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Saturday, November 20, 2004

Guess How Many Federal Corporate Criminal Offenses There Are?--UPDATED

Numbers Vikramditya S. Khanna of Boston University School of Law writes in the Spring issue of Regulation that "The recent spate of alleged corporate fraud has led to calls for new corporate crime legislation. Interestingly, there are already many such laws; before the passage of the Sarbanes-Oxley Act in 2002, some 300,000 federal corporate criminal offenses were already on the books. How did so much corporate crime legislation get enacted, given the lobbying strength of corporate interests?" The article, Politics and Corporate Crime Legislation, is available here. 300,000 corporate criminal offenses--simply amazing. 

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UPDATE: Professor Stuart Green in a comment to this post calls the 300,000 figure a likely "urban myth." This claim is supported by the site overcriminalized.com, which cites a 1998 ABA report identifying a mere 3,000 federal crimes in Appendix CJack Chin

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Comments

Corporate lobbying isn't monolithic. Established firms may lobby for regulations that disproportionately affect competitors or form a high barrier of entry to their market. Accounting firms might lobby for complex regulations that cause businesses to contract out more accounting work. Environmental-compliance firms may lobby for regulations that require businesses to buy their product, or use their services to get the compliance paperwork filled out.

In addition, anti-corporate demagoguery still has an effect, and many regulations serve several interests. For example, the regulations affecting automobile design are a mixture of genuine safety and environmental concern with anti-corporate posturing by congressmen from the most liberal districts, and also raise the barriers to entry. No new American auto manufacturers have been even temporarily successful since the 1920's except for "boutique" makers such as DeLorean and McClaren. Foreign auto companies have to re-design for the American market, but many of them have had the money (and sometimes the backing of their own governments) to overcome this obstacle.

Posted by: markm | Nov 10, 2004 12:36:22 PM

I agree with the comment; indeed, a firm might seek weak statutes to immunize against the possibility of strong statutes. But still--300K is a big number.

Posted by: Jack Chin | Nov 10, 2004 6:05:12 PM

The 300,000 figure cited by Khanna almost surely qualifies as an urban myth. As far as I can tell, the figure originally appeared in an article by John Coffee in the BU Law Review, where it was attributed to a criminal defense lawyer named Stanley Arkin, who had apparently thrown it out at a conference that Coffee attended. Coffee offered no explanation for how the figure was arrived at, and I think most scholars would agree that it is at best meaningless. There are simply too many unanswered methodological questions about what should count as an "offense." For example, do we count every provision of every statute that provides for criminal penalties, or every regulatory provision that is referenced by every such provision? No one seems prepared to sit down and actually do the hard (and, presumably, boring) work of sorting all this out, though I do recall having seen some publication from the Heritage Foundation, which has been on the warpath against so-called overcriminalization, which seemed headed in that direction (and, as I recall, their preliminary estimates were much much lower than 300,000).

Stuart Green

Posted by: stuart green | Nov 11, 2004 6:30:49 AM

Prof. John Baker of LSU recently prepared a report entitled "Measuring the Explosive Growth of Federal Crime Legislation," published by the Federalist Society.

http://www.fed-soc.org/Publications/practicegroupnewsletters/criminallaw/crimreportfinal.pdf

His count of federal crimes is conservatively estimated at 4,000 now. And he notes that he is only counting statutes, not regulations. The ABA did the same thing--statutes, not regs. If regs are included (and why shouldn't they be?) the estimates then range from 10,000 to the 300,000 number. There certainly are issues concerning methodology, which Baker carefully explains in his report. This is the latest research available. And that only involves a count of the federal rules, not state and local.

Posted by: Tim Lynch | Nov 22, 2004 9:26:32 AM

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