2012 -- H 7859 SUBSTITUTE B

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LC02090/SUB B/2

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

____________

A N A C T

RELATING TO ELECTIONS -- DISCLOSURE OF POLITICAL CONTRIBUTIONS AND

EXPENDITURES

     Introduced By: Representatives Blazejewski, Fox, Ajello, Marcello, and Edwards

     Date Introduced: February 28, 2012

     Referred To: House Judiciary

It is enacted by the General Assembly as follows:

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     SECTION 1. The legislature hereby finds and declares as follows:

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     (1) The amount of money spent in elections by persons, business entities or political

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action committees that are not coordinated with a candidate or political party is playing a greater

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role in elections.

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     (2) The Supreme Court’s decision in Citizens United v. FEC has accelerated these trends

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by allowing unlimited political spending by outside groups via independent expenditures. This

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spending is often extremely difficult or impossible to trace, being funneled through “shadow

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groups” that are able to avoid many current campaign finance disclosure regulations.

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     (3) The legislature finds it to be in the public and governmental interest to revise Rhode

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Island’s campaign finance disclaimer and disclosure laws to keep pace with the aforementioned

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developments and to protect and enhance core democratic values and maintain the integrity of

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elections.

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     (i) The source of political spending is vital information for voters, allowing them to make

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knowledgeable decisions at election time. Disclosure allows voters to properly weigh speakers

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and messages based on their affiliations and other contexts, such as whether the speaker stands to

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personally benefit from their advocated positions.

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     (ii) The United States Supreme Court has repeatedly upheld disclaimer and disclosure

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provisions as constitutionally protected methods of improving the integrity of electoral processes

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without unnecessarily restricting First Amendment free speech rights. The Court has noted that

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these requirements “impose no ceiling on campaign related activities” (Buckley v. Valeo) and “do

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not prevent anyone from speaking” (McConnell v. FEC). Whatever level of burden disclaimer

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and disclosure do place on the ability to speak is justified by a valid government interest in

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providing the electorate with information.

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     (iii) New communications technologies greatly increase the value and potential for

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disclosure by making disclosed information easily available to the average citizen. This potential

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should be embraced by encouraging electronic filing of campaign finance reports as much as is

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practicable and making this information as accessible as possible. New media and technological

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platforms also bring with them a risk of circumvention of existing regulation by funneling money

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through mediums unaddressed by extant law. Extension of disclaimer laws to new media will

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ensure that the interests bolstered by disclosure and disclaimer remain well supported.

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     (iv) By bringing political spending out into the light, stronger, modernized disclaimer and

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disclosure rules can serve as a powerful check on actual government corruption as well as reduce

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the perception of corruption. Armed with information about political spending, citizens can better

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detect improper political favors and then use this knowledge to hold those politicians accountable

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at the ballot box. By preventing the flooding of elections with untraceable money, these rules will

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leave the public with less reason to perceive “bought elections” in which the outcome is

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determined by outside or even out-of-state groups. Thus, improved disclosure and disclaimer laws

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can help restore citizen trust in government.

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     (v) Disclaimer and disclosure can also further the rights and interests of shareholders and

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group members. In both cases, an organization acts in a role representing its constituents’

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interests, including in its political actions. However, if information on a group’s spending is not

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disclosed to members and shareholders, their interests are compromised as they may support or

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oppose certain political spending but not be made aware of the spending being done in their

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names.

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     (vi) At present, spending between the final pre-election filing date and election day is

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hidden from public view until after the election is over. This deprives voters of knowledge when

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it would be most relevant to their decision-making and reduces disclosure’s effectiveness in

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promoting accountability in the political process.

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     (vii) Stronger disclosure rules can also assist in the gathering of information necessary to

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avoid circumvention of other existing rules. Existing law, such as bans on campaign contributions

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by foreign nationals and contribution limits, rely on the type of transparency in political spending

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that these regulations would create.

