Statement of James V. Delong, Adjunct Scholar of The Competitive Enterprise Institute, on:
Administrative Crimes And Quasi-Crimes
before the Subcommittee on Commercial and Administrative Law Committee on the Judiciary - U.S. House of Representatives
May 7, 1998

This hearing on Administrative Crimes and Quasi-Crimes focuses on a troubling area of national policy: Congress' steady drive to convert violations of regulations into criminal offenses, or to subject them to punishments that, while formally classified as "civil," are every bit as painful as criminal penalties. The impositions of civil fines, treble damages, punitive damages, forfeiture of property, debarment from doing business with the government, and exaggerated calculations of compensatory damages are all growing, right along with the increase in sanctions that are officially "criminal."

Both parties in Congress seem to have embraced an assumption that the solution to every perceived problem is not just a new round of laws and regulations, but severe punishments for any non-compliance, however inadvertent or minor. It is not enough to tell the transgressor to comply or to make him pay for any actual harm caused by a violation. He must be made to suffer.

The punitive impulse is permeating environmental protection, financial practices, government contracting, employment relations, civil rights, health care -- every area of government interaction with the society and the economy. It is becoming a matter of Congressional habit, as serious penalties are added routinely to every kind of regulatory proposal. For example, in response to the current debate about cloning, Senators Ted Kennedy and Dianne Feinstein have introduced S.1602, which would ban experiments with human cloning. If any scientist went too far, she would be subject to a $1 million fine plus confiscation of all property, including real estate, used in or derived from the experiment. I know little about the cloning issue, but I know enough to doubt the wisdom of reflexive application of blunt instruments -- such as huge fines and property forfeitures -- to questions of great scientific and moral difficulty.

The expansion in the sheer numbers of areas and activities subject to penalties, and in the variety and inventiveness of the penalties, is important in itself, but the impact is accentuated by other changes in the regulatory system. The most significant are:

• Increasing Complexity. Regulatory systems have become incredibly complex. No one understands them, not the people subject to them and not those charged with enforcing them. Nor is a good moral sense an adequate guide; many requirements are malum prohibitum (wrong because it is prohibited), not malum in se (wrong in itself), to invoke a very old, but very wise, doctrine from our legal heritage. Businesses and individuals who are dedicated to regulatory compliance regularly find themselves in violation.



• Diminished Role of Intent. Too often, Congress or the courts are persuaded to dilute the requirement of mens rea, or evil intent, as an element of criminal offenses, and to ignore it completely for "civil" penalties, even those having a fiercely punitive impact. People become strictly liable for complex and often incomprehensible rules, even if they were unaware that they were violating them.



• Greater Intrusiveness. The new regulatory regimes permeate every area of the economy and society, and few professionals, managers, entrepreneurs, or landowners can avoid them. The one group not much impacted so far is journalists, which may do much to explain why so little public attention is devoted to the trend.



• Diminished Constitutional Protections. Standards for what constitutes credible evidence are being lowered steadily and drastically. A person or firm involved in a regulatory dispute often cannot avoid self-incrimination, has little protection against arbitrary searches and seizures, and can make only limited use of lawyer-client privilege.



• Loss of Political Legitimacy. Political legitimacy is the sense among the people that its governors have the moral right to make the laws they make. It is the most important asset any government possesses. It is being dissipated by a stream of ill-considered, intrusive, and incompetent laws and regulations.

All these factors are combining to undermine time-honored principles of justice and freedom, and Congressional attention to this area is crucial. To help with the inquiry, I have brought along some material to add to the record you are developing.

The most important is a monograph entitled: The New 'Criminal' Classes: Legal Sanctions and Business Managers. This was published last year by the National Legal Center for the Public Interest, a distinguished institution located here in Washington, D.C. The NLCPI has graciously supplied me with copies to append to this statement. The work can also be downloaded from the NLCPI website, at http://www.nlcpi.org.

My recent book, Property Matters: How Property Rights Are Under Assault -- And Why You Should Care, published by the Free Press in 1997, discusses this trend toward the use of punitive sanctions, and the closely-related and equally important topic of political legitimacy. Information on the book is attached, and more is available from my web site, at http://www.regpolicy.com.

Finally, three magazine and newspaper articles on different aspects of this topic are attached:

• Computer Games (Reason, November 1997, p. 44), which analyzes the federal program to subsidize access to the Internet by schools and libraries, and the implications for these organizations of the criminal and civil penalties built into the program.



• Just What Crime Did Columbia/HCA Commit? (Wall Street Journal, August 20, 1997), which looks at the criminalization of health care rules, and draws a parallel to the experience of the Savings & Loan crisis.



• Slowing the Flow (Washington Times, August 23, 1997), which examines the effort to stamp out showerheads that deliver more than 2.2 gallons per minute and toilets that require more than 1.6 gallons per flush.

Thank you, Mr. Chairman. I would be happy to answer any questions