaration of policy) and are flexible as required by 66 Pa.C.S. § 2812(b)(9). In addition, the fees would allocate the costs of providing such services to the source of cost causation consistent with the general principle of economic pricing. Finally, the fees collected by the Commission for perfection-related services constitute reasonable cost-based charges as required by 66 Pa.C.S. § 317(a) (relating to fees for services rendered by commission).
The Commission notes that the proposed regulations are an amalgam of material from several sources. They differ in minor procedural ways from the comments provided by others.
The Commission seeks general comments on the proposed regulations as well as specific comments on the minor procedural variations. In both instances, persons submitting comments are requested to provide supporting justification for requested revisions and proposed regulatory language.
The Commission has identified five issues for specific comment. These are as follows:
Issue 1: Filing Date v. Effective Date. The Commission's proposed regulations make a distinction between the filing date and the effective date for perfection of a security interest. The Commission thinks this distinction is necessary so that it has the ability to reject filings that have more than minor problems under § 74.6(h). Without this distinction, every filing is effective when filed regardless of its conformity with the regulations.
Issue 2: Definitions. The Commission has defined terms under the act. In the absence of language in the act, the Commission has crafted definitions to support perfection of security interests. Some adjustments may be necessary.
Issue 3: Liberal Construction. The Commission requires the liberal construction of the proposed regulations. The Commission thinks that liberal construction is necessary to resolve the ambiguities that could arise from application of the regulations in specific instances. Without this authority, the Commission's inability to act could jeopardize the perfection of security interests.
Issue 4: Retention of Discretion. Section 74.9(a) preserves administrative discretion. The Commission believes that discretion is necessary to respond to factual and regulatory developments arising after the regulations go into effect.
Issue 5: Use of Proposed Forms and UCC-1 and UCC-3. The Commission proposes to require the filing of Form A and Form B as well as UCC-1 and UCC-3. The Commission thinks this is necessary in light of the informational filing with the Department of State which will be required by these regulations. The Commission also thinks that such a requirement is supported by the fact that other security interests are perfected in this Commonwealth by filing the UCC Form-1 and UCC Form-3.
Accordingly, under 66 Pa.C.S. §§ 501 and 2812(d) of the Public Utility Code; the Commonwealth Documents Law (45 P. S. § 1201 et seq.); and 71 P. S. § 745.1 et seq., the Commission issues the proposed regulations, attached as Annex A of this order and as published in the Pennsylvania Bulletin, for comment; Therefore,
It is Ordered that:
1. A rulemaking docket shall be opened to promulgate regulations for the perfection of security interests in intangible transition property under 66 Pa.C.S. § 2812(d) as set forth in Annex A of this order.
2. The Secretary shall submit this order and Annex A to Office of the Attorney General for preliminary review as to form and legality.
3. The Secretary shall submit a copy of this order, together with Annex A, to the Governor's Budget Office for review of fiscal impact.
4. The Secretary shall submit this order and Annex A for informal review and comments by the designated standing committees of both Houses of the General Assembly, and for informal review and comments by IRRC.
5. The Secretary shall duly certify this order and Annex A and deposit them with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
6. The Secretary shall provide a copy of this order and Annex A for placement on the Commission's electronic Bulletin Board, to the Department of State's Corporation Bureau, the Pennsylvania Electric Association, the Pennsylvania Banking Association and the Commonwealth of Pennsylvania Securities Commission for review and comment within the period prescribed by 45 P. S. § 1204(1)(iii) below.
7. That, within 20 days of this order's publication in the Pennsylvania Bulletin, consistent with 45 P. S. § 1204(1)(iii), an original and 15 copies of any comments concerning this order should be submitted to the Office of the Prothonotary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265.
JOHN G. ALFORD,
SecretaryFiscal Note: 57-183. No fiscal impact; (8) recommends adoption. The fees assessed by the Commission under these regulations are anticipated to offset related administrative costs, thereby resulting in a net effect of no increased costs to the Commission.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PENNSYLVANIA PUBLIC UTILITY COMMISSION
Subpart A. GENERAL PROVISIONS
CHAPTER 1. RULES OF ADMINISTRATIVE PRACTICE AND PROCEDURE § 1.43. Schedule of fees payable to the Commission.
