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The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Dec 28, 2012.
Hatch Act Modernization Act of 2012 - (Sec. 2) Allows a state or local officer or employee to be a candidate for partisan elective office unless the salary of such officer or employee is paid completely, directly or indirectly, by loans or grants made by the United States or a federal agency.
(Sec. 3) Redefines "state or local agency" for purposes of the Hatch Act to include the executive branch of the District of Columbia, or an agency or department thereof.
Extends the exemption from Hatch Act requirements for state or local officers or employees to individuals employed by an educational or research institution, establishment, agency or system supported in whole or in part by the District of Columbia.
Extends the exemption from the prohibition against running for elective office to the head of an executive department of the District of Columbia who is not classified under an applicable merit or civil-service system.
Extends to agencies of the District of Columbia provisions requiring the the Merit System Protection Board (MSPB) to withhold funds from agencies that reappoint employees removed for violating the Hatch Act within 18 months after removal.
Exempts individuals employed or holding office in the District of Columbia from provisions of the Hatch Act applicable to federal employees.
Makes federal employees living in the District of Columbia eligible to participate in local politics to the same extent as federal employees living in nearby areas of Maryland or Virginia.
(Sec. 4) Replaces existing penalty provisions for violations of the Hatch Act to make an offending employee subject to removal (currently, removal is mandatory), reduction in grade, debarment from federal employment for five years, suspension, reprimand, or a civil penalty of not more than $1,000.
(Sec. 5) Makes the new penalties imposed by this Act applicable to violations occurring before, on, or after the effective date of this Act, unless, before the effective date of this Act, the Special Counsel has presented a complaint for disciplinary action with respect to an alleged violation or the employee alleged to have committed the violation has entered into a signed settlement agreement with the Special Counsel.