Lungren Steers His Office to Business-Friendly Side : Attorney general: He defends moves that helped winemakers, B of A and others by citing economic impact.

SACRAMENTO — For Atty. Gen. Dan Lungren, the defining event of his first two years in office was the execution of double-murderer Robert Alton Harris.

Lungren does not gloat over Harris’ dawn gassing at San Quentin in April, but he and his aides return again and again to the image of the state’s top lawyer standing by at the prison through the night, fending off a series of last-minute appeals to see that California’s first execution in a quarter-century was carried out.

Midway through Lungren’s four-year term, no event has done more to put this bright, conservative and ambitious politician in the spotlight.

But, more quietly and in a myriad of ways, the state’s 29th attorney general has used his broad discretionary powers to transform the state Department of Justice into an institution more friendly to business and private property rights than it was under his Democratic predecessor, John K. Van de Kamp.

As the highest-ranking law enforcement officer in California, Lungren stands atop the Department of Justice, a $280-million-a-year bureaucracy with 3,700 employees. He is the people’s attorney, heading a group of more than 600 lawyers who handle most of the state’s criminal appeals, defend state laws against court challenge, represent agencies and initiate lawsuits on behalf of all Californians.

Much of the work of the department, which has 55,000 cases pending, is routine and would reach the same outcome no matter who sits in the attorney general’s office. But in a number of areas, Lungren, like other attorneys general before him, is putting his stamp on the office.

His most emphatic pledge has been to crack down on criminals and end the logjam on Death Row. Although he is hard-nosed in criminal law, he is not so hard-nosed in civil matters, where he has tilted the department toward business and development interests.

“We will vigorously enforce all the laws of our state, but we will not use the considerable power of our office to bash business and contribute to the flight of jobs out of California,” Lungren said in a speech last year.

While Lungren and his chief deputy, former Republican Assemblyman M. David Stirling, are open about the philosophy, they have been reluctant to volunteer specific examples.

But The Times has learned of a number of cases showing how the policy has been carried out.

In one example, Lungren ordered a $900,000 settlement in a case against the wine industry, though staff attorneys had recommended seeking $3 million. In another, Lungren agreed to drop a lawsuit against the Bank of America for its role in issuing government-guaranteed loans to a vocational school accused of defrauding its students.

In some cases, Lungren or Stirling have met with targets of state lawsuits without the deputies who worked on the cases--a practice that is within their authority, but breaks with precedent set by several predecessors.

The attorney general also has refused to represent state agencies in several court battles involving environmental protection or beach access--leaving the agencies to fend for themselves with in-house counsel or expensive outside attorneys.

In these and other matters, Lungren says that he was chosen by voters who expect him to exercise his judgment, and that includes worrying about the economic impact of his decisions.

Former Gov. George Deukmejian, who served as attorney general from 1979 to 1982, agrees.

“Each person who holds that office will set his own priorities,” said Deukmejian, a longtime Lungren ally. “And those priorities are based on what the attorney general said he was going to do . . . in the campaign.”

At times, keeping those campaign promises has opened up Lungren to criticism.

He promised to place a new emphasis on prosecuting public corruption cases. But when he pressed criminal conflict-of-interest charges against state Supt. of Public Instruction Bill Honig, he was roundly criticized by those sympathetic to the politically liberal educator. Honig, who called the prosecution “a conservative conspiracy,” was convicted last month on four counts for awarding contracts that benefited a nonprofit educational group headed by his wife.

Critics of the prosecution note that Lungren’s office dropped a criminal investigation of a fellow Republican, former Sen. William Campbell of Orange County. Department of Justice records show that Campbell used legislative staff and offices to help organize a nonprofit women’s conference, which hired his wife. Lungren has denied that politics played any part in these decisions; his chief deputy said it would not have been a violation of law for Campbell’s staff to work on the conference on state time.

Some of those within Lungren’s department complain that he has at times shown insensitivity to his role as the people’s attorney.

He has remained on the advisory board of the nonprofit Washington Legal Foundation, an aggressive advocate of private property rights that has sometimes battled in court with the state of California.

Late last year, Lungren signed a letter soliciting funds for the foundation from nonprofit groups in California that are regulated and audited by his office.

“I think it is inappropriate for the chief regulator of foundations to be personally fund-raising from foundations,” said Susan C. Silk, director of the San Francisco-based Columbia Foundation, one of at least a dozen California nonprofit groups to receive the letter.

Asked about the letter, Lungren said that he was “not sending out any solicitations.” He explained that he had approved the letter but had failed to check the mailing list.

“I’m sorry the legal foundation sent them to organizations that somehow were offended by it,” he said. “Maybe we should have been more careful than that.”

Others, including former Atty. Gen. Van de Kamp, fault Lungren for meetings that he and other department executives have held with targets of state litigation, but without the presence of the deputies responsible for the cases.

Lungren met with officers of the Hollywood Chamber of Commerce after the group had agreed to pay $220,000 to settle a potential civil suit charging that it had misappropriated $700,000 that was intended to maintain two Southern California landmarks, the Hollywood sign and the Walk of Fame.

