Senate File 571 - Introduced SENATE FILE 571 BY COMMITTEE ON COMMERCE (SUCCESSOR TO SF 402) A BILL FOR An Act prohibiting the state or a political subdivision of the 1 state from entering into contracts with, or providing tax 2 incentives or any other benefits to, certain companies that 3 censor online content, and including effective date and 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 2024SV (3) 89 jda/rn

S.F. 571 Section 1. Section 15A.1, subsection 2, Code 2021, is 1 amended by adding the following new paragraphs: 2 NEW PARAGRAPH . e. Whether a court has found by a 3 preponderance of the evidence that the person to whom the funds 4 will be dispersed has violated a provision of chapter 554E. 5 NEW PARAGRAPH . f. Whether the person to whom the funds will 6 be dispersed is involved in litigation in which it has been 7 alleged that the person has violated a provision of chapter 8 554E. 9 Sec. 2. Section 24.17, subsection 2, Code 2021, is amended 10 to read as follows: 11 2. a. One copy of the budget shall be retained on file 12 in the office by the county auditor and the other shall be 13 certified by the county auditor to the state board. The 14 department of management shall certify the taxes back to the 15 county auditor by June 15. 16 b. For budgets for fiscal years beginning on or after 17 July 1, 2021, if a political subdivision that is a city, 18 county, school district, or township has been found to have 19 intentionally violated a provision of chapter 554E during the 20 twelve-month period prior to the date taxes are certified back 21 to the county auditor under paragraph “a” , the amount of the 22 political subdivision’s budget certified under this chapter and 23 the amount of taxes certified back to the county auditor by 24 the department of management shall be reduced by ten percent. 25 If the political subdivision fails to remedy the violation 26 of chapter 554E prior to the date of certification of taxes 27 back to the county auditor by the department of management for 28 the subsequent fiscal year, the percentage reduction of the 29 political subdivision’s budget certified under this chapter and 30 the amount of taxes certified back by the department of revenue 31 shall be reduced by a percentage equal to the total reduction 32 for the preceding fiscal year plus five percent. 33 Sec. 3. NEW SECTION . 554E.1 Definitions. 34 As used in this chapter, unless the context otherwise 35 -1- LSB 2024SV (3) 89 jda/rn 1/ 22

S.F. 571 requires: 1 1. “Company” means and includes a person or an affiliate of 2 a person who owns or operates any of the following: 3 a. A massive online marketplace. 4 b. A massive online video sharing website. 5 c. A massive social networking website. 6 d. A monopolistic entity. 7 e. A pre-installed application store. 8 2. “Content generated by bots” means and includes content 9 that is created or posted on an internet site by a software 10 application or program. 11 3. “Excessively violent content” means any image, video, 12 or other content that, taking the material as a whole and 13 applying contemporary community standards with respect to what 14 is suitable for public distribution, meets all of the following 15 criteria: 16 a. Depicts or involves killing, maiming, dismembering, or 17 sexually assaulting an individual. 18 b. Lacks serious literary, scientific, political, or 19 artistic value. 20 4. “Expressive merchandise” means and includes any tangible 21 personal property that contains or displays a viewpoint that 22 constitutes constitutionally protected speech. 23 5. “Governmental entity” means and includes all of the 24 following: 25 a. A unit of state government in the executive, legislative, 26 or judicial branch. 27 b. A political subdivision of the state, including a city, 28 county, township, school district, and any other governmental 29 entity authorized to levy taxes. 30 6. “Intellectual property” means a commercially valuable 31 product of the human intellect in a concrete or abstract form 32 that is protected by a copyright, trademark, or patent. 33 7. “Internet site” means the same as defined in section 4.1. 34 8. “Massive online marketplace” means and includes an 35 -2- LSB 2024SV (3) 89 jda/rn 2/ 22

