E6-17225. Federal Process Agents of Surety Corporations

AGENCY:

Financial Management Service, Fiscal Service, Treasury.

ACTION:

Final rule.

SUMMARY:

The Financial Management Service (FMS) is revising its regulation governing the appointment of Federal process agents of surety corporations to allow for the appointment of a state official as a process agent. We are also revising the regulation by removing the requirement that all surety corporations appoint a process agent in the District of Columbia, regardless of whether the surety corporation provides bonds in the District of Columbia. Finally, we are updating obsolete contact information and references in the regulation.

DATES:

This rule is effective on October 17, 2006.

FOR FURTHER INFORMATION CONTACT:

Rose M. Miller, Manager, Surety Bond Branch, at 202-874-6850 or [e-mail]; or William Erle, Senior Counsel, at 202-874-6680 or [e-mail].

SUPPLEMENTARY INFORMATION:

Background

31 U.S.C. 9306 was amended November 29, 1999 to allow a surety corporation to appoint a State official as its process agent. This means that surety corporations conducting business in more than one judicial district in a state can appoint a State official to receive service of process on the corporation, thereby saving surety corporations from having to appoint an agent in each judicial district of that State. Prior to the amendment, a surety did not have the option of appointing a State official as its process agent to satisfy the service of process requirement. This revised rule makes the regulation at 31 CFR Part 224 consistent with 31 U.S.C. 9306 by providing for the appointment of State officials as process agents.

An additional change relates to the requirement currently found in 31 CFR 224.2(a)(3) which requires that an agent be appointed for service of process “in the District of Columbia where the bond is returnable and filed.” This requirement applies to all surety corporations whether or not the corporation contemplates the writing of bonds in favor of the United States to be undertaken within the District of Columbia. Requiring companies to appoint an agent in the District of Columbia, when they are not incorporated in the District of Columbia, and do not write bonds in the District of Columbia, is an unnecessary financial burden on the companies. FMS can see no benefit to the Federal government in maintaining this requirement since, as a matter of practice, Federal bonds are not necessarily returnable and filed in the District of Columbia. The revised rule eliminates this requirement.

The sample power of attorney form currently found in 31 CFR 224.4 is replaced with a reference to the Surety Bond Branch Web page. Moving the form to the Web page will allow the sample power of attorney form to be updated more easily. Also, it will provide surety corporations with easy access to an electronic version of the form.

Finally, 31 CFR 224.6 currently states that a listing of the divisional offices of the court in each judicial district may be obtained from the Surety Bond Branch, Financial Management Service, U.S. Department of the Treasury. This information is available directly from the U.S. Courts. Therefore, the regulation is revised to provide the contact information for the U.S. Courts.

Regulatory Analyses

Administrative Procedure Act. We did not publish a Notice of Proposed Rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), a rule is exempt from notice and comment rulemaking requirements if the agency finds that notice and public comment are unnecessary or contrary to the public interest. This rule reflects provisions that are already in effect as a matter of law. The changes will have no substantive effect on the public; therefore, it is unnecessary to publish an NPRM. Likewise, for the same reasons a delayed effective date is not required.

Clarity of Regulations. Executive Order 12866 requires each agency to write regulations that are easy to understand. We invite comment on how to make this rule clearer. For example, you may wish to discuss: (1) Whether we have organized the material to suit your needs; (2) whether the requirements of the rule are clear; or (3) whether there is something else we could do to make this rule easier to understand.

Executive Order 12866. FMS has determined that this regulation is not a significant action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required.

Regulatory Flexibility Act. Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply.

 

List of Subjects in 31 CFR Part 224

• Bonding
• Insurance
• Insurance companies
• Sureties
• Surety bonds
• Process agents

For the reasons set forth in the preamble, 31 CFR part 224 is revised as follows:

PART 224—FEDERAL PROCESS AGENTS OF SURETY CORPORATIONS

224.1

What does this part cover?

224.2

Definitions.

224.3

When may a surety corporation provide a bond without appointing a process agent?

224.4

When must a surety corporation appoint a process agent?

224.5

Who may a surety corporation appoint to be a process agent?

224.6

Where can I find a sample power of attorney form?

224.7

Where can I find a list of United States district court offices?

224.8

When must a surety corporation appoint a new process agent?

Authority: 31 U.S.C. 9306 and 9307.

§ 224.1

What does this part cover?

This part provides guidance on when a surety corporation must appoint a service of process agent and how the surety corporation complies with this requirement.

§ 224.2

Definitions.

For purposes of this regulation:

(a) Principal means the person or entity required to provide a surety bond.

(b) Process agent means a resident agent for service of process.

(c) State means a State, the District of Columbia, or a territory or possession of the United States.

§ 224.3

When may a surety corporation provide a bond without appointing a process agent?

A surety corporation may provide a bond without appointing a process agent when the State where the bond is filed, the State where the principal resides, and the State where the surety corporation is incorporated are the same.

§ 224.4

When must a surety corporation appoint a process agent?

A surety corporation must appoint a process agent when either the State where the bond is filed or the State where the principal resides is different from the State where the surety corporation is incorporated. In such a case, the surety corporation must appoint a process agent in each such State that is different from the State where the surety is incorporated.

§ 224.5

Who may a surety corporation appoint to be a process agent?

A surety corporation may appoint either of the following as process agent—(a) An official of the State who is authorized or appointed under the law of that jurisdiction to receive service of process on the surety corporation; or

(b) An individual who resides in the jurisdiction of the district court for the district in which a surety bond is filed and who is appointed by the surety corporation by means of a power of attorney. A certified copy of the power of attorney must be filed with the clerk of the district court for the district in which a surety bond is to be provided. In addition, the surety corporation must provide the clerk of the United States District Court at the main office in each judicial district with the required number of authenticated copies of the power of attorney for each divisional office of the court within that judicial district.

§ 224.6

Where can I find a sample power of attorney form?

The Surety Bond Branch provides a sample form on its Web page located at: http://www.fms.treas.gov/​c570. While use of the sample form is not required, any power of attorney provided should be substantially the same as the sample form.

§ 224.7

Where can I find a list of United States district court offices?

A list of the divisional offices of the court in each judicial district may be obtained from the Federal Judiciary, U.S. Courts Web page at http://www.uscourts.gov, or by mail by writing to: Office of Public Affairs, Administrative Office of the U.S. Courts, Washington, DC 20544.

§ 224.8

When must a surety corporation appoint a new process agent?

The surety corporation must immediately appoint a new process agent whenever the authority of a process agent is terminated by reason of revocation, disability, removal from the district, or any other cause.

Dated: October 11, 2006.

Kenneth R. Papaj,

Commissioner.