61992 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Rules and Regulations 

and involves no extraordinary 

circumstances. 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use 

The FAA has analyzed this final rule 

under Executive Order 13211, Actions 

Concerning Regulations that 

Significantly Affect Energy Supply, 

Distribution, or Use (May 18, 2001). We 

have determined that it is not a 

‘‘significant energy action’’ under the 

executive order because it is not a 

‘‘significant regulatory action’’ under 

Executive Order 12866, and it is not 

likely to have a significant adverse effect 

on the supply, distribution, or use of 

energy. 

Availability of Rulemaking Documents 

You can get an electronic copy of 

rulemaking documents using the 

Internet by— 

1. Searching the Federal eRulemaking 

Portal (http://www.regulations.gov); 

2. Visiting the FAA’s Regulations and 

Policies Web page at http://

www.faa.gov/regulations_policies/

rulemaking/; or 

3. Accessing the Government Printing 

Office’s Web page at http://

www.gpoaccess.gov/fr/index.html. 

You can also get a copy by sending a 

request to the Federal Aviation 

Administration, Office of Rulemaking, 

ARM–1, 800 Independence Avenue 

SW., Washington, DC 20591, or by 

calling (202) 267–9680. Make sure to 

identify the amendment number or 

docket number of this rulemaking. 

Anyone is able to search the 

electronic form of all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

statement in the Federal Register 

published on April 11, 2000 (Volume 

65, Number 70; Pages 19477–78) or you 

may visit http://www.regulations.gov. 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act (SBREFA) of 

1996 requires the FAA to comply with 

small entity requests for information or 

advice about compliance with statutes 

and regulations within its jurisdiction. If 

you are a small entity and you have a 

question regarding this document, you 

may contact your local FAA official, or 

the person listed under the FOR FURTHER

INFORMATION CONTACT heading at the 

beginning of the preamble. You can find 

out more about SBREFA on the Internet 

at http://www.faa.gov/regulationspolicies/rulemaking/sbre-act/. 

List of Subjects in 14 CFR Part 406 

Administrative procedure and review, 

Commercial space transportation, 

Enforcement, Investigations, Penalties, 

Rules of adjudication. 

The Amendment 

In consideration of the Foregoing, the 

Federal Aviation Administration 

amends part 406 of Title 14, Code of 

Federal Regulations as follows: 

PART 406—INVESTIGATIONS, 

ENFORCEMENT, AND 

ADMINISTRATIVE REVIEW 

■ 1. The authority citation for part 406 

continues to read as follows: 

Authority: 51 U.S.C. 50901–50923. 

■ 2. Amend § 406.9 by revising 

paragraph (a) to read as follows: 

§ 406.9 Civil penalties. 

(a) Civil penalty liability. Under 51 

U.S.C. 50917(c), a person found by the 

FAA to have violated a requirement of 

the Act, a regulation issued under the 

Act, or any term or condition of a 

license or permit issued or transferred 

under the Act, is liable to the United 

States for a civil penalty of not more 

than $120,000 for each violation, as 

adjusted for inflation. A separate 

violation occurs for each day the 

violation continues. 

* * * * * 

Issued under authority provided by 49 

U.S.C. 106(f) and 51 U.S.C. 50904–50905 in 

Washington, DC, on September 29, 2014. 

Michael P. Huerta, 

Administrator. 

[FR Doc. 2014–24528 Filed 10–15–14; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Fiscal Service 

31 CFR Part 223 

RIN 1510–AB27 

Surety Companies Doing Business 

With the United States 

AGENCY: Bureau of the Fiscal Service, 

Fiscal Service, Treasury. 

ACTION: Final rule. 

SUMMARY: The Department of the 

Treasury, Bureau of the Fiscal Service 

(Treasury) administers the Federal 

corporate surety program. Treasury 

issues certificates of authority to 

qualified sureties to underwrite and 

reinsure Federal bond obligations. 

Bonds underwritten by Treasurycertified sureties satisfy bonding 

requirements, provided such bonds are 

accepted by the agency bond-approving 

official. Treasury is amending its 

regulation to expressly provide that an 

agency may decline to accept a bond 

underwritten by a Treasury-certified 

surety for cause, provided the agency 

satisfies the requirements specified in 

the final rule. Treasury is also revising 

the procedures it uses to adjudicate any 

complaint received from an agency 

requesting that a surety’s certificate of 

authority be revoked. 

DATES: This rule is effective December 

15, 2014. 

ADDRESSES: You can download this rule 

at the following Web site: http://

www.fiscal.treasury.gov/fsreports/ref/

suretyBnd/surety_home.htm. You may 

also inspect and copy this rule at: 

Treasury Department Library, 1500 

Pennsylvania Avenue NW., Washington, 

DC 20220. 

Before visiting, you must call (202) 

622–0990 for an appointment. 

In accordance with the federal 

eRulemaking Initiative, the Bureau of 

the Fiscal Service publishes rulemaking 

information on http://

www.regulations.gov. 

Regulations.gov offers the public the 

ability to comment on, search, and view 

publicly available rulemaking materials, 

including comments received on rules. 

FOR FURTHER INFORMATION CONTACT: 

Melvin Saunders, Manager, Surety Bond 

Branch, Bureau of the Fiscal Service, at 

(202) 874–6850 or melvin.saunders@

fiscal.treasury.gov, or James J. Regan, 

Senior Counsel, Bureau of the Fiscal 

Service, at (202) 874–6680 or 

james.regan@fiscal.treasury.gov. 

SUPPLEMENTARY INFORMATION: On March 

17, 2011, Treasury published a notice of 

proposed rulemaking (NPRM) at 76 FR 

14592, requesting comment on a 

proposed amendment to 31 CFR part 

223 (Part 223), which implements the 

requirements of 31 U.S.C. 9304–9308. 

The NPRM proposed two main 

amendments to Part 223. First, under 

NPRM § 223.17, Treasury proposed to 

clarify the circumstances under which a 

Federal agency bond-approving official 

could decline to accept a bond 

underwritten by a Treasury-certified 

surety. Second, under NPRM § 223.20, 

Treasury proposed to clarify the 

procedures and standard of review to be 

used by Treasury in adjudicating any 

complaint submitted by an agency to 

Treasury requesting that a surety’s 

certificate be revoked. 

After consideration of the comments 

received, Treasury is amending its 


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regulation to expressly provide that an 

agency has discretion to decline to 

accept a bond underwritten by a 

Treasury-certified surety for cause, 

provided the agency satisfies the 

requirements specified in the final rule. 

Treasury is also revising the procedures 

it uses to adjudicate any complaint 

received from an agency requesting that 

a surety’s certificate of authority be 

revoked. 

I. Summary of Comments Received and 

Treasury’s Responses 

Treasury sought comments on all 

aspects of the proposed rule. Treasury 

received 14 comment letters from a 

cross-section of entities and individuals 

associated with the surety industry. Five 

of these comment letters were submitted 

by surety companies, four by surety 

trade associations, three by law firms, 

and two by individuals. The two 

individuals work for immigration 

bonding companies or bonding 

agencies, but the letters were submitted 

in their individual capacities. 

Thirteen of the commenters submitted 

comments that were opposed to the 

NPRM, as written, with several 

commenters suggesting the NPRM be 

withdrawn. The commenters who 

suggested the NPRM be withdrawn 

expressed the opinion that the current 

statutes and regulations are adequate to 

address the collection and performance 

issues that are of concern to Treasury. 

One comment from a national trade 

association representing construction 

subcontractors, specialty trade 

contractors, and suppliers, supported 

the NPRM. This commenter emphasized 

that subcontractors working on Federal 

construction projects ‘‘rely on the 

payment bonds’’ underwritten by 

Treasury-certified sureties to ensure 

their final payment. This commenter 

emphasized that the Federal 

Government’s extra oversight of this 

issue ‘‘will increase the value of this 

important payment assurance to 

subcontractors.’’ 

A. Comments on Proposed § 223.17 and 

Treasury’s Responses 

1. Several commenters expressed the 

opinion that proposed § 223.17 conflicts 

with 31 U.S.C. 9305(e). Section 9305(e) 

provides that: ‘‘A surety corporation 

providing a surety bond under section 

9304 of this title [31 U.S.C. 9304] may 

not provide any additional bond under 

that section if—(1) the corporation does 

not pay a final judgment or order against 

it on the bond; and (2) no appeal or stay 

of the judgment or order is pending 30 

days after the judgment or order is 

entered.’’ These commenters suggest 

that section 9305(e) provides the only 

circumstances under which an agency 

can decline to accept a bond from a 

surety. 

Section 223.17 does not conflict with 

section 9305(e). Section 9305(e) sets the 

statutory standard under which a 

surety’s certificate of authority to write 

any additional bond for any agency is 

revoked by operation of law for failure 

to pay a final court judgment or order. 

In contrast, § 223.17, as articulated in 

the final rule, clarifies the scope of an 

agency’s existing authority to decline to 

accept a particular bond or bonds from 

a surety. 

Under 31 U.S.C. 9304(b), and its 

predecessor derivations, Congress 

expressly conditioned acceptance of a 

bond on the approval of a Federal 

agency bond-approving official. This 

provision authorizes agencies to decline 

to accept bonds underwritten by 

Treasury-certified sureties. In enacting 

this provision, Congress expressed the 

general intent that Treasury-certification 

status does not provide a guarantee to a 

surety that its bonds will be accepted by 

an agency in all cases. Federal courts 

have also recognized that agencies have 

the discretion to decline acceptance of 

bonds from Treasury-certified sureties. 

See, e.g., Concord Casualty & Surety Co. 

v. United States, 69 F.2d 78 (2d Cir. 

1934); American Druggists Ins. Co. v. 

Bogart, 707 F.2d 1229 (11th Cir. 1983). 

