Federal vs. State Law

One of the primary reasons there exists Federal Statutes to govern certain industries lies in the fact that in many cases there exists a conflict due to the contradictory laws of various States. Such is the case in the immigration bond industry.

An immigration bond is a type of Federal Civil Performance Bond. A Criminal Bail Bond is a contract between an Insurance Company (the obligor) and its agent (the co-obligor), the principal (defendant) and the State in which the contract is executed. The obligor/ co-obligor guarantees the State that the defendant will appear for all court hearings until a disposition is reached on the case. Bail Bonds are regulated by the Department of Insurance of the State in which the contract is executed.

Unlike a criminal bail bond, an immigration bond is a contract between an Insurance Company (the obligor) and its agent (the co-obligor), the principal (alien/ respondent) and The Department of Homeland Security (“the DHS”). The concepts of these two bonds are very similar in nature yet are vastly different in practice. For an immigration bond, the obligor/co-obligor guarantees Homeland Security that a bonded alien will appear for ALL immigration proceedings up until the alien is either deported from the United States, voluntarily leaves the United States, or is granted residency (removal proceedings terminated). An immigration bond is a surety bond often required by the DHS when an alien is detained on suspicion that he/she is unlawfully in the United States. If the immigration bond is posted, the alien is released from the DHS pending determination of his/her immigration status. The bond is issued by a surety, which agrees to pay a penalty in the event the bonded alien fails to appear before the DHS upon a lawful demand. The DHS will only accept immigration bonds from an authorized surety appearing on a federal publication known as “Treasury Circular 570.” The typical federal immigration bonding process is as follows: (1) an alien is detained by the DHS in one state; (2) a hearing is heard before a federal immigration judge in that state to determine whether the alien may be released on bond pending his/her removal from the United States; (3) the alien is directed to contact an authorized bonding company on the Treasury Circular 570; (4) the alien may contact a friend or family member in another state; (5) the friend or family member contacts an immigration bond agent in any of the fifty (50) states; (6) the bond agent issues the bond from the state in which it is located; (7) the bond agent posts the bond in any federal court within the United States; and (8) the regional director of the immigration and Customs Enforcement (“ICE”) Department office releases the alien pursuant to the terms of the bond. Thus, an indemnitor may be located in one state while the detainee is located in another state, and the immigration bond is posted in yet a third state.

The general public, and even many insurance professionals, are not aware that bail bond agents are not authorized to transact immigration bonds. Thus, when friends and family of detained aliens seek an immigration bond, it is very common that they mistakenly visit the offices of a bail agent. When this occurs, the bail agent will typically refer such persons to a company authorized to transact immigration bonds. My agency, Action Immigration Bonds & Insurance Services, Inc., has developed relationships with bail agents across the country in the hopes that such referrals will be made in favor of Action.

My agency has been successful in obtaining immigration bond referrals due to the quality of its service and because of a unique feature of its program. Action, unlike most immigration bond producers, accepts available credit card balances as security for the bond. As such, bond indemnitors are not required to use their homes as collateral to secure the release of the detainee. This has proven to be an invaluable alternative to those who are afraid of losing their homes or who do not have real property with which to secure a bond. Action believes that its success is due in large part to this option, which is not offered by its competitors.

There exists a Federal Statute that sets forth regulation of the Insurance Company acting as the obligor. As long as an insurance company is on the Federal Treasury List (T-listed), they have the authority to execute (post) Federal Immigration Bonds. The Federal Bond Law establishes which sureties may issue federal civil immigration bonds, and the mechanisms by which surety bonds may be issued. See 31 U.S.C. § 9304(a). The federal government has, thus, evidenced its intent to regulate the field of immigration bonds and it cannot be disputed that immigration itself is exclusively a federal question. State laws cannot, directly or indirectly, interfere with or impact the federal government’s authority over the detention or deportation of aliens. See, e.g., Hines v. Davidowitz, 312 U.S. 52, 62-68 (1941). Herein lies the conflict.

Many States such as California to name one, insist on reverting to their State Insurance Law to enforce the transaction and sale of the immigration bonds. These “rouge” States attempt to supersede Federal Law as is the case with many other industries. It is unfortunate that the consumer bears the ultimate burden of these States’ ignorance of Federal guidelines. It is the belief of my agency that the Federal Laws as well as the Insurance Code of the resident State of the producer are applicable. Much can be contested on this issue and for further information, please read more under Gonzales & Gonzales v. Action International Insurance, a lawsuit initiated by a competitor of Action in an effort to protect a fifty year monopoly of the immigration bond market on much of the West coast. Since the resolution of this lawsuit, Action has resurfaced as the most reputable, lowest cost provider of immigration bonds in the United States. I have taken it upon myself to help educate the Nation on the immigration bond industry and I will continue to post my thoughts on this matter as often as possible.

Jeremy Wolf

CFO Action Immigration Bonds & Insurance Services, Inc.