S.F. 571 internet site that meets all of the following criteria: 1 a. Offers tangible personal property for sale to the general 2 public. 3 b. Sells or facilitates the sale of protected publications 4 or expressive merchandise. 5 c. Has at least seventy-five million subscribers or members 6 in the United States in the calendar year before the date a 7 court has found by a preponderance of the evidence that the 8 massive online marketplace violated this chapter, or has sold 9 goods to at least seventy-five million individuals in the 10 United States in the calendar year before the date a court 11 has found by a preponderance of the evidence that the massive 12 online marketplace has violated a provision of this chapter. 13 9. “Massive online video sharing website” means and includes 14 an internet site that meets all of the following criteria: 15 a. Allows users or the public to share videos with other 16 users or the public. 17 b. Hosts, stores, provides, or otherwise facilitates access 18 by individuals in the United States. 19 c. Has at least five hundred million videos available at any 20 point in time. 21 10. “Massive social networking website” means and includes 22 an internet site that meets all of the following criteria: 23 a. Allows users, through the creation of pages within 24 the internet site or profiles or by other means, to provide 25 information about themselves that is available to the public 26 or to other users. 27 b. Allows users a mechanism for communication with other 28 users. 29 c. Has at least twenty million subscribers or members in 30 the United States in the calendar year before the date a court 31 has found by a preponderance of the evidence that the massive 32 social networking website has violated a provision of chapter 33 554E, or has been used by at least twenty million individuals 34 in the United States in the calendar year before the date a 35 -3- LSB 2024SV (3) 89 jda/rn 3/ 22

S.F. 571 court has found by a preponderance of the evidence that the 1 massive social networking website has violated a provision of 2 this chapter. 3 11. “Monopolistic entity” means a person who owns or 4 operates a social networking website, a person who owns or 5 operates an internet search engine, or a person who owns or 6 operates any similar internet site that displays content to its 7 users, and to which any of the following apply: 8 a. The person, within the ten-year period preceding the date 9 a court has found by a preponderance of the evidence that the 10 person has violated a provision of this chapter, has been found 11 to have violated any state or federal antitrust or price-fixing 12 law. 13 b. The person is involved in litigation in which the 14 office of the attorney general has alleged that the person has 15 violated any state or federal antitrust or price-fixing law. 16 12. “Obscene material” means any material depicting or 17 describing the genitals, sex acts, masturbation, excretory 18 functions, or sadomasochistic abuse which the average person, 19 taking the material as a whole and applying contemporary 20 community standards with respect to what is suitable material 21 for minors, would find appeals to the prurient interest and is 22 patently offensive; and the material, taken as a whole, lacks 23 serious literary, scientific, political, or artistic value. 24 13. “Person” means the same as defined in section 4.1. 25 14. “Pornography” means and includes any material depicting 26 or describing erotic behavior that is intended to cause sexual 27 excitement which the average person, taking the material as a 28 whole and applying contemporary community standards, would find 29 appeals to the prurient interest and is patently offensive; 30 and the material, taken as a whole, lacks serious literary, 31 scientific, political, or artistic value. 32 15. “Pre-installed application store” means and includes 33 any program, application, service, or mechanism that is 34 pre-installed on a mobile telephone or other portable 35 -4- LSB 2024SV (3) 89 jda/rn 4/ 22

S.F. 571 electronic communication device capable of being used to write, 1 send, or view an electronic message that meets all of the 2 following criteria: 3 a. Facilitated at least one hundred million annual downloads 4 of programs or applications by individuals in the United 5 States in the calendar year before the date a court has found 6 by a preponderance of the evidence that the pre-installed 7 application store has violated a provision of this chapter. 8 b. Facilitated the download of programs or applications 9 that constitute a massive online marketplace, massive online 10 video sharing website, or massive social networking website 11 in the calendar year before the date a court has found by 12 a preponderance of the evidence that the pre-installed 13 application store has violated a provision of this chapter. 14 16. “Protected publication” means and includes any 15 newspaper, non-fiction book, periodical, religious text, or any 16 other publication that contains or displays a viewpoint that 17 constitutes constitutionally protected speech. 18 17. “Social networking website” means and includes an 19 internet site that meets all of the following criteria: 20 a. Allows users, through the creation of pages within 21 the internet site or profiles or by other means, to provide 22 information about themselves that is available to the public 23 or to other users. 24 b. Allows users a mechanism for communication with other 25 users. 26 Sec. 4. NEW SECTION . 554E.2 Prohibition on censorship —— 27 ability to opt out of certain algorithms. 28 1. a. A company shall not intentionally affect the ability 29 of a citizen of this state to view, comment, or otherwise 30 interact with a United States citizen’s content on the 31 company’s internet site by limiting, blocking, or otherwise 32 restricting any content on the company’s internet site if the 33 content constitutes constitutionally protected speech. 34 b. A company shall not intentionally restrict the ability of 35 -5- LSB 2024SV (3) 89 jda/rn 5/ 22