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     SECTION 2. Section 17-25-3 of the General Laws in Chapter 17-25 entitled "Rhode

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Island Campaign Contributions and Expenditures Reporting" is hereby amended to read as

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follows:

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     17-25-3. Definitions. -- As used in this chapter, unless a different meaning clearly

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appears from the context:

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      (1) "Business entity" means any corporation, whether for profit or not for profit,

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domestic corporation or foreign corporation, as defined in section 7-1.2-106, financial institution,

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cooperative, association, receivership, trust, holding company, firm, joint stock company, public

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utility, sole proprietorship, partnership, limited partnership, or any other entity recognized by the

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laws of the United States and/or the state of Rhode Island for the purpose of doing business. The

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term "business entity" shall not include a political action committee organized pursuant to this

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chapter or a political party committee or an authorized campaign committee of a candidate or

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office holder. The term “business entity” shall not include any exempt nonprofit as defined herein

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or any organization described in section 501(c)(3) of the Internal Revenue Code of 1986, or any

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subsequent corresponding internal revenue code of the United States, as amended from time to

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time, for the purposes of chapter 17-25.3 of the general laws only.

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     (2) "Candidate" means any individual who undertakes any action, whether preliminary or

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final, which is necessary under the law to qualify for nomination for election or election to public

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office, and/or any individual who receives a contribution or makes an expenditure, or gives his or

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her consent for any other person to receive a contribution or make an expenditure, with a view to

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bringing about his or her nomination or election to any public office, whether or not the specific

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public office for which he or she will seek nomination or election is known at the time the

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contribution is received or the expenditure is made and whether or not he or she has announced

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his or her candidacy or filed a declaration of candidacy at that time.

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      (3) "Contributions" and "expenditures" include all transfers of money, credit or debit

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card transactions on-line or electronic payment systems such as "pay pal," paid personal services,

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or other thing of value to or by any candidate, committee of a political party, or political action

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committee or ballot question advocate. A loan shall be considered a contribution of money until it

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is repaid.

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      (4) "Election" means any primary, general, or special election or town meeting for any

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public office of the state, municipality, or district or for the determination of any question

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submitted to the voters of the state, municipality, or district.

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      (5) "Election cycle" means the twenty-four (24) month period commencing on January 1

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of odd number years and ending on December 31 of even number years; provided, with respect to

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the public financing of election campaigns of general officers under sections 17-25-19, 17-25-20,

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and 17-25-25, "election cycle" means the forty-eight (48) month period commencing on January

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1 of odd numbered years and ending December 31 of even numbered years.

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      (6) "In-Kind Contributions" means the monetary value of other things of value or paid

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personal services donated to, or benefiting, any person required to file reports with the board of

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elections.

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      (7) "Other thing of value" means any item of tangible real or personal property of a fair

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market value in excess of one hundred dollars ($100).

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      (8) "Paid personal services" means personal services of every kind and nature, the cost or

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consideration for which is paid or provided by someone other than the committee or candidate for

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whom the services are rendered, but shall not include personal services provided without

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compensation by persons volunteering their time.

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      (9) "Person" means an individual, partnership, committee, association, corporation,

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union, charity and/or any other organization. The term “person” shall not include any exempt

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nonprofit as defined herein or any organization described in section 501(c)(3) of the Internal

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Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United

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States, as amended from time to time, for the purposes of chapter 17-25.3 of the general laws

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only.

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      (10) "Political action committee" means any group of two (2) or more persons that

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accepts any contributions to be used for advocating the election or defeat of any candidate or

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candidates. Only political action committees that have accepted contributions from fifteen (15) or

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more persons in amounts of ten dollars ($10.00) or more within an election cycle shall be

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permitted to make contributions, and those committees must make contributions to at least five

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(5) candidates for state or local office within an election cycle.

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      (11) "Public office" means any state, municipal, school, or district office or other

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position that is filled by popular election, except political party offices. "Political party offices"

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means any state, city, town, ward, or representative or senatorial district committee office of a

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political party or delegate to a political party convention, or any similar office.

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      (12) "State" means state of Rhode Island.

