BILL ANALYSIS                                                                                                                                                                                                    






                         SENATE COMMITTEE ON ELECTIONS 
                         AND CONSTITUTIONAL AMENDMENTS
                           Senator Lou Correa, Chair


          BILL NO:   SB 52             HEARING DATE:  04/30/13
          AUTHOR:    LENO              ANALYSIS BY:   Darren Chesin
          AMENDED:   04/24/13
          FISCAL:    YES
          
                                     SUBJECT
           
          Political Reform Act: advertisement disclosures;  
          contribution origination
           
                                  DESCRIPTION  
          
           Definitions
           
          For purposes of this bill, the following terms have the  
          following meanings:

           "  Advertisement  " means a general or public advertisement  
          that is any of the following:

           Authorized and paid for by a person or committee for the  
            purpose of supporting or opposing a candidate for  
            elective office or a ballot measure. 

           An electioneering communication. 

           An issue advocacy advertisement. 

           "Advertisement" does not include a communication from an  
          organization other than a political party to its members, a  
          campaign button smaller than 10 inches in diameter, a  
          bumper sticker smaller than 60 square inches, or other  
          advertisement as determined by regulations of the Fair  
          Political Practices Commission (FPPC).

          "  Cumulative contributions  " means the cumulative amount of  
          contributions received by a committee beginning 18 months  
          prior to the date the committee made its first expenditure  
          for a political advertisement or for the purpose of  
          qualifying, supporting, or opposing a candidate for  
          elective office or a ballot measure.










          "  Disclosure Internet Web site  " means a committee's Internet  
          Web site for a specific campaign that discloses the top  
          identifiable contributors to that committee for that  
          campaign, as required by this bill. 

          "  Disclosure threshold  " means $10,000 in the case of a  
          campaign regarding a statewide ballot measure or a state  
          candidate or in the case of a statewide issue advocacy  
          advertisement, or $2,000 in the case of a campaign  
          regarding a local ballot measure or a local candidate or in  
          the case of a local issue advocacy advertisement. 

          "  Identifiable contributor  " means a person that is the  
          original source of contributions received by a committee  
          that cumulatively meet or exceed the disclosure threshold,  
          notwithstanding the fact that the contributions were  
          transferred, in whole or in part, through one or more other  
          committees or persons. 

          "  Political advertisement  " means an advertisement, unless it  
          is paid for by a candidate-controlled committee and is an  
          advertisement relating to the candidate's own election and  
          not for any other campaign.

           Advertisement Disclosures
           
           Existing law  pursuant to the Political Reform Act (PRA),  
          provides for all of the following regarding political  
          advertisement disclosures:

           Requires an advertisement for or against any ballot  
            measure to include a disclosure statement identifying any  
            person whose cumulative contributions are $50,000 or  
            more.  Provides that if there are more than two donors of  
            $50,000 or more, the disclosure only needs to include the  
            highest and second highest donors in that order.

           Requires a committee that supports or opposes one or more  
            ballot measures to name itself using a name or phrase  
            that identifies the economic or other special interest of  
            its major donors of $50,000 or more.  Provides that if  
            the major donors of $50,000 or more share a common  
            employer, the identity of the employer must also be  
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            disclosed.

           Requires a broadcast or mass mailing advertisement  
            supporting or opposing a candidate or ballot measure that  
            is paid for by an independent expenditure (IE) to include  
            a disclosure statement identifying the name of the  
            committee making the expenditure and the names of the  
            persons from whom the committee making the IE received  
            its two highest cumulative contributions of $50,000 or  
            more during the 12-month period prior to the expenditure.

           Provides that when a disclosure of the top two donors is  
            required on an advertisement pursuant to either of the  
            above provisions, only the largest donor needs to be  
            disclosed on an advertisement that is an electronic  
            broadcast of 15 seconds or less or a print advertisement  
            of 20 square inches or less.
           
            This bill  would repeal these advertisement disclosure  
          requirements and impose new disclosure requirements for  
          radio, prerecorded telephonic messages, television or  
          video, mass mailing or printed political advertisements as  
          follows. 
          