Lungren said in a recent interview that the chamber’s new officers told him the group “would have to declare bankruptcy and go out of existence as a result of the terms of an agreement that the old board apparently had tentatively agreed to. . . . My business is not to put businesses out of business that are otherwise law-abiding and productive entities. “

As a result of Lungren’s meeting, the negotiations were reopened. Eventually, the suit was settled on terms more favorable to the chamber.

Chief Deputy Stirling confirmed that he and other top Lungren aides met with wine industry officials without the presence of negotiating deputies to discuss charges that winemakers had failed to warn consumers of the dangers of lead from foil bottle caps. Among those in attendance was Wine Institute President John De Luca.

The deputies had recommended seeking $3 million. But Lungren said in an interview that he questioned the reason for the multimillion-dollar figure and “the answer after you strip it down was that was what we think we can leverage them into.” He ordered the figure recalculated. The settlement was for $900,000.

On other occasions, Lungren and his top aides have dropped cases that deputies were ready to pursue.

In 1991, the attorney general’s consumer fraud unit sued the Bank of America, which had routinely made government-guaranteed loans to students at Wilshire Computer College, a now-defunct Los Angeles vocational school also named in the lawsuit. The suit charged that the bank had turned over its loan-making responsibilities to the school, which took the money but failed to deliver the promised training.

Had the bank been responsible for every defaulted loan, “we could be talking about conceivably millions of dollars,” Stirling said.

Elena Ackel, a member of the state Council for Private Postsecondary and Vocational Education, contended that Bank of America was liable under state law for Wilshire’s failures and ought to be held accountable. “If you have loans and all the students are defaulting, you know the school is no good,” she said.

Lungren defended the decision to drop the case, arguing that to pursue it would “discourage unnecessarily lenders from participating in a federal college loan program in the future.”

Lungren also exercised his discretion by refusing to represent state environmental agencies in a series of land use disputes.

The most contentious involved an attempt by the California Coastal Commission and State Lands Commission to establish public ownership of a sandy beach on the Bolinas Sandpit along the Marin County coast.

Homeowners from the Seadrift subdivision contend that the beach is theirs--by virtue of decisions by federal and state agencies going back to 1904. The commissions argued that the public’s right to the beach can be traced back “to when a Mexican land grant was first sought in the Bolinas region,” more than 140 years ago.

The U.S. Department of Interior in 1991 sided with the homeowners, but the state deputy attorney general on the case recommended an appeal to the federal courts.

Lungren overruled his deputy and refused to take the commissions’ case.

In a letter, Stirling explained that a lawsuit to claim title to the beach was “not good public policy. Most notably, (Lungren) believes that the state ought to protect the private property interest of its citizens rather than take them away.”

The Coastal Commission hired a private attorney at a cost of $200 an hour and in April filed suit in federal court.

“The decision to abandon a client in midstream like this is unprecedented,” said Peter Douglas, executive director of the Coastal Commission. “And I consider it a betrayal of the public trust.”

But Lungren is not the first attorney general to refuse to represent a state agency and he argues that he was elected to make just that sort of decision.

Democrat Van de Kamp recalled that he too turned down cases--refusing, for example, to defend a Department of Forestry plan to allow the harvesting of old-growth redwoods.

Although Lungren has provided ammunition to political opponents, he has at times astonished them as well. In recent months, he has stood side by side with environmentalists, joining in lawsuits to eliminate exposure to lead from dinner plates and kitchen faucets.

“You don’t need to set up a false dichotomy, that you’re either for the environment or for the consumer or in the pocket of business,” said communications director Jim Robinson, adding that it is possible to promote consumerism and the environment “without damaging the job climate.”

As attorney general, the 46-year-old Lungren is ideally positioned to run for governor, just as a number of his predecessors have done over the past 50 years. Three governors--Earl Warren, Edmund G. (Pat) Brown and Deukmejian--served first as attorney general.

It was Deukmejian who singled Lungren out from the political pack in 1987, nominating the Long Beach congressman to fill the vacancy left when Democratic state Treasurer Jesse M. Unruh died. But the state Senate rejected Lungren after a combative confirmation hearing in which Democrats attacked him for opposing the Equal Rights Amendment and reparations to Japanese-Americans forced into camps during World War II.

He began running for attorney general almost as soon as he lost the treasurer’s job. In 1990, he won a narrow victory over San Francisco’s Democratic district attorney, Arlo Smith.

Lungren denies rumors that he might take up the banner of party conservatives and run against Gov. Pete Wilson in 1994: “I don’t do that sort of thing. Look, I’ve been involved in this since I was 6 years old and I’ve seen kamikaze missions, and they don’t serve a single purpose.”

But over Lungren’s desk in his Sacramento office hangs a large photograph of the nation’s Capitol, and he does not rule out a run for the U.S. Senate one day.

In the meantime, he is content to remain attorney general, plans to run for reelection and has set himself a substantial agenda for the next several years. He wants the Department of Justice to become a leader in using mediation and arbitration as a cheaper, quicker way to settle civil violations than going to court.

He is preparing a series of legislative proposals to combat gangs and a rising tide of violent crime committed by juveniles. He has proposed trying 14- and 15-year-old murder suspects as adults.

And he says he has no regrets about the pro-business philosophy he has brought to the department and intends to continue it.