ENGROSSED SENATE
BILL NO. 2224 	By:	Myers of the Senate

			and

		Terrill and Hickman of the House

 [ prisons and reformatories - Private Prison Certificate of Need Act - stating purpose - defining terms - stating power and duties - codification - 		effective date ]

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.7 of Title 57, unless there is created a duplication in numbering, reads as follows:
This act shall be known and cited as the “Private Prison Certificate of Need Act”.
SECTION 2.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.8 of Title 57, unless there is created a duplication in numbering, reads as follows:
The Legislature hereby declares that it is the public policy of the State of Oklahoma that the offering and development of private prison services should be made in a planned, orderly and economical manner that it is essential to the realization of this public policy.  That the offering and development of private prison services in the state be made in accordance with the needs for such services.  It is the purpose of the Legislature in enacting this act to further this public policy by providing for the submittal of plans and applications, and by prohibiting the offering, development or change of existing services prior to the issuance of a certificate of need by the Department of Corrections.
SECTION 3.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.9 of Title 57, unless there is created a duplication in numbering, reads as follows:
As used in the Private Prison Certificate of Need Act:
1.  "Board" means the Board of Corrections;
2.  "Director" means the Director of the Department of Corrections;
3.  "Department" means the Department of Corrections;
4.  "Private prison" means any correctional facility within this state which houses minimum, medium or maximum security inmates and which is not owned or operated by the State of Oklahoma or the Department of Corrections, whether such facility is operated for profit or not for profit;
5.  "Disclosure statement" means a written statement by the applicant which contains:
a.	the full name, business address, and social security number of the applicant, and all persons with controlling interest as defined by the Private Prison Certificate of Need Act,
b.	the full name and address of any legal entity in which the applicant holds a debt or equity interest of at least five percent (5%), or which is a parent company or subsidiary of the applicant,
c.	a description of the experience and credentials of the applicant, including any past or present permits, licenses, certifications, or operational authorizations relating to private prison regulation,
d.	a listing and explanation of any administrative, civil, or criminal legal actions against the applicant or any person with a controlling interest which resulted in a final agency order or final judgment by a court of record including, but not limited to, final orders or judgments on appeal related to private prison operations in the five (5) years immediately preceding the filing of the application.  Such actions shall include, without limitation, any permit denial or any sanction imposed by a state or federal regulatory authority, and
e.	a listing of any state, federal, or local government agency outside this state that has or has had regulatory responsibility over the applicant;
6.  "History of noncompliance" means a detailed listing of fines or other penalties levied against the applicant by state, federal, or local government regulatory agencies in the past three (3) years;
7.  "Person" means any individual, corporation, industry, firm, partnership, association, venture, trust, institution, federal, state or local governmental instrumentality, agency or body or any other legal entity however organized; and
8.  "Person with a controlling interest" means a person who meets any one or more of the following requirements:
a.	controls fifty percent (50%) or more of the common stock of the corporate entity involved or controls fifty percent (50%) or more of the interest in the partnership involved,
b.	controls a percentage of stock greater than any other stockholder or equal to the other single largest stockholder or controls a percentage of partnership interest greater than any other partner or equal to the other single largest partnership interest, or
c.	a managing member of a Limited Liability Company (LLC).
SECTION 4.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.10 of Title 57, unless there is created a duplication in numbering, reads as follows:
No private prison facility shall be developed, acquired or offered unless a certificate of need therefor has been issued as provided in the Private Prison Certificate of Need Act.  No governmental entity shall approve any grant of funds, issue any debentures or issue or renew any license for the operation of a private prison facility, nor shall any third-party purchasers, licensed or operated by this state, issue reimbursement for services provided to its insurers or clients, unless the certificate of need as provided in the Private Prison Certificate of Need Act has been obtained.
SECTION 5.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.11 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  Every entity desiring to establish a new private prison, to expand an existing facility whether through construction or conversion of facilities, or to acquire an existing prison shall make application to the State Department of Corrections for a certificate of need.  The application for a certificate of need shall be in such form as the Director of the State Department of Corrections shall prescribe.