(a) Fees for services. The fees for services rendered by the Commission are as follows:
Fee Description (in dollars) * * * * * Initial filing and perfection of Form A & UCC-1 for intangible transition property notice $.00005 of Transition Bond Face Value or $100,000 whichever is lower. Subsequent filing of notice changes in intangible transition property notice on Form B & UCC-3 $.0000005 of Transition Bond Face Value or $1,000 whichever is lower. Public information requests $10 and per page copying costs. * * * * *
Subpart C. FIXED SERVICE UTILITIES
CHAPTER 74. PERFECTION OF SECURITY INTEREST IN INTANGIBLE TRANSITION PROPERTY Sec,
74.1. Purpose. 74.2. Definitions. 74.3. Liberal construction. 74.4. Information, filing and hours. 74.5. Place of filing; informational filing. 74.6. Intangible transition property notice requirements; amendment; forms; error; recharacterization. 74.7. Intangible transition property notice filing; duration lapses; filing officer; fees. 74.8. Termination notice; filing officer; fees. 74.9. Assignment of security interest; filing officer; fees. 74.10. Release or retransfer; filing officer; fees. 74.11. Information requests; filing officer; fees. 74.12. Record retention; admissibility; filing officer. 74.13. Fees; notice changes. 74.14. Forms officer. § 74.1. Purpose.
This chapter implements the ministerial requirements of section 2812(d)(1)--(4) of the act (relating to approval of transition bonds) governing the granting, perfection or enforcement of a security interest in intangible transition property. This chapter establishes the recordkeeping regulations and requirements and provides technical rules on administration. This chapter also establishes how an intangible transition property notice is filed, what a filing shall contain and what obligatory record retention requirements are imposed on the Commission. This chapter governs notice, amendment, effectiveness and termination of the security interest.
§ 74.2. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context indicates otherwise:
Act--66 Pa.C.S. Chapter 28 (relating to restructuring of electric utility industry).
Assignee--A person, partnership, corporation, public authority or trust, whether public or private, that succeeds to the interest of a financing party in intangible transition property. The term includes a transferee and any other relevant party. The term also includes a party necessary for any action taken. The term does not include the Commission.
Assignment--A transfer of an existing security interest, or of the interest of an assignee, in intangible transition property.
Assignor--An electric utility or others who transfer an interest in intangible transition property to an assignee.
Certificate--A document establishing whether there is on file with the Commission on the date and hour stated a presently effective intangible transition property notice with information sufficient to provide the necessary identification information.
Commission--The Pennsylvania Public Utility Commission, including an appointed successor entity.
Continuation notice--A filing submitted to extend the effective date of a filing beyond the initial 12-year effective date.
Department of State--The Corporation Bureau of the Department of State of the Commonwealth including an appointed successor entity.
Effective date--The date an intangible transition property notice filing will be deemed complete.
File number--A numerical sequence used to identify a filing by means other than the qualified rate order docket number and the general docket number.
Filing--The submission of a completed intangible transition property notice or other document described in this chapter to the filing officer, together with the applicable filing or processing fee, and the acceptance thereof as complete by the filing officer.
Filing date--The date on which a filing is made as described in this chapter.
Filing officer--An authorized person in the Office of the Prothonotary of the Commission, including an appointed successor entity or office.
Filing party--A party, person, partnership, corporation, public authority or trust, whether public or private, who makes a filing under this chapter. The term does not include the Commission.
Financing party--A party, person, partnership, corporation, public authority or trust, whether public or private, including an assignee, whose interest in intangible transition property is or may be secured. The term includes anyone necessary for action to be taken. The term does not include the Commission.
General docket number--The generic docket location established by the Commission as a repository for filings pertaining to the granting, perfection or enforcement of a security interest.