S.F. 571 a citizen of this state to download a social networking website 1 on a pre-installed application store. 2 c. A company shall not intentionally restrict the ability of 3 a citizen of this state to purchase any protected publication 4 or expressive merchandise on a massive online marketplace 5 if similar protected publications or expressive merchandise 6 were allowed for sale on the massive online marketplace at 7 the time the company restricted the ability of a citizen of 8 this state to purchase the protected publication or expressive 9 merchandise. 10 2. Notwithstanding subsection 1, a company may do any of the 11 following: 12 a. Restrict the ability of a citizen of this state to 13 view, comment, or otherwise interact with a United States 14 citizen’s content on the company’s internet site if the 15 content is criminal in nature, if the content does not 16 constitute constitutionally protected speech, or if the content 17 constitutes any of the following: 18 (1) Obscene material. 19 (2) Excessively violent content. 20 (3) Pornography. 21 (4) Content generated by bots. 22 (5) Intellectual property. 23 b. Restrict the ability of a citizen of this state to 24 download a social networking website program or application 25 from a pre-installed application store if the social networking 26 website is being used for criminal activity and the social 27 networking website does not have a policy in place to require 28 its employees to notify law enforcement upon receiving a 29 complaint or otherwise becoming aware of the criminal activity 30 being discussed or conducted on its social networking website, 31 or does not have a policy in place to require its employees 32 to refer the complaint or existence of criminal activity to 33 designated employees that carry out the policy. 34 c. Restrict the ability of a citizen of this state to 35 -6- LSB 2024SV (3) 89 jda/rn 6/ 22

S.F. 571 download a social networking website program or application 1 from a pre-installed application store if, within sixty days 2 of the restriction, the United States department of homeland 3 security determines the social networking website program or 4 application constitutes a national security threat. 5 3. a. A company shall provide its subscribers, members, and 6 users who are citizens of this state with the ability to opt 7 out of post promoting algorithms and shadow banning algorithms 8 on the company’s massive online marketplace, massive online 9 video sharing website, or massive social networking website. 10 b. For purposes of this subsection: 11 (1) “Post promoting algorithm” means and includes the 12 mechanism, process, or set of rules that is used to sort the 13 content that is visible to a subscriber, member, or user based 14 on data or information possessed, used, or controlled by a 15 company which relates to the subscriber, member, or user. 16 (2) “Shadow banning algorithm” means and includes the 17 mechanism, process, or set of rules that is used to restrict 18 the visibility of a subscriber’s, member’s, or user’s content 19 to other subscribers, members, or users in a way that is not 20 readily apparent to the subscriber, member, or user who created 21 the content. 22 Sec. 5. NEW SECTION . 554E.3 Enforcement —— companies. 23 1. a. A court’s finding by a preponderance of the evidence 24 that a company has violated a provision of this chapter shall 25 be conclusive proof of the company’s breach of any agreement 26 regarding tax credits; assistance under section 15.335B; sales 27 tax exemptions or refunds under chapter 423; or property tax 28 credits, exemptions, including but not limited to exemptions 29 under chapter 427, rebates, refunds, reimbursements, or 30 grants for property taxes paid between the company and a 31 governmental entity in effect as of the effective date of this 32 Act, and the governmental entity shall cancel the agreement 33 effective as of the date the company receives the notice the 34 governmental entity provides pursuant to section 554E.4, 35 -7- LSB 2024SV (3) 89 jda/rn 7/ 22