B.  A certificate of need shall be required for:
1.  Any capital investment or lease of One Million Dollars ($1,000,000.00) or more, including predevelopment activities such as arrangements and commitments for financing, architectural designs, plans, working drawings specifications, and site acquisition;
2.  Acquisition of the ownership or operation of a facility whether by purchase, lease, donation, transfer of stock or interest, management contract, corporate merger, assignment, or through foreclosure; and
3.  An increase in authorized beds, whether through establishment of a new facility or expansion of an existing facility.
SECTION 6.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.12 of Title 57, unless there is created a duplication in numbering, reads as follows:
The Director of the Department of Corrections shall have the power and duty to:
1.  Issue, renew, deny, modify, suspend and revoke certificates of need;
2.  Establish and enforce standards and requirements for certificates of need;
3.  Require the submission of and to review reports from any person requesting or obtaining a certificate of need;
4.  Employ or designate personnel necessary to implement the provisions of the Private Prison Certificate of Need Act;
5.  Report to the district attorney having jurisdiction or the Attorney General, any act committed by any person which may constitute a violation pursuant to the provisions of the Private Prison Certificate of Need Act;
6.  Advise, consult and cooperate with other agencies of this state, the federal government, other states and interstate agencies, and with affected groups and political subdivisions to further the purposes of the provisions of the Private Prison Certificate of Need Act;
7.  Promulgate and enforce rules subject to the approval of the Board of Corrections to implement the provisions of the Private Prison Certificate of Need Act;
8.  Investigate, request or otherwise obtain the information necessary to determine the qualifications and background of an applicant for a certificate of need and to determine whether a violation of the Private Prison Certificate of Need Act might have occurred;
9.  Establish administrative penalties for violations of the provisions of the Private Prison Certificate of Need Act as authorized by the Board;
10.  Institute and maintain or intervene in any action or proceeding where deemed necessary by the Department pursuant to the Private Prison Certificate of Need Act; and
11.  Exercise all incidental powers as necessary and proper for the administration of the Private Prison Certificate of Need Act.
Facility occupancy data used in the review of certificate of need applications shall be based upon reports to the Department of Corrections which are submitted by agency facilities and currently operating private prison facilities and which are available to the public upon request.
SECTION 7.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.13 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  The Department of Corrections within fifteen (15) days after receipt of an application, shall issue an exemption from certificate of need requirements upon written request and demonstration that applicable exemption criteria have been met, for any of the following activities:
1.  An increase of no more than ten beds or ten percent (10%) of the facility’s licensed beds, whichever is greater, per calendar year if:
a.	the total capital cost of the increase is less than One Million Dollars ($1,000,000.00), and
b.	the facility’s occupancy rate averaged ninety-three percent (93%) or more during the twelve (12) months preceding the filing of the exemption request;
2.  Construction of a private prison facility to replace or relocate all or part of the licensed bed capacity of an existing facility if:
a.	the project involves no increase in authorized beds,
b.	the facility shall be constructed no farther than three (3) miles for rural areas and seven and one-half (7 1/2) miles for urban areas, as defined by the Standard Metropolitan Statistical Area (SMSA), from the facility it is replacing or relocating, and
c.	a plan for the use of the facility to be replaced or relocated is provided that ensures continuity of services; and
3.  A management agreement if:
a.	the management entity discloses all persons with controlling interest in the management entity and discloses all experience in correctional facility management or operation in any state during the preceding thirty-six (36) months,
b.	the management entity and any person with controlling interest if the management entity has less than thirty-six (36) months experience in management or operation of correctional facilities, does not have a history of noncompliance, and
c.	the approved entity remains responsible for facility operation, financial performance, staffing and delivery of private prison services.
B.  A certificate of need shall not be required for:
1.  Any changes of ownership resulting from the operation of law, including but not limited to divorce, probate, reversions and bankruptcy if the transfer of interest is to any already existing stockholder or person or entity listed on the license application disclosure statement.  This shall also include cancellations and expirations of leases.  Operational law ownership changes shall be reported to the Department within five (5) working days of the change;
2.  Ownership changes for estate planning purposes, treasury stock purchases, and transfers between existing owners and/or family members; increases in the amount of common stock or partnership interest for any individual who already owns fifty percent (50%) of the common stock or corporate entity involved or controls fifty percent (50%) or more of the interest in the partnership involved; and
3.  New purchases of common stock or partnership interest by any legal entity if such new purchaser will own, in total, less than fifty percent (50%) of the corporate entity involved or partnership involved.