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      (13) "Testimonial affair" means an affair of any kind or nature including, but not limited

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to, cocktail parties, breakfasts, luncheons, dinners, dances, picnics, or similar affairs expressly

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and directly intended to raise campaign funds in behalf of a candidate to be used for nomination

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or election to a public office in this state, or expressly and directly intended to raise funds in

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behalf of any state or municipal committee of a political party, or expressly and directly intended

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to raise funds in behalf of any political action committee.

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     (14) "Electioneering communication" means any print, broadcast, cable, satellite, or

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electronic media communication not coordinated, as set forth in section 17-25-23, with any

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candidate, authorized candidate campaign committee, or political party committee and which

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unambiguously identifies a candidate or referendum and is made either within sixty (60) days

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before a general or special election or town meeting for the office sought by the candidate or

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referendum; or thirty (30) days before a primary election, for the office sought by the candidate;

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and is targeted to the relevant electorate.

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     (i) A communication which refers to a clearly identified candidate or referendum is

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"targeted to the relevant electorate" if the communication can be received by two thousand

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(2,000) or more persons in the district the candidate seeks to represent or the constituency voting

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on the referendum.

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     (ii) Exceptions: The term "electioneering communication" does not include:

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     (A) A communication appearing in a news story, commentary, or editorial distributed

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through the facilities of any broadcasting station, unless such facilities are owned or controlled by

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any political party, political committee, or candidate;

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     (B) A communication which constitutes a candidate debate or forum conducted pursuant

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to regulations adopted by the board of elections or which solely promotes such a debate or forum

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and is made by or on behalf of the person sponsoring the debate or forum; or

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     (C) A communication made by any business entity to its members, owners, stockholders,

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or employees;

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     (D) A communication over the Internet, except for (I) Communications placed for a fee

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on the website of another person, business entity, or political action committee; and (II) Websites

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formed primarily for the purpose, or whose primary purpose is, to expressly advocate the election

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or defeat of a clearly identified candidate or the passage or defeat of a referendum; or

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     (E) Any other communication exempted under such regulations as the board of elections

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may promulgate (consistent with the requirements of this paragraph) to ensure the appropriate

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implementation of this paragraph.

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     (15) "Independent expenditure" means an expenditure which, when taken as a whole,

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expressly advocates the election or defeat of a clearly identified candidate, or the passage or

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defeat of a referendum, or amounts to the functional equivalent of such express advocacy, and is

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in no way coordinated, as set forth in section 17-25-23, with any candidate’s campaign,

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authorized candidate committee, or political party committee. An expenditure amounts to the

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functional equivalent of express advocacy if it can only be interpreted by a reasonable person as

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advocating the election, passage, or defeat of a candidate or referendum, taking into account

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whether the communication mentions a candidate or referendum and takes a position on a

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candidate’s character, qualifications, or fitness for office. An independent expenditure is not a

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contribution to that candidate or committee.

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     (i) Exceptions: The term "independent expenditure" does not include:

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     (A) A communication appearing in a news story, commentary, or editorial distributed

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through the facilities of any broadcasting station, unless such facilities are owned or controlled by

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any political party, political committee, or candidate;

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     (B) A communication which constitutes a candidate debate or forum conducted pursuant

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to regulations adopted by the board of elections or which solely promotes such a debate or forum

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and is made by or on behalf of the person sponsoring the debate or forum;

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     (C) A communication made by any business entity to its members, owners, stockholders,

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or employees;

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     (D) A communication over the Internet, except for (I) Communications placed for a fee

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on the website of another person, business entity, or political action committee; and (II) Websites

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formed primarily for the purpose, or whose primary purpose is, to expressly advocates the

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election or defeat of a clearly identified candidate or the passage or defeat of a referendum; or

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     (E) Any other communication exempted under such regulations as the board of elections

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may promulgate (consistent with the requirements of this paragraph) to ensure the appropriate

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implementation of this paragraph.

