(a) Upon determining that an applicant for naturalization is an alien enemy, the Service shall notify the applicant in writing of its determination. Upon service of this notice to the applicant, the provisions of section 336(b) of the Act will no longer apply to such applicant, until that applicant is no longer classifiable as an alien enemy.

(b) Upon completion of the investigation described in §331.3, if the Service concludes that the applicant's loyalty and attachment to the United States have been fully established, the application may be granted.