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A03564
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1692
Session of
2017
INTRODUCED BY KAUFER, MURT, READSHAW, BERNSTINE, SCHLOSSBERG,
MILLARD, WHEELAND, TALLMAN, D. COSTA, RADER, BOBACK AND
BAKER, AUGUST 15, 2017
REFERRED TO COMMITTEE ON STATE GOVERNMENT, AUGUST 15, 2017
AN ACT
Amending Title 62 (Procurement) of the Pennsylvania Consolidated
Statutes, in Iran-free procurement, further providing for
expiration; and providing for North Korea-free procurement.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 3506 of Title 62 of the Pennsylvania
Consolidated Statutes is amended to read:
§ 3506. Expiration.
The department shall have no obligations under this chapter
with respect to a company engaged in business activities in Iran
[upon the occurrence of any of the following:
(1) Iran does not appear on the List of State Sponsors
of Terrorism.
(2) The President or Congress of the United States,
through legislation or executive order, declares that
mandatory divestment of the type provided for in this chapter
interferes with the conduct of United States foreign policy.]
upon the repeal of the Comprehensive Iran Sanctions,
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Accountability, and Divestment Act of 2010 (Public Law 111-
195, 124 Stat. 1312) by the Congress of the United States.
Section 2. Title 62 is amended by adding a chapter to read:
CHAPTER 35A
NORTH KOREA-FREE PROCUREMENT
Sec.
35A01. Definitions.
35A02. Engaging in investment activities.
35A03. List of persons engaged in investment activities.
35A04. Certification.
35A05. Penalties for false certification.
35A06. Expiration.
§ 35A01. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of General Services of the
Commonwealth.
"Energy-related activities." The term includes all of the
following:
(1) Development of petroleum, natural gas or nuclear
energy resources. This paragraph does not include the mere
sale of gasoline and related consumer products.
(2) Owning rights to oil or natural gas blocks or
nuclear facilities.
(3) Exporting, extracting, producing, refining,
processing, exploring for, transporting, selling or trading
oil or natural gas or developing nuclear energy.
(4) Constructing, maintaining or operating any pipeline,
refinery, liquefaction facility, nuclear reactor or other
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oil, natural gas or nuclear energy infrastructure.
"Financial institution." A financial institution subject to
the provisions of the North Korea Sanctions and Policy
Enhancement Act of 2016 (Public Law 114-122, 22 U.S.C. § 9201 et
seq.).
"North Korea." The government of North Korea or an agency or
instrumentality of North Korea.
"Person." An individual, organization, a financial
institution, sole proprietorship, association, corporation,
partnership, joint venture, limited partnership, limited
liability partnership, limited liability company or other entity
or business association that exists for the purpose of making a
profit or government entity that includes a multilateral
development institution as defined in section 1701 of the
International Financial Institutions Act (Public Law 95-118, 22
U.S.C. § 262r).
§ 35A02. Engaging in investment activities.
A person or financial institution engages in an investment
activity by doing any of the following:
(1) Providing goods or services worth at least
$20,000,000, including oil tankers or transporters and
liquefied natural gas tankers or transporters, to the energy-
related activities of North Korea, or products used to
construct or maintain pipelines used to transport oil or
liquefied natural gas for the energy sector of North Korea.
(2) Extending at least $20,000,000 in credit to a person
for 45 days or more if all of the following apply:
(i) The person uses the credit to provide goods or
services to the energy sector in North Korea.
(ii) The person is, at the time the financial
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institution or person extends credit, identified on a
list created under section 35A03 (relating to list of
persons engaged in investment activities).
§ 35A03. List of persons engaged in investment activities.
(a) List.--The department shall develop a list of persons
whom the department determines are engaged in investment
activities in North Korea as described in section 35A02
(relating to engaging in investment activities). The department
shall make its determination based on publicly available,
credible information. The department shall update the list every
180 days. Ninety days prior to adding a person to the list, the
department shall do all of the following:
(1) Provide notice to the person of the department's
intention to add the person to the list. The notice shall
inform the person that inclusion on the list makes the person
ineligible to enter into a contract with a Commonwealth
entity for goods or services worth at least $1,000,000. The
notice shall specify that if the person ceases to engage in
investment activities in North Korea, the person may regain
eligibility upon removal from the list.
