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                                                      PRINTER'S NO. 1219



No. 930 Session of 2005

           PIPPY AND BOSCOLA, OCTOBER 13, 2005


                                     AN ACT

     1  Prohibiting government competition with private enterprise.

     2     The General Assembly of the Commonwealth of Pennsylvania
     3  hereby enacts as follows:
     4  Section 1.  Short title.
     5     This act shall be known and may be cited as the Free
     6  Enterprise and Taxpayer Protection Act.
     7  Section 2.  Declaration of policy.
     8     The General Assembly finds and declares as follows:
     9         (1)  Private enterprise is necessary to the health,
    10     welfare and prosperity of this Commonwealth.
    11         (2)  Government competes with private enterprise when it
    12     provides goods and services to the public beyond its
    13     government function.
    14         (3)  This act is intended to protect economic
    15     opportunities for private enterprise against unfair
    16     competition by government agencies and to enhance the
    17     efficient provision of goods and services to the public.

     1  Section 3.  Definitions.
     2     The following words and phrases when used in this act shall
     3  have the meanings given to them in this section unless the
     4  context clearly indicates otherwise:
     5     "Agency."  A government agency as defined in this act.
     6     "Authority."  Any authority created by a government agency or
     7  agencies for a purpose other than the purpose of the agency or
     8  agencies.
     9     "Commercial activity."  Performing services or providing
    10  goods that can normally be obtained from private enterprise.
    11     "Government agency."  The State, any unit of State
    12  government, and any municipality, municipal or county authority
    13  or political subdivision. The term includes an entity which is
    14  not majority-owned as private property and established under the
    15  Constitution of Pennsylvania, statute, ordinance or any other
    16  order or action by the entity or its officers. The term includes
    17  State-owned and State-related universities, community colleges
    18  and public school districts.
    19     "Government competition."  The provision of goods or services
    20  to the public by government agencies that are essentially the
    21  same as those offered by private enterprise.
    22     "Government functions."  Those functions that are exclusively
    23  the prerogative of government, including, but not limited to,
    24  operation of the agency or department, fulfillment of the legal
    25  obligations of the agency, law enforcement and the judicial
    26  system.
    27     "Invited guests."  Persons who enter onto a campus for
    28  educational, research or public service activity and not
    29  primarily to purchase or receive goods and services which are
    30  not related to the educational, research or public service
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     1  activity for which the persons enter onto the campus.
     2     "Local agency."  A department, office, commission,
     3  institution, board or other agency or local organization,
     4  regardless of whether moneys are appropriated to the agency,
     5  including, but not limited to, cities, boroughs, towns,
     6  townships or any other municipal entity.
     7     "Necessary services."  Those services that are critical for
     8  human safety and health, including, but not limited to, fire
     9  departments, emergency services and medical services.
    10     "Private enterprise."  An individual, firm, partnership,
    11  joint venture, corporation, association or any other legal
    12  entity engaging in the manufacturing, processing, sale, offering
    13  for sale, rental, leasing, delivery, dispensing, distributing or
    14  advertising of goods or services for profit.
    15     "Private sector."  Two or more competing privately owned
    16  companies.
    17     "Public service."  An activity that is normally and generally
    18  associated with community colleges and universities in this
    19  Commonwealth, a purpose or significant result of which is not to
    20  engage in competition with private enterprise.
    21     "State agency."  A department, office, commission,
    22  institution, board or other agency or State organization,
    23  regardless of whether moneys are appropriated to the agency.
    24     "Telecommunications."  Radio, telegraph, telefax, telephoto,
    25  television, cable and satellite transmission, computer, Internet
    26  and other electronic services.
    27     "Utilities."  Provision of electric power and water supply.
    28     "Vital services."  Those services that are vital to the
    29  public, including, but not limited to, water and electric
    30  supply, sewers, garbage and trash removal, recycling, streets
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     1  and roads, public transportation and public transportation
     2  infrastructure, State and local correctional facilities, child
     3  care, elder care, telecommunication services which include
     4  radio, telegraph, telefax, telephoto, television cable and
     5  satellite transmission, computer, Internet and other electronic
     6  services.
     7  Section 4.  Government competition prohibited.
     8     Government, government agencies, State-owned and State-
     9  related universities, community colleges, school districts and
    10  public authorities are prohibited from competing against private
    11  enterprise, including by intergovernmental or interagency
    12  agreement, and are prohibited from funding, capitalizing,
    13  securing the indebtedness of, or leasing the obligations of, or
    14  subsidizing, any charitable or not-for-profit institution which
    15  would use such support to compete against private enterprise.
    16  Section 5.  Excepted functions and services.
    17     The following functions or services are excepted from the
    18  provisions of section 4:
    19         (1)  Government functions.
    20         (2)  Necessary services. Nothing in this act shall
    21     preclude a government agency or authority from utilizing
