23.1069.01000
Sixty-eighth
Legislative Assembly HOUSE BILL NO. 1500
of North Dakota
Introduced by
Representatives Schatz, Hanson
1 A BILL for an Act to create and enact sections 16.1-08.1-09, 16.1-08.1-10, 16.1-08.1-11, and
2 16.1-08.1-12 of the North Dakota Century Code, relating to reporting the ultimate and true
3 source of funds; to amend and reenact sections 16.1-08.1-01 and 16.1-10-04.1 of the North
4 Dakota Century Code, relating to political advertisements and reporting the ultimate and true
5 sources of funds; to repeal section 16.1-08.1-08 of the North Dakota Century Code, relating to
6 identifying the ultimate and true source of funds; and to provide a penalty.
7 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
8 SECTION 1. AMENDMENT. Section 16.1-08.1-01 of the North Dakota Century Code is
9 amended and reenacted as follows:
10 16.1-08.1-01. Definitions.
11 As used in this chapter, unless the context otherwise requires:
12 1. "Affiliate" means an organization that controls, is controlled by, or is under common
13 control with another organization. For purposes of this definition, control means the
14 possession, direct or indirect, of the power to direct or cause the direction of the
15 management and policies of an organization, whether through the ownership of voting
16 securities, by contract other than a commercial contract for goods or nonmanagement
17 services, or otherwise. Control is presumed to exist if an organization, directly or
18 indirectly, owns, controls, holds with the power to vote, or holds proxies representing
19 fifty percent or more of the voting securities of any other organization.
20 2. "Association" means any club, association, union, brotherhood, fraternity, organization,
21 or group of any kind of two or more persons, including labor unions, trade
22 associations, professional associations, or governmental associations, which is united
23 for any purpose, business, or object and which assesses any dues, membership fees,
24 or license fees in any amount, or which maintains a treasury fund in any amount. The
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1 term does not include corporations, cooperative corporations, limited liability
2 companies, political committees, or political parties.
3 3. "Candidate" means an individual who seeks nomination for election or election to
4 public office, and includes:
5 a. An individual holding public office;
6 b. An individual who has publicly declared that individual's candidacy for nomination
7 for election or election to public office or has filed or accepted a nomination for
8 public office;
9 c. An individual who has formed a campaign or other committee for that individual's
10 candidacy for public office;and
11 d. An individual who has circulated a nominating petition to have that individual's
12 name placed on the ballot.
13 4. "Conduit" means a person that is not a political party, political committee, or candidate
14 and which receives a contribution of money and transfers the contribution to a
15 candidate, political party, or political committee when the contribution is designated
16 specifically for the candidate, political party, or political committee and the person has
17 no discretion as to the recipient and the amount transferred. The term includes a
18 transactional intermediary, including a credit card company or a money transfer
19 service that pays or transfers money to a candidate on behalf of another person.
20 4.5. "Contribution" means a gift, transfer, conveyance, provision, receipt, subscription,
21 loan, advance, deposit of money, or anything of value, made for the purpose of
22 influencing the nomination for election, or election, of any person to public office or
23 aiding or opposing the circulation or passage of a statewide initiative or referendum
24 petition or measure. The term also means a contract, promise, or agreement, express
25 or implied, whether or not legally enforceable, to make a contribution for any of the
26 above purposes. The term includes funds received by a candidate for public office or a
27 political party or committee which are transferred or signed over to that candidate,
28 party, or committee from another candidate, party, or political committee or other
29 source including a conduit. The term "anything of value" includes any good or service
30 of more than a nominal value. The term "nominal value" means the cost, price, or
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1 worth of the good or service is trivial, token, or of no appreciable value. The term
2 "contribution" does not include:
3 a. A loan of money from a bank or other lending institution made in the regular
4 course of business.
5 b. Time spent by volunteer campaign or political party workers.
6 c. Money or anything of value received for commercial transactions, including rents,
7 advertising, or sponsorships made as a part of a fair market value bargained-for
8 exchange.
9 d. Money or anything of value received for anything other than a political purpose.
10 e. Products or services for which the actual cost or fair market value are reimbursed
11 by a payment of money.