S.F. 571 subsection 1, paragraph “b” , or if the governmental entity 1 fails to send the notice, the governmental entity shall cancel 2 the agreement effective thirty days after the effective date 3 of this Act. Nothing in this subsection shall be interpreted 4 to provide a company that did not receive notice a defense to 5 a suit alleging a violation of this chapter or a defense to 6 a suit alleging the company breached an agreement with the 7 governmental entity. 8 b. A court’s finding by a preponderance of the evidence 9 that a company has violated a provision of this chapter shall 10 be conclusive proof of the company’s breach of any agreement 11 regarding tax credits; assistance under section 15.335B; sales 12 tax exemptions or refunds under chapter 423; or property tax 13 credits, exemptions, including but not limited to exemptions 14 under chapter 427, rebates, refunds, reimbursements, or grants 15 for property taxes paid between the company and a governmental 16 entity entered into after the effective date of this Act, and 17 the governmental entity shall cancel the agreement effective as 18 of the date of the court’s finding. 19 2. Notwithstanding any other provision of law to the 20 contrary, upon a court’s finding by a preponderance of the 21 evidence that a company has violated a provision of this 22 chapter, the company shall be prohibited from entering into 23 any future agreement with a governmental entity regarding 24 tax credits; assistance under section 15.335B; sales tax 25 exemptions or refunds under chapter 423; or property tax 26 credits, exemptions, including but not limited to exemptions 27 under chapter 427, rebates, refunds, reimbursements, or grants 28 for property taxes paid and shall be prohibited from receiving 29 any future payments; tax credits; assistance under section 30 15.335B; sales tax exemptions or refunds under chapter 423; or 31 property tax credits, exemptions, including but not limited to 32 exemptions under chapter 427, rebates, refunds, reimbursements, 33 or grants for property taxes paid. The prohibition provided in 34 this subsection shall begin on the date of the court’s finding. 35 -8- LSB 2024SV (3) 89 jda/rn 8/ 22

S.F. 571 Except as provided in section 554E.7, the prohibition shall 1 be for a period of twenty years. The twenty-year prohibition 2 shall be reinstated for each subsequent finding by a court 3 pursuant to this subsection. 4 3. Notwithstanding any other provision of law to the 5 contrary, upon a court’s finding by a preponderance of the 6 evidence that a company has violated a provision of this 7 chapter all of the following shall apply: 8 a. Tax credits; assistance from programs and funds under 9 section 15.335B; sales tax exemptions or refunds under chapter 10 423; or property tax credits, exemptions, including but not 11 limited to exemptions under chapter 427, rebates, refunds, 12 reimbursements, or grants for property taxes paid that were 13 previously claimed by the company shall be recaptured or 14 terminated by the governmental entity. The recapture or 15 termination of any tax credits; assistance under section 16 15.335B; sales tax exemptions or refunds under chapter 423; or 17 property tax credits, exemptions, including but not limited to 18 exemptions under chapter 427, rebates, refunds, reimbursements, 19 or grants for property taxes paid that were previously claimed 20 by the company pursuant to this subsection shall supersede 21 any agreement previously entered into with the governmental 22 entity. Recapture or termination pursuant to this subsection 23 shall be accomplished in the same manner as provided in section 24 15.330, subsection 2, by the method for resolving a breach 25 described in the agreement, through court action, or any other 26 means determined by the attorney general to result in the most 27 expeditious recapture or termination of tax credits; assistance 28 under section 15.335B; sales tax exemptions or refunds under 29 chapter 423; or property tax credits, exemptions, including but 30 not limited to exemptions under chapter 427, rebates, refunds, 31 reimbursements, or grants for property taxes paid that were 32 previously claimed by the company. 33 b. Payments or other quantifiable benefits received but not 34 earned by the company shall be returned to the governmental 35 -9- LSB 2024SV (3) 89 jda/rn 9/ 22

