A leading business organization opened fire yesterday on a bill that would use stiff prison sentences and fines to deter corporate crimes imperiling life or health.

The bills "noble intent" is outweighed by such defects as a potential to shut down production lines "throughout the country for a plethora of reviews and inspections," the National Association of Manufacturers charged.

In addition, key words and phrases i the bill are unconstitutionally vague, NAM General Counsel Thomas J. Houser told a hearing of the House Judiciary Subcommittee on Crime. It's "The wrong vehicle," he testified.

The charges drew a swift counterattack from subcommittee Chairman John Conyers Jr. (D-Mich).), who contended that the NAM is nitpicking and conjuring up hypothetical horrors distant from real-world realities.

Rep. Henry J. Hyde R-Ill.) alleged that the bill exempts union officials to preclude opposition from organized labor.

Rejecting the allegation, Conyers said that he knows of no "recalcitrant union officials" who had caused large-scale death or injury by covering up product or work-place hazards.

Instead, he said, the bill was tailored specifically to prevent recurrences of major abuses found to have been knowingly caused by managers of large corporations, such as marketing millions of unsafe steel-belted radial tires, suppressing reports of deaths and injuries from prescription drugs, exposing thousands of asbestos workers to lung diseases and dumping poisonous industrial wastes in residential areas.

Among the NAM's 12,000 members firms are some whose conduct has been cited by the bill's supporters, including Firestone Tire & Rubber Co. and Smith Kline and French Laboratories, according to a subcommittee source.

The hearing was the subcommittee's sixth and last on the bill, which was introduced by Rep. George Miller (D-Calif.) and has 54 co-sponsors including Conyers. The measure is set for a mark-up next Tuesday. Whether the subcommittee will report it is uncertain.

The bill, which the Justice Department has helped to revise to overcome initial criticisms, creates potential criminal liability for businesses and persons with "management authority" and "signifcant responsibility" for the safety of a product, the work place or research or testing.

A business or manager who "discovers" a "serious concealed danger" in a product or business practice -- a danger of death of serious bodily injury recognizable by "a reasonable person" -- would be required to notify affected employes and any of eight federal regulatory agencies within 15 days.

A violation carries a maximum penalty for a manager of 5 years in prison and a $250,000 fine, and for a corporation of a $1 million fine.

NAM lawyer Houser testified that words and phrases such as "discovers" and "significant responsibility" violate the constitutional prohibition of vagueness in criminal laws. Jerris Leonard, the NAM's outside counsel and a former U.S. assistant attorney general, protested that the bill menaces the constitutional privilege against self-incrimination. Conyers disagreed.

After hearing the arguments, constitutional lawyer Louis Seidman of Georgetown University was asked by Steven G. Raikin, the subcommittee counsel, whether he saw anything unconstitutional in the bill. "Nothing" to which a "nonfrivolous" objection could be made, he replied.

Houser acknowledged that "rotten apples" exists in industry, but said that the bill proceeds from the "mistaken and faulty premise . . . that our corporations and their managers are hearless scofflaws whose behavior requires drastic measures to correct."