           Radio and Telephone
           
          A political radio advertisement or prerecorded telephonic  
          message must include a disclosure at the end of the  
          advertisement read in a clearly spoken manner and in a  
          pitch and tone substantially similar to the rest of the  
          advertisement that reads as follows: "Top funders of this  
          ad are [state names in descending order of identifiable  
          contributors who have made the three largest cumulative  
          contributions, if applicable].  Paid for by [name of the  
          committee that paid for the advertisement]."

           Television and Video
           
          A political television or video advertisement must include  
          a disclosure area with a solid black background on the  
          entire bottom one-third of the television or video display  
          screen for a minimum of six seconds at the beginning of the  
          advertisement that includes  all  of the following:

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           The text "Top Funders of This Ad" shall be located at the  
            top of the disclosure area, centered horizontally, yellow  
            in color in Arial equivalent font and at least 4 percent  
            of the height of the television or video display screen  
            in size.

           The names of the identifiable contributors who have made  
            the three largest cumulative contributions shall be  
            immediately below that text in a similar fashion except  
            white in color.

           The text "Funding Details At [insert Internet Web site  
            address of the disclosure Internet Web site]."  This text  
            must be yellow in color in Arial Narrow equivalent font  
            2.5 percent of the height of the television or video  
            display screen in size and left-aligned, as specified.

           The text "Paid for by [name of the committee that paid  
            for the advertisement]." This text shall also be yellow  
            in color in Arial Narrow equivalent 2.5 percent of the  
            height of the television or video display screen in size  
            but right-aligned, as specified.

          If there are fewer than three identifiable contributors,  
          the disclosure shall be adjusted accordingly.  If the  
          committee does not have any identifiable contributors, the  
          disclosure shall be adjusted to include the name of the  
          committee in place of the names of identifiable  
          contributors.
          
           Mass Mailing and Print
           
          Except for slate mailers, a political advertisement that is  
          a mass mailing or a print advertisement and that is 12  
          square inches or more in size shall include a disclosure  
          area on the largest page of the advertisement that  
          satisfies all of the following:

           The disclosure area must have a solid white background so  
            as to be easily legible in a printed or drawn box on the  
            bottom of the page that is set apart from any other  
            printed matter.  All text in the disclosure area must be  
            black in color.

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           The text "Top Funders of This Ad" shall be centered  
            horizontally at the top of the disclosure area in an  
            Arial equivalent font at least 12-point in size for  
            advertisements smaller than 93 square inches and at least  
            14-point in size for advertisements that are equal to, or  
            larger than, 93 square inches.

           Immediately below the text shall be the names of the  
            identifiable contributors who have made the three largest  
            cumulative contributions centered horizontally in an  
            Arial Narrow equivalent font at least 10-point in size  
            for advertisements smaller than 93 square inches and at  
            least 12-point in size for advertisements that are equal  
            to, or larger than, 93 square inches. The text "Funding  
            Details At [insert Internet Web site address of the  
            disclosure Internet Web site]" shall be similarly  
            displayed unless the advertisement is 5 inches tall or  
            less.

           If the advertisement is 4 inches tall or less, it need  
            only show the names of the identifiable contributors who  
            have made the two largest cumulative contributions.  If  
            the advertisement is 3 inches tall or less, it need only  
            show the name of the identifiable contributor who made  
            the largest cumulative contribution. 

           The text "Paid for by [name of the committee that paid  
            for the advertisement]" shall be located at the bottom of  
            the disclosure area in an Arial Narrow equivalent font at  
            least 8-point in size for pages smaller than 8.5 inches  
            and at least 10-point in size for pages that are equal  
            to, or larger than, 8.5 inches by 11 inches.

          If there are fewer than three identifiable contributors,  
          the disclosure shall be adjusted accordingly.  If the  
          committee does not have any identifiable contributors, the  
          disclosure shall be adjusted to include the name of the  
          committee in place of the names of identifiable  
          contributors.

           Identifiable Contributors Who are Individuals
           
          For purposes of a disclosure required by this bill, the  
          following shall also apply in the event that an  
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          identifiable contributor is a person who is an individual:

           If the committee receiving the cumulative contributions  
            is supporting or opposing a candidate, the disclosure  
            shall include the occupation and employer of the  
            identifiable contributor in addition to the contributor's  
            name.  If the identifiable contributor is not employed,  
            no occupation or employer shall be listed.