SECTION 8.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.14 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  All applicants for the issuance of a certificate of need, at such time and in such manner as required by the Department of Corrections, shall file:
1.  A disclosure statement with their applications unless the applicant is a publicly held company required to file periodic reports under the Securities and Exchange Act of 1934, or a wholly owned subsidiary of a publicly held company.  In such case, the applicant shall not be required to submit a disclosure statement, but shall submit the most recent annual and quarterly reports required by the Securities and Exchange Commission, which provide information regarding legal proceedings in which the applicant has been involved; and
2.  Such other relevant information required by the Department pursuant to the Private Prison Certificate of Need Act that relates to the competency, reliability, or responsibility of the applicant and affiliated persons.
B.  An application for a certificate of need shall be signed under oath by the applicant.
C.  Promptly upon receipt of any such application, the Department shall examine and transmit the application to reviewing bodies selected by the Department to assist the Department in determining whether the application is complete.  Once the Department has determined that the application is complete, it shall notify the affected parties and other reviewing bodies and cause a thorough investigation to be made of the need for and appropriateness of the new or any private prison service acquisition, expansion, or establishment of a new facility.
D.  Except as provided by Section 7 of this act, the investigation made pursuant to an application for a certificate of need shall include the following:
1.  The availability of sufficient occupancy of the private prison as determined by letters of intent from a state, federal or local government jurisdiction;
2.  The adequacy of financial resources for the acquisition, expansion, or establishment of a new private prison facility and for the continued operation thereof;
3.  The availability of sufficient staff to properly operate the proposed acquisition, expansion, or establishment of a new private prison facility;
4.  The record of the applicant's current and prior ownership, operation and management of similar facilities in this state and in any other state; and
5.  Any other matter which the Department deems appropriate.
E.  Before making a final determination on an acquisition application, the Director of the Department of Corrections shall cause paid public notices to be published in a newspaper of general circulation near the facility and in a newspaper of general circulation in the area where the application is available for public inspection.  The public notices shall offer participating parties an opportunity to submit written comments.
F.  The Director's decision to approve or deny the proposed acquisition, expansion, or establishment of a new facility shall be made within forty-five (45) days following the deadline for submitting written comments, or the proposed acquisition or establishment shall be automatically approved, unless otherwise prohibited pursuant to the provisions of the Private Prison Certificate of Need Act.
G.  If the Director finds that a proposed acquisition, expansion, or establishment of a new facility is consistent with the criteria and standards for review of such projects, and is otherwise in compliance with the provision of the Private Prison Certificate of Need Act, then the Director shall issue a certificate of need.  If the Director finds that the proposed acquisition, expansion, or establishment of a new facility is not consistent with the criteria and standards, or is otherwise not in compliance with the provisions of the Private Prison Certificate of Need Act, the Director shall deny the certificate of need.
SECTION 9.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.15 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  Each application for a new certificate of need applied for pursuant to the provisions of Section 5 of this act, except for those applications filed by state agencies, shall be accompanied by an application fee of Three Thousand Dollars ($3,000.00).
B.  The maximum filing fee on an application for replacement of an existing facility shall be One Thousand Dollars ($1,000.00).
C.  1.  The maximum filing fee on an application for an acquisition shall be Five Thousand Dollars ($5,000.00).
2.  The capital cost for acquisition shall be the current book value of the facility as shown by a recognized method or basis of accounting as attested by a Certified Public Accountant.
D.  If an application for a certificate of need is not approved, the Department of Corrections shall refund the application fee in full.
E.  Each request for exemption from certificate of need requirements submitted under Section 7 of this act, except for a request filed by a state agency, shall be accompanied by a fee of One Hundred Dollars ($100.00).