Several commenters appeared to 

suggest that a certificate, once granted, 

gives a surety the right to have its bonds 

approved in all cases, unless the 

surety’s authority to write bonds is 

revoked by court order or judgment 

under 31 U.S.C. 9305(e). This view is 

incorrect as it fails to give effect to the 

intent of Congress under section 

9304(b). 

Moreover, a court judgment or order 

meeting the requirements of section 

9305(e) precludes the surety from 

writing any Federal bond for any 

agency. In contrast, § 223.17 authorizes 

an agency official to decline bonds 

presented by a Treasury-certified surety 

to that agency for cause. The Treasurycertified surety is still authorized to 

present additional bonds to other 

agencies. 

2. Several commenters expressed the 

view that Federal agencies often err in 

making administrative determinations 

that bond obligations are due and 

owing. These commenters believe that a 

court is the proper arbiter of bond 

disputes because agency administrative 

practices are allegedly deficient. 

Treasury recognizes the importance of 

fair and accurate administrative 

processes. However, Treasury does not 

believe it is necessary or appropriate to 

require an agency to reduce every surety 

claim to judgment, or submit a surety 

revocation complaint to Treasury in 

every instance, in order to facilitate 

equitable and efficient resolution of 

surety performance and collection 

concerns at the agency level. 

Under final rule § 223.17(b), a surety 

company is provided a series of 

protections before an agency can decline 

to accept its bonds. First, the agency 

must provide advance written notice to 

the surety and provide the surety with 

the opportunity to rebut the agency’s 

reasons for declination and the 

opportunity to cure. Second, the agency 

must consider any submission by the 

surety and issue a written determination 

that the bonds should not be accepted. 

Third, the agency must issue a 

regulation pursuant to notice and 

comment rulemaking that articulates the 

agency’s procedures and for cause 

standards for declining bonds. Treasury 

believes that these requirements will 

improve any agency practices that are 

allegedly deficient and will provide 

certified surety companies with 

adequate due process protections before 

their bonds can be declined by a 

particular agency. 

If a surety is not satisfied with the 

agency bond-approving official’s 

decision to decline bonds, the surety 

may petition a court of competent 

jurisdiction to stay or enjoin the 

agency’s written determination to 

decline additional bonds from that 

surety. § 223.17(b)(5)(i). 

3. Several commenters expressed 

concern that ‘‘administratively final 

bond obligation’’ was not defined in the 

NPRM for purposes of governing the 

exercise of agency discretion under 

§ 223.17. One commenter suggested this 

lack of definition could lead to 

inconsistent definitions, procedures, 

and decisions across agencies. 

Treasury believes that this 

determination should be left to the 

agency that is requiring the bond. 

Accordingly, final rule § 223.17(b)(3) 

requires the agency to define in its 

regulation when a bond obligation 

becomes administratively final under 

the agency’s procedures. 

4. Several commenters expressed 

concern that an agency bond-approving 

official could decline additional bonds 

based on a single bond obligation. One 

commenter stated the standard was 

coercive because it could force a surety 

to capitulate to the agency’s demand for 

payment even if the surety has a good 

defense on a bond claim. One 

commenter expressed concern that the 

proposed rule would allow an agency to 

decline bonds for a ‘‘single, immaterial, 

or insignificant delinquency’’ rather 

than requiring that the declination be 


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61994 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Rules and Regulations 

limited to a situation where the surety 

is ‘‘significantly delinquent either in the 

number of outstanding bills or dollar 

amounts thereof.’’ 

Treasury expects that agencies will 

act in good faith when exercising their 

authority to decline bonds. The agency 

must provide the Treasury-certified 

surety with extensive administrative 

due process protections, as specified in 

§ 223.17(b), prior to declining bonds 

from that surety. 

5. Several commenters engaged in one 

agency’s immigration surety bond 

business alleged that the agency does 

not afford sureties with adequate due 

process in determining when a bond 

obligation is administratively final and 

that the agency has a high 

administrative error rate in declaring 

bond obligations due. One commenter 

stated that giving that agency’s bondapproving official the discretion not to 

accept additional bonds under the 

standards articulated in the proposed 

rule would give the agency unfettered 

discretion. 

Treasury does not believe it would be 

appropriate to comment specifically on 

the allegations made by these 

commenters on a particular agency’s 

alleged internal processes. We do 

emphasize, however, that Treasury 

believes that a fair and equitable 

administrative process is essential. 

Our response to Comment #2 

summarizes the due process protections 

afforded to sureties under the final rule. 

The final rule ensures a fair and 

equitable administrative process, and 

expressly provides that each agency 

may exercise the discretion to decline 

additional bonds under § 223.17(b), only 

in accordance with the specified 

requirements. 

6. One commenter raised a concern 

that permitting agencies to define 

additional ‘‘for cause’’ reasons to 

decline bonds in agency-specific 

regulations, as provided in proposed 

§ 223.17, would provide extraordinary 

leverage to agencies that already have 

allegedly flawed administrative 

processes. Another commenter raised a 

concern with the proposed ‘‘for cause’’ 

provision because of its inherent ‘‘lack 

of specificity and consistency, as well as 

the potential for misapplication and 

mis-implementation’’ across disparate 

agencies. 

‘‘For cause’’ includes circumstances 

when a surety has failed to pay or 

satisfy an administratively final bond 

obligation due the agency. Other ‘‘for 

cause’’ reasons for declining bonds will 

depend on the particular needs and 

concerns of each agency. The final rule 

under § 223.17(b)(3) requires an agency 

to issue a regulation subject to notice 

and comment rulemaking before 

declining any bonds. This requirement 

will ensure that surety companies have 

the opportunity to comment on the ‘‘for 

cause’’ reasons proposed by each 

agency. 

7. Two commenters suggested the 

proposed rule would upset, or 

undermine, the surety bond contract 

tripartite relationship in which the 

surety (secondary obligor) agrees to be 

answerable to the obligee (Federal 

agency) for the debt or default of the 

principal (primary obligor). One of these 

commenters expressed concern that the 

proposed rule focuses on the obligation 

of the secondary obligor (the surety) 

without first affording the primary 

obligor (the principal) the right to have 

its position adjudicated. The commenter 

suggested this focus could yield 

inconsistent results if the surety satisfies 

the Federal agency’s bond demand and 

the principal is required to indemnify 

the surety, but the principal later defeats 

the Federal agency’s default claim in 

court. 

The final rule in § 223.17(b)(3) 

requires the agency to articulate its 

procedures and for cause standards for 

declining bonds in a regulation subject 

to notice and comment rulemaking 

before it can decline bonds from a 

particular surety. That agency regulation 

must define when a bond obligation is 

administratively final. The terms of the 

final rule do not alter existing tripartite 

bond contract obligations, but 

reasonably balance the interests of the 

parties in determining when additional 

bonds presented to an agency may be 

declined. 

8. As stated in the NPRM, Federal 

courts have affirmed that section 

9304(b) affords agency bond-approving 

officials discretion to decline to accept 

a bond underwritten by a Treasurycertified surety, consistent with the due 

process standards articulated in the 

proposed rule. See, e.g., Concord 

Casualty & Surety Co. v. United States, 

69 F.2d 78 (2d Cir. 1934); American 

Druggists Ins. Co. v. Bogart, 707 F.2d 

1229 (11th Cir. 1983). One commenter 

stated that these cases, in dicta, merely 

stand for the proposition that a bondapproving official could disapprove a 

particular undertaking in a particular 

case. One commenter stated this 

authority is not a basis for the NPRM to 

authorize agencies to bar a surety on a 

blanket basis. 

Treasury has broad administrative 

authority over certificate of authority 

matters. See Concord, 69 F.2d at 80–81 

(The ‘‘supervision, conduct, and 

responsibility’’ of sureties operating 

under Treasury-issued certificates of 

authority is placed with Treasury). In 

the final rule, Treasury, in the exercise 

of its discretion, has decided that 

agency bond-approving officials may 

decline bonds from a Treasury-certified 

surety under section 9304(b) for cause. 

The agency must issue a regulation 

specifying the procedures and for cause 

standards for declining bonds. The 

Concord and American Druggists cases 

provide roadmaps for agencies to 

decline bonds in particular cases, in the 

absence of specific Treasury guidance. 

These cases do not limit, and in fact 

expressly recognize, Treasury’s plenary 

authority to regulate certificates of 

authority that it issues. 

9. One commenter stated that 31 

U.S.C. 9305(d)(1) clearly and 

unambiguously provides that Treasury 

may revoke the authority of a surety 

corporation to do new business if the 

Secretary decides the corporation is 

insolvent or is in violation of sections 

9304, 9305, 9306. The commenter stated 

that none of these three sections 

‘‘authorize a Government agency to 

reject a bond issued by a surety who has 

an outstanding unpaid bond obligation 

that the agency contends is due and 

owing.’’ 

As explained in the discussion under 

Comment #1, the discretion of a Federal 

agency to decline additional bonds 

underwritten by a Treasury-certified 

surety, consistent with the requirements 

of §§ 223.16 and 223.17 in the final rule, 

is authorized under 31 U.S.C. 9304(b). 

10. Several commenters expressed the 

view that the proposed amendment to 

part 223 is not necessary as Treasury, in 

the NPRM, stated it has only recognized 

a problem with sureties in ‘‘anomalous 

and rare’’ cases. One commenter 

expressed the view that the proposed 

changes are excessive and punitive to 

sureties. Another commenter suggested 

the proposed changes would create 

more strife by compelling litigation and 

parallel administrative practices. This 

commenter stated ‘‘if the surety has 

independently investigated the merits of 

a claim and proceeded in a manner 

consistent with the outcome of its 

investigation [e.g., denied the agency’s 

claim], it has acted responsibly and 

properly, even if it is ultimately 

determined in subsequent litigation that 

the surety’s decision was incorrect.’’ In 

general, these commenters suggested 

that the government has adequate 

recourse against sureties, as sureties are 

precluded from writing additional 

bonds if they have not paid a final 

judgment under the standards of 31 

U.S.C. 9305(e). 

