I

104TH CONGRESS

2D SESSION H. R. 3702

To prohibit discrimination on the basis of certain factors with respect to

any aspect of a surety bond transaction.

IN THE HOUSE OF REPRESENTATIVES

JUNE 24, 1996

Ms. NORTON introduced the following bill; which was referred to the

Committee on the Judiciary

A BILL

To prohibit discrimination on the basis of certain factors

with respect to any aspect of a surety bond transaction.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Equal Surety Bond

5 Opportunity Act’’.

6 SEC. 2. EQUAL SURETY BOND OPPORTUNITY REQUIRE7 MENTS.

8 (a) ACTIVITIES CONSTITUTING DISCRIMINATION.—It

9 shall be unlawful for any surety to discriminate against
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1 any applicant, with respect to any aspect of a surety bond

2 transaction—

3 (1) on the basis of race, color, religion, national

4 origin, sex, marital status, sexual orientation, dis5 ability, or age (if the applicant has the capacity to

6 contract);

7 (2) because the applicant has in good faith ex8 ercised any right under this Act;

9 (3) because the applicant previously obtained a

10 bond through an individual or personal surety; or

11 (4) because the applicant previously obtained a

12 bond through—

13 (A) any bonding assistance program ex14 pressly authorized by law;

15 (B) any bonding assistance program ad16 ministered by a nonprofit organization for its

17 members or an economically disadvantaged

18 class of persons; or

19 (C) any special purpose bonding program

20 offered by a profit-making organization to meet

21 special needs.

22 (b) ACTIVITIES NOT CONSTITUTING DISCRIMINA23 TION.—It shall not constitute discrimination for purposes

24 of this Act for a surety—
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1 (1) to make an inquiry of marital status if such

2 inquiry is for the purpose of ascertaining the sure3 ty’s rights and remedies applicable to the granting

4 of a bond and not to discriminate in a determination

5 of bondability;

6 (2) to make an inquiry of the applicant’s age if

7 such inquiry is for the purpose of determining the

8 amount and probable continuance of bondability; or

9 (3) to make an inquiry as to where the appli10 cant has previously obtained a bond, in order to de11 termine bonding history, or other pertinent element

12 of bondability, except that an applicant may not be

13 assigned a negative factor or value because the ap14 plicant previously obtained a bond through—

15 (A) an individual or personal surety;

16 (B) a bonding assistance program ex17 pressly authorized by law;

18 (C) any bonding program administered by

19 a nonprofit organization for its members or an

20 economically disadvantaged class of persons; or

21 (D) any special purpose bonding program

22 offered by a profit-making organization to meet

23 special needs.
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1 (c) ADDITIONAL ACTIVITIES NOT CONSTITUTING

2 DISCRIMINATION.—It is not a violation of this Act for a

3 surety to refuse to issue a bond pursuant to—

4 (1) any bonding assistance program authorized

5 by law for an economically disadvantaged class of

6 persons;

7 (2) any bonding assistance program adminis8 tered by a nonprofit organization for its members or

9 an economically disadvantaged class of persons; or

10 (3) any special purpose bonding program of11 fered by a profit-making organization to meet special

12 needs;

13 if such refusal is required by or made pursuant to such

14 program.

15 (d) REASONS FOR ADVERSE ACTION; PROCEDURE

16 APPLICABLE; DEFINITION.—

17 (1) NOTICE REQUIRED.—

18 (A) IN GENERAL.—Except as provided in

19 subparagraph (B), any surety approved under

20 section 9304 of title 31, United States Code,

21 shall notify an applicant of the surety’s action

22 on a completed application before the end of the

23 10-day period beginning on the date the appli24 cation is filed with the surety.
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1 (B) EXTENSION.—The 10-day period re2 ferred to in subparagraph (A) may be extended

3 an additional 10 days if the surety has not is4 sued a bond to the applicant during the 1-year

5 period ending on the date the application is

6 filed with the surety.

7 (2) STATEMENT OF REASONS.—

8 (A) IN GENERAL.—Each applicant against

9 whom adverse action is taken shall be entitled

10 to a statement of reasons for such action from

11 the surety.

12 (B) ACCEPTABLE FORMS OF STATE13 MENT.—A surety satisfies the requirement es14 tablished under subparagraph (A) by—

15 (i) providing a statement of reasons in

16 writing as a matter of course to applicants

17 against whom adverse action is taken; or

18 (ii) giving written notification of ad19 verse action which discloses—

20 (I) the applicant’s right to a

21 statement of reasons within 30 days

22 after receipt by the surety of a re23 quest made within 60 days after such

24 notification; and
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1 (II) the identity of the person or

2 office from which such statement may

3 be obtained.

4 (C) ORAL STATEMENT PERMITTED.—Such

5 statement may be given orally if the written no6 tification advises the applicant of the appli7 cant’s right to have the statement of reasons

8 confirmed in writing on written request.

9 (3) SPECIFICITY OF REASONS.—A statement of

10 reasons meets the requirements of this Act only if

11 it contains specific reasons for the adverse action

12 taken.

13 (4) APPLICABILITY IN CASE OF 3D PARTY AP14 PLICATIONS.—In the case of a request to a surety

15 by a third party to issue a bond directly or indirectly

16 to an applicant, the notification and statement of

17 reasons required by this section may be made di18 rectly by such surety, or indirectly through the third

19 party, if the identity of the surety is disclosed to the

20 applicant.

21 (5) APPLICABILITY IN CASE OF SURETIES

22 WHICH ACCEPT FEW APPLICATIONS.—The require23 ments of paragraph (2), (3), or (4) may be satisfied

24 by oral statements or notifications in the case of any

25 surety who did not act on more than 100 applica-
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1 tions during the calendar year in which the adverse

2 action is taken.

