Subject: File No S7-18-00 Date: 10/24/2000 11:06 AM Dear Mr.Katz, My name is Loren Hanson and 'm responding to the proposed rule 17AD-19 and proposed changes to rule 17f-1 and 17AD-12 concerning safekeeping of certificates. I am the Manager of Shareholder Relations at Otter Tail Power Company - an electric utility located in west central Minnesota. Our company acts as its own transfer agent and have approximately 14,000 registered shareholders. First of all let me state that I applaud the efforts of the SEC to address the problem of safekeeping cancelled stock certificates. There obviously has been a problem with the way some larger transfer agents have handled cancelled certificates. I also applaud your efforts to make sure that brokers check to see if certificates have been reported as lost before trying to sell them. However, the proposed rules, as they are now written, would be overly burdensome and costly to a small transfer agent - especially for a transfer agent that only acts as transfer agent for its own stock. In terms of new rule 17AD-19, we average about 30 transfers a month that involve the issuing and canceling of stock certificates. We do perforate the word 'cancelled' on all of the signatures on the stock certificate as well as initial and date the time of cancellation. There is no question that the certificate is cancelled after we are done with it. We then store all of our recently cancelled certificates in a large fire proof vault. Eventually older cancelled certificates are transferred to a secured area in our record storage facility where we have kept cancelled certificates for the last 20 years. We follow this procedure with a very limited staff - basically two people. Since we are in the business to generate and sell electricity we can't afford to hire a lot extra staff to handle extra administrative processes as your rule would require. As indicated, we already are using very promptly the word cancelled on the certificates. However, to require that we witness the ultimate destruction of the certificates and to require that we keep and maintain an electronic record of each cancelled certificate would require more expense than our department can justify. It would first of all require the purchasing of scanning equipment and more importantly, the hiring of additional staff to do all of the scanning and cataloging of the cancelled certificates - a cost our small department can't afford. We basically are at the point that if we have to incur any additional administrative costs we will need to outsource our work to a commercial transfer agent. We view that not only as a loss of jobs but a disservice to our shareholders. This rule should apply for larger commercial transfer agents that have huge inventories of cancelled certificates. Certainly there is more risk for a commercial agent that handles multiple issues and thousands of cancelled stock certificates than for a small transfer agent that acts only acts on behalf of the issuing company. In terms of changes to rule 17f-1, my only concern there is the coverage of certificates that were destroyed before being issued. There are instances were certificates are ruined in the printing process. It seems like we average 3 - 4 of those types of instances each week. When that occurs we mark them very conspicuously as 'cancelled' and file them in a secured area. To require, however, for us to report them as lost would add an administrative burden to our small staff. It currently costs us about $50 for each certificate that is reported to the SIC as lost, and or stolen. Therefore, it would cost us and additional $1,000 a month just to report stock certificates that are not printed correctly. Also, it would add tremendously to number of reported certificates to SIC. That would increase their costs. Certainly, the greatest risk are lost and stolen certificates - not certificates that are accounted for but not issued because of printing and or appearance problems. Again, our stance is that as a small transfer agent for a small company, there is little if any risk of our cancelled certificates being confiscated and poses no threat to the marketplace. As the safekeeper of our own stock we are very conscientious of our how we handle cancelled certificates. That, in my opinion, would be true for any company that acts as its own transfer agent. Therefore, the additional administrative requirements of writing up and maintaining rules, purchasing of scanning equipment, and hiring of additional staff for scanning certificates for limited or no risk is nothing more than additional cost of running our core business - that is efficiently operating and running an electric utility company. Rule 17AD-19 should apply to commercial transfer agents that have large inventories of cancelled certificates and are constantly working with transport companies and commercial agents that are in the business of destroying certificates. The proposed change to rule 17f-1(c)(2) should not include certificates that are destroyed as a result of printing and or appearance problems. Those certificates are properly cared for and pose no threat to the market place. We see no problems of placing cancelled certificates under the jurisdiction of rule 17Ad-12. Since we treat cancelled certificates in the same manner as newly unissued certificates, there is no extra burden with that change. Again, it would be our position that most companies that act as their own transfer agent that this would be the case. We would encourage the SEC to take a firm position on the retention of cancelled certificates. Some companies hang on to certificates forever and others destroy theirs after 6 years. There appears to be no real consensus on what is required for retention purposes. Most records are only required to be kept for 7 years at a maximum. Why can't certificates be destroyed after 6-7 years without having to go through the expense of filming them? If the SEC were to issue a clear statement on the length of record retention that would eliminate the huge inventories of cancelled certificates that some companies have amassed over time. The longer those certificates remain from being destroyed the greater the threat is for them reappearing in the marketplace. That is especially true for the larger commercial agents that cancel hundred of thousands certificates on a yearly basis. Thank you for your consideration of these comments. If you do have any questions, please don't hesitate to contact me at the address shown below. Loren Hanson Manager, Shareholder Relations Otter Tail Power Company 215 S. Cascade Street PO Box 496 Fergus Falls, MN 56537