In the NPRM Treasury stated that the 

regulatory amendment was necessary to 

facilitate the prompt resolution of bond 

disputes between Federal agencies and 


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Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Rules and Regulations 61995 

sureties. Treasury noted that, in a 

limited number of cases, sureties appear 

to have simply ignored agency final 

decisions for extended periods of time. 

Treasury stated these ‘‘anomalous and 

rare’’ cases represented an unwelcome 

burden on the Treasury and the public 

fisc. 

The NPRM proposed to address this 

concern. Treasury is particularly 

concerned with situations where a 

surety underwrites high-volume, lowdollar bonds, and hundreds, even 

thousands, of bond cases remain 

unresolved for extended periods of time. 

The commenters appear to suggest that 

a Treasury certificate, once granted, 

gives a surety the unilateral authority to 

decline every agency bond demand with 

impunity based on the surety’s own 

internal investigations. These 

commenters suggest that the agency’s 

recourse is to reduce each bond claim to 

a judgment; otherwise, the agency is 

compelled to continue doing business 

with that surety in all cases. 

We disagree with this position. In our 

view, permitting an agency to decline 

additional bonds under certain 

circumstances, as provided in the final 

rule, may reduce litigation as the agency 

and surety will have the proper 

incentive to resolve disputes at the 

administrative level. Moreover, the 

discretion afforded to agencies under 

§ 223.17(b) is consistent with, and gives 

effect to, 31 U.S.C. 9304(b). 

11. One commenter expressed 

concern that the proposed rule would 

enable an agency to reject bonds from a 

Treasury-certified surety in accordance 

with standards in an agency-specific 

rule or regulation. Another commenter 

expressed concern that agency-specific 

standards could lead to inconsistent 

definitions, procedures, and decisions 

across agencies. 

The agency regulations on declining 

bonds will be subject to notice and 

comment rulemaking. Surety companies 

will have the opportunity to express 

their concerns directly to the agencies 

during this process. 

12. One commenter expressed 

concern that an agency’s decision to 

decline payment and performance 

bonds on a project under proposed 

§ 223.17, after the agency has already 

accepted a project bid bond 

underwritten by that same surety, could 

present contract complications, 

including a claim on the bid bond, 

because the principal may not be able to 

obtain a replacement surety in time. 

We agree with the commenter that 

this sequence of events could present 

unintended contract complications. The 

final rule has been amended under 

§ 223.17(b)(5)(ii) to provide that an 

agency’s authority to decline bonds does 

not apply to otherwise acceptable 

payment and performance contract 

bonds, when the agency has already 

accepted a bid bond from the same 

surety on the particular project. 

13. One commenter recommended 

proposed § 223.17(b)(3) be amended to 

require that an agency post notice of any 

proposed declination of bonds in the 

Federal Register within five days of the 

date the agency gives the surety written 

notice of its intention to decline bonds. 

This commenter also recommended that 

the proposed declination by the agency 

be posted by Treasury as an on-line 

supplement to Department Circular 570. 

Section 223.17(b)(4), as provided in 

the final rule, encourages agencies ‘‘to 

use best efforts to ensure that persons 

conducting business with the agency are 

aware that bonds underwritten by the 

particular certified company will not be 

accepted.’’ Treasury believes each 

agency is in the best position to 

determine how this information should 

be provided to principals who may be 

seeking to do business with the agency. 

We do not believe it is appropriate to 

publish this information in Department 

Circular 570, as the surety will still be 

certified by Treasury to write bonds for 

any other agency. 

14. One commenter asked whether the 

scope of an agency’s authority to decline 

additional bonds under proposed 

§ 223.17 is intended to permit the 

agency to also require the replacement 

of bonds previously accepted by that 

agency. 

Section 223.17, in the final rule, is 

prospective and is not intended to 

require a principal to obtain 

replacement bonds that have already 

been accepted. In contrast, when 

Treasury revokes the authority of a 

surety to underwrite bonds for any 

agency, under 31 U.S.C. 9305(b)–(d) and 

31 CFR 223.18–223.20, agencies are 

advised that they should secure new 

bonds for bonds currently in force if a 

significant amount of liability remains 

outstanding, and that continuous bonds 

should not be renewed. 

15. Several commenters expressed 

concern that the proposed rule would 

require a surety to obtain injunctive 

relief in court in order to prevent the 

agency from declining additional bonds 

under the authority of § 223.17. One of 

these commenters expressed concern 

that this standard would permit an 

agency to impose sanctions which 

eliminate the obligation of the agency to 

prove its claim in court, i.e., reduce the 

claim to final judgment. Another 

commenter recommended that the 

agency not be permitted to decline 

additional bonds until the time to seek 

judicial review has expired or the 

judicial review has been completed. 

Another commenter noted that the 

injunctive relief requirement would 

result in a need to file and engage in 

inefficient fast-track litigation. 

As noted above in our response to 

Comment #10, Treasury is of the view 

that permitting an agency to decline 

additional bonds, subject to a court of 

competent jurisdiction granting the 

surety injunctive relief, as provided in 

the final rule, may reduce litigation as 

the agency and surety will have the 

proper incentive to resolve disputes at 

the administrative level. 

16. One commenter expressed 

concern that the ‘‘willful conduct’’ 

exception in the proposed rule would 

provide an agency too much discretion 

in deciding whether to permit the surety 

to cure its noncompliance to avoid nonacceptance of its bonds by the agency. 

Under § 223.17(b)(1)(iv), as provided 

in the final rule, a surety has the 

opportunity to cure its noncompliance 

to avoid non-acceptance of its bonds by 

the agency. The ‘‘willful conduct’’ 

exception under § 223.20(g), as 

proposed and in the final rule, whereby 

a surety does not have the opportunity 

to cure its noncompliance in specified 

circumstances, only applies to Treasury 

revocation actions. Agencies do not 

have authority to exercise the ‘‘willful 

conduct’’ cure exception. 

17. One commenter suggested that an 

agency’s proposed decision to decline 

bonds should be submitted to an 

independent Administrative Law Judge 

under 5 U.S.C. 556, due to what the 

commenter describes as the serious 

nature of the action, the impact on the 

principal and surety, costs, and 

potential delays. 

The formal adjudication requirements 

under the Administrative Procedure Act 

only apply in cases ‘‘required by statute 

to be determined on the record after an 

opportunity for an agency hearing.’’ 5 

U.S.C. 554(a) and 556(a). The authority 

for an agency to decline additional 

bonds is established under 31 U.S.C. 

9304(b) and 31 CFR 223.17(b). Section 

556 procedures are not required because 

the surety statutes, 31 U.S.C. 9304– 

9308, do not require a formal 

adjudication to be determined on the 

record after an opportunity for a 

hearing. 

18. One commenter suggested the 

proposed rule should be amended to 

provide guidance on Treasury’s role in 

assuring that the standards in the rule 

and in an agency’s rules and processes, 

meet minimum due process standards. 

Treasury’s final rule establishes 

requirements that apply to all agencies 

that exercise discretion under 


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61996 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Rules and Regulations 

§ 223.17(b) to decline bonds from 

Treasury-certified sureties. 

B. Comments on Proposed § 223.20 and 

Treasury’s Responses 

19. Several commenters expressed 

concern that under proposed § 223.20 

Treasury would not conduct a de novo 

review of an agency’s administratively 

final decision (that the surety owes a 

past-due bond obligation) when 

adjudicating the agency’s complaint 

requesting that the surety’s certificate be 

revoked. The NPRM specified that 

Treasury would review whether the 

agency’s administratively final decision 

(that the surety owes a past-due bond 

obligation) was reasonable, based on a 

consideration of relevant factors, and 

did not involve a clear error of 

judgment. The commenters expressed 

concern this standard of review would 

not provide sufficient opportunity for 

the surety to present its case to 

Treasury. 

Treasury has amended § 223.20(f) in 

the final rule to provide that revocation 

complaints submitted to Treasury will 

be adjudicated by determining whether 

the default is clear and whether the 

company’s failure to pay or satisfy the 

bonds is based on inadequate grounds. 

This standard of review retains, in large 

part, the existing standard under current 

31 CFR 223.18. This change addresses 

the concerns raised by these 

commenters, and ensures that each 

surety has a meaningful opportunity to 

present its position to Treasury before a 

revocation is made. Matthews v. 

Eldridge, 424 U.S. 319, 333 (1976) 

(Fundamental due process is satisfied 

when an individual is given the 

opportunity to be heard at a 

‘‘meaningful time and in a meaningful 

manner’’). 

The final rule under § 223.20(a)(1) 

requires that an agency submitting a 

revocation complaint to Treasury certify 

that the bond obligation that is the 

subject of the complaint is 

administratively final under the 

agency’s regulations or other authorities. 

In contrast to § 223.17 (which requires 

an agency to publish a regulation), this 

means that an agency has the discretion 

to submit a revocation complaint to 

Treasury without promulgating a 

regulation, as long as the bond 

obligation is administratively final 

under agency authorities and practices. 

This flexibility is appropriate due, in 

part, to the array of due process 

protections afforded to sureties by 

Treasury under § 223.20. 

Treasury anticipates that its 

revocation decisions under § 223.20(f) 

will be subject to judicial review under 

the ‘‘arbitrary, capricious, an abuse of 

discretion, or otherwise not in 

accordance with law’’ standard set forth 

in 5 U.S.C. 706(2)(A). This is the 

judicial review standard of informal 

agency actions, including agency 

adjudications where no hearing or 

formal evidentiary standard is required 

by statute. Camp v. Pitts, 411 U.S. 138, 

142 (1973); Castillo v. Army & Air Force 

Exchange Serv., 849 F.2d 199, 203, n. 1 

(5th Cir. 1988) (reasoning that the 

arbitrary and capricious test of section 

706(2)(A) is the appropriate standard for 

review of an administrative decision 

when an informal hearing is held or 

required, but not pursuant to statute). 

