SPEAKERS CONTENTS INSERTS
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47–360 CC
1998
OVERSIGHT OF THE U.S. CUSTOMS SERVICE
HEARING
before the
SUBCOMMITTEE ON TRADE
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
MAY 15, 1997
Serial 105–18
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Printed for the use of the Committee on Ways and Means
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois
BILL THOMAS, California
E. CLAY SHAW, Jr., Florida
NANCY L. JOHNSON, Connecticut
JIM BUNNING, Kentucky
AMO HOUGHTON, New York
WALLY HERGER, California
JIM McCRERY, Louisiana
DAVE CAMP, Michigan
JIM RAMSTAD, Minnesota
JIM NUSSLE, Iowa
SAM JOHNSON, Texas
JENNIFER DUNN, Washington
MAC COLLINS, Georgia
ROB PORTMAN, Ohio
PHILIP S. ENGLISH, Pennsylvania
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
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WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
CHARLES B. RANGEL, New York
FORTNEY PETE STARK, California
ROBERT T. MATSUI, California
BARBARA B. KENNELLY, Connecticut
WILLIAM J. COYNE, Pennsylvania
SANDER M. LEVIN, Michigan
BENJAMIN L. CARDIN, Maryland
JIM McDERMOTT, Washington
GERALD D. KLECZKA, Wisconsin
JOHN LEWIS, Georgia
RICHARD E. NEAL, Massachusetts
MICHAEL R. McNULTY, New York
WILLIAM J. JEFFERSON, Louisiana
JOHN S. TANNER, Tennessee
XAVIER BECERRA, California
KAREN L. THURMAN, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
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Subcommittee on Trade
PHILIP M. CRANE, Illinois, Chairman
BILL THOMAS, California
E. CLAY SHAW, Jr., Florida
AMO HOUGHTON, New York
DAVE CAMP, Michigan
JIM RAMSTAD, Minnesota
JENNIFER DUNN, Washington
WALLY HERGER, California
JIM NUSSLE, Iowa
ROBERT T. MATSUI, California
CHARLES B. RANGEL, New York
RICHARD E. NEAL, Massachusetts
JIM McDERMOTT, Washington
MICHAEL R. McNULTY, New York
WILLIAM J. JEFFERSON, Louisiana
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined. The electronic version of the hearing record does not include materials which were not submitted in an electronic format. These materials are kept on file in the official Committee records.
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C O N T E N T S
Advisory of May 1, 1997, announcing the hearing
WITNESSES
U.S. Customs Service, Hon. George J. Weise, Commissioner
U.S. General Accounting Office, Norman J. Rabkin, Director, Administration of Justice Issues, General Government Division; accompanied by Walter Raheb, Los Angeles Office
U.S. General Accounting Office, Linda D. Koontz, Associate Director, Information Resources, Management/General Government Issues, Accounting and Information Management Division; accompanied by Mark Byrd, Senior Information Systems Analyst
Ambrose, Hon. Myles J., Ross & Hardies
American Association of Exporters and Importers, John Partilla
American Automobile Manufacturers Association, Jeffrey Bobeck
Border Trade Alliance, Susan Kohn Ross
Federal Law Enforcement Officers Association, Andrew R. Rakowsky
Industry Functional Advisory Committee I, Selig S. Merber
National Customs Brokers & Forwarders Association of America, Inc., Harold G. Brauner
Olympus America, Inc., John Partilla
United Parcel Service Airlines, and U.S. Transportation Coalition for an Effective U.S. Customs Service, Philip W. Hughes
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SUBMISSIONS FOR THE RECORD
American Frozen Food Institute, McLean, VA, Steven C. Anderson, letter
American Iron and Steel Institute, statement
Joint Industry Group, statement
National Council on International Trade Development, Jason Clawson, statement
National Treasury Employees Union, Robert M. Tobias, statement
Ramstad, Hon. Jim, a Representative in Congress from the State of Minnesota, statement
OVERSIGHT OF THE U.S. CUSTOMS SERVICE
THURSDAY, MAY 15, 1997
House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:05 p.m., in room B–318, Rayburn House Office Building, Hon. Philip Crane (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
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FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON TRADE
CONTACT: (202) 225–1721
FOR IMMEDIATE RELEASE
May 1, 1997
No. TR–6
Crane Announces Hearing on
Oversight of the U.S. Customs Service
Congressman Philip M. Crane (R–IL), Chairman, Subcommittee on Trade of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on oversight of the U.S. Customs Service. The hearing will take place on Thursday, May 15, 1997, in room B–318 Rayburn House Office Building, beginning at 2:00 p.m.