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     (16) “Covered transfer” means any transfer or payment of funds by any person, business

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entity or political action committee to another person, business entity, or political action

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committee if the person, business entity, or political action committee making the transfer: (i)

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Designates, requests, or suggests that the amounts be used for independent expenditures or

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electioneering communications or making a transfer to another person for the purpose of making

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or paying for such independent expenditures or electioneering communications; (ii) Made such

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transfer or payment in response to a solicitation or other request for a transfer or payment for the

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making of or paying for independent expenditures or electioneering communications or making a

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transfer to another person for the purpose of marking or paying for such independent expenditures

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or electioneering communications; (iii) Engaged in discussions with the recipient of the transfer

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or payment regarding independent expenditures or electioneering communications or making a

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transfer to another person for the purpose of marking or paying for such independent expenditures

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or electioneering communications; or (iv) Made independent expenditures or electioneering

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communications in an aggregate amount of five thousand dollars ($5,000) or more during the two

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(2) year period ending on the date of the transfer or payment, or knew or had reason to know that

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the person receiving the transfer or payment made such independent expenditures or

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electioneering communications in such an aggregate amount during that two (2) year period.

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     (A) Exceptions: The term "covered transfer" does not include:

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     (I) A transfer or payment made by a person, business entity or political action committee

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in the ordinary course of any trade or business conducted by the person, business entity or

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political action committee or in the form of investments made by the person, business entity or

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political action committee; or

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     (II) A transfer or payment made by a person, business entity or political action committee

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if the person, business entity or political action committee making the transfer prohibited, in

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writing, the use of such transfer or payment for independent expenditures, electioneering

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communications, or covered transfers and the recipient of the transfer or payment agreed to

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follow the prohibition and deposited the transfer or payment in an account which is segregated

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from any account used to make independent expenditures, electioneering communications, or

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covered transfers.

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     (17) For the purposes of chapter 17-25.3 of the general laws, “donation” means all

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transfers of money, credit or debit card transactions on-line or electronic payment systems such as

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"pay pal," paid personal services, or other thing of value to or by any person, business entity, or

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political action committee. A loan shall be considered a donation of money until it is repaid.

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     (18) For the purposes of chapter 17-25.3 of the general laws, “donor” means a person,

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business entity, or political action committee that makes a donation.

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     (19) "Exempt nonprofit" means any organization described in section 501(c)(4) of the

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Internal Revenue Code that spends an aggregate annual amount of no more than ten percent

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(10%) of its annual expenses or no more than fifteen thousand dollars ($15,000), whichever is

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less, on independent expenditures, electioneering communications, and covered transfers as

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defined herein and certifies the same to the board of elections seven (7) days before and after a

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primary election and seven (7) days before and after a general or special election.

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     (20) For purposes of chapter 17-25.3 of the general laws, "referendum" means the same

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as the definition set forth in section 17-5-1 of the general laws.

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     SECTION 3. Title 17 of the General Laws entitled "ELECTIONS" is hereby amended by

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adding thereto the following chapter:

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     CHAPTER 25.3

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INDEPENDENT EXPENDITURES AND ELECTIONEERING COMMUNICATIONS

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     17-25.3-1. Independent expenditures and electioneering communications for

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elections. – (a) It shall be lawful for any person, business entity or political action committee, not

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otherwise prohibited by law and not acting in coordination with a candidate, authorized candidate

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campaign committee, political action committee, or political party committee, to expend

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personally from that person's own funds a sum which is not to be repaid to him or her for any

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purpose not prohibited by law to support or defeat a candidate or referendum. Whether a person,

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business entity or political action committee is "acting in coordination with a candidate,

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authorized candidate campaign committee, political action committee or political party

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committee" for the purposes of this subsection shall be determined by application of the standards

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set forth in section 17-25-23. All terms used in this chapter shall have the same meaning as

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defined in section 17-25-3.

