```

[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 666 Introduced in Senate (IS)]

104th CONGRESS
  1st Session
                                 S. 666

    To amend chapter 93 of title 31, United States Code, to provide 
additional requirements for a surety corporation to be approved by the 
   Secretary of the Treasury, to provide for equal access to surety 
                    bonding, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

               April 4 (legislative day, March 27), 1995

   Mr. Simon introduced the following bill; which was read twice and 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL

 
    To amend chapter 93 of title 31, United States Code, to provide 
additional requirements for a surety corporation to be approved by the 
   Secretary of the Treasury, to provide for equal access to surety 
                    bonding, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Equal Surety Bond Opportunity Act of 
1995''.

SEC. 2. ADDITIONAL REQUIREMENTS REGARDING APPROVAL OF SURETIES.

    (a) In General.--A company may not be approved as a surety by the 
Secretary of the Treasury under section 9304 of title 31, United States 
Code, or provide any surety bond pursuant to such section unless the 
company maintains full compliance with the requirements of section 9310 
of title 31, United States Code.
    (b) Requirements Relating to Enforceability.--
            (1) Signed statement of compliance with application.--
        Section 9305(a) of title 31, United States Code, is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (1);
                    (B) by striking the period at the end of paragraph 
                (2) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(3) a statement of compliance with section 9310, which is 
        signed under penalty of perjury by the president and the 
        secretary of the corporation.''.
            (2) Compliance as a condition for approval of 
        application.--Section 9305(b) of title 31, United States Code, 
        is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (2);
                    (B) by striking the period at the end of paragraph 
                (3) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(4) the corporation is in full compliance with section 
        9310.''.
            (3) Signed statement of compliance with quarterly 
        reports.--Section 9305(c) of title 31, United States Code, is 
        amended by inserting ``and a statement of compliance with 
        section 9310,'' before ``signed and sworn''.
            (4) Enforcement authority of secretary of the treasury.--
        Section 9305(d) of title 31, United States Code, is amended--
                    (A) in paragraph (1), by striking ``9304 or 9306'' 
                and inserting ``9304, 9306, or 9310'';
                    (B) by striking ``and'' at the end of paragraph 
                (2);
                    (C) by striking the period at the end of paragraph 
                (3) and inserting ``; and''; and
                    (D) by adding at the end the following new 
                paragraph:
            ``(4) may, after the end of the 1-year period beginning on 
        the effective date of any revocation under paragraph (1) of the 
        authority of a surety corporation for noncompliance with 
        section 9310, reauthorize such corporation to provide surety 
        bonds under section 9304.''.
            (5) Revocation for failure to pay certain judgments.--
        Section 9305(e) of title 31, United States Code, is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (1);
                    (B) by redesignating paragraph (2) as paragraph 
                (3); and
                    (C) by inserting after paragraph (1) the following 
                new paragraph:
            ``(2) the corporation does not pay a final judgment or 
        order against the corporation for noncompliance with section 
        9310, or fails to comply with any order under that section; 
        and''.
    (c) Technical and Conforming Amendment.--Section 9304(a)(3) of 
title 31, United States Code, is amended by striking ``9305 and 9306'' 
and inserting ``9305, 9306, and 9310''.

SEC. 3. INFORMATION FOR BOND APPLICANTS AND NONDISCRIMINATION.

    (a) In General.--Chapter 93 of title 31, United States Code, is 
amended by adding at the end the following new section:

``SEC. 9310. INFORMATION FOR BOND APPLICANTS; NONDISCRIMINATION.

    ``(a) Reasons for Adverse Action; Procedure Applicable.--
            ``(1) Notice required.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any surety approved under section 
                9304 shall notify an applicant for a bid bond, payment 
                bond, or performance bond of its action on a completed 
                application not later than 10 days after receipt of the 
                application.
                    ``(B) Extension.--The notification required by 
                subparagraph (A) may be furnished not later than 20 
                days after receipt of the application, if the surety 
                has not issued a bond to the applicant in the 12-month 
                period preceding the date of receipt of the 
                application.
            ``(2) Statement of reasons.--
                    ``(A) In general.--Each applicant against whom 
                adverse action is taken shall be entitled to a 
                statement of reasons for such action from the surety.
                    ``(B) Acceptable forms of statement.--A surety 
                satisfies the requirements of subparagraph (A)--
                            ``(i) by providing a statement of reasons 
                        in writing as a matter of course to applicants 
                        against whom adverse action is taken; or
                            ``(ii) by giving written notification of 
                        adverse action which discloses--
                                    ``(I) the applicant's right to a 
                                statement of reasons not later than 30 
                                days after receipt by the surety of a 
                                written request made by the applicant 
                                not later than 60 days after such 
                                notification; and
                                    ``(II) the identity of the person 
                                or office from which such statement may 
                                be obtained.
                    ``(C) Oral statement permitted.--A required 
                statement of reasons for adverse action may be given 
                orally if written notification advises the applicant of 
                the applicant's right to have the statement of reasons 
                confirmed in writing upon the applicant's written 
                request.
            ``(3) Specificity of reasons.--A statement of reasons meets 
        the requirements of this section only if it contains specific 
        reasons for the adverse action taken.
