[penalize employers who hi...] The Senate approved immigration legislation that would grant permanent residency to millions of alie

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The Senate approved immigration legislation that would grant permanent residency to millions of aliens currently residing here and if employers hired illegal aliens they would be penalized.

if employers hired illegal aliens they would be penalized

hiring illegal aliens would be a penalty for employers

penalize employers who hire illegal aliens

penalizing employers hiring illegal aliens

employers to be penalized for hiring illegal aliens

Explanation:
The sentence contains a relative clause (that...) indicating, in its compound predicate, two effects of the immigration legislation: (it) would grant x and (would) penalize y. The auxiliary would may be omitted before penalize, but the main verbs must remain parallel. Only C, the best choice, observes these conditions. A and B produce incoherent, fused sentences in which the two main clauses are not parallel. Furthermore, in A the referent of they is unclear, and in B the statement hiring illegal aliens would be a penalty makes no sense. D violates parallel structure by substituting a present participle (penalizing) for the second main verb. E introduces an incoherent passive infinitive construction that violates sense and parallel structure.

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