SACRAMENTO / BRADLEY INMAN : Hart Bill Would Put Corporate Repeat Offenders on Probation
If state Sen. Gary Hart has his way, California judges will put corporations that persist in breaking the law on probation.
Introduced by the Santa Barbara Democrat, SB 2500 would authorize mandatory probation and other legal remedies when corporations repeatedly commit environmental crimes, violate antitrust laws or perpetrate consumer product-related offenses.
“The idea of probation for individuals should also apply to corporations,” said Hart’s legislative consultant Drew Liebert. “We don’t have as many tools for corporations; we can’t put them in jail.”
Under the bill, which was passed by the Senate last week, a corporation would be sentenced to probation when the company or one of its officers had a similar criminal conviction within the previous five years. A judge would also be required to put a company on probation when “management policies substantially contributed to the criminal conduct” or when the judge finds that that “probably will significantly reduce the likelihood of the corporation repeating a similar or related offense.”
Once a company is under court supervision, special company audits can be conducted, corporate policies can be revised and a probation officer would have access to company records. Also, the court can order a convicted corporation to take out an advertisement explaining its crimes and its plan for avoiding the problem in the future.
The proposal applies to felonies and misdemeanors that result in a loss of human life, threaten the safety of an individual or cause public injury. The length of probation would be one to five years for a felony conviction and up to three years for a misdemeanor.
The legislation is aimed at offenders who have been undeterred by other penalties. Under current law, when the rules of probation are ignored, the only remedy is to impose a fine. “Monetary fines generally appear to be treated as mere costs of doing business,” an analysis of the bill states.
Jan Chatten-Brown, special assistant in the Los Angeles District Attorney’s Office, cited the case of Arrowhead Industrial Water and one of its subsidiaries, which were slapped with a $500,000 penalty for illegally discharging wastes in 1985. Three years later, the Los Angeles-based firm was fined for not stopping the pollution.
A strict probation sentence would have prevented the continued dumping, said Chatten-Brown.
“The major motivation here is environmental law, but it’s not limited to that,” said Liebert. “The same reason that this bill applies to environmental crimes is why it’s important to securities violations and other wrongdoing.”
Supported by environmental organizations, consumer groups and the California Trial Lawyers Assn., the bill promises better monitoring of businesses that consistently break the law.
Opponents of the bill, such as the California Manufacturers Assn., argue that the measure will permit the courts, prosecutors and the legislature to meddle in business.
Supporters of the Hart measure claim that that may not be a bad idea. “To the extent that we are saying that a health and safety officer should be hired to correct serious environmental problems, then yes, we are talking about getting involved in management,” said Chatten-Brown.
If the legislation passes in the Assembly and is signed by the governor, California would be the first state to enact strict probation rules for white-collar crime.
Report Says Reports Aren’t Getting Done
When state lawmakers can’t agree on solutions to knotty public policy problems, they often put off action by authorizing a study. Calling for a little research is an easy way of showing progress without doing much.
But even the promise of a study can be a shallow commitment because the vast majority of these reports are never completed.
A report on reports published by the Legislative Counsel’s office reveals that most state agencies ignore legislative mandates to conduct studies.
The 175-page “List of Reports” includes more than 1,500 studies that have been mandated by the state legislature. But fewer than 400 have been completed.
The Public Utilities Commission, for example, is required to conduct an annual review of “the use of alcoholic beverages by minors on charter-party passenger boats.” These reports have never been submitted to the legislature, according to the Counsel’s report.
Some state agencies are better than others in responding to the mandates. The Commission on State Finance, for instance, is required to prepare an annual report on the “impact of federal expenditures on the state’s economy and employment.” The first study was due July 1, 1989, and was completed by the fall of last year.
Even the Legislative Counsel’s report on reports was five months late, and the Counsel staff is pushing to change the requirement for monthly updates.
Moving Industry Balks at Deregulation Plan
Some of the toughest critics of proposals to remove government regulations are business firms that have learned to compete in a regulated environment.
Just ask the California Moving & Storage Assn., which represents some of the state’s largest moving and storage companies, such as Bekins, Allied Van Lines and Mayflower. It is fighting a proposal by a division of the Public Utilities Commission that would deregulate moving companies that transport household goods.
The PUC has been holding hearings this month to gather testimony on a scheme to throw out 40-year-old rate regulations that set a floor on the cost of moving within California. (The Interstate Commerce Commission regulates moves between states.)
Under the proposal, a complicated schedule of rates would be replaced with a free-market approach to pricing. “The current method of regulation may be impeding the lowest reasonable rates,” said a PUC announcement.
The trade association, which represents 700 household movers, sees it differently. “The thought of this proposal is disastrous,” said Pat Andrews, manager of the group. “Just look what deregulation did for the airline industry.”
Andrews claimed that the pending PUC rules will increase the number of unlicensed and “shoddy” moving companies, boost consumer complaints and make the highways unsafe.
The last of the PUC hearings will be held in San Diego on Tuesday and in Van Nuys on Wednesday.