SECTION 10.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.16 of Title 57, unless there is created a duplication in numbering, reads as follows:
Except as provided in subsection D of Section 7 of this act, no certificate of need shall be issued by the Department of Corrections unless, after investigation, the Director of the Department of Corrections makes the following findings:
1.  The proposed action can be economically accomplished and maintained;
2.  The proposed action will contribute to the orderly development of corrections services in the state;
3.  The applicant employs or has the resources to adequately staff the facility with trained employees; and
4.  The applicant is found to be in compliance with the provisions of Section 12 of this act.
5.  The applicant provides proof of the availability of sufficient occupancy of the private prison as determined by letters of intent from a state, federal or local government jurisdiction.
SECTION 11.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.17 of Title 57, unless there is created a duplication in numbering, reads as follows:
An application for a certificate of need for a capital expenditure to eliminate or prevent imminent safety hazards as defined by federal, state or local fire, building or life safety codes or regulations, or to comply with state licensure standards, or to comply with accreditation standards, shall be approved unless the Department of Corrections finds:
1.  That the facility or service is not needed; or
2.  That the applicant is found to be out of compliance with the provisions of Section 12 of this act.
Approval under this section shall cover only the capital expenditure to eliminate or prevent the hazards or to comply with standards described herein.
SECTION 12.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.18 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  No certificate of need shall be issued for the acquisition of an existing facility unless after investigation the Director of the Department of Corrections finds that the applicant:
1.  Has financial resources necessary to complete the transaction and to maintain services and staffing; and
2.  Is found to be in compliance with the provisions of Section 10 of this act.
B.  1.  The Director shall refuse to issue a certificate of need to any applicant who has had, in ten percent (10%) or more of the applicant's private prison facility holdings in the preceding sixty (60) months, fines for inadequate staff or training, escapes, excessive assaults, or other fines or other penalties relating to the operation or security of a facility; license or certification revoked, rescinded, canceled, terminated, involuntarily suspended, or refused renewal; or if the license or certification was relinquished voluntarily in lieu of penalty.
2.  The Director shall refuse to issue a certificate of need to any applicant except where the applicant overcomes a presumption against approval with clear and convincing evidence that one of the following circumstances was not due to the action or inaction of the applicant or any person with a controlling interest:
a.	the applicant has had, in any of the applicant's private prison holdings in the preceding sixty (60) months, a facility's license or certificate revoked, rescinded, canceled, terminated, involuntarily suspended or refused renewal,
b.	the applicant has a history of noncompliance, as defined by statute, with the standards for licensure of private prison facilities of any state in which the applicant has or has had private prison facilities, or with federal standards for certification of private prison facilities,
c.	the applicant, in all current and prior ownership, operation and management of private prison facilities, has not complied with all lawful orders of suspension, receivership, temporary management, or administrative penalty issued by the Department or by other authorities with similar responsibilities in other states or by the federal government, or
d.	the applicant has been convicted of a felony criminal offense related to the operation or management of a private prison facility.
3.  Other than any of those reasons listed in paragraph 1 or 2 of this subsection, the Director may refuse to issue a certificate of need to any applicant who has had, in the preceding thirty-six (36) months, one or more of the following:
a.	a temporary manager, monitor, or receiver appointed, or
b.	had a civil money penalty imposed of Thirty-five Thousand Dollars ($35,000.00) or more.
C.  Noncompliance with a final agency order or final order or judgment of a court of record which has been set aside by a court on appeal of such final order or judgment shall not be considered a final order or judgment for the purposes of this section.
SECTION 13.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.19 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  When the Director of the Department of Corrections makes a determination to issue or deny a certificate of need, the Director shall provide written findings to the applicant, other reviewers and to other persons upon their request.  The certificate of need shall establish the maximum capital expenditure for the project.  The Board of Corrections shall adopt rules concerning the time in which a decision must be made on an application.
B.  Any person may request a reconsideration of the Director's determination for good cause shown, the grounds for which shall be established by the Board by rule.  A request for reconsideration shall be filed within ten (10) days of the Department's determination.  The hearing thereupon shall be conducted within thirty (30) days following the receipt of request.  Written findings shall be issued within forty-five (45) days of such hearing. 