20. Several commenters stated 

Treasury can only revoke a surety’s 

certificate of authority to write Federal 

bonds if the surety fails to pay a final 

judgment on a bond that has not been 

stayed or appealed under 31 U.S.C. 

9305(e). One commenter stated that 

proposed § 223.20 was an impermissible 

attempt to amend 31 U.S.C. 9305(e). 

As detailed above in our responses to 

Comments #1 and #8, Congress granted 

to Treasury the administrative authority 

and responsibility to issue, regulate, and 

revoke certificates of authority to write 

Federal bonds. This broad authority is 

codified in 31 U.S.C. 9305(a)–(d). 

Section 9305(e) sets a statutory 

revocation standard that applies by 

operation of law when a surety fails to 

pay a final court judgment or order, 

without substantive review of the 

underlying dispute by Treasury. It does 

not preclude Treasury, as licensor, from 

establishing an administrative 

revocation standard based on its 

independent authority to do so under 

section 9305(a)–(d). Treasury’s existing 

administrative revocation standards 

have been codified in regulations for 

many decades. For example, the source 

authorities for current 31 CFR 223.18– 

223.20 were published in the Federal 

Register as early as 1969, 1973, and 

1977. Here, Treasury, in the reasonable 

exercise of its administrative discretion, 

has decided to update its existing 

administrative revocation standard 

under 31 CFR 223.20, as provided in the 

final rule. 

21. Proposed § 223.20(c) provided that 

Treasury, on receipt of an agency 

complaint meeting the stated 

requirements, will notify the surety that 

its certificate ‘‘will’’ be revoked in the 

absence of a satisfactory explanation. 

One commenter suggested this 

provision should be amended to 

provided that Treasury ‘‘may’’ revoke 

the certificate, which is the standard 

provided in the current regulation. 

The final rule has been amended 

under § 223.20(c) to provide that 

Treasury will notify the surety of the 

agency complaint, and the notice will 

afford the surety the opportunity to 

address the complaint and demonstrate 

its qualifications to retain its certificate. 

The resolution of the complaint by 

Treasury is governed by § 223.20. 

22. One commenter expressed 

concern that the formal rules of 

evidence and the formal adjudication 

standards provided by the 

Administrative Procedure Act would 

not apply to the informal hearing 

afforded to a surety under proposed 

§ 223.20(f) and (h)(6) and (7). 

The formal adjudication standards 

under the Administrative Procedure Act 

only apply in cases ‘‘required by statute 

to be determined on the record after an 

opportunity for an agency hearing.’’ 5 

U.S.C. 554(a). As discussed in our 

response to Comment #17, the surety 

statutes, 31 U.S.C. 9304–9308, do not 

require a formal adjudication to be 

determined on the record after an 

opportunity for a hearing. 

23. Several commenters suggested 

that the administrative revocation 

standards under proposed § 223.20 

should be amended to provide a surety 

more due process before Treasury makes 

a revocation decision. Some 

commenters suggested the final rule be 

amended to provide the surety an 

opportunity for a trial-like evidentiary 

hearing in § 223.20 revocation actions. 

Fundamental due process is satisfied 

when an individual is given notice and 

the opportunity to be heard at a 

‘‘meaningful time and in a meaningful 

manner.’’ Matthews v. Eldridge, 424 

U.S. 319, 333 (1976). Section 223.20 in 

the final rule provides a panoply of due 

process protections to ensure 

compliance with this standard. Before 

Treasury commences a revocation 

action, the agency must certify to 

Treasury that the bond obligations that 

are the subject of the complaint are 

administratively final under the 

agency’s regulations or other authorities. 

§ 223.20(a)(1). The agency must submit 

documentation to Treasury supporting 

the complaint. § 223.20(b). In addition, 

the agency must certify that the surety’s 

obligation to pay the bonds has not been 

stayed or enjoined by a court of 

competent jurisdiction. § 223.20(a)(3). 

Upon receipt of the complaint, 

Treasury notifies the surety of the facts 

and conduct referenced in the 

complaint, and provides the surety the 

opportunity to demonstrate its 

qualifications to retain its certificate. 

§ 223.20(c). Treasury affords the surety 

the opportunity to request an informal 

hearing. § 223.20(h)(1). If an informal 

hearing is requested, Treasury provides 

the surety with written notice of the 

time and place of the hearing, directs 


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the surety to bring all documents 

necessary and relevant to support its 

position, offers the surety the 

opportunity to be represented by 

counsel at the hearing, and affords the 

surety the opportunity to present any 

relevant material and to examine the 

administrative record. § 223.20(h)(2), (3) 

and (4). The complaining agency may be 

requested to send a representative to the 

hearing to present any relevant material. 

§ 223.20(h)(5). The Treasury Reviewing 

Official is authorized to require the 

submission of additional documentation 

from the complaining agency and the 

surety to ensure appropriate 

consideration of relevant factual or legal 

issues. § 223.20(h)(6). The Treasury 

Reviewing Official prepares a written 

recommendation to the Treasury 

Deciding Official setting forth findings 

and a recommended disposition. 

§ 223.20(h)(10). The Treasury Deciding 

Official makes the final decision based 

on the specified administrative record, 

which includes documentation 

submitted by the surety. § 223.20(h)(10). 

Due process is flexible ‘‘and calls for 

such procedural protections as the 

particular situation demands.’’ 

Matthews, 424 U.S. at 334 (internal 

citations omitted). A surety’s protected 

interest in its certificate of authority to 

write Federal bonds ‘‘is indeed narrow.’’ 

American Druggists Ins. Co. v. Bogart, 

707 F.2d 1229, 1235 (11th Cir. 1983). 

Given this narrow interest, rudimentary 

due process requires ‘‘notice reasonably 

calculated to apprise the surety of the 

charge of unreliability, and an 

opportunity to rebut that charge.’’ Id. at 

1237. The protections in § 223.20, as 

provided in the final rule, are more than 

adequate to satisfy the process required. 

C. General Comments on the NPRM and 

Treasury’s Responses 

24. One trade association, whose 

members underwrite Federal bonds on 

which the Customs and Border 

Protection (CBP) agency is the obligee, 

expressed the opinion that CBP-specific 

authorities set a higher standard for 

actionable surety delinquency and due 

process standards than the proposed 

rule. The commenter suggested that 

Treasury should adopt the CBP 

standards, or clarify that the Treasury 

final rule does not take precedence over 

CBP standards in the context of customs 

bonds. 

CBP has promulgated, under its own 

specific authority, a regulation that 

governs when CBP is authorized to 

decline additional customs bonds from 

a surety when a surety is in default on 

a customs bond. See, e.g., 19 U.S.C. 66, 

1623, 1624; 19 CFR 113.38. Given the 

CBP specific authority, the Treasury 

final rule under § 223.17(b) does not 

supersede or take precedence over the 

CBP regulation. However, Treasury 

declines to accept the CBP standards for 

government-wide application; therefore, 

CBP surety bond regulations do not 

apply to surety bonds presented to, or 

accepted by, other agencies. 

25. The trade association whose 

members write Federal customs bonds 

on which the CBP agency is the obligee, 

recommended that the final rule 

enhance the CBP-specific regulation in 

several ways. 

Treasury is not in a position to amend 

a CBP-specific regulation, and declines 

to do so. Instead, Treasury has 

considered whether the suggestions 

made by this commenter are appropriate 

for the Treasury regulation and has 

amended the final rule, as appropriate. 

26. Two commenters suggested the 

proposed rule was a ‘‘significant 

regulatory action’’ which should be 

subject to additional regulatory review 

procedures under Executive Order 

12866. One of these commenters 

suggested if an agency declines to 

accept bonds from a Treasury-certified 

surety, or if Treasury revokes a surety’s 

certificate, it will have an effect on the 

economy of $100 million or more, 

depending on which surety is involved. 

Treasury has determined that the 

proposed regulation will not have an 

effect on the economy of $100 million 

or more because of the rule’s limited 

scope. Federal bond-approving officials 

already have statutory authority under 

31 U.S.C. 9304(b) to determine which 

bonds proffered by Treasury-certified 

sureties are acceptable. Section 

223.17(b) of the final rule provides that 

an agency bond-approving official may 

decline bonds from a Treasury-certified 

surety for cause, provided the due 

process standards are met. This 

provision does not impact a Treasurycertified surety’s authority to 

underwrite bonds that are presented to 

other Federal agencies for acceptance. 

Under final rule 31 CFR 223.17(b)(5)(i), 

the agency declination authority does 

not apply when the ‘‘for cause’’ basis or 

reason has been stayed or enjoined by 

a court of competent jurisdiction. In 

addition, Treasury already has existing 

authority under current 31 CFR 223.18 

to revoke a surety’s certificate of 

authority based on a complaint received 

from an agency; see also 31 U.S.C. 

9305(d)(1) (example of Treasury’s 

revocation authority). The final rule 

under 31 CFR 223.20 updates the 

procedures used by Treasury to 

adjudicate agency revocation 

complaints. Final rule 31 CFR 

223.20(a)(3) requires an agency 

submitting a revocation complaint to 

Treasury to certify that the bond 

obligations which are the subject of the 

complaint have not been stayed or 

enjoined by a court of competent 

jurisdiction. 

27. One commenter suggested that the 

NPRM 60-day comment period should 

be extended to ensure a sufficient 

number of responses are received. 

The publication of the NPRM in the 

Federal Register, including the 60-day 

notice and comment period, resulted in 

the submission of 14 comment letters to 

Treasury. These letters, which were 

submitted by individuals and a crosssection of the industry, included 

substantive and thorough comments on 

a broad range of issues associated with 

the proposed rule. The 60-day notice 

and comment period gave interested 

parties the opportunity to participate in 

the rulemaking, consistent with 5 U.S.C. 