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     (b) Any person, business entity or political action committee making independent

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expenditures, electioneering communications, or covered transfers shall report all such campaign

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finance expenditures and expenses to the board of elections, provided the total of the money so

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expended exceeds one thousand dollars ($1000) within a calendar year, to the board of elections

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within seven (7) days of making the expenditure.

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     (c) A person, business entity or political action committee who makes or contracts to

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make independent expenditures, electioneering communications, or covered transfers with an

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aggregate value of one thousand dollars ($1,000) or more shall electronically file a campaign

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finance report to the board of elections describing the expenditures.

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     (d) After a person, business entity or political action committee files a report under

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subsection (b), the person, business entity or political action committee shall file an additional

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report after each time the person, business entity or political action committee makes or contracts

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to make independent expenditures, electioneering communications, or covered transfers

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aggregating an additional one thousand dollars ($1,000) with respect to the same election as that

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to which the initial report relates.

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     (e) When a report is required by subsection (c) or (d) of this section within thirty (30)

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days prior to the election to which the expenditure was directed, it shall be filed with twenty-four

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(24) hours of the expenditure. When such a report is required at any other time, it shall be filed

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within seven (7) days after the expenditure.

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     (f) Reports of independent expenditures, electioneering communications, or covered

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transfers by a person shall contain the name, street address, city, state, zip code, occupation,

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employer (if self-employed, the name and place of business), of the person responsible for the

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expenditure, the name, street address, city, state, and zip code of the person receiving the

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expenditure the date and amount of each expenditure, and the year to date total.

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     (g) The report shall also include a statement identifying the candidate or referendum that

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the independent expenditure or electioneering communication is intended to promote the success

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or defeat, and affirm under penalty of false statement that the expenditure is not coordinated with

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the campaign in question, and provide any information that the board of elections requires to

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facilitate compliance with the provisions of this chapter.

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     (h) Reports of independent expenditures, electioneering communications, or covered

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transfers by a person, business entity or political action committee shall also disclose the identity

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of all donors of an aggregate of one thousand dollars ($1000) or more to such person, business

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entity or committee within the current election cycle, if applicable, unless the person, business

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entity or political action committee has established a separate campaign-related account for

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independent expenditures, electioneering communications, and covered transfers as detailed in

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section 17-25.3-2 in which case this paragraph applies only to donors to the person’s, business

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entity’s or political action committee’s separate campaign-related account; provided that no

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person, business entity, or political action committee shall be required to disclose in a report to

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the board of elections the identity, which includes name, address, place of employment, and

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donation amount, of any donor who makes no donation to such person, business entity, or

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political action committee after the date of enactment of this section.

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     (i) If a person, business entity or political action committee and a donor mutually agree,

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at the time a donation, payment, or transfer to the person, business entity or political action

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committee which is required to disclose the identification under subsection (f) that the person,

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business entity or political action committee will not use the donation, payment, or transfer for

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independent expenditures, electioneering communications, or covered transfers, then not later

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than thirty (30) days after the person, business entity or political action committee receives the

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donation, payment, or transfer the person, business entity or political action committee shall

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transmit to the donor a written certification by the chief financial officer of the person, business

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entity or political action committee (or, if the organization does not have a chief financial officer,

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the highest ranking financial official of the organization) that:

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     (1) The person, business entity or political action committee will not use the donation,

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payment, or transfer for independent expenditures, electioneering communications, or covered

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transfers; and

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     (2) The person, business entity or political action committee will not include any

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information on the donor in any report filed by the person, business entity or political action

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committee under this section with respect to independent expenditures, electioneering

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communications, or covered transfers, so that the donor will not be required to appear in the list

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of donors.

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     (3) Exception for payments made pursuant to commercial activities. Subsections (e) and

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(f) do not apply with respect to any payment or transfer made pursuant to commercial activities in

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the regular course of a person’s, business entity’s or political action committee’s business.