C.  Any final determination by the Department pursuant to the Private Prison Certificate of Need Act may be appealed by the applicant, or any other aggrieved party under the provisions of Sections 317 and 318 of Article II of the Administrative Procedures Act; provided, that the venue for such appeal shall be in Oklahoma County or in the county in which the facility at issue in the application is located.
SECTION 14.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.20 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  1.  A certificate of need issued pursuant to the provisions of the Private Prison Certificate of Need Act for the construction or establishment of a new private prison facility or the expansion of an existing facility shall be valid for a period of six (6) months during which time the applicant shall submit to the Department of Corrections the plans and specifications for the facility to be constructed; however, the Department may extend such time by a period not to exceed twelve (12) months for extraordinary circumstances beyond the control of the applicant.
2.  If no such plans and specifications are submitted within the time required by this section, then such certificate shall be null and void.
3.  If plans and specifications are submitted, the Department shall approve or disapprove such plans and specifications within thirty (30) days of the filing or such plans and specifications shall be presumed to be approved.
4.  If the Department disapproves the plans and specifications, such disapproval shall include a detailed statement of the corrections needed.
5.  The Board of Corrections shall provide by rule the review process and time deadlines not exceeding twelve (12) months for approval or disapproval and resubmittal of initial, final and corrected plans and specifications.  The applicant’s failure to meet the review process deadlines promulgated by the Board shall render the certificate of need void.
6.  The applicant must begin construction of the structure within twelve (12) months following the approval of the final plans and specifications and must proceed to complete the structure within eighteen (18) months of the approval from the beginning of construction or the certificate will be canceled.
However, the Department may extend such completion day by a period not to exceed twenty-four (24) months for good cause upon the applicant’s demonstration that the applicant has made a good faith effort to complete the structure or modifications and that the delay is unlikely to result in harm to the population to be served by the applicant.
B.  A certificate of need issued pursuant to the provisions of this act for the acquisition of a private prison facility shall be valid for a period of six (6) months by which time the acquisition must be finalized, provided that the Department may extend such final date by a period not to exceed twelve (12) months for good cause.
C.  Pending the appeal of an order granting a certificate of need in the district or Supreme Court, the effective dates of deadlines for submitting plans, filing reports, completion of the project and other requirements related to such project shall commence on the date of a final judicial determination of any such appeal, and any certificate of need which has been approved by the Department shall remain in effect pending such appeal.  The effective date of the issuance of a certificate of need shall be the date of a final judicial determination of any such appeal.  The provisions of this subsection shall have prospective and retrospective application.
SECTION 15.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.21 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  The Board of Corrections shall promulgate such rules as are necessary to implement the provisions of the Private Prison Certificate of Need Act and meet the requirements of federal regulations.  The Department of Corrections may administer oaths at any hearing or investigation conducted pursuant to the Private Prison Certificate of Need Act, and receive federal grant or contract funds by complying with the requirements therefor.
B.  The Department shall post on the Department’s Internet site a monthly report which shall include the status of each review currently being conducted, the reviews completed since the last report issued, and a general statement of the findings and decisions made in the course of these reviews.
SECTION 16.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 561.22 of Title 57, unless there is created a duplication in numbering, reads as follows:
A.  Any person who offers or develops or begins to offer or develop a private prison facility without having first obtained a certificate of need, as provided by the Private Prison Certificate of Need Act, shall be deemed guilty of a misdemeanor, and upon conviction shall be punishable by payment of a fine of not less than One Thousand Dollars ($1,000.00) and not more than Five Thousand Dollars ($5,000.00).
B.  If the Department of Corrections, through one of its agents or representatives, notifies in writing, through certified mail, return receipt requested, the person who has unlawfully commenced the offering or development of a private prison facility to cease and desist, then each day that such person continues such offering or development shall be a separate offense.  If any person continues to offer or develop a private prison service after the issuance of a cease and desist order, the Department shall seek an injunction to prohibit the continued offering or development.
SECTION 17.  This act shall become effective November 1, 2010.
Passed the Senate the 2nd day of March, 2010.

	
Presiding Officer 	of the Senate

Passed the House of Representatives the ____ day of __________, 2010.

	
Presiding Officer	of the House
	of Representatives