(2) Provide the person an opportunity to comment in
writing to the department. The person shall maintain
eligibility if the person demonstrates no engagement in
investment activities in North Korea.
(b) Ineligibility of persons on list.--A person identified
on a list under subsection (a) shall be ineligible to enter into
a contract with a Commonwealth entity to provide for goods or
services worth at least $1,000,000.
(c) List.--The department shall post the list on its
publicly accessible Internet website. Upon request, the
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department shall provide the list free of charge to the General
Assembly or a public entity.
(d) Investment service contracts.--Service contracts entered
into by Commonwealth entities for the management and investment
of a fund for which there is a fiduciary responsibility and for
which compliance with the act of July 2, 2010 (P.L.266, No.44),
known as the Protecting Pennsylvania's Investments Act, is
required, shall be exempt from the provisions of this chapter.
(e) Exception.--On a case-by-case basis, the department may
permit a person engaging in investment activities in North Korea
to enter a contract with a Commonwealth entity for goods or
services worth at least $1,000,000 if any of the following
apply:
(1) The investment activities in North Korea were made
before and were not expanded after January 1, 2018.
(2) The person refrains from entering into new
agreements to engage in any future investment activities in
North Korea.
(3) The department determines that the Commonwealth
entity has no other cost-effective method of obtaining the
goods or services than entering into a contract with the
person.
§ 35A04. Certification.
(a) General rule.--The department shall make available a
certification form indicating that a person is not on the list
under section 35A03(a) (relating to list of persons engaged in
investment activities) and is eligible under this chapter to
contract with the Commonwealth. Prior to entering into a
contract with a Commonwealth entity, a person shall provide a
certification form to the Commonwealth entity unless the person
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is exempt under section 35A03(e).
(b) Right to cure.--
(1) If the department determines, using credible
information available to the public, that a person has
submitted a false certification under subsection (a), the
person shall be provided with written notice and an
opportunity to demonstrate to the department that the person
has ceased its engagement in energy-related activities in
North Korea within 90 days of the notice.
(2) A person who reasonably demonstrates to the
department that the person has ceased its engagement in
energy-related activities in North Korea within 90 days after
the written notice shall not be subject to the penalties
under section 35A05 (relating to penalties for false
certification).
§ 35A05. Penalties for false certification.
(a) Penalties.--Subject to the provisions of section
35A04(b) (relating to certification), if the department
determines that a person has provided a false certification form
to a Commonwealth entity under section 35A04, the person shall
be subject to the following:
(1) A civil penalty in the amount of $250,000 or twice
the amount of the contract, whichever is greater. Only one
civil penalty may be imposed upon a person per investment.
(2) Suspension of the existing contract with the
Commonwealth entity for a period of three years from the date
of the determination that the person submitted the false
certification. Following the three-year suspension period,
the Commonwealth entity or the department may terminate the
contract.
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(b) Report of false certification.--The department shall
report to the Attorney General the name of the person who
submitted the false certification and the pertinent information
that led to the department's determination. No later than three
years after the department makes a determination under
subsection (a), the Attorney General shall determine whether to
bring a civil action against the person to collect the penalty
described in subsection (a). If a court determines the person
submitted a false certification, the person shall pay all
reasonable costs and fees incurred in the civil action.
Reasonable costs shall include the reasonable costs incurred by
the Commonwealth entity in investigating the authenticity of the
certification. Only one civil action against the person may be
brought for a false certification on a contract.
(c) No private right of action.--Nothing in this section may
be construed to create or authorize a private right of action.
§ 35A06. Expiration.
The department shall have no obligations under this chapter
with respect to a person engaged in investment activities in
North Korea upon the repeal of s ection 204 of the North Korea
Sanctions and Policy Enhancement Act of 2016 (Public Law 114-
122, 22 U.S.C. § 9224).
Section 2 3. This act shall take effect immediately. as
follows:
(1) The addition of 62 Pa.C.S. Ch. 35A shall take effect
January 1, 2018.
(2) The remainder of this act shall take effect
immediately.
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