I
107TH CONGRESS
2D SESSION
H. R. 4891
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 6, 2002
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Equal Surety Bond
Opportunity Act’’.
SEC. 2. EQUAL SURETY BOND OPPORTUNITY REQUIRE-
MENTS.
(a) ACTIVITIES CONSTITUTING DISCRIMINATION.—It
shall be unlawful for any surety to discriminate against
(c) ADDITIONAL ACTIVITIES NOT CONSTITUTING
DISCRIMINATION.—It is not a violation of this Act for a
surety to refuse to issue a bond pursuant to—
(1) any bonding assistance program authorized
by law for an economically disadvantaged class of
persons;
(2) any bonding assistance program adminis-
tered by a nonprofit organization for its members or
an economically disadvantaged class of persons; or
(3) any special purpose bonding program of-
fered by a profit-making organization to meet special
needs;
if such refusal is required by or made pursuant to such
program.
(d) REASONS FOR ADVERSE ACTION; PROCEDURE
APPLICABLE; DEFINITION.—
(1) NOTICE REQUIRED.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), any surety approved under
section 9304 of title 31, United States Code,
shall notify an applicant of the surety’s action
on a completed application before the end of the
10-day period beginning on the date the appli-
cation is filed with the surety.
(B) EXTENSION.—The 10-day period re-
ferred to in subparagraph (A) may be extended
an additional 10 days if the surety has not
issued a bond to the applicant during the 1-
year period ending on the date the application
is filed with the surety.
(2) STATEMENT OF REASONS.—
(A) IN GENERAL.—Each applicant against
whom adverse action is taken shall be entitled
to a statement of reasons for such action from
the surety.
(B) 
ACCEPTABLE
FORMS
OF
STATE-
MENT.—A surety satisfies the requirement es-
tablished under subparagraph (A) by—
(i) providing a statement of reasons in
writing as a matter of course to applicants
against whom adverse action is taken; or
(ii) giving written notification of ad-
verse action which discloses—
(I) the applicant’s right to a
statement of reasons within 30 days
after receipt by the surety of a re-
quest made within 60 days after such
notification; and
(II) the identity of the person or
office from which such statement may
be obtained.
(C) ORAL STATEMENT PERMITTED.—Such
statement may be given orally if the written no-
tification advises the applicant of the appli-
cant’s right to have the statement of reasons
confirmed in writing on written request.
(3) SPECIFICITY OF REASONS.—A statement of
reasons meets the requirements of this Act only if
it contains specific reasons for the adverse action
taken.
(4) APPLICABILITY IN CASE OF 3D PARTY AP-
PLICATIONS.—In the case of a request to a surety
by a third party to issue a bond directly or indirectly
to an applicant, the notification and statement of
reasons required by this section may be made di-
rectly by such surety, or indirectly through the third
party, if the identity of the surety is disclosed to the
applicant.
(5) APPLICABILITY
IN
CASE
OF
SURETIES
WHICH ACCEPT FEW APPLICATIONS.—The require-
ments of paragraph (2), (3), or (4) may be satisfied
by oral statements or notifications in the case of any
surety who did not act on more than 100 applica-
tions during the calendar year in which the adverse
action is taken.
(e) ADVERSE ACTION DEFINED.—For purposes of
this Act, the term ‘‘adverse action’’—
(1) means a denial of a bond, a change in the
terms of an existing bonding arrangement, or a re-
fusal to issue a bond in the amount or on substan-
tially the terms requested; and
(2) does not include any refusal to issue an ad-
ditional bond under an existing bonding arrange-
ment where the applicant is in default, or where
such additional bond would exceed a previously es-
tablished bonding limit.
SEC. 3. CIVIL LIABILITY.
(a) DAMAGES.—Any surety who fails to comply with
section 2(a) shall be liable to the aggrieved applicant for—
(1) any actual damage sustained by such appli-
cant (individually or as a member of a class); and
(2) in the case of any successful action under
this section, the costs of the action, together with
reasonable attorney’s fees as determined by the
court.
(b) EQUITABLE RELIEF.—Upon application by an
aggrieved applicant, a court of competent jurisdiction may
enjoin a surety from violating the requirements of this Act
or grant such other equitable relief as the court deter-
mines to be appropriate to enforce such requirements.
