Our current legal system lacks adequate measures to recoup the government's direct costs caused by irresponsible business or individual actions. States should have the right to recover these costs out of profits generated from such actions. This new legislation would operate on established principles guiding implementation of existing tort and ill-gotten gains laws. However, it is targeted specifically towards recovering direct government costs. It does not pertain to estimated fiscal impact, proposed future spending, or costs incurred by entities or individuals outside government.

Specifically:

• Like existing US tort laws, this legislation could cover a wide range of activities that are legal, quasi-legal, and illegal. The only additional requirement to invoke this legislation would be the existence of government costs directly traceable to those activities, in excess of expected government expenses. (For example, routine maintenance of roads is an expected government expense; repair of damage to a specific road segment caused by overloaded vehicles is not an expected government expense. Under this legislation, the cost of those repairs could be recovered if it can be attributed to the actions of a specific entity or individual.)
• Like existing US ill-gotten gains laws, this legislation would follow the money after it leaves the possession of the entity or individual accused of wrong-doing. It is not necessary to demonstrate that individuals knew that their income was the result of irresponsible actions. However, the government must show that they benefitted substantially from those actions. (For example, this legislation might establish a minimum threshold of $50,000 in ill-gotten gains before an entity or individual can be pursued using this legislation.) 
• The following limitations are placed on what income can be recovered:
  • Amount recovered will NEVER exceed the amount originally received (including income derived from that amount) by the entity or individual accused of wrong-doing.
  • Amount recovered will NEVER exceed the amount of direct costs incurred by the government as a result of actions of the entity or individual accused of wrong-doing.
  • Amount recovered will generally be limited based on the proportion of the original amount that is attributed to wrong-doing. However, in situations where the costs to government FAR exceed the profits from wrong-doing, that proportion may  be adjusted in the government’s favor.

Example #1: The CEO of a local corporation presided over a 5-year-interval where that corporation engaged in deceptive accounting practices and underpaid for taxes. After their departure from the organization, the discrepancies were discovered and the corporation entered bankruptcy. In addition to unpaid taxes, state government held stock from that corporation that lost 95% compared to cost basis. The CEO’s performance-based bonuses, which they should not have received based on the true value of the company, are ill-gotten gains that the state can claim to recover part of these costs.

Example #2: A prominent media personality is found to be a major influence on a minor child who committed a hate crime that led to a man’s death. The judge determines that fully 1/3 of the media personality’s brand is based in various forms of hate speech, and about 1/10 of his content directly promotes violence. Based on these numbers, she concludes that 1/8 of his company’s value is attributable to actions that contributed to this hate crime (and others around the country). The media personality reduces his company to a tiny fraction of its former value by transferring assets to himself (personally), his parents, and another company he owns. 1/8 of those transferred assets are identified as ill-gotten gains that the government might claim to cover the costs of investigating and prosecuting the hate crime. 

Example 3: A corporation owns several factories that routinely violate clean-air regulations. However, the fine of $25,000 per infraction is far less than the cost of fixing the problem, especially since they are almost never caught. The corporation budgets $100,000 per year for paying these fines and continues business as usual. After a local child dies of asthma, parents whose children attend a nearby school organize and persuade a local news organization to cover the story. A state epidemiologist analyzes Medicaid data and finds that the state is paying $20 million/year in treatment costs for children with asthma. After considering a number of factors, the judge decides that $2 million/year of these costs can be blamed on the corporation’s factories, all of which is recoverable under the proposed legislation.

Note: The preceding examples are composites of familiar stories, and/or details have been changed to protect the not-so-innocent. 

CONCLUSION

While it is likely that government will only seek cost recovery under this legislation in extreme cases (such as the previous examples), this legislation will have an outsized impact on corporate behavior. The goal of this legislation is NOT to be punitive, but rather to make irresponsible parties liable for more of the natural consequences of their actions. For every case where government might actually recover costs, there are a hundred who will rethink their actions once threatened with real world consequences.

This petition is for the state of New Mexico. If you are from New Mexico, please sign! If you are from elsewhere, please consider writing your own speculative legislation. I don’t have all the details figured out, but I do believe that this can be done in ways that are both fair and just.