           If the committee receiving the cumulative contributions  
            is supporting or opposing a ballot measure, and the  
            passage or defeat of the ballot measure directly benefits  
            the employer of the identifiable contributor, the  
            disclosure shall include the occupation and employer of  
            the identifiable contributor in addition to the  
            contributor's name.   

           If the employer of an identifiable contributor is also an  
            identifiable contributor of that committee, the  
            cumulative contributions of its employees shall be deemed  
            to be cumulative contributions by the employer for  
            purposes of determining which identifiable contributors  
            shall be disclosed on an advertisement.  This does not  
            apply however to an employee whose cumulative  
            contributions amount to more than 75 percent of the  
            cumulative contributions of the employer.

           Miscellaneous
           
          The disclosure of the name of an identifiable contributor  
          required by this bill need not include such legal terms as  
          "incorporated," "committee," "political action committee,"  
          or "corporation," or their abbreviations, unless the term  
          is part of the contributor's name in common usage or  
          parlance.   If this bill requires the disclosure of the  
          name of an identifiable contributor that is a sponsored  
          committee, the name of the committee's sponsoring  
          organization shall be disclosed.  The committee name listed  
          also need not include its economic or other special  
          interests, nor the names of any major donors, as specified.
           
           Issue Advocacy Advertisements
           
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           Existing law  does not require disclosure of major funders  
          of issue advocacy advertisements on the advertisements  
          themselves however, radio and television advertisements  
          must include a "paid for by" disclaimer under Federal  
          Communications Commission (FCC) law. 

           This bill  would define "issue advocacy advertisement" as an  
          advertisement that clearly refers to and reflects a view on  
          the subject matter, description, or name of a pending  
          legislative action, administrative action, or one or more  
          ballot measures and does any of the following: 

           Can only be reasonably interpreted as an appeal for the  
            recipient of the advertisement to take action by  
            contacting an employee or elected official of the state  
            government or any local government or encouraging others  
            to contact those persons. 

           Refers to a pending legislative action and is  
            disseminated, broadcast, or otherwise communicated within  
            60 days of the end of the legislative session. 

           Refers to one or more ballot measures and is  
            disseminated, broadcast, or otherwise communicated within  
            120 days of the election concerning that measure or  
            measures. 

           This bill  would require issue advocacy advertisements to  
          disclose their top three funders in the same manner as  
          other political advertisements.
           
           Non-Express Advocacy Communications Identifying State  
          Candidates
           
           Existing law  provides that any person who makes a payment  
          totaling $50,000 or more for a communication that clearly  
          identifies a candidate for elective state office, but does  
          not expressly advocate the election or defeat of the  
          candidate, and that is disseminated, broadcast, or  
          otherwise published within 45 days of an election, shall  
          file online or electronically with the Secretary of State a  
          report disclosing their name, address, occupation,  
          employer, and amount of the payment.  The report must be  
          filed within 48 hours of making the payment or the promise  
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          to make the payment.

           Existing law  does not require disclosure of major funders  
          of these non-express advocacy communications on the  
          communications themselves however, radio and television  
          advertisements must include a "paid for by" disclaimer  
          under FCC law. 

           This bill  would define these communications as  
          "electioneering communications" and would reduce the  
          payment threshold to $10,000 and change the communication  
          dissemination period to the period beginning 120 days  
          before the primary or special election and ending on the  
          date of the general or runoff election. 

           This bill  would require electioneering communications to  
          disclose their top three funders in the same manner as  
          other political advertisements.

           Campaign Committee Websites
           
           Existing law  does not require committees to establish or  
          maintain their own Internet Web sites nor does it require  
          them to disclose their campaign finance information on  
          them.

           This bill  would provide that a committee that has paid for  
          political advertisements and that has received cumulative  
          contributions that meet or exceed the disclosure threshold,  
          as defined, must establish and maintain a disclosure  
          Internet Web site.  The homepage of the disclosure Internet  
          Web site and any landing pages that visitors are directed  
          to on the disclosure Internet Web site and any other  
          Internet Web sites maintained by the committee shall  
          include a disclosure area that satisfies specified  
          criteria.