S.F. 571 entity. 1 4. Upon a court’s finding by a preponderance of the evidence 2 that a company has violated a provision of this chapter, the 3 prohibition provided in subsection 1 and the return of received 4 but not earned amounts provided in subsection 3 shall not be 5 stayed during appeal proceedings. 6 Sec. 6. NEW SECTION . 554E.4 Inventory of agreements with 7 companies —— obligations. 8 1. Within thirty days following the effective date of this 9 Act, a governmental entity shall do all of the following: 10 a. Conduct a review of currently effective agreements; 11 tax credits; assistance under section 15.335B; sales tax 12 exemptions or refunds under chapter 423; or property tax 13 credits, exemptions, including but not limited to exemptions 14 under chapter 427, rebates, refunds, reimbursements, or grants 15 for property taxes paid that were provided by the governmental 16 entity beginning January 1, 2001, through the effective date 17 of this Act, to determine if any agreements, tax credits; 18 assistance under section 15.335B; sales tax exemptions or 19 refunds under chapter 423; or property tax credits, exemptions, 20 including but not limited to exemptions under chapter 427, 21 rebates, refunds, reimbursements, or grants for property taxes 22 paid were entered into with, or provided to, a company. 23 b. Provide notice to a company on the form provided by the 24 office of the attorney general pursuant to subsection 3, of 25 the governmental entity’s rights pursuant to section 554E.3 by 26 certified mail return receipt requested if the governmental 27 entity determines pursuant to subsection 1 that a currently 28 effective agreement; tax credit; assistance under section 29 15.335B; sales tax exemption or refund under chapter 423; or 30 property tax credit, exemption, including but not limited to 31 an exemption under chapter 427, rebate, refund, reimbursement, 32 or grant for property taxes paid was entered into with, or 33 provided to, the company beginning January 1, 2001, through the 34 effective date of this Act. 35 -10- LSB 2024SV (3) 89 jda/rn 10/ 22

S.F. 571 c. Provide the office of the attorney general with copies of 1 the notice and receipt of delivery provided in subsection 2. 2 2. A governmental entity shall include all of the following 3 in agreements to which it is a party entered into on or after 4 the effective date of this Act: 5 a. A statement summarizing the governmental entity’s 6 enforcement rights under section 554E.3 with respect to 7 agreements related to tax credits; assistance under section 8 15.335B; sales tax exemptions or refunds under chapter 423; and 9 property tax credits, exemptions, including but not limited to 10 exemptions under chapter 427, rebates, refunds, reimbursements, 11 or grants for property taxes paid. 12 b. A provision stating that any agreement between the 13 governmental entity and a company subject to section 554E.3 14 that does not relate to tax credits; assistance under section 15 15.335B; sales tax exemptions or refunds under chapter 423; or 16 property tax credits, exemptions, including but not limited to 17 exemptions under chapter 427, rebates, refunds, reimbursements, 18 or grants for property taxes paid may be canceled at the 19 governmental entity’s discretion within ninety days after a 20 court’s finding by a preponderance of the evidence that the 21 company has violated a provision of this chapter. 22 3. The office of the attorney general shall develop and 23 provide to governmental entities a form to be used for the 24 notice provided in subsection 2 within seven days of the 25 effective date of this Act. 26 Sec. 7. NEW SECTION . 554E.5 Enforcement —— governmental 27 entities. 28 Notwithstanding any other provision of law to the contrary, 29 upon a court’s finding by a preponderance of the evidence 30 that a governmental entity intentionally violated a provision 31 of this chapter, including but not limited to by making 32 payments or providing tax credits; assistance under section 33 15.335B; sales tax exemptions or refunds under chapter 423; or 34 property tax credits, exemptions, including but not limited to 35 -11- LSB 2024SV (3) 89 jda/rn 11/ 22

S.F. 571 exemptions under chapter 427, rebates, refunds, reimbursements, 1 or grants for property taxes paid in violation of section 2 554E.3, all of the following shall apply: 3 1. The governmental entity’s certified budget and amount of 4 taxes certified shall be reduced as provided in section 24.17, 5 subsection 2, paragraph “b” . 6 2. If the governmental entity receives an appropriation, 7 the governmental entity’s portion of each appropriation in the 8 fiscal year of the court’s finding of an intentional violation 9 shall be reduced by ten percent. If the governmental entity 10 fails to remedy the violation of this chapter prior to the 11 beginning of the subsequent fiscal year, the governmental 12 entity’s portion of each appropriation made by the general 13 assembly for the subsequent fiscal year shall be reduced by a 14 percentage equal to the percentage reduction for the preceding 15 fiscal year plus five percent. All appropriation amounts 16 reduced pursuant to this section shall be transferred to the 17 fund from which they were appropriated. 18 Sec. 8. NEW SECTION . 554E.6 Obligations of the office of 19 the attorney general. 20 1. The office of the attorney general shall enforce 21 the provisions of this chapter, including in all appeal 22 proceedings. 23 a. The office of the attorney general shall appeal a 24 district court’s decision if a company prevails in the district 25 court in an action under this chapter. 26 b. The office of the attorney general shall file an 27 application for further review with the supreme court if, after 28 the appeal provided in paragraph “a” , the supreme court issues 29 an order of transfer and transfers the case to the court of 30 appeals and the company prevails in the action before the court 31 of appeals. 32 c. When an appeal is taken by the office of the attorney 33 general, the office shall not be required to give an appeal 34 bond or security for costs. 35 -12- LSB 2024SV (3) 89 jda/rn 12/ 22

