[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3702 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3702

To prohibit discrimination on the basis of certain factors with respect 
              to any aspect of a surety bond transaction.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 24, 1996

  Ms. Norton introduced the following bill; which was referred to the 
                       Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
To prohibit discrimination on the basis of certain factors with respect 
              to any aspect of a surety bond transaction.

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

SECTION 1. SHORT TITLE.

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

SEC. 2. EQUAL SURETY BOND OPPORTUNITY REQUIREMENTS.

    (a) Activities Constituting Discrimination.--It shall be unlawful 
for any surety to discriminate against any applicant, with respect to 
any aspect of a surety bond transaction--
            (1) on the basis of race, color, religion, national origin, 
        sex, marital status, sexual orientation, disability, or age (if 
        the applicant has the capacity to contract);
            (2) because the applicant has in good faith exercised any 
        right under this Act;
            (3) because the applicant previously obtained a bond 
        through an individual or personal surety; or
            (4) because the applicant previously obtained a bond 
        through--
                    (A) any bonding assistance program expressly 
                authorized by law;
                    (B) any bonding assistance program administered by 
                a nonprofit organization for its members or an 
                economically disadvantaged class of persons; or
                    (C) any special purpose bonding program offered by 
                a profit-making organization to meet special needs.
    (b) Activities Not Constituting Discrimination.--It shall not 
constitute discrimination for purposes of this Act for a surety--
            (1) to make an inquiry of marital status if such inquiry is 
        for the purpose of ascertaining the surety's rights and 
        remedies applicable to the granting of a bond and not to 
        discriminate in a determination of bondability;
            (2) to make an inquiry of the applicant's age if such 
        inquiry is for the purpose of determining the amount and 
        probable continuance of bondability; or
            (3) to make an inquiry as to where the applicant has 
        previously obtained a bond, in order to determine bonding 
        history, or other pertinent element of bondability, except that 
        an applicant may not be assigned a negative factor or value 
        because the applicant previously obtained a bond through--
                    (A) an individual or personal surety;
                    (B) a bonding assistance program expressly 
                authorized by law;
                    (C) any bonding program administered by a nonprofit 
                organization for its members or an economically 
                disadvantaged class of persons; or
                    (D) any special purpose bonding program offered by 
                a profit-making organization to meet special needs.
    (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 administered by a 
        nonprofit organization for its members or an economically 
        disadvantaged class of persons; or
            (3) any special purpose bonding program offered 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 
                application is filed with the surety.
                    (B) Extension.--The 10-day period referred 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 statement.--A surety 
                satisfies the requirement established 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 adverse 
                        action which discloses--
                                    (I) the applicant's right to a 
                                statement of reasons within 30 days 
                                after receipt by the surety of a 
                                request 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 notification advises the 
                applicant of the applicant'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 applications.--In the 
        case of a request to a surety by a third party to issue a bond 
        directly or indirectly to an applicant, the notification and 
        statement of reasons required by this section may be made 
        directly by such surety, or indirectly through the third party, 
        if the identity of the surety is disclosed to the applicant.
            (5) Applicability in case of sureties which accept few 
        applications.--The requirements of 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 
        applications 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 refusal to issue a bond in 
        the amount or on substantially the terms requested; and
            (2) does not include any refusal to issue an additional 
        bond under an existing bonding arrangement where the applicant 
        is in default, or where such additional bond would exceed a 
        previously established bonding limit.

SEC. 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 applicant 
        (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 determines 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 maintains 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 paragraph 
                (1);
                    (B) by striking the period at the end of paragraph 
                (2) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(3) a statement of compliance with 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 approval of 
        application.--Section 9305(b) of title 31, United States Code, 
        is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (2);
                    (B) by striking the period at the end of paragraph 
                (3) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(4) the corporation is in full compliance with 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 Opportunity Act'' 
                before the semicolon;
                    (B) by striking ``and'' at the end of paragraph 
                (2);
                    (C) by striking the period at the end of paragraph 
                (3) and inserting ``; and''; and
                    (D) by adding at the end the following new 
                paragraph:
            ``(4) may, after the end of the 1-year period beginning on 
        the effective date of any revocation under paragraph (1) of the 
        authority of a surety corporation for noncompliance with the 
        Equal Surety Bond Opportunity Act, reauthorize such corporation 
        to provide surety bonds under section 9304.''.
            (5) Revocation for failure to pay certain judgments.--
        Section 9305(e) of title 31, United States Code, is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (1);
                    (B) by redesignating paragraph (2) as paragraph 
                (3); and
                    (C) by inserting after paragraph (1) the following 
                new paragraph:
            ``(2) the corporation does not pay a final judgment or 
        order against the corporation for noncompliance with the Equal 
        Surety Bond Opportunity Act or fails to comply with any order 
        under section 3(c) of such Act; and''.
    (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 Surety Bond Opportunity Act'' before the period.
    (d) Regulations.--
            (1) In general.--The Secretary of the Treasury shall 
        prescribe such regulations as may be necessary to carry out the 
        purposes of this Act.
            (2) Initial regulations.--The initial regulations 
        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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