Grantor--An electric utility or other party, partnership, person, corporation, public authority or trust, whether public or private, who grants a security interest in intangible transition property to another person. The term does not include the Commission.
Information request--A request from a party or person to the Commission concerning the granting, perfection or enforcement of a security interest.
Intangible transition property--A notice of a security interest in, or of a transfer to an assignee of, intangible transition property. References to an intangible transition property include all properly filed amendments to a notice, unless the context otherwise requires, and subject to the limitations provided.
Intangible transition property notice--A section filing submitted by a party in furtherance of section 2812(d) of the act (relating to approval of transition bonds).
Lapse--An event that causes the perfection accorded a security interest to become unperfected.
Party--A person, partnership, corporation, public authority or trust, whether public or private, seeking the granting, perfection or enforcement of a security interest. The term does not include the Commission.
Person--A human being, partnership, corporation, public authority or trust, whether public or private, existing under the laws of the Commonwealth, another state, the United States or a foreign country.
Qualified rate order--An adopted and entered order of the Commission consistent with the act.
Qualified rate order docket number--The established Commission filing number for an adopted and entered qualified rate order.
Release--An action taken by an assignee to return to an assignor all or a portion of the interest of the assignee in intangible transition property.
Retransfer--An action taken by a party to alter a right, duty or obligation concerning the granting, perfection or enforcement of a security interest.
Security interest--An interest in intangible transition property securing the payment of performance of an obligation.
Successor--A party, person, partnership, corporation, public authority or trust, whether public or private, which succeeds in interest to the rights and responsibilities of a party to a transaction concerning intangible transition property. The term does not include the Commission.
Termination notice--The notification provided to a requesting grantor concerning the termination of an encumbrance arising from a security interest previously granted and perfected.
§ 74.3. Liberal construction.
(a) This chapter will be liberally construed to ensure that legal, equitable, efficient and cost-effective requirements are in place concerning the granting, perfection or enforcement of a security interest.
(b) The Commission or filing officer may waive a requirement of this chapter when necessary or appropriate, if the waiver does not adversely affect a substantive right of a person or party, in order to effectuate the granting, perfection or enforcement of a security interest arising under the act or this chapter.
§ 74.4. Information, filing and hours.
(a) Information as to procedures and forms for filing under this chapter, and instructions supplementing this chapter in special instances, may be obtained upon request:
Office of the Prothonotary
Pennsylvania Public Utility Commission
P. O. Box 3265
Harrisburg, Pennsylvania 17105-3265
(b) Submittal, filings, requests, forms and all other communications either written or otherwise should be addressed as follows:
Office of the Prothonotary
Pennsylvania Public Utility Commission
P. O. Box 3265
Harrisburg, Pennsylvania 17105-3265
(c) Unless directed otherwise by the Governor or due to unforeseen circumstances, the Commission offices will be open from 8 a.m. until 4:30 p.m. on business days except Saturdays, Sundays and legal holidays.
§ 74.5. Place of filing; informational filing.
(a) Place of filing. An intangible transition property notice shall be filed with the filing officer of the Commission by the filing party and be accompanied by the payment of all filing fees established by the Commission.
(b) Informational filing. An intangible transition property notice shall also be filed by the filing party with the Department of State in accordance with the procedures and fees as determined to be necessary by the Department of State. An intangible transition property notice filed with the Department of State will be deemed for informational purposes only and will have no force and effect under section 2812(d) of the act (relating to approval of transition bonds). The filing party shall file a copy of an intangible transition property notice for informational purposes with the Department of State within a reasonable time after the filing date.
(c) Effect of successor entity on filing. An effective intangible transition property notice continues in force and effect even though the grantor or assignor whose intangible transition property notice is (or originally was) the subject of a filing merges, consolidates or otherwise reorganizes.
§ 74.6. Intangible transition property notice requirements; amendment; forms; error; recharacterization.
(a) General. An intangible transition property notice will be deemed complete and have an effective date if it provides the following:
(1) The name of the grantor or assignor.
(2) The address of the grantor or assignor.