Oral testimony at this hearing will be from both invited and public witnesses. Any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee or for inclusion in the printed record of the hearing.
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BACKGROUND:
The Customs Modernization Act was enacted as part of the North American Free Trade Agreement implementing legislation in December 1993 (P.L. 103–182). Through passage of this Act, the Committee provided the Customs Service with the necessary tools to successfully redesign its processes for the 21st Century. Specifically, the Act allowed Customs to develop a fully-automated commercial environment, redesign and restructure its core business-related activities, and reevaluate the culture and work practices of its employees.
Pursuant to this legislation, the Customs Service announced a major reorganization and modernization plan in September 1994. The original goals stated by Customs for its reorganization effort were to make the agency more effective, improve management practices, and secure more stable sources of funding such as user fees. The plan itself included initiatives to concentrate services at ports of entry, restructure and reduce staffing at headquarters, eliminate regional and district offices, establish Customs Management Centers to manage field operations, and establish regional Strategic Trade Centers to target trade-enforcement efforts.
The Subcommittee held hearings on the progress of the Customs Service reorganization and modernization efforts in January 1995. Extensive legislative and oversight review by the Subcommittee eventually led to passage of the Miscellaneous Trade and Technical Corrections Act of 1996 (P.L. 104–295) , which was signed by the President on October 11, 1996. This Act made several important corrections to the Customs Modernization Act by improving Customs' ability to facilitate trade.
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On March 11, 1997, the Subcommittee held a hearing on the Budget Authorizations for fiscal years 1998 and 1999 for the U.S. Customs Service, as well as the Office of the U.S. Trade Representative, and the International Trade Commission. The Subcommittee received testimony from representatives from the business and trade community. Much of the testimony concerned the operations of the Customs Service.
Customs continues to work on the detailed regulatory and operational efforts required to implement the massive organizational change required by the Customs Modernization Act.
In announcing the hearing, Chairman Crane stated: ''I applaud Commissioner Weise's work in implementing the Customs Modernization Act so that Customs is prepared to address trade and enforcement issues in the coming century. This hearing will allow the Subcommittee to assess how well Customs has reallocated its resources. I am also interested in the status of the various regulatory packages which Customs has rewritten pursuant to the Customs Modernization Act. It is imperative that the Subcommittee work with Customs to reduce the burden of Customs regulations not only on legitimate imports, but also on our strong and growing export sector.''
FOCUS OF THE HEARING:
The hearing will provide both Customs and the trade community with an opportunity to identify for the Subcommittee the status, progress, and concerns related to the changes Customs has made pursuant to the Customs Modernization Act and the reorganization. Other areas of inquiry may include Customs Officers Pay Reform Act, user fees, and the allocation of inspectors, Special Agents, and other personnel resources. In addition, the Subcommittee is interested in Customs' role in interdicting illegal narcotics, as well as its anti-money laundering activities. Specifically, the Subcommittee is concerned about Customs methods for measuring the effectiveness of its efforts in the drug war.
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DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:
Requests to be heard at the hearing must be made by telephone to Traci Altman or Bradley Schreiber at (202) 225–1721 no later than the close of business, Wednesday, May 7, 1997. The telephone request should be followed by a formal written request to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. The staff of the Subcommittee on Trade will notify by telephone those scheduled to appear as soon as possible after the filing deadline. Any questions concerning a scheduled appearance should be directed to the Subcommittee on Trade staff at (202) 225–6649.
In view of the limited time available to hear witnesses, the Subcommittee may not be able to accommodate all requests to be heard. Those persons and organizations not scheduled for an oral appearance are encouraged to submit written statements for the record of the hearing. All persons requesting to be heard, whether they are scheduled for oral testimony or not, will be notified as soon as possible after the filing deadline.
Witnesses scheduled to present oral testimony are required to summarize briefly their written statements in no more than five minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full written statement of each witness will be included in the printed record, in accordance with House Rules.
In order to assure the most productive use of the limited amount of time available to question witnesses, all witnesses scheduled to appear before the Subcommittee are required to submit 200 copies of their prepared statement and a 3.5-inch diskette in WordPerfect or ASCII format, for review by Members prior to the hearing. Testimony should arrive at the Subcommittee on Trade office, room 1104 Longworth House Office Building, no later than Monday, May 12, 1997. Failure to do so may result in the witness being denied the opportunity to testify in person.
