Community Dividend

Crow Nation, State of Montana sign UCC filing compact

Published May 1, 2008  |  May 2008 issue

In a ceremony at the U.S. Capitol on February 6, the Crow Nation and the State of Montana signed a historic compact that will facilitate lending and economic development on the Crow Reservation.

Through the Joint Sovereign UCC Filing Compact, the state will provide a crucial service that breathes life into the tribe's newly enacted secured transactions law. Secured transactions are loans or other extensions of credit in which personal property other than real estate is used as collateral. Examples include consumer installment loans for home appliances and business loans for equipment and inventory where collateral secures the loans.

The compact enables banks and other creditors to use a service of the Montana Secretary of State's Office to file liens that are made under Crow law in collateral that is located on the Crow Reservation. As required under Article 9 of the Uniform Commercial Code (UCC), which has been adopted by all 50 states and U.S. territories, a creditor perfects its secured interest in a borrower's collateral by filing a UCC financing statement with the state's UCC filing office. (Typically, a state's UCC filing office is located in the Secretary of State's Office.) This filing, called perfection, establishes the creditor's priority in relation to other creditors or third parties that may have an interest in the same collateral. Modern UCC filing systems are Internet-accessible databases that enable lenders to search for prior liens on the collateral offered by potential borrowers.

A publicly accessible UCC filing system is an indispensable component of secured lending. Without one, a tribal community's secured transactions law is incomplete. For this reason, an Indian tribe that enacts a secured transactions law must also ensure it has a publicly accessible UCC filing system. However, establishing such a system is prohibitively expensive for many tribes.

Under the Crow-Montana compact, the State of Montana will meet the Crow Nation's need for a modern, robust UCC filing system by serving as the tribe's UCC filing agent. On its UCC web site, the State of Montana has created a special filing page for liens made under the Crow Nation's secured transactions law. Through this arrangement, lenders and other creditors can use the state's existing, familiar filing system to perfect their liens under Crow law. By enabling creditors to file liens confidently and seamlessly under tribal law, this first-of-its kind compact has the potential to encourage more lending in Crow communities.

The compact is the final step in the Crow Nation's enactment of the Model Tribal Secured Transactions Act (MTA), which was drafted by a committee of the National Conference of Commissioners on Uniform State Laws (NCCUSL) over a period of four years, with input from many tribal advisors. The drafting committee completed the MTA in the summer of 2005. In April 2006, the Crow Nation became the first tribe to adopt the act. (For more on the MTA, see "A super model: New secured transaction code offers legal uniformity, economic promise for Indian Country," in Community Dividend Issue 1, 2006. Similar tribal-state UCC filing agreements are now being considered by other tribes that have adopted the MTA, including the Chippewa Cree Tribes of Rocky Boy's Reservation in Montana and the Oglala Sioux Tribe of the Pine Ridge Indian Reservation in South Dakota.

Attendees at the February 6 signing ceremony in Washington, D.C., included Crow dignitaries; state officials; Montana's full Congressional delegation; representatives from NCCUSL, the National Association of Secretaries of State, and the Federal Reserve Bank of Minneapolis; and staff from the Board of Governors of the Federal Reserve System and several other federal agencies. During the event, Crow leaders recognized Sue Woodrow, Community Affairs project director for the Minneapolis Fed's Helena Branch, for her contributions to the tribe's economic development efforts. Woodrow served as a legal advisor to NCCUSL's MTA drafting committee and worked closely with the Crow Nation as it considered and adopted the act.

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