           This bill  requires that these Internet Web sites include a  
          list of the identifiable contributors who have made the 10  
          largest cumulative contributions to the committee and a  
          hyperlink to another page on the disclosure Internet Web  
          site that lists all of the committee's identifiable  
          contributors, as specified.

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           This bill  would also require that every page of these  
          Internet Web sites include the statement "Paid for by [name  
          of the committee that paid for the advertisement]" and any  
          other identifying information specified by the FPPC.

           FPPC Regulations
           
           This bill  would require the FPPC to promulgate regulations  
          to require disclosures on all forms of political  
          advertisements not covered by this bill, including, but not  
          limited to, electronic media advertisements and billboards.  
           If feasible, the regulations shall require the listing of  
          the name of the committee and as many of the three  
          identifiable contributors that made the largest cumulative  
          contributions as possible in a conspicuous manner, as  
          specified.

           This bill  would also require the FPPC to promulgate  
          regulations to require disclosure of the name of the  
          committee, if feasible, on all advertisements that are paid  
          for by a candidate-controlled committee and that are  
          advertisements relating to the candidate's own election and  
          not for any other campaign.

                                    BACKGROUND  
          
           Existing  Political Advertising Disclaimers  .  Under the  
          PRA, committees must put "paid for by" disclaimers on  
          campaign advertising, including campaign mailers, radio and  
          television ads, telephone robocalls, and electronic media  
          ads.  The following, which is based on a publication  
          produced by the FPPC, discusses disclaimer requirements for  
          committees that purchase advertisements or circulate  
          material supporting or opposing a state or local candidate  
          or ballot measure in California.

           Mass mailings, including blast campaign emails, must  
            include identification of the sender. 

           Paid telephone calls must identify the candidate or  
            committee who paid for or authorized the call. 

           Radio and television ads must include "paid for by"  
            disclaimer under FCC law. 
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           Ballot measure ads and independent expenditure ads must  
            include "paid for by committee name" and such ads by  
            primarily formed committees must also list top two donors  
            of $50,000 or more.  This applies to television, radio,  
            and electronic media advertisements, robocalls, mass  
            mailings, and print ads such as newspaper ads, billboards  
            and yard signs.

           Are the PRA's disclaimer rules the same for all  
            committees and all ads?  No. Basic disclaimer rules apply  
            to campaign materials disseminated by a candidate for  
            their own election campaign because it is generally clear  
            to the public that the candidate is sending the  
            communication.  Stricter disclaimer rules apply to (1)  
            ballot measure advertisements and (2) independent  
            expenditure advertisements on candidates and ballot  
            measures, because it is less clear to the public who is  
            responsible for these ads. 

           What does the disclaimer have to state?  The basic  
            disclaimer must state: "Paid for by committee name."   
            Ballot measure and independent expenditure ads paid for  
            by primarily formed committees must also list top two  
            donors of $50,000 or more and special committee name  
            rules apply.  All independent expenditure ads for or  
            against a candidate must state that the ad was: "Not  
            authorized by a candidate or a committee controlled by a  
            candidate." 

           What is an independent expenditure?  An "independent  
            expenditure" is an expenditure made by any person in  
            connection with a communication that expressly advocates  
            the election or defeat of a clearly identified candidate  
            or measure, or taken as a whole and in context,  
            unambiguously urges a particular result in an election  
            but which is not made at the behest of (e.g., in  
            consultation, cooperation or coordination with) the  
            affected candidate or committee.

           Updating a disclaimer.  When a committee's name changes  
            because of new top donors or otherwise, advertisement  
            disclaimers must be revised. Television, radio,  
            electronic media, or robocalls must be amended within  
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            five calendar days.  Print media, mass mailings, or other  
            tangible items must be amended every time an order to  
            reproduce is placed. 

           Advertisements in languages other than English.   
            Disclaimers on political advertisements should be written  
            or spoken in the same language used in the advertisement.  