(3) A signature of an authorized person acting on behalf of the grantor or assignor.
(4) The name of the financing party or assignee.
(5) The address of the financing party or assignee.
(6) The signature of an authorized person acting on behalf of the financing party or assignee.
(7) A statement constituting notice to the public that information concerning the security interest or assignment which is the subject of the intangible transition property notice may be obtained from the financing party or assignee and which provides the name and address of the financing party or assignee.
(8) A statement setting forth whether all or a portion of the recovery permitted under the qualified rate order, from which the intangible transition property notice is derived, is covered by the intangible transition property notice. If the portion covered by an intangible transition property notice relates to less than all of the qualified rate order, the portion or the amount thereof to which the intangible transition property notice shall be stated.
(9) The Commission docket number and date of entry of the qualified rate order from which an intangible transition property is derived.
(10) The general docket number established by the filing officer as a repository at the Commission for all filings submitted for the granting, perfection or enforcement of a security interest.
(b) Filing sequence. An intangible transition property notice may be filed before a security agreement or assignment is made or a security interest otherwise attaches or an assignment becomes effective.
(c) Effect of partial completion. An intangible transition property notice which otherwise complies with this section will be deemed complete and effective when it is signed by the financing party or assignee instead of the grantor or assignor, if it is filed to perfect a security interest in or record a transfer to an assignee of:
(1) In the case of a security interest, intangible transition property as to which the filing of a security interest has lapsed.
(2) Intangible transition property under a security agreement or an agreement effecting a transfer to an assignee signed by the grantor or assignor and authorizing the financing party or the assignee, as the case may be, to file an intangible transition property notice. An intangible transition property notice shall state that it is filed in accordance with a security agreement or an agreement effecting a transfer signed by the grantor or assignor and authorizing the filing of the notice and may be filed by the financing party or the assignee.
(d) Form. A filing party shall submit Form A and UCC-1, to comply with this section. Both Form A and UCC-1 shall be filed with the Commission and the Secretary of State.
(e) Amendments. An intangible transition property notice may be amended only with a filed writing signed by both the grantor or assignor and the financing party or assignee, as the case may be. An amendment does not extend the period of effectiveness of an intangible transition property notice. If any amendment adds intangible transition property, it is effective as to the added intangible transition property only from the effective date of filing of the amendment.
(f) Amendment form. A filing party shall submit Form B and UCC-3 to comply with this section.
(g) Sufficiency of name. An intangible transition property notice sufficiently shows the name of the grantor or assignor if it gives the partnership or corporate name of a party, whether or not it adds other trade names or the names of partners. A filed intangible transition property notice remains effective with respect to intangible transition property transferred by the grantor or assignor even though the financing party or the assignee knows of or consents to the transfer.
(h) Effect of minor errors; recharacterization. An intangible transition property notice substantially complying with this section will be sufficient even if it contains minor errors which are not seriously misleading. If an intangible transition property notice is filed with respect to an assignment of interest in intangible transition property under this chapter, and an assignment is thereafter held for a reason or purpose to constitute the grant of a security interest in intangible transition property, the intangible transition property notice will be deemed to constitute a filing with respect to a security interest under this chapter, from and as of the date and time of the effective date of the original intangible transition property notice, without the necessity of any amendment of (or other action by the parties with respect to) the originally filed intangible transition property notice.
§ 74.7. Intangible transition property notice filing; duration lapses; filing officer; fees.
(a) What constitutes a filing with an effective date. Presentation for filing of an intangible transition property notice and tender of the filing or processing fee, and acceptance of the intangible transition property notice by the filing officer, will constitute a filing with an effective date under the act and this chapter. Nothing in the act or this chapter will preclude the filing officer from rejecting or otherwise returning an unreasonable and insufficient filing to a person or party.
(b) Purposes of filing. An intangible transition property notice may be filed to perfect the security interest of a financing party in intangible transition property. An intangible transition property notice shall also be filed in respect of each transfer to an assignee of an interest in intangible transition property.