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WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:
Any person or organization wishing to submit a written statement for the printed record of the hearing should submit at least six (6) copies of their statement and a 3.5-inch diskette in WordPerfect or ASCII format, with their address and date of hearing noted, by the close of business, Thursday, May 29, 1997, to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Trade office, room 1104 Longworth House Office Building, at least one hour before the hearing begins.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.
1. All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages including attachments. At the same time written statements are submitted to the Committee, witnesses are now requested to submit their statements on a 3.5-inch diskette in WordPerfect or ASCII format.
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2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a topical outline or summary of the comments and recommendations in the full statement. This supplemental sheet will not be included in the printed record.
The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and the public during the course of a public hearing may be submitted in other forms.
Note: All Committee advisories and news releases are available on the World Wide Web at 'HTTP://WWW.HOUSE.GOV/WAYS_MEANS/'.
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The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 202–225–1721 or 202–226–3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.
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Chairman CRANE. The Subcommittee will come to order.
Welcome to the Trade Subcommittee's hearing on oversight of the U.S. Customs Service. The history of the Customs Service is closely intertwined with that of the Ways and Means Committee. While Customs revenue are no longer the primary source of revenues for our Nation, we rely on Customs to interdict illegal narcotics and enforce our trade laws at the border.
In keeping with the traditionally close relationship between the Committee and the Customs Service, we have worked with Commissioner Weise over the past several years on many of the same issues in the Customs area. First, we have sought to reduce the burden on American business and industry of the regulations being promulgated by the Customs Office of Rules and Regulations pursuant to the Customs Modernization Act.
One of best ways to reduce this regulatory burden is for Customs to computerize its import-export processes. Computerization will also improve Customs' ability to target and interdict fraudulent imports. We must get a handle on the problem of the transshipment of counterfeit products which threaten the health and safety of the American people, and we must protect America's children from drug smugglers by taking the profit out of their business.
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The Ways and Means Committee has already acted through the authorization process to increase the number of Customs special agents, particularly those dedicated to antimoney laundering activities. Protecting our children from the threat of drugs means properly staffing and compensating the men and women who protect our borders.
In 1993, the Trade Subcommittee helped pass the Customs Officer Pay Reform Act, which sought to eliminate longstanding waste and abuse of overtime. Yet it still provided Customs inspectors with the most generous overall compensation package of employees in the Federal Government. Unfortunately, the practical outcome of certain labor arbitration decisions governing the application of the act are unconscionable. For example, Customs inspectors may be paid premium pay and overtime pay for hours scheduled but not worked due to annual leave or sick leave. I firmly believe, as does the administration, that the law requires Customs inspectors to actually work for any premium pay earned. I also believe the Customs and National Treasury Employees Union should undertake a comprehensive review of the partnership agreement and share that information with this Subcommittee.
I would now like to recognize our distinguished Ranking Member, Mr. Matsui, for any statement he would like to make.
Mr. MATSUI. Thank you very much, Mr. Chairman.
I would like to join you in welcoming Commissioner Weise and other witnesses to the hearing on the oversight of the U.S. Customs Service. This will probably be the final appearance of Commissioner Weise before this Subcommittee. As we all know, Commissioner Weise has announced his retirement effective some time this summer.
As Chairman Archer, Chairman Crane, Ranking Member Rangel and I wrote in a recent letter to Mr. Weise, he has been one of the finest commissioners in the long history of the Customs Service. His leadership and professional integrity have set the standards for the Customs Service for years to come. After 25 years of public service, of which some was on this Ways and Means Committee's Trade Subcommittee, he can leave his official duties in the knowledge that he has earned the respect and admiration of this Committee and the public at large.
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Mr. Chairman, I would like to enter a copy of our letter to Commissioner Weise in the record of this hearing.
Chairman CRANE. Without objection.
Mr. MATSUI. Thank you.
[The information follows:]
[The official Committee record contains additional material here.]
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Mr. MATSUI. As we all know, the Customs Service and its over 18,000 employees perform a variety of tasks that are essential to the economic health of this country. Its diverse mission includes collecting duties, taxes and fees on imports, enforcing laws intended to prevent unfair trade practices, and protecting public health by interdicting narcotics and other hazardous goods before they enter into the country.