           Does a disclaimer have to appear on ALL printed materials  
            or campaign items?  No.  A disclaimer is not required on  
            regular-size campaign buttons, pins, bumper stickers, or  
            magnets.  It is not required on pens, pencils, rulers,  
            mugs, potholders, key tags, golf balls and similar small  
            campaign promotional items where a disclaimer cannot be  
            conveniently printed.  The disclaimer is not required on  
            t-shirts, caps, hats, and other articles of clothing;  
            skywriting and airplane banners; or committee checks and  
            receipts. 

           Does a disclaimer have to appear on communications from  
            an organization to its members?  For political party  
            communications, yes.  For communications from other  
            organizations to their members, a disclaimer is not  
            required.

           Is there a penalty for circulating or publishing  
            literature or other material concerning a candidate or  
            ballot measure without a disclaimer?  Yes.  The penalty  
            for failing to comply with the PRA's disclaimer  
            requirements is a fine of up to $5,000 per violation.  In  
            addition, any person who violates the disclaimer  
            requirements concerning ballot measure and independent  
            expenditure advertisements may be liable for a fine of up  
            to three times the cost of the advertisement, including  
            placement costs.





                                     COMMENTS  
          
           1.According to the author  :  Campaign spending has reached  
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            unprecedented levels in recent years.  In California,  
            over $450 million was spent on ballot measures alone in  
            2012.  Although there are limits on the amount of direct  
            contributions candidates can receive, funders can make  
            unlimited contributions to candidates through independent  
            expenditure committees and to ballot measure committees  
            that have significantly shaped the way California is  
            governed.  Furthermore, many of these committees are  
            purposely established to disguise who exactly is funding  
            the campaign messages that voters see and hear, hiding  
            behind vague names such as "Californians for Progress."   
            As a result, the March 2013 PPIC Poll found that 84% of  
                                                        all likely voters, across political ideology, want  
            increased public disclosure of funding sources for  
            signature gathering and initiative campaigns.   

          While it is essential for individuals and organizations in  
            a democracy to be able to communicate effectively and  
            efficiently with voters, it is equally important that  
            voters are not intentionally deceived and elections are  
            not decided upon misinformation.  SB 52 will increase  
            transparency of campaign spending in elections by  
            disclosing major contributors on campaign advertisements   
            and ensuring that the true major contributor are known.    
               SB 52 requires all state and local political ads in  
            California, except those paid for by candidate-controlled  
            committees for their own races, to clearly and  
            prominently list their top three funders of $10,000 or  
            more for state races and $2,000 for local races.  It also  
            requires committees to maintain a campaign website that  
            lists all funders of $10,000 or more for state races and  
            $2,000 for local races.  Strengthening disclosure  
            requirements on political advertisements is necessary to  
            help Californians be better informed and feel more  
            represented by their government.

          Current law does not require disclosure of any major  
            funders for electioneering communications - political  
            advertisements that clearly identify candidates but do  
            not expressly advocate for their election or defeat - or  
            for issue advocacy advertisements - political  
            advertisements meant to influence state legislative or  
            administrative action, whether or not they identify  
            specific candidates.  Electioneering communications,  
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            commonly referred to as "sham issue ads," are an  
            increasing problem at both the state and national levels.  
             For example, 64 days before the 2010 primary, sham issue  
            ads ran against Jerry Brown in an attempt to influence  
            voters.  Issue advocacy advertisements that appeal to  
            voters to lobby for or against legislative or  
            administrative proposals while hiding who is behind the  
            ads are a growing problem in California and nationally.   
            For example, in Michigan last year, a secretive new  
            non-profit called "Michigan Freedom Fund" spent $1  
            million on issue ads supporting right-to-work  
            legislation.

          SB 52 addresses these problems by applying clear and  
            prominent disclosure requirements of the top three  
            funders to political advertisements including  
            electioneering communications that clearly identify  
            candidates in the period beginning 120 days before the  
            primary and until the general election.  The top three  
            disclosure requirements also apply to issue advocacy  
            advertisements that clearly refer to and reflect a view  
            on pending legislative action, administrative action, or  
            ballot measures.