12 f. An independent expenditure.
13 g. The value of advertising paid by a political party, multicandidate political
14 committee, or caucus which is in support of a candidate.
15 h. In-kind contributions from a candidate to the candidate's campaign.
16 5.6. "Cooperative corporations", "corporations", and "limited liability companies" are as
17 defined in this code, and for purposes of this chapter "corporations" includes nonprofit
18 corporations. However, if a political committee, the only purpose of which is accepting
19 contributions and making expenditures for a political purpose, incorporates for liability
20 purposes only, the committee is not considered a corporation for the purposes of this
21 chapter.
22 6.7. "Covered person" means any person that spends more than two hundred dollars in an
23 election cycle on expenditures. "Covered person" does not include:
24 a. A political committee of a political party;
25 b. A person that spends or contributes the person's own original funds; and
26 c. A candidate or candidate committee.
27 8. "Election cycle" means the two-year period beginning on January first of an
28 odd-numbered year and ending on December thirty-first of an even-numbered year.
29 9. "Ethics commission" means the ethics commission established by article XIV of the
30 Constitution of North Dakota.
31 10. "Expenditure" means:
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1 a. A gift, transfer, conveyance, provision, loan, advance, payment, distribution,
2 disbursement, outlay, or deposit of money or anything of value, except a loan of
3 money from a bank or other lending institution made in the regular course of
4 business, made for a political purpose or for the purpose of influencing the
5 passage or defeat of a measure.
6 b. A contract, promise, or agreement, express or implied, whether or not legally
7 enforceable, to make any expenditure.
8 c. The transfer of funds by a political committee to another political committee.
9 d. An independent expenditure.
10 7.11. "Expenditure categories" means the categories into which expenditures must be
11 grouped for reports under this chapter. The expenditure categories are:
12 a. Advertising;
13 b. Campaign loan repayment;
14 c. Operations;
15 d. Travel; and
16 e. Miscellaneous.
17 8.12. "Identity" means:
18 a. The name, mailing address, occupation, and employer of an individual; or
19 b. The full name and address, federal tax status, and state of incorporation or
20 partnership, if any, of a person other than an individual.
21 13. "Independent expenditure" means an expenditure made for a political purpose or for
22 the purpose of influencing the passage or defeat of a measure if the expenditure is
23 made without the express or implied consent, authorization, or cooperation of, and not
24 in concert with or at the request or suggestion of, any candidate, committee, or
25 political party.
26 9.14. "Original funds" means:
27 a. Wages, investment income, or bequests an individual receives; or
28 b. Money a person receives through ordinary commercial transactions.
29 15. "Patron" means a person who owns equity interest in the form of stock, shares, or
30 membership or maintains similar financial rights in a cooperative corporation.
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1 10.16. "Person" means an individual, partnership, political committee, association,
2 corporation, cooperative corporation, limited liability company, or other organization or
3 group of persons.
4 11.17. "Personal benefit" means a benefit to the candidate or another person which is not for
5 a political purpose or related to a candidate's responsibilities as a public officeholder,
6 and any other benefit that would convert a contribution to personal income.
7 12.18. "Political committee" means any committee, club, association, or other group of
8 persons which receives contributions or makes expenditures for political purposes and
9 includes:
10 a. A political action committee not connected to another organization and free to
11 solicit funds from the general public, or derived from a corporation, cooperative
12 corporation, limited liability company, affiliate, subsidiary, or an association that
13 solicits or receives contributions from its employees or members or makes
14 expenditures for political purposes on behalf of its employees or members;
15 b. A candidate committee established to support an individual candidate seeking
16 public office which solicits or receives contributions for political purposes;
17 c. A political organization registered with the federal election commission, which
18 solicits or receives contributions or makes expenditures for political purposes;
19 d. A multicandidate political committee, including a caucus, established to support
20 multiple groups or slates of candidates seeking public office, which solicits or
21 receives contributions for political purposes; and
22 e. A measure committee, including an initiative or referendum sponsoring
23 committee at any stage of its organization, which solicits or receives contributions
24 or makes expenditures for the purpose of aiding or opposing a measure sought
25 to be voted upon by the voters of the state, including any activities undertaken for
26 the purpose of drafting an initiative or referendum petition, seeking approval of
27 the secretary of state for the circulation of a petition, or seeking approval of the
28 submitted petitions.