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     (j) For the purposes of this chapter, two (2) or more entities (other than an exempt

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nonprofit as defined in section 17-25-3 or an organization described in section 501(c)(3) of the

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Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the

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United States, as amended from time to time) are treated as a single entity if the entities:

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     (1) Share the majority of members on their boards of directors;

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     (2) Share two (2) or more officers;

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     (3) A candidate committee and a political committee other than a candidate committee

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are for the purposes of this section treated as a single committee if the committees both have the

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candidate or a member of the candidate’s immediate family as an officer;

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     (4) Are owned or controlled by the same majority shareholder or shareholders or persons;

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     (5) Are in a parent-subsidiary relationship; or

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     (6) Have bylaws so stating.

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     17-25.3-2. Optional use of separate campaign-related account by person, business

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entity or political action committee for independent expenditures, electioneering

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communications, and covered transfers. – (a)(1) Establishment of account: (i) A person,

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business entity or political action committee may make disbursements for independent

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expenditures, electioneering communications, or covered transfers using amounts from a bank

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account established and controlled by the person, business entity or political action committee to

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be known as the separate campaign-related account (hereafter in this section referred to as the

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“account”), which shall be maintained separately from all other accounts of the person, business

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entity or political action committee and which shall consist exclusively of funds that were paid

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directly to such account by one or more person, business entity, or political action committee

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other than the person, business entity, or political action committee that controls the account. A

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person, business entity, or political action committee shall not make transfers from its general

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treasury into an account established under this section that such person, business entity, or

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political action committee controls.

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     (ii) Mandatory use of account after establishment. If a person, business entity or political

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action committee establishes an account under this section, it may not make disbursements for

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independent expenditures, electioneering communications, or covered transfers from any source

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other than amounts from the account.

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     (iii) Exclusive use of account for independent expenditures, electioneering

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communications, and covered transfers. Amounts in the account shall be used exclusively for

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disbursements by the person, business entity or political action committee for independent

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expenditures, electioneering communications, or covered transfers. After such disbursements are

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made, information with respect to deposits made to the account shall be disclosed in accordance

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with subsection 17-25.3-1(f).

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     17-25.3-3. Disclaimers. – (a) No person, business entity or political action committee

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shall make or incur an independent expenditure or fund an electioneering communication for any

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written, typed, or other printed communication, unless such communication bears upon its face

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the words "Paid for by" and the name of the entity, the name of its chief executive officer or

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equivalent, and its principal business address. In the case of a person, business entity or political

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action committee making or incurring such an independent expenditure or electioneering

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communication, which entity is a tax-exempt organization under Section 501(c) of the Internal

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Revenue Code of 1986 (other than an organization described in section 501(c)(3) of such Code)

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or an exempt nonprofit as defined in section 17-25-3, or any subsequent corresponding internal

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revenue code of the United States, as amended from time to time, or an organization organized

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under Section 527 of said code, such communication shall also bear upon its face the words "Top

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Five Donors" followed by a list of the five (5) persons or entities making the largest aggregate

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donations to such person, business entity or political action committee during the twelve (12)

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month period before the date of such communication, provided that no donor shall be listed who

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is not required to be disclosed in a report to the board of elections by the person, business entity,

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or political action committee.

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     (b) The provisions of subsections (a) of this section shall not apply to:

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     (1) Any editorial, news story, or commentary published in any newspaper, magazine or

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journal on its own behalf and upon its own responsibility and for which it does not charge or

11-59

receive any compensation whatsoever;

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     (2) Political paraphernalia including pins, buttons, badges, emblems, hats, bumper

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stickers or other similar materials; or

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     (3) Signs or banners with a surface area of not more than thirty-two (32) square feet.

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     (c) No person, business entity or political action committee shall make or incur an

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independent expenditure or fund an electioneering communication for paid television advertising

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or paid Internet video advertising, unless at the end of such advertising there appears

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simultaneously, for a period of not less than four (4) seconds:

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     (1) A clearly identifiable video, photographic or similar image of the entity's chief

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executive officer or equivalent; and

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     (2) A personal audio message, in the following form: "I am …. (name of entity's chief

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executive officer or equivalent), …. (title) of …. (entity), and I approved its content."