           2.Constitutionality  .  Some provisions of this bill could be  
            interpreted as a violation of the United States and  
            California Constitutions' guarantees to free speech.   
            While the right to freedom of speech is not absolute,  
            when a law burdens core political speech, the  
            restrictions on speech generally must be "narrowly  
            tailored to serve an overriding state interest," McIntyre  
            v. Ohio Elections Commission (1995), 514 U.S. 334.  It  
            should be noted however, that the McIntyre case involved  
            the distribution by hand of homemade leaflets, which  
            would not fall under the advertising disclosure  
            requirements of this bill nor those of existing law.

          Supporters of this bill argue that, notwithstanding the  
            McIntyre case and other similar cases, the provisions of  
            this bill nonetheless are constitutional, particularly in  
            light of disclosure requirements that were upheld by the  
            United States Supreme Court in Citizens United v. Federal  
            Election Commission (2010), 130 S.Ct. 876.  While  
            Citizens United is probably best known as the case in  
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            which the United States Supreme Court struck down a 63  
            year old law that prohibited corporations and unions from  
            using general treasury funds to make independent  
            expenditures in federal elections, in the same case, the  
            Court also upheld certain disclaimer and disclosure  
            provisions of the federal Bipartisan Campaign Reform Act  
            of 2002.

          While some of the requirements of this bill are comparable  
            to provisions of federal law that were at issue in  
            Citizens United, other requirements in this bill, as well  
            as existing law regarding political advertising  
            disclosures, go beyond what was considered by the court.   
            Specifically, the provisions of this bill and existing  
            law that require the identities of certain campaign  
            contributors - entities that were not responsible for the  
            content or the production of the advertising - to be  
            included in campaign advertising go beyond what was  
            upheld in the Citizens United case.  In light of that  
            fact, while the court in Citizens United did uphold  
            certain disclaimer requirements, it is unclear whether  
            the broader requirements in this bill or existing law  
            would similarly be upheld against a constitutional  
            challenge on the grounds that those requirements violate  
            the First Amendment. 

           3.Definitions With Benefits  .  This bill provides that if  
            the passage or defeat of a ballot measure directly  
            benefits the employer of an identifiable contributor, the  
            disclosure shall include the occupation and employer of  
            the identifiable contributor in addition to the  
            contributor's name.  However, since this bill does not  
            define "directly benefit" it would be incumbent upon the  
            FPPC to define it via regulation or advice.  

          4.Related Legislation  .  This bill is similar to AB 1148  
            (Brownley) of 2011 and AB 1648 (Brownley) of 2012.  AB  
            1148 failed passage on the Assembly floor.  AB 1648  
            passed the Assembly very late in the session (August 20,  
            2012) and was therefore never heard in the Senate.

          This bill conflicts with portions of SB 2 (Lieu) which is  
            also before this committee as both bills seek to amend  
            the law regarding disclosure of major donors who must be  
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            identified on specified advertisements.

          The provisions of this bill regarding identification of top  
            contributors on a committee's website are similar to  
            provisions in SB 27 (Correa) which is also before this  
            committee.

                                    POSITIONS  

          Sponsor: California Clean Money Campaign

           Support: Brennan Center for Justice at New York University  
                   School of Law
                    California Alliance of Retired Americans
                    California Church IMPACT
                    California Common Cause 
                    California League of Conservation Voters
                    California National Organization for Women
                    California Public Interest Research Group  
                   (CalPIRG)
                    Common Cause
                    Consumer Federation of California
                    Endangered Habitats League
                    Fresno Stonewall Democrats
                    Friends Committee on Legislation
                    Green Chamber of Commerce
                    League of Women Voters of California
                    Lutheran Office of Public Policy - California
                    MapLight
                    National Council of Jewish Women
                    Pacific Palisades Democratic Club
                    Progressives United
                    Public Citizen's Congress Watch
                    Sierra Club of California
                    Southwest California Synod, Evangelical Lutheran  
                   Church in America
                    Southwest Voter Registration Education Project
                    
                    (The sponsors, California Clean Money Campaign,  
                   have also submitted petitions in support of SB 52  
                   signed by 5,000 individuals.)

           Oppose:  None received
           
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