29 13.19. "Political party" means any association, committee, or organization which nominates a
30 candidate for election to any office which may be filled by a vote of the electors of this
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1 state or any of its political subdivisions and whose name appears on the election ballot
2 as the candidate of such association, committee, or organization.
3 14.20. "Political purpose" means any activity undertaken in support of or in opposition to the
4 election or nomination of a candidate to public office and includes using "vote for",
5 "oppose", or any similar support or opposition language in any advertisement whether
6 the activity is undertaken by a candidate, a political committee, a political party, or any
7 person. In the period thirty days before a primary election and sixty days before a
8 special or general election, "political purpose" also means any activity in which a
9 candidate's name, office, district, or any term meaning the same as "incumbent" or
10 "challenger" is used in support of or in opposition to the election or nomination of a
11 candidate to public office. The term does not include activities undertaken in the
12 performance of a duty of a public office or any position taken in any bona fide news
13 story, commentary, or editorial.
14 15.21. "Public office" means every office to which an individual can be elected by vote of the
15 people under the laws of this state.
16 16.22. "Subsidiary" means an affiliate of a corporation under the control of the corporation
17 directly or indirectly through one or more intermediaries.
18 17.23. "Traceable funds" means funds a covered person receives and for which no donor has
19 opted out of the use or transfer for expenditures under subsection 3 of
20 section 16.1-08.1-09.
21 24. "Tracing record" means a written record identifying the persons that directly or
22 indirectly contributed or transferred original funds used to make expenditures, the
23 amount of each contribution or transfer of original funds, and the expenditure for which
24 the original funds were used.
25 25. "Ultimate and true source" means thea person that knowingly contributed over two
26 hundred dollars solely to influence a statewide election or an election for the legislative
27 assemblywhose original funds are used by a covered person to make an expenditure.
28 SECTION 2. Section 16.1-08.1-09 of the North Dakota Century Code is created and
29 enacted as follows:
30 16.1-08.1-09. Ultimate and true source of funds - Recordkeeping.
31 1. A covered person shall maintain tracing records that include:
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1 a. The identity of each ultimate and true source that directly or indirectly contributed
2 more than two hundred dollars in traceable funds;
3 b. For each person identified under subdivision a, the amount of the original funds
4 the person contributed or transferred to the covered person and the date of the
5 contribution or transfer;
6 c. The identity of all intermediaries that transferred traceable funds between an
7 ultimate and true source and the covered person. If more than one transfer
8 occurred, the covered person shall disclose all transfers and intermediaries;
9 d. The date, amount, recipient, and expenditure category of each expenditure paid
10 with traceable funds; and
11 e. The candidate or ballot measure that is the subject of the expenditure, if known,
12 and whether the expenditure was used to support or oppose a ballot measure or
13 an election or nomination of a candidate for public office.
14 2. A covered person shall maintain records identifying transfers and intermediaries under
15 subdivision c of subsection 1 for at least five years, and provide the records to the
16 secretary of state upon request.
17 3. Before a covered person uses funds other than original funds of the covered person
18 for an expenditure, the covered person shall:
19 a. Notify the person that contributed or transferred the funds to the covered person:
20 (1) The funds may be used for an expenditure; and
21 (2) The covered person may be required to disclose the identity of any person
22 whose original funds are used to make an expenditure.
23 b. Provide the person that contributed or transferred the funds an opportunity to opt
24 out of allowing the funds to be used for expenditures. The covered person may
25 provide the opportunity to opt out before or after receiving the funds. The covered
26 person may not use the funds to make an expenditure until the earlier of:
27 (1) The receipt of written consent to use the funds for expenditures; or
28 (2) Twenty-one days after the opportunity to opt out was provided, and the
29 person has not opted out.
30 4. A person that contributes or transfers more than two hundred dollars in aggregate
31 traceable funds to a covered person in an election cycle shall inform the covered