(c) Duration of effectiveness of filing in general. A filed intangible transition property notice filed to perfect the security interest of a financing party will be effective for 12 years from the effective date. The effectiveness of a filed intangible transition property notice filed to perfect the security interest of a financing party lapses on the expiration of the 12-year period unless a continuation notice is filed prior to the lapse. If a security interest perfected or continued by filing exists at the time insolvency proceedings are commenced by or against the grantor, the security interest will remain so perfected until the later of the expiration of the applicable 12-year period or a period ending 60-days following the termination of the insolvency proceedings.
(d) Lapse. Upon lapse, the security interest becomes unperfected. If the security interest becomes unperfected upon lapse, it is deemed to have been unperfected as against a person who became a purchase or lien creditor before the lapse. A filed intangible transition property notice filed and perfected to record the transfer to an assignee of intangible transition property is continuously effective.
(e) Continuation notice. A continuation notice shall be filed by a financing party no earlier than 6 months prior to the expiration of the 12-year period specified in subsection (c). A continuation notice shall be signed by the financing party, identify the original notice by file number and state that the original intangible transition property notice is still effective. A continuation notice signed by a person other than the financing party or transferee of record shall be accompanied by a separate written statement of assignment signed by the financing party or transferee of record and comply with this chapter, including payment of the required fees. Upon timely filing of the continuation notice, the effectiveness of the original notice is continued for 12 years after the last date to which the filing was effective whereupon it lapses in the same manner as provided in subsection (d) unless another continuation notice is filed prior to a lapse. Succeeding continuation notices may be filed in the same manner to continue the effectiveness of the original notice.
(1) Unless a statute on disposition of public records provides otherwise, the filing officer may remove a lapsed notice from the files and destroy it immediately if he has retained a microfilm or other photographic record or in other cases 1 year after the lapse.
(2) The filing officer will so arrange matters by physical annexation of intangible transition property notices to continuation notices or other related filings, or by other means, that if the filing officer physically removes the intangible transition property notices of a period more than 12 years past, those which have been continued by a continuation notice shall be retained.
(3) The filing officer will place a filing in the Commission's docketed qualified rate order which legitimized a subsequent intangible transition property notice as well as in the general docket number established by the Commission and set aside for an intangible transition property notice.
(f) Establishment and duties of filing officer.
(1) The Commission will establish and appoint a filing officer who will be responsible for maintaining the records and taking the other actions described or otherwise necessary. The filing officer will place copies of filings submitted under this chapter in the appropriate dockets for future reference and otherwise manage all filings.
(2) The filing officer will also mark each intangible transition property notice and each subsequent filing in a general docket number with a consecutive file number and with the date and time of filing and will hold the intangible transition property notice and each subsequent filing or a microfilm or other photographic or electronic copy thereof for public inspection. Consecutive file numbers for intangible transition property notices and subsequent filings for notices filed in each calendar year will begin with the number one preceded by the last two digits of the calendar year in which the filing occurs. In addition, the filing officer will index the intangible transition property notices according to the name of the grantor or assignor and will note in the index the file number and address of a party.
(g) Fees. The Commission will prescribe one uniform filing fee for filing, indexing and furnishing filing data for an original or a continuation notice based upon the total direct and indirect administrative cost of providing for filings.
(h) Legible papers. The duties of the filing officer prescribed in this chapter will relate only to clearly legible papers filed with the filing officer or submitted to the filing officer for filing. A filing officer will promptly return to the person a filing that is not clearly legible. No intangible transition property notice nor another related filing will be accepted unless it is typed or printed in black ink and, in the determination of the filing officer, interpreted or reproduced using the technology employed by the Commission.
§ 74.8. Termination notice; filing officer; fees.