            ``(4) Applicability in case of third party applications.--
        In the case of a request to a surety by a third party to issue 
        a bond directly or indirectly to an applicant, the notification 
        and statement of reasons required by this section may be made 
        directly by such surety, or indirectly through the third party, 
        if the identity of the surety is disclosed to the applicant.
            ``(5) Applicability in case of sureties which accept few 
        applications.--The requirements of paragraphs (2), (3), and (4) 
        may be satisfied by oral statements or notifications in the 
        case of any surety which acted on not more than 100 
        applications during the calendar year in which the adverse 
        action is taken.
    ``(b)  Nondiscrimination.--
            ``(1) Activities.--It shall be unlawful for any surety to 
        discriminate against any applicant, with respect to any aspect 
        of a surety bond transaction--
                    ``(A) on the basis of race, color, religion, 
                national origin, sex, marital status, disability, or 
                age (if the applicant has the capacity to contract);
                    ``(B) because the applicant has in good faith 
                exercised any right under this chapter;
                    ``(C) because the applicant previously obtained a 
                bond through an individual or personal surety; or
                    ``(D) because the applicant previously obtained a 
                bond through--
                            ``(i) any bonding assistance program 
                        expressly authorized by law;
                            ``(ii) any bonding assistance program 
                        administered by a nonprofit organization for 
                        its members or an economically disadvantaged 
                        class of persons; or
                            ``(iii) any special purpose bonding program 
                        offered by a profitmaking organization to meet 
                        special needs.
            ``(2) Activities not constituting discrimination.--It shall 
        not constitute discrimination for purposes of this section for 
        a surety--
                    ``(A) to make an inquiry of marital status if such 
                inquiry is for the purpose of ascertaining the surety's 
                rights and remedies applicable to the granting of a 
                bond and not to discriminate in a determination of 
                bondability;
                    ``(B) to make an inquiry of the applicant's age if 
                such inquiry is for the purpose of determining the 
                amount and probable continuance of bondability; or
                    ``(C) to make an inquiry as to where the applicant 
                has previously obtained a bond, in order to determine 
                bonding history, or other pertinent element of 
                bondability, except that an applicant may not be 
                assigned a negative factor or value because such 
                applicant previously obtained a bond through--
                            ``(i) an individual or personal surety;
                            ``(ii) a bonding assistance program 
                        expressly authorized by law;
                            ``(iii) any bonding program administered by 
                        a nonprofit organization for its members or an 
                        economically disadvantaged class of persons; or
                            ``(iv) any special purpose bonding program 
                        offered by a profitmaking organization to meet 
                        special needs.
            ``(3) Additional activities not constituting 
        discrimination.--It is not a violation of this section for a 
        surety to refuse to issue a bond pursuant to--
                    ``(A) any bonding assistance program authorized by 
                law for an economically disadvantaged class of persons;
                    ``(B) any bonding assistance program administered 
                by a nonprofit organization for its members or an 
                economically disadvantaged class of persons; or
                    ``(C) any special purpose bonding program offered 
                by a profitmaking organization to meet special needs,
        if such refusal is required by or made pursuant to such 
        program.''.
    (b) Definition of Adverse Action.--Section 9301 of title 31, United 
States Code, is amended--
            (1) by striking the period at the end of paragraph (1) and 
        inserting a semicolon;
            (2) by striking the period at the end of paragraph (2) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(3) `adverse action'--
                    ``(A) means a denial of a bond, a change in the 
                terms of an existing bonding arrangement, or a refusal 
                to issue a bond in the amount or on substantially the 
                terms requested; and
                    ``(B) does not include any refusal to issue an 
                additional bond under an existing bonding arrangement 
                where the applicant is in default, or where such 
                additional bond would exceed a previously established 
                bonding limit.''.

SEC. 4. CIVIL PENALTIES.

    Section 9308 of title 31, United States Code, is amended--
            (1) in the first sentence by striking ``A surety 
        corporation'' and inserting the following:
    ``(a) Liability to the United States.--A surety corporation'';
            (2) in the second sentence by striking ``A civil action'' 
        and inserting the following:
    ``(c) Jurisdiction.--A civil action'';
            (3) in the third sentence by striking ``A penalty imposed'' 
        and inserting the following:
    ``(d) Effect of Penalties on Contracts.--A penalty imposed''; and
            (4) by inserting after subsection (a) (as designated by 
        paragraph (1)) the following new subsection:
    ``(b) Liability for Discriminatory Action.--Any surety corporation 
that fails to comply with section 9310(b) shall be liable to the 
applicant for--
            ``(1) any actual damage sustained by such applicant 
        (individually or as a member of a class); and
            ``(2) in the case of any successful action under this 
        subsection, the costs of the action, together with reasonable 
        attorney's fees, as determined by the court.''.

SEC. 5. REGULATIONS.

    The Secretary of the Treasury shall issue such proposed regulations 
as may be necessary to carry out this Act not later than 270 days after 
the date of the enactment of this Act. The final regulations shall 
become effective not later than 1 year after the date of enactment of 
this Act.

SEC. 6. EFFECTIVE DATE.

    The amendments made by this Act shall become effective on the 
earlier of--
            (1) the effective date of final regulations promulgated 
        pursuant to section 5; or
            (2) the end of the 1-year period beginning on the date of 
        enactment of this Act.
                                 <all>
```