553(b)(c). 

28. One commenter expressed 

concern that Federal contractors would 

be impacted by the revocation of surety 

certificates of authority under the 

NPRM. This commenter emphasized 

that it takes time for a contractor, 

particularly a small and emerging 

contractor, to develop a relationship 

with a surety, and if a surety’s certificate 

is revoked under the terms of the 

proposed rule, such a contractor may 

not be able to find a replacement in time 

to qualify for Federal work. This 

commenter noted this could cause the 

contractor to fail and may have the 

effect of lessening competition on 

agency contracts. 

Treasury certifies sureties for the 

primary purpose of ensuring that a 

Federal agency’s position is protected in 

the event of a default by a principal. 

This purpose is not furthered by a 

surety that fails to satisfy bond 

obligation(s), or whose certificate of 

authority is revoked by Treasury, as 

provided in § 223.20. Section 

223.17(b)(5)(ii) of the final rule mitigates 

against undue impact on Federal 

contractors by providing that an 

agency’s authority to decline additional 

bonds does not apply to proffered 

payment and performance contract 

bonds, when the agency has already 

accepted a bid bond from the principal 

on the same project. Moreover, the 

surety is given the right to cure to avoid 

agency declination of bonds under 

§ 223.17(b)(1)(iv), and, in general, is 

given the right to cure to avoid 

revocation of its certificate by Treasury 

under § 223.20(e)(2). 

29. One commenter requested the 

opportunity to provide testimony on the 

NPRM if Treasury conducts hearings on 

the proposed revisions. 


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The 60-day notice and comment 

period gave interested parties the 

opportunity to participate in the 

rulemaking, consistent with 5 U.S.C. 

553(b)(c). Treasury received 14 

comment letters from individuals and a 

cross-section of the industry. These 

letters included substantive and 

thorough comments on a broad range of 

issues associated with the proposed 

rule. Treasury has considered and 

addressed these comments, as reflected 

in the final rule, and Treasury does not 

believe it would be further informed by 

conducting a hearing on the NPRM. A 

hearing is not required. 5 U.S.C. 

553(b)(c). 

II. Section-by-Section Analysis 

Section 223.1 

Revised § 223.1 states, in plain 

language, that Part 223 governs the 

issuance and revocation of certificates of 

authority of surety companies to do 

business with the United States as 

sureties on, or reinsurers of, Federal 

surety bond obligations, and the 

acceptance of such obligations. The 

final rule deletes archaic language and 

clarifies that the U.S. Department of the 

Treasury, Bureau of the Fiscal Service 

(Treasury), acts on behalf of the 

Secretary of the Treasury in performing 

these duties. 

Section 223.2 

Revised § 223.2 provides that 

applications for certificates of authority 

should be submitted to Treasury at the 

location, and in the manner, specified 

online at http://www.fiscal.treasury.gov/ 

fsreports/ref/suretyBnd/surety_

home.htm, as amended from time to 

time. 

Section 223.3 

Section 223.3(a) establishes, in part, 

the requirements that must be met by an 

applicant company in order to be issued 

a certificate of authority by Treasury. 

Revised § 223.3(a) restates such 

requirements in plain language. In 

addition, the final rule clarifies that any 

certificate issued by Treasury is 

expressly subject to continued 

compliance by the surety with all 

statutory requirements and the other 

conditions referenced in this part. 

Section 223.4 

Revised § 223.4 provides that no 

company will be issued a certificate of 

authority by Treasury unless it 

maintains on deposit with the insurance 

commissioner of the State in which it is 

incorporated, or other specified State 

official, legal investments having a 

current market value of $100,000 or 

more, for the protection of claimants, 

including the surety’s policyholders in 

the United States. Revised § 223.4 adds 

a sentence requiring a company to 

submit to Treasury with its initial 

application for a certificate of authority, 

and annually thereafter, a written 

statement signed by the State official 

attesting to the current market value of 

the deposit and that the legal 

investments remain on deposit with the 

State. 

Section 223.8 

Section 223.8 requires Treasurycertified sureties to file annual and 

quarterly financial reports to Treasury 

for review. Revised § 223.8(a) updates 

the specified Treasury official to whom 

these reports should be submitted. 

Revised § 223.8(a) specifies that the 

reports must be submitted using the 

annual and quarterly statement blanks 

adopted by the National Association of 

Insurance Commissioners. 

Section 223.9 

Section 223.9 establishes the criteria 

by which Treasury values the assets and 

liabilities of a company for certificate of 

authority purposes. Revised § 223.9 

provides that Treasury will allow credit 

for reinsurance in all classes of risk if 

the reinsuring company holds a 

certificate of authority from Treasury, or 

has been recognized as an admitted 

reinsurer by Treasury. Revised § 223.9 

clarifies that this credit for reinsurance 

will be allowed only if the reinsurer is 

in continued compliance with all 

certificate of authority requirements. 

Section 223.11 

Revised § 223.11(b) provides that a 

surety can underwrite a Federal bond in 

excess of its underwriting limitation if 

the excess amount is reinsured by a 

company holding a certificate of 

authority issued by Treasury, provided 

the specified reinsurance requirements 

are met. Revised § 223.11(b) states that 

the requisite reinsurance bond forms are 

available on the General Services 

Administration Web site at 

www.gsa.gov. 

Section 223.12 

Section 223.12 establishes the 

application requirements and standards 

for a company to be recognized by 

Treasury as an admitted reinsurer 

(except on excess risks running to the 

United States) for surety companies 

doing business with the United States. 

When a Treasury-certified surety cedes 

non-Federal risks to an admitted 

reinsurer, Treasury will credit the surety 

for the ceded reinsurance when valuing 

its assets and liabilities, provided 

applicable requirements are met. 

Revised § 223.12 updates the specified 

Treasury official to whom applications 

and reports pertaining to admitted 

reinsurer status should be submitted. 

Section 223.16 

Revised § 223.16 adds two new 

sentences to the end of this subpart. 

These sentences clarify that Treasurycertified companies have the 

opportunity to present their bonds to an 

agency bond-approving official for 

acceptance, but that the actual 

acceptance of a bond by an agency 

bond-approving official is subject to 

revised § 223.17. 

Section 223.17 

Revised § 223.17(a) provides that a 

Treasury-certified company may present 

its bonds to any agency bond-approving 

official for acceptance, and that such 

bond-approving official may accept 

such bonds. 

Revised § 223.17(b)(1) provides that 

an agency bond-approving official may 

decline bonds from a Treasury-certified 

surety for cause, provided the agency 

gives advance written notice to the 

agency. 

Revised 223.17(b)(2) provides that the 

agency may decline bonds after 

consideration of any submission by the 

company and after a written 

determination by the agency to decline 

the bonds that is consistent with agency 

authorities. 

Revised § 223.17(b)(3) requires the 

agency to issue a regulation articulating 

the agency’s procedures and for cause 

standards for declining to accept bonds. 

The regulation should define when a 

bond obligation becomes 

administratively final under the 

agency’s procedures. 

Revised § 223.17(b)(4) encourages 

agencies to ensure that persons 

conducting business with the agency are 

aware that bonds from a particular 

certified company will not be accepted. 

Revised § 223.17(b)(5) provides that 

the agency’s authority to decline bonds 

does not apply to bonds where the 

underlying obligation or other for cause 

reason that forms the basis for the 

declination has been stayed or enjoined 

by a court of competent jurisdiction, or 

to payment and performance contract 

bonds when the agency has already 

accepted a bid bond from the company 

on a particular project. 

Revised § 223.17(b)(6) provides that 

an agency bond-approving official may 

decline a bond from a Treasury-certified 

surety without advance notice to the 

surety if the bond is not executed in 

proper form, or is not in the correct 

penal sum amount, or is otherwise 

technically deficient. 


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Section 223.18 

Revised § 223.18 states that revocation 

of a surety’s certificate of authority by 

Treasury can occur in two ways. First, 

Treasury can initiate a revocation 

proceeding on its own initiative under 

final rule § 223.19 when it has reason to 

believe that a surety is not complying 

with 31 U.S.C. 9304–9308 and/or Part 

223. Second, Treasury can initiate a 

revocation proceeding under final rule 

§ 223.20 upon receipt of a complaint 

from an agency meeting the 

requirements of that section. 

Section 223.19 

Revised § 223.19 states the process by 

which Treasury initiates proceedings on 

its own accord to revoke a surety’s 

certificate of authority for failure to 

meet the requirements of 31 U.S.C. 

9304–9308 and/or Part 223. 

Section 223.20 

Revised § 223.20 specifies the process 

for an agency to submit a complaint to 

Treasury requesting that a certified 

surety’s certificate of authority be 

revoked for failure to pay or satisfy one 

or more administratively final bond 

obligations. Under revised 

§ 223.20(a)(1), the agency submitting the 

complaint to Treasury must certify that 

the bond obligations that are the subject 

of the complaint are administratively 

final under the agency’s regulations or 

other authorities. The agency must also 

certify to Treasury that the obligation to 

pay or satisfy the bond obligations has 

not been stayed or enjoined by a court. 

§ 223.20(a)(3). 

Revised § 223.20(c) and (d) afford the 

surety the opportunity to demonstrate 

its qualifications to retain its certificate, 

and establish the role of the Treasury 

Reviewing Official and the Treasury 

Deciding Official in the adjudicative 

process. 

Revised § 223.20(f) provides that 

revocation complaints will be 

adjudicated by Treasury based on a 

determination whether the default is 

clear and whether the surety’s failure to 

pay or satisfy the bonds is based on 

inadequate grounds. 

Revised § 223.20(h) retains the right of 

a surety to request an informal hearing 

before Treasury makes its revocation 

decision. The final rule specifies the 

procedures under which such an 

informal hearing would be conducted. 

