Signed as Law: North Dakota Reforms Asset Forfeiture, But Federal Loophole Remains

By: Mike Maharrey

BISMARCK, N.D. (May 9, 2019) – Last week, North Dakota Gov. Doug Burgum signed a bill to reform the state’s asset forfeiture laws and prohibit the state from taking a person’s property without a criminal conviction in most situations. But the new law leaves a loophole in place allowing police to circumvent stricter state laws by passing cases off to the feds.

A coalition of 12 Republicans, including Senate President Pro Tempore and Majority Caucus Leader David Hogue, introduced House Bill 1286 (HB1286) on Jan. 3. Under the new law, the state cannot proceed with asset forfeiture until the owner of the property has been convicted of or pled guilty to a criminal offense in most cases. HB1286 also raises the standard of proof necessary in forfeiture cases to “clear and convincing evidence.”

On April 26, the House approved the final version of HB1286 by a 55-37 vote. The Senate passed the bill 42-5. With Gov. Brugum’s signature, the law will go into effect Aug. 1.

HB1286 takes a step toward addressing the policing for profit motive inherent in the asset forfeiture process. In order for law enforcement agencies to access forfeiture proceeds, the city or county they operate in must create a forfeiture fund and establish an application process to accept and process applications from law enforcement agencies seeking an appropriation from the fund.

The new law also includes extensive reporting requirements.

According to the Institute for Justice, North Dakota has some of the worst asset forfeiture laws in the country. Law enforcement only needs to meet the lowest possible standard of proof—probable cause—to forfeit property. When property has been used for illegal activity without the owner’s knowledge, the burden falls upon owners to prove their innocence in order to recover their property. Police agencies can also keep up to 100% of forfeiture proceeds up to $200,000.

While HB1286 implements significant reforms, including the requirement of a criminal conviction, a House committee stripped important language from the bill that will render the state reforms largely ineffective if additional steps aren’t taken.

As originally introduced, HB1286 took a big step toward closing a loophole that allows state and local police to get around more strict state asset forfeiture laws in a vast majority of situations. This is particularly important in light of a policy directive issued in July 2017 by then-Attorney General Jeff Sessions for the Department of Justice (DOJ). Those provisions were removed.

FEDERAL LOOPHOLE

A federal program known as “Equitable Sharing” allows prosecutors to bypass more stringent state asset forfeiture laws by passing cases off to the federal government through a process known as adoption. The DOJ directive reiterates full support for the equitable sharing program, directs federal law enforcement agencies to aggressively utilize it, and sets the stage to expand it in the future.

Law enforcement agencies can circumvent more strict state forfeiture laws by claiming cases are federal in nature. Under these arrangements, state officials simply hand cases over to a federal agency, participate in the case, and then receive up to 80 percent of the proceeds. However, when states merely withdraw from participation, the federal directive loses its impact.

Until recently, California faced this situation. The state has some of the strongest state-level restrictions on civil asset forfeiture in the country, but state and local police were circumventing the state process by passing cases to the feds. According to a report by the Institute for Justice, Policing for Profit, California ranked as the worst offender of all states in the country between 2000 and 2013. In other words, California law enforcement was passing off a lot of cases to the feds and collecting the loot. The state closed the loophole in 2016.

The Judiciary committee stripped out the following language to close the loophole and withdraw North Dakota from the federal program from HB1286.

A law enforcement agency may not refer or initiate a transfer of property seized under state law to a federal agency by way of adoption or equitable sharing of seized property for the purpose of the property’s forfeiture under federal law. All proceeds received by a law enforcement agency from equitable sharing, adoption, or other transfer of seized property to a federal agency for the purpose of the property’s forfeiture must be added to the state school fund as provided under section 29 – 27 – 02.1.

Without this crucial provision, state and local police will be able to simply bypass the more restrictive state law and continue to cash in on asset forfeiture proceeds. In order for the reforms to have a significant practical effect, the North Dakota legislature needs to follow up and pass a law to close the loophole.

As the Tenth Amendment Center previously reported the federal government inserted itself into the asset forfeiture debate in California. The feds clearly want the policy to continue.

Why?

We can only guess. But perhaps the feds recognize paying state and local police agencies directly in cash for handling their enforcement would reveal their weakness. After all, the federal government would find it nearly impossible to prosecute its unconstitutional “War on Drugs” without state and local assistance. Asset forfeiture “equitable sharing” provides a pipeline the feds use to incentivize state and local police to serve as de facto arms of the federal government by funneling billions of dollars into their budgets.