(c) JURISDICTION.—Any action under this section
may be brought in any United States district court, or
in any other court of competent jurisdiction, within 1 year
after the date of the occurrence of the violation involved.
SEC. 4. ADMINISTRATIVE ENFORCEMENT.
(a) IN GENERAL.—A company may not be approved
as a surety by the Secretary of the Treasury under section
9304 of title 31, United States Code, or provide any surety
bond pursuant to such section unless such company main-
tains full compliance with the requirements of this Act.
(b) REQUIREMENTS RELATING TO ENFORCEABILITY
OF ACT.—
(1) SIGNED STATEMENT OF COMPLIANCE WITH
APPLICATION.—Section 9305(a) of title 31, United
States Code, is amended—
(A) by striking ‘‘and’’ at the end of para-
graph (1);
(B) by striking the period at the end of
paragraph (2) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
paragraph:
‘‘(3) a statement of compliance with the Equal
Surety Bond Opportunity Act which is signed under
penalty of perjury by the president and the secretary
of the corporation.’’.
(2) COMPLIANCE
AS
A
CONDITION
FOR
AP-
PROVAL OF APPLICATION.—Section 9305(b) of title
31, United States Code, is amended—
(A) by striking ‘‘and’’ at the end of para-
graph (2);
(B) by striking the period at the end of
paragraph (3) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
paragraph:
‘‘(4) the corporation is in full compliance with
the Equal Surety Bond Opportunity Act.’’.
(3) SIGNED STATEMENT OF COMPLIANCE WITH
QUARTERLY REPORTS.—Section 9305(c) of title 31,
United States Code, is amended by inserting ‘‘and a
statement of compliance with the Equal Surety
Bond Opportunity Act’’ before the period.
(4) ENFORCEMENT AUTHORITY OF SECRETARY
OF THE TREASURY.—Section 9305(d) of title 31,
United States Code, is amended—
(A) in paragraph (1), by inserting ‘‘or the
provisions of the Equal Surety Bond Oppor-
tunity Act’’ before the semicolon;
(B) by striking ‘‘and’’ at the end of para-
graph (2);
(C) by striking the period at the end of
paragraph (3) and inserting ‘‘; and’’; and
(D) by adding at the end the following new
paragraph:
‘‘(4) may, after the end of the 1-year period be-
ginning on the effective date of any revocation under
paragraph (1) of the authority of a surety corpora-
tion for noncompliance with the Equal Surety Bond
Opportunity Act, reauthorize such corporation to
provide surety bonds under section 9304.’’.
(5) REVOCATION FOR FAILURE TO PAY CER-
TAIN
JUDGMENTS.—Section 9305(e) of title 31,
United States Code, is amended—
(A) by striking ‘‘and’’ at the end of para-
graph (1);
(B) by redesignating paragraph (2) as
paragraph (3); and
(C) by inserting after paragraph (1) the
following new paragraph:
‘‘(2) the corporation does not pay a final judg-
ment or order against the corporation for noncompli-
ance with the Equal Surety Bond Opportunity Act
or fails to comply with any order under section 3(c)
of such Act;’’.
(c) TECHNICAL AND CONFORMING AMENDMENT.—
Section 9304(a)(3) of title 31, United States Code, is
amended by inserting ‘‘and section 4(a) of the Equal Sur-
ety Bond Opportunity Act’’ before the period.
(d) REGULATIONS.—
(1) IN GENERAL.—The Secretary of the Treas-
ury shall prescribe such regulations as may be nec-
essary to carry out the purposes of this Act.
(2) INITIAL REGULATIONS.—The initial regula-
tions prescribed pursuant to paragraph (1) shall
take effect at the earliest practicable date after the
date of the enactment of this Act and not later than
the end of the 1-year period beginning on such date
of enactment.
SEC. 5. EFFECTIVE DATE.
Sections 2(d) and 4(a) shall take effect on the earlier
of—
(1) the effective date of the initial regulations
prescribed pursuant to section 4(d); or
(2) the end of the 1-year period beginning on
the date of the enactment of this Act.
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