Under the final rule, the formal 

adjudication standards of the 

Administrative Procedure Act (APA), 5 

U.S.C. 554, 556, 557 do not apply to the 

informal hearing or adjudication 

process. 

In the event that Treasury sustains the 

agency’s complaint and makes a 

decision that the surety’s certificate 

should be revoked, revised 

§ 223.20(e)(2) provides a surety will be 

afforded an opportunity to cure the 

noncompliance to avoid decertification, 

unless its noncompliance is ‘‘willful.’’ 

Revised § 223.20(g) articulates the scope 

and application of the willful exception 

to the cure opportunity. 

Section 223.21 

Revised § 223.21 provides that a 

surety whose certificate of authority has 

been revoked or not renewed by 

Treasury can apply for reissuance of a 

certificate of authority after one year. 

Among other things, such a surety must 

demonstrate as a condition of 

reinstatement that the basis for the nonrenewal or revocation of its certificate 

has been eliminated. Under revised 

§ 223.21 the determination of whether 

the basis for the non-renewal or 

revocation has been eliminated or 

effectively cured will be made by 

Treasury in its discretion. 

DERIVATION CHART FOR REVISED

PART 223 

Old section New section 

............................................... 223.17 

223.17 ................................... 223.18 

............................................... 223.19 

223.18 ................................... 223.20 

223.19 ................................... 223.20 

223.20 ................................... 223.20 

223.21 ................................... 223.21 

223.22 ................................... 223.22 

III. Procedural Analysis 

Regulatory Planning and Review 

The final rule does not meet the 

criteria for a ‘‘significant regulatory 

action’’ as defined in Executive Order 

12866. Therefore, the regulatory review 

procedures contained therein do not 

apply. 

Regulatory Flexibility Act Analysis 

It is hereby certified that the final rule 

will not have a significant economic 

impact on a substantial number of small 

entities. Treasury-certified sureties have 

an existing obligation to make payment 

on bond obligations to ensure 

acceptance of their bonds by agency 

bond-approving officials under 31 

U.S.C. 9304(b). The rule merely codifies 

this existing obligation in the regulation 

and clarifies that Federal agencies can 

decline to accept bonds underwritten by 

Treasury-certified sureties for cause. In 

addition, the final rule revises the 

existing procedures and standard of 

review that will be used by Treasury in 

adjudicating revocation complaints 

submitted by agencies. Accordingly, a 

regulatory flexibility analysis under the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.) is not required. 

Unfunded Mandates Act of 1995 

Section 202 of the Unfunded 

Mandates Reform Act of 1995, 2 U.S.C. 

1532 (Unfunded Mandates Act), 

requires that the agency prepare a 

budgetary impact statement before 

promulgating any rule likely to result in 

a Federal mandate that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. If a budgetary impact 

statement is required, section 205 of the 

Unfunded Mandates Act also requires 

the agency to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating the 

rule. We have determined that the final 

rule will not result in expenditures by 

State, local, and tribal governments, or 

by the private sector, of $100 million or 

more in any one year. Accordingly, we 

have not prepared a budgetary impact 

statement or specifically addressed any 

regulatory alternatives. 

List of Subjects in 31 CFR Part 223 

Administrative practice and 

procedure, Surety bonds. 

For the reasons set out in the 

preamble, 31 CFR part 223 is amended 

to read as follows: 

PART 223—SURETY COMPANIES 

DOING BUSINESS WITH THE UNITED 

STATES 

■ 1. Revise the authority citation for part 

223 to read as follows: 

Authority: 5 U.S.C. 301; 31 U.S.C. 9304– 

9308. 

■ 2. Revise § 223.1 to read as follows: 

§ 223.1 Certificate of authority. 

The regulations in this part will 

govern the issuance by the Secretary of 

the Treasury, acting through the U.S. 

Department of the Treasury, Bureau of 

the Fiscal Service (Treasury), of 

certificates of authority to bonding 

companies to do business with the 

United States as sureties on, or 

reinsurers of, Federal surety bonds 

(hereinafter ‘‘bonds’’ or ‘‘obligations’’) 

under the authority of 31 U.S.C. 9304– 

9308 and this part, and the acceptance 

of such obligations. The regulations in 

this part also govern the revocation of 

certificates. 

■ 3. Revise § 223.2 to read as follows: 

§ 223.2 Application for certificate of 

authority. 

Every company wishing to apply for 

a certificate of authority shall submit an 


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application to the Bureau of the Fiscal 

Service, U.S. Department of the 

Treasury, c/o Surety Bond Branch, to 

the location, and in the manner, 

specified online at http://

www.fiscal.treasury.gov/fsreports/ref/

suretyBnd/surety_home.htm, as 

amended from time to time. In 

accordance with 31 U.S.C. 9305(a), the 

application will include a copy of the 

applicant’s charter or articles of 

incorporation and a financial statement, 

signed and sworn to by its president and 

secretary, showing its assets and 

liabilities. A fee shall be transmitted 

with the application in accordance with 

the provisions of § 223.22(a)(i). 

■ 4. In § 223.3, revise paragraph (a) to 

read as follows: 

§ 223.3 Issuance of certificates of 

authority. 

(a)(1)(i) A company submitting an 

application to be issued a certificate of 

authority by Treasury to underwrite and 

reinsure Federal surety bonds must 

include all required data and 

information, as determined by Treasury 

in its discretion, for the application to 

be complete and ready for review. Upon 

receipt of a complete application, 

Treasury will evaluate the submission to 

determine whether the applicant 

company: 

(A) Is duly authorized under its 

charter or articles of incorporation to 

conduct the business referenced under 

31 U.S.C. 9304(a)(2); 

(B) Has paid-up capital of at least 

$250,000 in cash or its equivalent; 

(C) Is solvent and financially and 

otherwise qualified to conduct the 

business referenced under 31 U.S.C. 

9304(a)(2); and 

(D) Is able and willing to carry out its 

contracts. 

(ii) In making the determination 

whether a company meets these 

requirements, Treasury will evaluate the 

application as a whole, the required 

financial statement(s) submitted by the 

company, the company’s charter or 

articles of incorporation, the past 

history of the company, and any further 

evidence or information that Treasury 

may require the company to submit (at 

the company’s expense). 

(2) If Treasury determines, in its 

discretion, that the applicant company 

meets all of these requirements, 

Treasury will issue a certificate of 

authority to the company authorizing it 

to underwrite and reinsure Federal 

bonds. The certificate of authority will 

be effective for a term that expires on 

the last day of the next June. All such 

statutory requirements and regulatory 

requirements under this part are 

continuing obligations, and any 

certificate is issued expressly subject to 

continuing compliance with such 

requirements. The certificate of 

authority will be renewed annually on 

the first day of July, provided the 

company remains qualified under the 

law, the regulations in this part, and 

other pertinent Treasury requirements, 

and the company submits the fee 

required under § 223.22 by March 1st of 

each year to the address and/or account 

specified by Treasury. 

* * * * * 

■ 5. In § 223.4, add a sentence to the end 

of the section to read as follows: 

§ 223.4 Deposits. 

* * * The company shall submit to 

Treasury with its initial application for 

a certificate of authority, and annually 

thereafter, a written statement signed by 

such State official attesting to the 

current market value of the deposit (not 

less than $100,000) and that the legal 

investments remain on deposit with the 

State under the terms specified. 

■ 6. In § 223.8, revise paragraph (a) to 

read as follows: 

§ 223.8 Financial reports. 

(a) Every company certified under this 

part will be required to file with the 

designated Treasury official annual and 

quarterly statements of its financial 

condition using the annual and 

quarterly statement form blanks adopted 

by the National Association of Insurance 

Commissioners. The annual and 

quarterly statements will be signed and 

sworn to by the company president and 

secretary. The timeframes and process 

for submitting the required annual and 

quarterly statements to Treasury are 

provided in Treasury’s current Annual 

Letter to Executive Heads of Surety 

Companies. 

* * * * * 

■ 7. In § 223.9, revise the last sentence 

to read as follows: 

§ 223.9 Valuation of assets and liabilities. 

* * * Credit will be allowed for 

reinsurance in all classes of risks if the 

reinsuring company holds a certificate 

of authority from the Secretary of the 

Treasury, provided such reinsuring 

company is in continuing compliance 

with all certificate of authority 

requirements, or has been recognized as 

an admitted reinsurer in accord with 

§ 223.12. 

■ 8. In § 223.11, revise paragraph (b)(1) 

to read as follows: 

§ 223.11 Limitation of risk: protective 

methods. 

* * * * * 

(b) Reinsurance. (1) In respect to 

bonds running to the United States, 

liability in excess of the underwriting 

limitation shall be reinsured within 45 

days from the date of execution and 

delivery of the bond with one or more 

companies holding a certificate of 

authority from the Secretary of the 

Treasury. Such reinsurance shall not be 

in excess of the underwriting limitation 

of the reinsuring company. Where 

reinsurance is contemplated, Federal 

agencies may accept a bond from the 

direct writing company in satisfaction of 

the total bond requirement even though 

it may exceed the direct writing 

company’s underwriting limitation. 

Within the 45 day period, the direct 

writing company shall furnish to the 

Federal agency any necessary 

reinsurance agreements. However, a 

Federal agency may, at its discretion, 

require that reinsurance be obtained 

within a lesser period than 45 days, and 

may require completely executed 

reinsurance agreements to be provided 

before making a final determination that 

any bond is acceptable. Reinsurance 

may protect bonds required to be 

furnished to the United States by the 

Miller Act (40 U.S.C. 3131, as amended) 

covering contracts for the construction, 

alteration, or repair of any public 

building or public work of the United 

States, as well as other types of Federal 

bonds. Use of reinsurance or 

coinsurance to protect such bonds is at 

the discretion of the direct writing 

company. Reinsurance shall be executed 

on reinsurance agreement forms: 

Standard Form 273 (Reinsurance 

Agreement for a Miller Act Performance 

Bond), Standard Form 274 (Reinsurance 

Agreement for a Miller Act Payment 

Bond), and Standard Form 275 

(Reinsurance Agreement in Favor of the 

United States for other types of Federal 

bonds). These Standard Forms are 

available on the General Services 

Administration Web site at 

www.gsa.gov. 