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     (3) In the case of a person, business entity or political action committee making or

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incurring such an independent expenditure or electioneering communication, which person,

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business entity or political action committee is a tax-exempt organization under Section 501(c) of

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the Internal Revenue Code of 1986 (other than an organization described in section 501(c)(3) of

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such Code) or an exempt nonprofit as defined in section 17-25-3, or any subsequent

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corresponding internal revenue code of the United States, as amended from time to time, or an

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organization organized under Section 527 of said code, such advertising shall also include a

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written message in the following form: "The top five (5) donors to the organization responsible

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for this advertisement are" followed by a list of the five (5) persons or entities making the largest

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aggregate donations during the twelve (12) month period before the date of such advertisement,

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provided that no donor shall be listed who is not required to be disclosed in a report to the board

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of elections by the person, business entity, or political action committee.

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     (d) No person, business entity or political action committee shall make or incur an

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independent expenditure or fund an electioneering communication for paid radio advertising or

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paid Internet audio advertising, unless the advertising ends with a personal audio statement by the

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entity's chief executive officer or equivalent;

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     (1) Identifying the entity paying for the expenditure; and

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     (2) A personal audio message, in the following form: "I am …. (name of entity's chief

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executive officer or equivalent), …. (title), of …. (entity), and I approved its content."

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     (3) In the case of a person, business entity or political action committee making or

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incurring such an independent expenditure or electioneering communication, which entity is a

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tax-exempt organization under Section 501(c) of the Internal Revenue Code of 1986 (other than

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an organization described in section 501(c)(3) of such Code) or an exempt nonprofit as defined in

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section 17-25-3, or any subsequent corresponding internal revenue code of the United States, as

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amended from time to time, or an organization organized under Section 527 of said code, such

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advertising shall also include:

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     (A) An audio message in the following form: "The top five (5) donors to the organization

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responsible for this advertisement are" followed by a list of the five (5) persons or entities making

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the largest aggregate donations during the twelve (12) month period before the date of such

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advertisement, provided that no donor shall be listed who is not required to be disclosed in a

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report to the board of elections by the person, business entity, or political action committee; or

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     (B) In the case of such an advertisement that is thirty (30) seconds in duration or shorter,

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an audio message providing a website address that lists such five (5) persons or entities, provided

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that no contributor shall be listed who is not required to be disclosed in a report to the board of

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elections by the person, business entity, or political action committee. In such case, the person,

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business entity or political action committee shall establish and maintain such a website with such

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listing for the entire period during which such person, business entity or political action

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committee makes such advertisement.

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     (e) No person, business entity or political action committee shall make or incur an

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independent expenditure or fund an electioneering communication for automated telephone calls,

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unless the narrative of the telephone call identifies the person, business entity or political action

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committee making the expenditure and its chief executive officer or equivalent. In the case of a

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person, business entity or political action committee making or incurring such an independent

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expenditure, which entity is a tax-exempt organization under Section 501(c) of the Internal

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Revenue Code of 1986 (other than an organization described in section 501(c)(3) of such Code)

13-48

or an exempt nonprofit as defined in section 17-25-3, or any subsequent corresponding internal

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revenue code of the United States, as amended from time to time, or an organization organized

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under Section 527 of said code, such narrative shall also include an audio message in the

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following form: "The top five (5) donors to the organization responsible for this telephone call

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are" followed by a list of the five (5) persons or entities making the largest aggregate donations

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during the twelve (12) month period before the date of such telephone call, provided that no

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donor shall be listed who is not required to be disclosed in a report to the board of elections by the

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person, business entity, or political action committee.

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     17-25.3-4. Penalties. – (a) Any person who willfully and knowingly violates the

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provisions of this chapter shall, upon conviction, be guilty of a misdemeanor and shall be fined

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not more than one thousand dollars ($1,000) per violation.