(a) General. Whenever there is no outstanding secured obligation and no commitment to make advances, incur obligations or otherwise give value, the financing party shall on written demand by the grantor send the grantor a termination notice to the effect that it no longer claims a security interest under the applicable intangible transition property notice, which shall be identified by its file number. A termination notice signed by a person other than the financing party of record shall be accompanied by a separate written notice of assignment signed by the financing party of record and complying with this chapter, including payment of the required fee. If the affected financing party fails to file a termination notice as required by this subsection, or to send a termination notice within 10 days after proper demand therefor, the financing party shall be liable for a loss caused to the grantor by reason of the failure.
(b) Duties of filing officer. On presentation to the filing officer of a termination notice, the filing officer shall note the filing on the termination notice. If the filing officer has received the termination notice in duplicate, the filing officer will return one copy of the termination notice to the financing party stamped to show the date of receipt thereof. If the filing officer has a microfilm or other photographic record of the intangible transition property notice and of a related continuation notice, notice of assignment and notice of release, the filing officer may remove the originals from the file at a time after receipt of the termination notice, or if the filing officer has no record, the filing officer may remove the originals from the files 1 year after receipt of the termination notice.
(c) Fees for filing. The Commission will prescribe the uniform fee for filing and indexing the termination notice. A duplicate of the termination notice will be returned to the financing party. There will be a fee for each name (more than one) against which the termination notice is required to be indexed. The fee is the fee for filing Form B and UCC-3 in § 1.43 (relating to schedule of fees payable to the Commission).
§ 74.9. Assignment of security interest; filing officer; fees.
(a) Assignment disclosed in intangible transition property notice. An intangible transition property notice may disclose an assignment of a security interest of a financing party or the interest of an assignee in the intangible transition property described in the intangible transition property notice by indication in the notice of the name and address of the transferee or by an assignment itself or a copy thereof on the face or back of the notice. Either the original financing party or assignee or the transferee may sign this statement as the financing party or assignee. On presentation to the filing officer of an intangible transition property notice, the filing officer will mark it as provided for in this chapter.
(b) Fees. The Commission will prescribe the uniform fee for filing, indexing and furnishing filing data for an intangible transition property notice plus an additional fee for each name against which the intangible transition property notice is required to be indexed. The fee is the fee for filing Form B and UCC-3 in § 1.43 (relating to schedule of fees payable to the Commission).
(c) Separate notice of assignment. A financing party or assignee of record may assign all or a part of its rights under an intangible transition property notice by the filing of a separate written notice of assignment signed by the financing party or assignee of record and setting forth the name of the financing party or assignee of record, the grantor or assignor, the file number and the date of filing of the intangible transition property notice and the name and address of the transferee and a description of the intangible transition property assigned, including the information described in § 74.6(a) (relating to intangible transition property notice requirements; amendment; forms; error; recharacterization). A copy of the assignment is sufficient as a separate notice if it complies with the preceding sentence. On presentation to the filing officer of a separate notice, the filing officer will mark a separate notice with the date and hour of the filing. The filing officer will note the assignment on the indices of the intangible transition property notice or enter the assignment information into the computerized system for intangible transition property notices.
(d) Fees. The Commission will prescribe the uniform fee for filing, indexing and furnishing filing data about a separate notice of assignment, plus, for each additional person, firm or organization, beyond the first, named as a grantor or assignor in the notice, an additional fee. The fee is the fee for filing Form B and UCC-3 in § 1.43.
(e) Status of transferee. After the disclosure or filing of an assignment under this section, the transferee is the financing party or assignee of record.
§ 74.10. Release or retransfer; filing officer; fees.
(a) Release of intangible transition property interest. A financing party or assignee of record may by its signed notice release or retransfer all or a part of an intangible transition property described in a filed intangible transition property notice. The notice of a release or retransfer is sufficient if it contains a description of the intangible transition property being released or retransferred (including the information described in § 74.6(a) (relating to intangible transition property notice requirements; amendments; forms; error; recharacterization)), the name and address of the grantor or assignor, the name and address of the financing party or assignee, the docket number for the qualified rate order from which an intangible transition property is derived, the file number of the intangible transition property notice and the general docket number. A notice of release or retransfer signed by a person other than the financing party or assignee of record shall be accompanied by a separate written statement of assignment signed by the financing party or assignee of record and comply with § 74.6(a), including payment of the required fee. Upon presentation of a notice of release or retransfer to the filing officer, the filing officer will mark the notice with the date of filing and will note the same upon the margins of the indices of the filing of the intangible transition property notice.