* * * * * 

■ 9. In § 223.12, revise paragraph (a) 

introductory text, paragraph (a)(5), 

paragraph (b) introductory text, and 

paragraph (c) to read as follows: 

§ 223.12 Recognition as reinsurer. 

(a) Application by U.S. company. Any 

company organized under the laws of 

the United States or of any State thereof, 

wishing to apply for recognition as an 

admitted reinsurer (except on excess 

risks running to the United States) of 

surety companies doing business with 

the United States, shall file the 

following data with the designated 

Treasury official, and shall transmit 


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therewith the fee in accordance with the 

provisions of § 223.22: 

* * * * * 

(5) Such other evidence as Treasury 

may determine is necessary to establish 

that the company is solvent and able to 

meet the continuing obligation to carry 

out its contracts. 

(b) Application by a U.S. branch. A 

U.S. branch of an alien company 

applying for such recognition shall file 

the following data with the designated 

Treasury official, and shall transmit 

therewith the fee in accordance with the 

provisions of § 223.22: 

* * * * * 

(c) Financial reports. Each company 

recognized as an admitted reinsurer 

shall file with the designated Treasury 

official, on or before the first day of 

March of each year, its financial 

statement and such additional evidence 

as the Secretary of the Treasury 

determines necessary to establish that 

the requirements of this section are 

being met. A fee shall be transmitted 

with the foregoing data, in accordance 

with the provisions of § 223.22. 

■ 10. Revise § 223.16 to read as follows: 

§ 223.16 List of certificate holding 

companies. 

A list of qualified companies is 

published annually as of July 1 in 

Department Circular No. 570, 

Companies Holding Certificates of 

Authority as Acceptable Sureties on 

Federal Bonds and as Acceptable 

Reinsuring Companies, with 

information as to underwriting 

limitations, areas in which listed 

sureties are licensed to transact surety 

business and other details. If the 

Secretary of the Treasury shall take any 

exceptions to the financial statements 

submitted by a company, he or she 

shall, before issuing Department 

Circular 570, give a company due notice 

of such exceptions. Copies of the 

Circular are available at http://

www.fiscal.treasury.gov/fsreports/ref/

suretyBnd/c570.htm, or from the 

designated Treasury official, upon 

request. Bonds underwritten by certified 

companies on the Department Circular 

No. 570 list may be presented to an 

agency bond-approving official for 

acceptance. Selection of a particular 

qualified company from among all 

companies holding certificates of 

authority is discretionary with the 

principal required to furnish the bond, 

but the acceptance of a bond by an 

agency bond-approving official is 

subject to § 223.17. 

§§ 223.18 through 223.20 [Removed] 

■ 11. Remove §§ 223.18, 223.19, and 

223.20. 

§ 223.17 [Redesignated as § 223.18] 

■ 12. Redesignate § 223.17 as § 223.18. 

■ 13. Add a new § 223.17 to read as 

follows: 

§ 223.17 Acceptance and non-acceptance 

of bonds. 

(a) Acceptance of bonds. A bond 

underwritten by a certified company on 

the § 223.16 Department Circular No. 

570 list may be presented to any agencybond approving official for acceptance, 

and such agency bond-approving 

official may accept such bonds. 

(b) Non-acceptance of bonds. (1) An 

agency bond-approving official may 

decline to accept bonds underwritten by 

a certified company for cause, but only 

if the company has been given advance 

written notice by such agency. The 

advance written notice shall: 

(i) State the intention of the agency to 

decline bonds underwritten by the 

company; 

(ii) State the reasons for or cause of 

the proposed declination of such bonds; 

(iii) Provide the opportunity for the 

company to rebut the stated reasons or 

cause; and 

(iv) Provide the company the 

opportunity to cure the stated reasons or 

cause. 

(2) The agency may decline to accept 

bonds underwritten by the company if, 

after consideration of any submission by 

the company or failure of the company 

to respond to the agency’s notice, the 

agency issues a written determination 

that the bonds should not be accepted, 

consistent with agency authorities. 

(3) The agency shall articulate its 

procedures and for cause standards for 

declining to accept bonds in an agency 

regulation prior to declining any bonds 

in specific cases. The agency regulation 

should be subject to notice and 

comment rulemaking. ‘‘For cause’’ 

includes, but is not limited to, 

circumstances when a surety has not 

paid or satisfied an administratively 

final bond obligation due the agency. 

The agency regulation should define 

when a bond obligation becomes 

administratively final under the 

agency’s procedures. Existing agency 

rules or regulations that substantially 

comply with, or that are consistent with, 

the requirement to articulate procedures 

and standards in advance meet the 

requirements of this paragraph. 

(4) Agencies that decline bonds under 

this section are encouraged to use best 

efforts to ensure that persons 

conducting business with the agency are 

aware that bonds underwritten by the 

particular certified company will not be 

accepted. 

(5) The agency’s authority to decline 

bonds under this section does not apply: 

(i) When the underlying obligation or 

other for cause reason that forms the 

basis for the agency’s written 

determination to decline bonds under 

paragraph (b)(2) of this section, or the 

agency written determination to decline 

bonds, has been stayed or enjoined by 

a court of competent jurisdiction, or 

(ii) To otherwise acceptable payment 

and performance contract bonds, when 

the agency has already accepted a 

project bid bond on a contract before 

making the written determination under 

paragraph (b)(2) of this section. 

(6) Notwithstanding any provision of 

this section, an agency bond-approving 

official may decline a bond from a 

Treasury-certified surety without 

advance notice if the bond is not 

executed in proper form, or is not in the 

correct penal sum amount, or is 

otherwise technically deficient on its 

face. 

■ 14. Revise newly redesignated 

§ 223.18 to read as follows: 

§ 223.18 Revocation. 

(a) A revocation proceeding against a 

Treasury-certified company can be 

initiated by Treasury in either of two 

ways: 

(1) Treasury, of its own accord, under 

§ 223.19, may initiate revocation 

proceedings against the company when 

it has reason to believe that the 

company is not complying with 31 

U.S.C. 9304–9308 and/or the regulations 

under this part, or 

(2) Treasury, under § 223.20, may 

initiate revocation proceedings against 

the company upon receipt of a 

complaint from an agency that the 

company has not paid or satisfied one 

or more administratively final bond 

obligations due the agency. 

(b) A revocation of a company’s 

certificate of authority under § 223.19 or 

§ 223.20 precludes the company from 

underwriting or reinsuring additional 

bonds for any agency, and therefore 

revokes the company’s opportunity to 

have its bonds presented to any agency 

bond-approving official for acceptance. 

■ 15. Add new § 223.19 to read as 

follows: 

§ 223.19 Treasury-initiated revocation 

proceedings. 

Whenever Treasury has reason to 

believe that a company is not complying 

with the requirements of 31 U.S.C. 

9304–9308 and/or the regulations under 

this part, including but not limited to a 

failure to satisfy corporate and financial 

standards, Treasury shall: 

(a) Notify the company of the facts or 

conduct which indicate such noncompliance, and provide the company 

an opportunity to respond, and 


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(b) Revoke a company’s certificate of 

authority after providing notice to the 

company if: 

(1) The company does not respond 

satisfactorily to Treasury’s notification 

of non-compliance, or 

(2) The company, provided an 

opportunity to demonstrate or achieve 

compliance, fails to do so. 

■ 16. Add new § 223.20 to read as 

follows: 

§ 223.20 Revocation proceedings initiated 

by Treasury upon receipt of an agency 

complaint. 

(a) Agency complaint. If an agency 

determines that a company has not 

promptly made full payment or fully 

satisfied one or more bond obligations 

naming the agency as obligee, the head 

of the agency, or his or her designee, 

may submit a written complaint to the 

designated Treasury official (with 

executive oversight over the Treasury 

surety program, at the Assistant 

Commissioner level or equivalent), 

requesting that the company’s certificate 

of authority be revoked for 

nonperformance. Under such complaint, 

the agency shall certify that: 

(1) The bond obligations that are the 

subject of the complaint are 

administratively final under the 

agency’s regulations or other authorities; 

(2) The company has not paid or 

satisfied those bond obligations; and 

(3) The company’s obligation to pay 

or satisfy the bond obligations has not 

been stayed or enjoined by a court of 

competent jurisdiction. 

(b) Documentation of complaint. The 

agency shall include in its complaint 

copies of the bonds, and documentation 

indicating that, for each such bond 

provided: 

(1) The agency has determined the 

principal is in default on the obligation 

covered by the bond, consistent with 

agency authorities, or if the default has 

been litigated, documentation indicating 

a court of competent jurisdiction has 

determined the principal is in default; 

(2) The agency made a written 

demand with the company on the bond 

requesting payment or satisfaction on its 

own behalf, consistent with agency 

authorities, or on behalf of laborers, 

materialmen, or suppliers (on payment 

bonds), based on the default status of 

the principal; 

(3) The agency afforded the company 

the opportunity to request 

administrative review within the agency 

contesting the agency’s demand on the 

bond; 

(4) The agency made a final 

administrative determination that the 

bond obligation was due after the 

completion of such administrative 

review, or after the time period for the 

company to request administrative 

review within the agency has expired; 

(5) The agency provided the company 

the opportunity to enter into a written 

agreement to pay or satisfy the bond; 

and 

(6) The company has not made full 

payment or fully satisfied the demand, 

and the claim on the bond is past due. 