S.F. 571 2. a. Within sixty days following the effective date 1 of this Act, the office of the attorney general shall make 2 available on its internet site a system to allow a citizen of 3 this state to report potential violations of this chapter by a 4 company or by a governmental entity to the office. 5 b. The system required pursuant to paragraph “a” shall 6 include all of the following: 7 (1) A mechanism for the electronic submission of 8 photographs or other evidence of a company’s potential 9 violation of this chapter. 10 (2) An annual accounting, on a calendar year basis, of the 11 number of complaints received by the office of the attorney 12 general related to the number of potential violations of this 13 chapter by companies and governmental entities. In addition 14 to the current year’s accounting, the system shall display 15 annual accountings required by this subparagraph for the years 16 preceding the current calendar year. 17 (3) An annual accounting, on a calendar year basis, of the 18 number of investigations required pursuant to subsections 3 19 and 4 in which the office of the attorney general determines 20 there is a reasonable suspicion that a company or governmental 21 entity violated this chapter. In addition to the current 22 year’s accounting, the system shall display annual accountings 23 required by this subparagraph for the years preceding the 24 current calendar year. 25 (4) A list of the companies that a court has found by a 26 preponderance of the evidence have violated this chapter. 27 (5) A list of the governmental entities that a court has 28 found by a preponderance of the evidence have violated this 29 chapter. 30 (6) A mechanism to ensure that the person submitting the 31 report is a citizen of this state. 32 3. Notwithstanding subsection 5, the office of the attorney 33 general shall complete the investigation of a report received 34 pursuant to subsection 2 within thirty days of the receipt 35 -13- LSB 2024SV (3) 89 jda/rn 13/ 22

S.F. 571 of the report if the report included a photograph or other 1 evidence that, in the opinion of the office, indicates a 2 company’s potential violation of this chapter. 3 4. The office of the attorney general shall contact a person 4 who submits a report pursuant to subsection 2 related to a 5 company’s potential violation of this chapter that did not 6 contain a photograph or other evidence within seven days of 7 the receipt of the report and inform the person of one of the 8 following: 9 a. The office will investigate the report, in which case the 10 office shall complete the investigation within thirty days of 11 the receipt of the report. 12 b. The person has thirty days to provide the office with 13 a photograph or other evidence that indicates a potential 14 violation of this chapter, in which case the office shall 15 complete the investigation within thirty days of the receipt of 16 the photograph or other evidence. 17 5. a. Upon completion of an investigation in which 18 the office of the attorney general determines there is a 19 reasonable suspicion that a company or governmental entity has 20 violated this chapter, the office shall file suit in a court 21 of competent jurisdiction to enforce the provisions of this 22 chapter. 23 b. The office of the attorney general shall file suit for a 24 violation of this chapter every four years from the date of the 25 most recent court’s finding if the office determines there is 26 reasonable suspicion that a company has violated this chapter 27 at any point during the four-year period after the court’s most 28 recent finding. 29 c. The office of the attorney general shall file suit to 30 enforce this chapter against a governmental entity every year 31 from the date of the most recent court’s finding that the 32 governmental entity has violated this chapter if the office 33 determines there is reasonable suspicion that a violation of 34 this chapter has occurred at any point during the one-year 35 -14- LSB 2024SV (3) 89 jda/rn 14/ 22