    22     private enterprise to provide necessary services.
    23         (3)  Vital services, to the extent such services are not
    24     available from private enterprise. In such cases, government
    25     shall make good faith efforts for private enterprise to
    26     furnish such services.
    27         (4)  The development, management and operation of State
    28     parks, historical monuments and hiking or equestrian trails.
    29         (5)  Provisions of goods and services to students and
    30     invited guests by State-owned and State-related universities,
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     1     community colleges and public school districts.
     2  Section 6.  Existing government competition.
     3     (a)  General rule.--In cases of government competition
     4  against private enterprise that exist on the effective date of
     5  this act, the government agency or authority may continue to
     6  engage in the competition but may not exceed the scope of the
     7  competition.
     8     (b)  Construction.--Nothing in this act shall be construed to
     9  preclude a government agency or authority from contracting with
    10  private enterprise to provide goods or services to the public.
    11  Section 7.  Financial statements.
    12     (a)  Maintenance.--
    13         (1)  In all cases of commercial activity by government
    14     agencies, annual financial statements of all income and
    15     expenses of the commercial activities shall be maintained
    16     separately and on the same basis as the financial statements
    17     of the government agencies.
    18         (2)  Income from monetary assets of government agencies
    19     shall not be shown as income of commercial activities but
    20     shall be shown as income of the government agencies.
    21     (b)  Income from government agencies.--The financial
    22  statements of commercial activities shall not include any income
    23  from government agencies. Grants shall not be included as income
    24  of the commercial activities, but shall be shown as income to
    25  the government agencies.
    26     (c)  Common expenses.--The financial statements of commercial
    27  activities shall include proportionate amounts of common
    28  expenses shared with government agencies, including, but not
    29  limited to, utility costs, supplies, repair and replacement
    30  costs, insurance of all types, employee compensation, employee
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     1  benefits, payroll taxes, debt service and depreciation of all
     2  types.
     3     (d)  Audit.--The financial statements of government agencies
     4  and commercial activities shall be audited and certified as
     5  correct by a certified public accountant and auditor within 120
     6  days after the end of the annual accounting period and when
     7  certified shall be released to the public.
     8  Section 8.  Remedies.
     9     (a)  Nature of action and jurisdiction.--The civil cause of
    10  action authorized under this section shall be brought in the
    11  Commonwealth Court, which shall have jurisdiction to issue
    12  preliminary and permanent injunctive relief.
    13     (b)  Preliminary orders.--
    14         (1)  An affected person or entity may file a complaint
    15     seeking preliminary injunctive relief by alleging that a
    16     government agency is participating or planning to participate
    17     in commercial activity resulting in new competition with
    18     existing private enterprise. Upon receipt of the complaint,
    19     the court shall order a preliminary hearing, which shall not
    20     be later than 30 days from the date of the order.
    21         (2)  The court shall issue appropriate preliminary
    22     injunctive relief if at the preliminary hearing the plaintiff
    23     makes a prima facie showing that:
    24             (i)  the government agency is or is planning to
    25         participate in commercial activity;
    26             (ii)  that commercial activity results or will result
    27         in competition with private enterprise;
    28             (iii)  the government has not made a good faith
    29         effort for private enterprise to furnish vital services;
    30         and
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     1             (iv)  the threat to private enterprise or public
     2         moneys is imminent.
     3         (3)  The plaintiff shall not be required to show no
     4     adequate remedy at law or irreparable harm nor any other
     5     common law element applicable to obtaining preliminary
     6     injunctive relief.
     7         (4)  If the court finds that the government agency is
     8     participating or planning to participate in commercial
     9     activity resulting in competition with private enterprise but
    10     that preliminary injunctive relief is not warranted the court
    11     shall deny the request for preliminary injunctive relief and
    12     proceed to trial.
    13     (c)  Permanent injunction.--Where, after a final hearing on
    14  the merits, the court finds that a governmental agency is
    15  participating or planning to participate in commercial activity
    16  resulting in competition with private enterprise in violation of
    17  this act, the court shall grant permanent injunctive relief and
    18  shall issue orders as necessary to abate the government
    19  competition with private enterprise.
    20     (d)  Monetary damages.--The court may award actual monetary
    21  damages to the plaintiff. The plaintiff must prove actual
    22  damages by clear and convincing evidence.
    23     (e)  Recovery of costs.--Whenever an action for injunctive
    24  relief and damages brought pursuant to this section terminates
    25  in a settlement or judgment favorable to the plaintiff, the
    26  plaintiff shall be entitled to recover the actual costs of the
    27  suit, including, but not limited to, reasonable attorney fees
    28  and all expenses and disbursements made by the plaintiff in
    29  bringing the action.
    30  Section 30.  Effective date.
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     1     This act shall take effect in 60 days.

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