(c) Notice to company. On receipt of 

a complaint meeting the requirements of 

paragraphs (a) and (b) of this section, 

Treasury will notify the company of the 

agency complaint. The notice will 

require the company to submit a written 

explanatory response to Treasury within 

20 business days of the date of the 

notice. The notice will advise the 

company of the facts and conduct 

referenced in the complaint. Treasury 

will attach a copy of the incoming 

complaint to the notice. The notice will 

afford the company the opportunity to 

address the complaint and demonstrate 

its qualifications to retain its certificate 

of authority. 

(d) Reviewing official and deciding 

official. The designated Treasury official 

(with executive oversight over the 

Treasury surety program, at the 

Assistant Commissioner level or 

equivalent) will appoint a Treasury 

Reviewing Official to conduct a review 

of the agency complaint referenced in 

paragraphs (a) and (b) of this section, 

and the company response referenced in 

paragraph (c) of this section, to 

determine whether revocation of the 

company’s certificate of authority is 

warranted. To ensure appropriate 

consideration of relevant factual or legal 

issues, the Reviewing Official is 

authorized to require the submission of 

additional documentation from the 

complaining agency and the company. 

Upon completion of such review, the 

Reviewing Official shall prepare a 

written Recommendation Memorandum 

addressed to the designated Treasury 

official setting forth findings and a 

recommended disposition. The 

designated Treasury official will be the 

Deciding Official who will make the 

final decision whether the company’s 

certificate of authority to write and 

reinsure bonds should be revoked based 

on the administrative record. The 

administrative record consists of the 

agency complaint referenced in 

paragraphs (a) and (b) of this section, 

the company response referenced in 

paragraph (c) of this section, any other 

documentation submitted to, or 

considered by, the Reviewing Official, 

and the Reviewing Official’s 

Recommendation Memorandum. 

(e) Final decision. (1) If the Deciding 

Official’s final decision is that 

revocation is not warranted, the 

company and the agency will be 

notified of the basis of this decision and 

the complaint against the company will 

be dismissed. 

(2) If the Deciding Official’s final 

decision is that the company’s 

certificate of authority shall be revoked, 

the Deciding Official will notify the 

company and the agency of the 

revocation decision and the basis for 

such decision. Except as provided in 

paragraph (g) of this section, the notice 

will afford the company an opportunity 

to cure its noncompliance by paying or 

satisfying the bonds (including payment 

of any interest, penalties, and fees) 

forming the basis of the final decision 

within 20 business days. If the company 

cures its noncompliance within 20 

business days, the complaint against the 

company will be deemed moot and the 

company will retain its certificate of 

authority to write Federal bonds. If the 

company does not cure its 

noncompliance within 20 business 

days, the company’s certificate of 

authority shall be revoked by Treasury 

without further notice. 

(f) Standard of review. In reviewing 

whether the revocation of the 

company’s certificate of authority is 

warranted under this section, the 

Reviewing Official will recommend, and 

the Deciding Official will determine, 

whether the default is clear and whether 

the company’s failure to pay or satisfy 

the bonds is based on inadequate 

grounds. 

(g) Consideration of willful conduct. 

The company is not entitled to an 

opportunity to cure its noncompliance if 

its conduct in failing to carry out its 

contracts is willful. For purposes of this 

regulation, ‘‘willful’’ means a careless or 

reckless disregard of a known legal 

obligation to satisfy an administratively 

final bond obligation. In considering 

whether a company’s conduct is willful, 

the Deciding Official may consider 

whether: 

(1) An agency has filed a prior 

complaint with Treasury requesting that 

the company’s certificate be revoked for 

a substantially similar bond obligation; 

(2) The company asserted 

substantially similar defenses to such 

bond obligation; 

(3) Such defenses were considered by 

the agency under pertinent authorities 

and dismissed; 

(4) Treasury made a final decision 

that revocation of the company’s 

certificate was justified; and 

(5) Other pertinent factors. 

(h) Informal hearing. (1) If a company 

that is the subject of a complaint under 

paragraph (a) and (b) of this section 

believes the opportunity to make known 


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its views, as provided for under 

paragraph (c) of this section, is 

inadequate, it may, within 20 business 

days of the date of the notice required 

by paragraph (c), request, in writing, 

that an informal hearing be convened. 

(2) As soon as possible after a written 

request for an informal hearing is 

received, the Reviewing Official shall 

convene an informal hearing, at such 

time and place as he or she deems 

appropriate, for the purpose of 

determining whether the company’s 

certificate of authority should be 

revoked. 

(3) The company shall be advised, in 

writing, of the time and place of the 

informal hearing and shall be directed 

to bring all documents, records and 

other information as it may find 

necessary and relevant to support its 

position. 

(4) The company may be represented 

by counsel and shall have a fair 

opportunity to present any relevant 

material and to examine the 

administrative record. 

(5) The complaining agency may be 

requested by the Reviewing Official to 

send a representative to the hearing to 

present any relevant material, and the 

agency representative may examine the 

administrative record. 

(6) The Reviewing Official is 

authorized to require the submission of 

additional documentation from the 

complaining agency and the company to 

ensure appropriate consideration of 

relevant factual or legal issues. 

(7) Formal rules of evidence will not 

apply at the informal hearing. 

(8) The formal adjudication standards 

under the Administrative Procedure 

Act, 5 U.S.C. 554, 556, 557 do not apply 

to the informal hearing or adjudication 

process. 

(9) Treasury may promulgate 

additional procedural guidance 

governing the conduct of informal 

hearings. This additional procedural 

guidance may be contained in the 

Annual Letter to Executive Heads of 

Surety Companies referenced in § 223.9, 

the Treasury Financial Manual, or other 

Treasury publication or correspondence. 

(10) Upon completion of the informal 

hearing, the Reviewing Official shall 

prepare a written Recommendation 

Memorandum addressed to the Deciding 

Official setting forth findings and a 

recommended disposition. The 

Deciding Official will make the final 

decision whether the company’s 

certificate of authority to write and 

reinsure Federal bonds should be 

revoked based on the administrative 

record. The administrative record 

consists of the Federal agency complaint 

referenced in paragraphs (a) and (b) of 

this section, the company response 

referenced in paragraph (c), any other 

documentation submitted to, considered 

by, or entered into the administrative 

record by the Reviewing Official, the 

hearing transcript, and the Reviewing 

Official’s Recommendation 

Memorandum. 

(11) The provisions of paragraphs (e), 

(f), and (g) of this section shall apply to 

the adjudication of the agency 

complaint when an informal hearing is 

conducted. 

■ 17. Revise § 223.21 to read as follows: 

§ 223.21 Reinstatement. 

If, after one year from the date of the 

non-renewal or the revocation of its 

certificate of authority under this part, 

a company can demonstrate that the 

basis for the non-renewal or revocation 

has been cured, as determined by 

Treasury in its discretion, and that it 

can comply with, and does meet, all 

continuing requirements for 

certification under 31 U.S.C. 9304–9308 

and this part, the company may submit 

an application to Treasury for 

reinstatement or reissuance of a 

certificate of authority, which will be 

granted without prejudice, provided all 

such requirements are met. 

■ 18. In § 223.22, revise paragraph (c) to 

read as follows: 

§ 223.22 Fees for services of the Treasury 

Department. 

* * * * * 

(c) Specific fee information may be 

obtained from the designated Treasury 

official, or online at http://

www.fiscal.treasury.gov/fsreports/ref/

suretyBnd/surety_home.htm. In 

addition, a notice of the amount of a fee 

referred to in paragraphs (a)(1) through 

(4) of this section will be published in 

the Federal Register as each change in 

such fee is made. 

Dated: October 2, 2014. 

David A. Lebryk, 

Fiscal Assistant Secretary. 

[FR Doc. 2014–24460 Filed 10–15–14; 8:45 am] 

BILLING CODE P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R03–OAR–2014–0629; FRL–9917–69– 

Region–3] 

Approval and Promulgation of Air 

Quality Implementation Plans; 

Pennsylvania; State Boards 

Requirements 

AGENCY: Environmental Protection 

Agency. 

ACTION: Direct Final Rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is taking direct final 

action to approve a revision to the 

Commonwealth of Pennsylvania State 

Implementation Plan (SIP). The SIP 

revision addresses the State Boards’ 

requirements for all criteria pollutants 

of the National Ambient Air Quality 

Standards (NAAQS). EPA is also 

approving a related infrastructure 

element from Pennsylvania’s September 

24, 2012 SIP submittal for the 2008 Lead 

NAAQS. EPA is approving this SIP 

revision in accordance with the 

requirements of the Clean Air Act 

(CAA). 

DATES: This rule is effective on 

December 15, 2014 without further 

notice, unless EPA receives adverse 

written comment by November 17, 

2014. If EPA receives such comments, it 

will publish a timely withdrawal of the 

direct final rule in the Federal Register 

and inform the public that the rule will 

not take effect. 

ADDRESSES: Submit your comments, 

identified by Docket ID Number EPA– 

R03–OAR–2014–0629 by one of the 

following methods: 

A. www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

B. E-Mail: fernandez.cristina@

epa.gov. 

C. Mail: EPA–R03–OAR–2014–0629, 

Cristina Fernandez, Associate Director, 

Office of Air Program Planning, Air 

Protection Division, Mailcode 3AP30, 

U.S. Environmental Protection Agency, 

Region III, 1650 Arch Street, 

Philadelphia, Pennsylvania 19103. 

D. Hand Delivery: At the previouslylisted EPA Region III address. Such 

deliveries are only accepted during the 

Docket’s normal hours of operation, and 

special arrangements should be made 

for deliveries of boxed information. 

Instructions: Direct your comments to 

Docket ID No. EPA–R03–OAR–2014– 

0629. EPA’s policy is that all comments 

received will be included in the public 

docket without change, and may be 

made available online at 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 

protected through www.regulations.gov 

or email. The www.regulations.gov Web 

site is an ‘‘anonymous access’’ system, 

which means EPA will not know your 

identity or contact information unless 


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