3 (e) ADVERSE ACTION DEFINED.—For purposes of

4 this Act, the term ‘‘adverse action’’—

5 (1) means a denial of a bond, a change in the

6 terms of an existing bonding arrangement, or a re7 fusal to issue a bond in the amount or on substan8 tially the terms requested; and

9 (2) does not include any refusal to issue an ad10 ditional bond under an existing bonding arrange11 ment where the applicant is in default, or where

12 such additional bond would exceed a previously es13 tablished bonding limit.

14 SEC. 3. CIVIL LIABILITY.

15 (a) DAMAGES.—Any surety who fails to comply with

16 section 2(a) shall be liable to the aggrieved applicant for—

17 (1) any actual damage sustained by such appli18 cant (individually or as a member of a class); and

19 (2) in the case of any successful action under

20 this section, the costs of the action, together with

21 reasonable attorney’s fees as determined by the

22 court.

23 (b) EQUITABLE RELIEF.—Upon application by an

24 aggrieved applicant, a court of competent jurisdiction may

25 enjoin a surety from violating the requirements of this Act
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1 or grant such other equitable relief as the court deter2 mines to be appropriate to enforce such requirements.

3 (c) JURISDICTION.—Any action under this section

4 may be brought in any United States district court, or

5 in any other court of competent jurisdiction, within 1 year

6 after the date of the occurrence of the violation involved.

7 SEC. 4. ADMINISTRATIVE ENFORCEMENT.

8 (a) IN GENERAL.—A company may not be approved

9 as a surety by the Secretary of the Treasury under section

10 9304 of title 31, United States Code, or provide any surety

11 bond pursuant to such section unless such company main12 tains full compliance with the requirements of this Act.

13 (b) REQUIREMENTS RELATING TO ENFORCEABILITY

14 OF ACT.—

15 (1) SIGNED STATEMENT OF COMPLIANCE WITH

16 APPLICATION.—Section 9305(a) of title 31, United

17 States Code, is amended—

18 (A) by striking ‘‘and’’ at the end of para19 graph (1);

20 (B) by striking the period at the end of

21 paragraph (2) and inserting ‘‘; and’’; and

22 (C) by adding at the end the following new

23 paragraph:

24 ‘‘(3) a statement of compliance with the Equal

25 Surety Bond Opportunity Act which is signed under
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1 penalty of perjury by the president and the secretary

2 of the corporation.’’.

3 (2) COMPLIANCE AS A CONDITION FOR AP4 PROVAL OF APPLICATION.—Section 9305(b) of title

5 31, United States Code, is amended—

6 (A) by striking ‘‘and’’ at the end of para7 graph (2);

8 (B) by striking the period at the end of

9 paragraph (3) and inserting ‘‘; and’’; and

10 (C) by adding at the end the following new

11 paragraph:

12 ‘‘(4) the corporation is in full compliance with

13 the Equal Surety Bond Opportunity Act.’’.

14 (3) SIGNED STATEMENT OF COMPLIANCE WITH

15 QUARTERLY REPORTS.—Section 9305(c) of title 31,

16 United States Code, is amended by inserting ‘‘and a

17 statement of compliance with the Equal Surety

18 Bond Opportunity Act’’ before the period.

19 (4) ENFORCEMENT AUTHORITY OF SECRETARY

20 OF THE TREASURY.—Section 9305(d) of title 31,

21 United States Code, is amended—

22 (A) in paragraph (1), by inserting ‘‘or the

23 provisions of the Equal Surety Bond Oppor24 tunity Act’’ before the semicolon;
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1 (B) by striking ‘‘and’’ at the end of para2 graph (2);

3 (C) by striking the period at the end of

4 paragraph (3) and inserting ‘‘; and’’; and

5 (D) by adding at the end the following new

6 paragraph:

7 ‘‘(4) may, after the end of the 1-year period be8 ginning on the effective date of any revocation under

9 paragraph (1) of the authority of a surety corpora10 tion for noncompliance with the Equal Surety Bond

11 Opportunity Act, reauthorize such corporation to

12 provide surety bonds under section 9304.’’.

13 (5) REVOCATION FOR FAILURE TO PAY CER14 TAIN JUDGMENTS.—Section 9305(e) of title 31,

15 United States Code, is amended—

16 (A) by striking ‘‘and’’ at the end of para17 graph (1);

18 (B) by redesignating paragraph (2) as

19 paragraph (3); and

20 (C) by inserting after paragraph (1) the

21 following new paragraph:

22 ‘‘(2) the corporation does not pay a final judg23 ment or order against the corporation for noncompli24 ance with the Equal Surety Bond Opportunity Act
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1 or fails to comply with any order under section 3(c)

2 of such Act; and’’.

3 (c) TECHNICAL AND CONFORMING AMENDMENT.—

4 Section 9304(a)(3) of title 31, United States Code, is

5 amended by inserting ‘‘and section 4(a) of the Equal Sur6 ety Bond Opportunity Act’’ before the period.

7 (d) REGULATIONS.—

8 (1) IN GENERAL.—The Secretary of the Treas9 ury shall prescribe such regulations as may be nec10 essary to carry out the purposes of this Act.

11 (2) INITIAL REGULATIONS.—The initial regula12 tions prescribed pursuant to paragraph (1) shall

13 take effect at the earliest practicable date after the

14 date of the enactment of this Act and not later than

15 the end of the 1-year period beginning on such date

16 of enactment.

17 SEC. 5. EFFECTIVE DATE.

18 Sections 2(d) and 4(a) shall take effect on the earlier

19 of—

20 (1) the effective date of the initial regulations

21 prescribed pursuant to section 4(d); or

22 (2) the end of the 1-year period beginning on

23 the date of the enactment of this Act.

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