- The Washington Times - Sunday, March 19, 2006

When a gasoline spill and explosion killed three young persons in Washington state, officials announced a record penalty against a gas-pipeline company: $3 million to send the message that such tragedies “must never happen again.”

When nuclear labs across the country were found exposing workers to radiation and breaking other safety rules, assessments totaling $2.5 million were quickly ordered.

What happened next with these no-nonsense enforcement measures? Not much. The pipeline tab eventually was reduced by 92 percent, and the labs’ assessments were waived as soon as they were issued.

The amount of unpaid federal fines has risen sharply in the past decade. Individuals and corporations regularly avoid large penalties for wrongdoing — sometimes through negotiations, sometimes because companies go bankrupt, sometimes because of officials’ failure to keep close track of who owes what.

These are conclusions of an Associated Press examination of federal financial-penalty enforcement across the nation, which also found:

• The government currently is owed more than $35 billion in fines and other payments from criminals and in civil cases, according to Justice Department figures. This is almost five times the amount uncollected 10 years ago — and enough to cover the annual budget of the Department of Homeland Security. A decade ago, Congress mandated that fines be imposed regardless of defendants’ ability to pay, which has added tremendously to outstanding debt.

• In 2004, federal authorities ordered $7.8 billion in 98,985 fines, penalties and restitution demands in criminal and civil cases, but collected less than half of that.

• White-collar crime cases account for the largest amount of uncollected debt. In a study, Government Accountability Office (GAO) investigators found that just 7 percent of restitution in such cases is paid.

“Fines and orders to pay restitution are an important part of how we punish convicted criminals. When so little effort is made to collect that money, we allow convicted criminals to avoid punishment for their crimes, weaken our criminal justice system and ultimately deny justice to the victims of crimes,” said Sen. Byron L. Dorgan, North Dakota Democrat, who has pressed for closer scrutiny for years.

The AP filed Freedom of Information Act requests with a dozen federal agencies, seeking records on why and how they issue and collect administrative penalties and other assessments.

Although the government does collect billions each year in fines, penalties and restitution, success rates vary from agency to agency, region to region, case to case.

In many high-profile cases, fines are touted by authorities as proof that they are cracking down. Yet frequently those orders are quietly negotiated to just a fraction of their original amounts.

Documents provided to the AP by the Labor Department’s Employment Benefits Security Administration, whose job is to protect pension and welfare benefits, showed that $2,000 was the maximum amount paid on nearly a dozen penalties ranging from $86,500 to $180,000.

Why the reductions? Officials explained that compliance is the agency’s goal, and that the law allows penalties to be reduced when companies make amends. Violators who don’t comply risk being referred to the Treasury Department, which can collect by seizing federal benefits.

The Occupational Safety and Health Administration’s written policy explains to inspectors that they can reduce penalties by as much as 95 percent, “depending upon the employer’s ‘good faith,’ (25 percent) ‘size of business,’ (60 percent) and ‘history of previous violations.’ (10 percent)”

Federal law exempts the national nuclear laboratories from most financial liability, but the Energy Department has issued about $2.5 million in fines against Los Alamos, Livermore and Argonne national laboratories since 2000.

“This is kind of an exercise in absurdity,” said Greg Mello, who heads the Los Alamos Study Group, a nuclear-disarmament activist organization in Albuquerque, N.M.

Even so, the Energy Department includes the fines in its annual reports to Congress and often announces them in press releases.

Last year, Congress tightened the rules so that as nuclear-laboratory contracts are renewed, the fine waivers are eliminated. Eventually, DOE spokesman Jeff Sherwood said, nuclear labs will have to pay imposed fines.

The reason DOE issued fines it could not collect was to show what the problems were and how bad, he said: “A $1 million fine says something different than a $10,000 fine.”

When agencies can’t get debtors to pay, the Justice Department may get the task of collecting a penalty. But the process is decentralized. The collection legwork falls to the 93 U.S. Attorney’s Offices across the country.

Reviewing the adequacy of staffing was one of 14 recommendations made by GAO in 2001 to improve collection. A follow-up report two years ago still found “fragmented processes and lack of coordination.”

The Justice Department office overseeing U.S. attorneys said it has made strides toward better coordination.

The 1996 Victims Mandatory Restitution Act requires judges to order payments regardless of a defendant’s ability to pay. It’s no coincidence, says Natalie Collins of the U.S. Attorney’s Office in Las Vegas, that the uncollected debts have steeply increased since the law was passed.

Many people leave prison with a large debt they can’t pay, she said. “We can’t squeeze blood out of a turnip.”


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