S.F. 571 period after the court’s most recent finding. 1 6. All records provided to the office of the attorney 2 general pursuant to this section shall be kept confidential and 3 are not subject to chapter 22. 4 Sec. 9. NEW SECTION . 554E.7 Petition for stay. 5 1. No sooner than four years after a court’s finding that 6 a company violated a provision of this chapter pursuant to 7 section 554E.3, the company may petition the court for a stay 8 of the provisions of section 554E.3, subsection 1. 9 2. At the time the company petitions the court for a stay 10 pursuant to subsection 1, the company shall file with the court 11 a bond payable to the state in an amount deemed necessary by 12 the office of the attorney general. 13 3. Within thirty days after a company files a petition for 14 a stay pursuant to subsection 1, the office of the attorney 15 general shall file with the court a statement indicating any 16 reports received under section 554E.6, subsection 2, related 17 to the company from the date of the court’s finding that 18 the company violated a provision of this chapter pursuant to 19 section 554E.3 through the date the company filed the petition 20 for a stay. 21 4. The court shall grant the petition for stay filed 22 pursuant to subsection 1 if it finds that the company did not 23 violate the provisions of this chapter from the date of the 24 court’s finding that the company violated a provision of this 25 chapter pursuant to section 554E.3 through the date the company 26 filed the petition for a stay. 27 a. Beginning one year after the court grants the petition 28 for stay pursuant to this subsection, the company shall 29 annually file with the court an additional bond in the amount 30 of any payments; tax credits; assistance under section 31 15.335B; sales tax exemptions or refunds under chapter 423; or 32 property tax credits, exemptions, including but not limited to 33 exemptions under chapter 427, rebates, refunds, reimbursements, 34 or grants for property taxes paid the company received from the 35 -15- LSB 2024SV (3) 89 jda/rn 15/ 22

S.F. 571 state during the previous year. 1 b. A governmental entity shall not provide the company 2 with any tax credits; assistance under section 15.335B; sales 3 tax exemptions or refunds under chapter 423; or property tax 4 credits, exemptions, including but not limited to exemptions 5 under chapter 427, rebates, refunds, reimbursements, or grants 6 for property taxes paid, until the company has satisfied the 7 requirements in paragraph “a” for the previous year. 8 5. The company shall be permanently prohibited from 9 entering into any agreement regarding tax credits; assistance 10 under section 15.335B; sales tax exemptions or refunds under 11 chapter 423; or property tax credits, exemptions, including 12 but not limited to exemptions under chapter 427, rebates, 13 refunds, reimbursements, or grants for property taxes paid with 14 a governmental entity and shall be permanently prohibited from 15 receiving any payments; tax credits; assistance under section 16 15.335B; sales tax exemptions or refunds under chapter 423; or 17 property tax credits, exemptions, including but not limited to 18 exemptions under chapter 427, rebates, refunds, reimbursements, 19 or grants for property taxes paid from a governmental entity 20 if the company violates a provision of this chapter after a 21 court has granted the company’s petition for stay pursuant to 22 this section and before the end of the twenty-year prohibition 23 provided in section 554E.3, subsection 1. 24 6. The amount of any bond forfeited under this section shall 25 be deposited in the general fund of the state. 26 7. A company shall not file more than one petition for 27 a stay of the provisions of section 554E.3, subsection 1, 28 during the twenty-year prohibition provided in section 554E.3, 29 subsection 1. 30 8. Nothing in this section shall be construed to limit the 31 authority of the office of the attorney general under section 32 554E.6 to investigate potential violations of this chapter or 33 file suit to enforce the provisions of this chapter. 34 Sec. 10. NEW SECTION . 554E.8 Right to intervene —— 35 -16- LSB 2024SV (3) 89 jda/rn 16/ 22

S.F. 571 enforcement by citizens of this state. 1 1. A governmental entity impacted by an action under this 2 chapter may intervene in any action under this chapter. 3 2. A citizen of this state who has reported a company’s 4 potential violation of this chapter pursuant to section 554E.6 5 may intervene in any action related to the company under this 6 chapter. 7 3. Notwithstanding section 554E.6, subsection 1, a citizen 8 of this state who has reported a company’s potential violation 9 of this chapter pursuant to section 554E.6 may file suit in a 10 court of competent jurisdiction to enforce the provisions of 11 this chapter if the company is not currently subject to the 12 prohibition provided in section 554E.3, subsection 2, and if 13 the company’s potential violation of this chapter occurred at 14 least thirty days following the effective date of this Act. 15 Sec. 11. NEW SECTION . 554E.9 Rules. 16 The office of the attorney general shall adopt rules 17 pursuant to chapter 17A to administer and interpret this 18 chapter. 19 Sec. 12. TRANSITIONAL COMPLAINT REPORTING SYSTEM. Within 20 thirty days following the effective date of this Act, and until 21 fifty-nine days following the effective date of this Act, the 22 office of the attorney general shall make available on its 23 internet site a transitional system to allow a citizen of 24 this state to report potential violations of chapter 554E by 25 a company or a governmental entity to the office. The system 26 shall include, at a minimum, a mechanism for the electronic 27 submission of reports of potential violations of chapter 554E 28 and the electronic evidence associated with the potential 29 violations. 30 Sec. 13. IMPLEMENTATION OF ACT. Section 25B.2, subsection 31 3, shall not apply to this Act. 32 Sec. 14. EFFECTIVE DATE. This Act, being deemed of 33 immediate importance, takes effect upon enactment. 34 Sec. 15. APPLICABILITY. This Act applies to agreements 35 -17- LSB 2024SV (3) 89 jda/rn 17/ 22