(b) Fees. The Commission will prescribe the uniform fee for filing and noting a notice of release or retransfer plus, for each additional person, firm or organization, beyond the first, named as a grantor or assignor in the notice, an additional fee. The fee is the fee for filing Form B and UCC-3 in § 1.43 (relating to schedule of fees payable to the Commission).
§ 74.11. Information requests; filing officer; fees.
(a) Marking copy of intangible transition property notice filed. If the filing party submitting an intangible transition property notice, continuation notice, termination notice, notice of assignment, notice of release or notice of retransfer, furnishes the filing officer with a copy, the filing officer will upon request note upon the copy the file number and date of the filing of the original and deliver or send the copy to the filing party.
(b) Fees. The fee for information requests is the fee in § 1.43 (relating to schedule of fees payable to the Commission) for public information requests.
(c) Furnishing certificates and copies. Upon request of a person, the filing officer will issue a certificate showing whether there is on file on the date and hour stated therein, a presently effective intangible transition property notice naming a particular grantor or assignor and a notice of assignment and if there is, giving the date and hour of filing of each notice and the names and addresses of each financing party or assignee named therein. The certificates will also show whether there is on file on the date and hour stated therein, a notice of Federal tax lien or other certificate or notice affecting intangible transition property of the grantor or assignor, naming a party, and if there is, giving the date and hour of filing of each notice or certificate. The Commission will prescribe the uniform fee for a certificate premised upon the total direct and indirect administrative costs of providing the service. Upon request, the filing officer will furnish a copy of a filed intangible transition property notice, notice of Federal tax lien or notice or certificate affecting intangible transition property of a grantor or assignor, or a continuation notice, termination notice, notice of assignment, notice of release or notice of retransfer respecting an intangible transition property notice, all for a uniform fee prescribed by the Commission.
§ 74.12. Record retention; admissibility; filing officer.
In lieu of retaining the original of a filing, a filing officer may make microfilm, photographic, photostat, electronic or other copies which accurately reproduce an original and may thereafter dispose of the originals so copied, and the copy will be admissible in evidence in a proceeding with the same effect as though it were an original. If a filing officer upon making a copy of a paper will have disposed of the original, then upon the filing of a termination notice the filing officer will be relieved of the duties imposed regarding the underlying intangible transition property notice, and instead will note the termination notice on the index and will send to the financing party an acknowledgement of the filing of the termination notice.
§ 74.13. Fees; notice changes.
(a) The fees are those in § 1.43(a) (relating to schedule of fees payable to the Commission) for services. The feesin § 1.43(a) governing this chapter are based on the total direct and indirect administrative cost of providing the service, including staffing and infrastructure support, necessary to effectuate the granting, perfection or enforcement of a security interest under the act and as required by 66 Pa. Code § 317(a) (relating to fees for services rendered by Commission).
(b) The initial filing and perfection fee will be that in § 1.43 for the filing of Form A and UCC-1. The fee for changes and other action with respect to an intangible transition property notice in connection with an amendment, continuation, termination, assignment, release or retransfer will be that in § 1.43 for the filing of Form B and UCC-3. Forms will be available from the forms officer of the Commission.
§ 74.14. Forms officer.
There will be a forms officer responsible for providing forms to the public. The forms will include, at a minimum, the following:
(1) Form A for intangible transition property notice.
(2) Form UCC-1.
(3) Form B for any amendment, assignment, continuation, release, retransfer or termination of interest in an intangible transition property notice.
(4) Form UCC-3.
(5) An established fee schedule.
(6) Other forms as may be necessary to effectuate the granting, perfection or enforcement of a security interest under the act and this chapter.
[Pa.B. Doc. No. 97-680. Filed for public inspection May 2, 1997, 9:00 a.m.]
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