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     (b) The state board of elections may impose a civil penalty upon any person, business

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entity, or political action committee who violates the provisions of this chapter in the amount of

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one thousand dollars ($1,000), or up to one hundred fifty percent (150%) of the aggregate amount

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of the independent expenditures, electioneering communications, or covered transfers per

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violation, whichever is greater.

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     SECTION 4. Section 17-25.2-3 of the General Laws in Chapter 17-25.2 entitled "Ballot

13-65

Question Advocacy and Reporting" is hereby amended to read as follows:

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     17-25.2-3. Definitions. -- As used in this chapter, unless a different meaning clearly

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appears from the context:

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      (1) "Ballot question" means any question, charter change, constitutional amendment,

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referendum or voter initiated petition placed on any state, district, city, town or municipal ballot

14-70

for a general or special election.

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      (2) "Ballot question advocacy" means advocating the passage or defeat of a ballot

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question.

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      (3) "Ballot question advocate" means (i) for purposes of referenda as defined in section

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17-5-1 of the general laws only, any exempt nonprofit as defined in section 17-25-3 or any

14-75

organization described under section 501(c)(3) of the Internal Revenue Code of 1986, or any

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subsequent corresponding internal revenue code of the United States any person; and (ii) for all

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other ballot questions as defined herein, any person making an expenditure with a cumulative

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total that exceeds one thousand dollars ($1,000) in a calendar year for ballot-question advocacy

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on a particular ballot question.

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      (4) "Contributions" means donations to a ballot-question advocate in the form of money,

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gifts, loans, paid personal services, or in-kind contributions as defined herein.

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      (5) "In-Kind Contributions" means the monetary value of other things of value or paid

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personal services donated to any person required to file reports with the board of elections, except

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for newsletters and other communications paid for and transmitted by an organization to its own

14-85

members and not to the general public;

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      (6) "Paid personal services" means personal services of every kind and nature, the cost or

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consideration for which is paid or provided by someone other than the ballot-question advocate

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for whom the services are rendered, but shall not include personal services provided without

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compensation by persons volunteering their time.

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      (7) "Expenditures" means the payment for any goods and services for the purpose of

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ballot-question advocacy as set forth in this paragraph:

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      (i) Any media advertising services or products, including, but not limited to, newspapers,

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radio stations or television stations;

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      (ii) General advertising in letters, brochures, flyers, handbills, lawn signs, posters,

14-95

bumper stickers, buttons or other materials except for newsletters and other communications paid

14-96

for and transmitted by an organization to its own members and not to the general public; or

14-97

      (iii) Paid personal services donated to any ballot-question advocate including advertising

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agency services or other professional services including accounting services, printing, secretarial

14-99

services, public opinion polls, research and professional campaign consultation or management,

14-100

media production or computer services. A written contract, agreement or promise to make an

14-101

expenditure, is an expenditure as of the date such contract expenditure or obligation is made.

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      (8) "Person" means any individual, partnership, committee, association, corporation,

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city, town, or other governmental unit and any other organization.

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      (9) "Election cycle" means the twenty-four (24) month period commencing on January 1

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of odd number years and ending on December 31 of even number years.

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     SECTION 5. Severability. If any provision of this act or amendment made by this act, or

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the application of a provision or amendment to any person or circumstance, is held to be

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unconstitutional, the remainder of this act and amendments made by this act, and the application

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of the provisions and amendment to any person or circumstance, shall not be affected by the

15-110

holding.

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     SECTION 6. This act shall take effect upon passage; provided, however, that any report

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which would be required by the terms of this act to be filed between the effective date of this act

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and August 1, 2012, shall be filed on or before August 1, 2012.

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LC02090/SUB B/2

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO ELECTIONS -- DISCLOSURE OF POLITICAL CONTRIBUTIONS AND

EXPENDITURES

***

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     This act would impose a regulatory structure relating to the sources of political spending.

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     This act would take effect upon passage; provided, however, that any report which would

16-3

be required by the terms of this act to be filed between the effective date of this act and August 1,

16-4

2012, shall be filed on or before August 1, 2012.

=======

LC02090/SUB B/2

=======