S.F. 571 between a company and a governmental entity in effect or 1 entered into on or after the effective date of this Act. 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill prohibits the state or political subdivisions of 6 the state from entering into contracts with, or providing tax 7 incentives or other benefits to, certain companies that censor 8 online content. 9 The bill requires that, before public funds are used for 10 economic development, the public body dispensing the public 11 funds shall consider whether a court has found that the person 12 to whom the funds will be dispersed has violated a provision 13 of new Code chapter 554E, and whether the person is involved 14 in litigation in which it has been alleged that the person 15 violated Code chapter 554E. 16 The bill modifies Code section 24.17 to provide that, for 17 fiscal years beginning on or after July 1, 2021, if a political 18 subdivision has been found to have violated new Code chapter 19 554E during the 12-month period prior to the date taxes are 20 certified, the amount of the political subdivision’s budget 21 certified under Code chapter 24 and the amount of taxes 22 certified back to the county auditor by the department of 23 management shall be reduced as described in the bill. 24 The bill establishes new Code chapter 554E. The bill 25 adds several defined terms to the Code chapter, including 26 definitions for “company”, “content generated by bots”, 27 “excessively violent content”, “expressive merchandise”, 28 “governmental entity”, “intellectual property”, “internet 29 site”, “massive online marketplace”, “massive online video 30 sharing website”, “massive social networking website”, 31 “monopolistic entity”, “obscene material”, “pornography”, 32 “pre-installed application store”, and “social networking 33 website”. 34 The bill prohibits a company from intentionally affecting 35 -18- LSB 2024SV (3) 89 jda/rn 18/ 22

S.F. 571 the ability of a citizen of this state to view, comment, or 1 otherwise interact with certain content on the company’s 2 internet site by restricting such content. 3 The bill prohibits a company from intentionally affecting 4 the ability of a citizen of this state to interact with 5 certain content on the company’s internet site, restricting 6 the ability of a citizen of this state to download a social 7 networking website on a pre-installed application store, or 8 restricting the ability of a citizen of this state to purchase 9 any protected publication or expressive merchandise on a 10 massive online marketplace as prescribed in the bill. The bill 11 provides, however, that a company may restrict the ability 12 of a citizen of this state to interact with a United States 13 citizen’s content on the company’s internet site in certain 14 enumerated cases. 15 The bill requires a company to provide its subscribers, 16 members, and users who are citizens of this state with 17 the ability to opt out of post promoting algorithms and 18 shadow banning algorithms on the company’s massive online 19 marketplace, massive online video sharing website, or massive 20 social networking website. The bill defines “post promoting 21 algorithm” and “shadow banning algorithm”. 22 The bill provides that a court’s finding that a company has 23 violated the prohibition on censorship shall be conclusive 24 proof of the company’s breach of any agreement between the 25 company and a governmental entity, and the governmental entity 26 shall cancel the agreement effective as of the date described 27 in the bill. 28 The bill provides that, upon a court’s finding that a 29 company has violated this prohibition on censorship, the 30 company shall be prohibited from entering into any future 31 agreement with a governmental entity and shall be prohibited 32 from receiving any future payment from a governmental entity. 33 The bill establishes that this begins on the date of the 34 court’s finding and shall extend for a period of 20 years, 35 -19- LSB 2024SV (3) 89 jda/rn 19/ 22