Customs is the source for trade statistics on imports used in monitoring and formulating trade and public policy, which is the primary responsibility of this Subcommittee. In recent years, much has been done both legislatively and administratively to prepare the Customs Service for the challenges of the 21st century. Most notably, the Congress passed the Customs Modernization Act as part of the North American Free Trade Agreement, NAFTA. This act was drafted by this Subcommittee.
Administratively, the Customs Service under Commissioner Weise's bold leadership has formulated and implemented a comprehensive reorganization plan. Most recently, Customs has taken new initiatives to improve its drug enforcement and antimoney laundering capacities. I look forward to hearing the testimony in this hearing of Commissioner Weise, and other witnesses, on these and other issues today.
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Mr. Chairman, I believe this hearing is important and timely of the Customs operations, and I look forward to working with you on the Subcommittee on the legislative matters and oversight recommendations that might result from this hearing. And again, I would like to thank Commissioner Weise for all his work over the years, 25 years of public service, and certainly we wish him well and congratulate him.
Chairman CRANE. Today, we will hear from a number of distinguished witnesses, but our first witness, of course, will be George, and George recently did announce that he is retiring at an early age after nearly two decades of service with the Federal Government. Your leadership on Customs is going to be sorely missed, and welcome back to the Subcommittee.
STATEMENT OF HON. GEORGE J. WEISE, COMMISSIONER, U.S. CUSTOMS SERVICE
Mr. WEISE. Thank you, Mr. Chairman, and I wish it were a real retirement. It is kind of a change of careers. It is an official retirement from the government's standpoint, but I am going to need another career before I can really retire.
Thank you so much for those kind words. Clearly, whenever I return to this room and return to appear before this distinguished Subcommittee, having spent a substantial portion of that 25 years on the other side of this dais, it always gives me a great sense of feeling at home, and I have learned so much from the Members of this Subcommittee and very much about the importance of public service and trying to do the best you can with the resources that you are given, to give the American people back what they deserve.
I know you have a number of witnesses today. I have a detailed statement that I would ask to be included for the record. I would like to make some brief remarks and as quickly as possible, get into a dialog and discussion with you and Members of the Subcommittee on issues that are of concern to you.
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Chairman CRANE. Without objection, so ordered.
Mr. WEISE. Thank you.
I guess I could say that I do sit before you having looked back at the last 25 years, but in particular the last 4 years, with a great sense of what the people of the Customs Service have been able to accomplish with the assistance and support all the way of this Subcommittee.
This Subcommittee, as you said, has had a long association with the Customs Service. Throughout my career I have seen that you have led by example, you have attempted to provide the tools necessary to get the job done and clear guidance on how we could better serve the American people. When I look back and see where we were 4 years ago and where we have come, I have a great deal of pride, not so much in my accomplishments, but of the fine men and women of Customs who have been able to work with the tools you have provided them through the Customs Modernization Act, which was absolutely essential.
But second, if you recall 4 years ago when I took this position, the Customs Service, in my judgment, was in need of tremendous restructuring. It had been more than 30 years since the last restructuring. We were so much distrusted in the Congress, not in this Subcommittee, but our annual appropriation bill forbade us not only from reorganizing and restructuring, but forbade us from spending one nickel of our appropriations on even studying whether we needed to reorganize.
Frankly, we have, with your help, been able to remove that impediment and restructured the Customs Service. We have eliminated district offices. We have reduced the size of our headquarters, we have tried to do everything in our power. We called it ''People, Processes and Partnership,'' a look at not only the way we are structured, but the way we do our work and tried to identify what our core process and core missions were and how we could work together in business community and the people who count on us to do our jobs better. I think if you look at what we were able to achieve in the course of this 4 years, you also would be proud of where we have come.
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There are witnesses that will appear later that have some concerns about the timeliness and whether certain things have come far enough fast enough. I think those are important issues for discussion, and I think that that is something that we do need to recommit ourselves to: to coming through on some additional provisions. But we have come a long, long way.
Another area that needs to be looked at in terms of what we have accomplished in the last 4 years is our own financial house. This was in such disarray that when we had our first audit in 1993 by the General Accounting Office, our books and records were in such bad shape that they couldn't even audit them. They basically gave us a disclaimer under the Chief Financial Officers Act. That means we can't even give you an opinion, the books are in such bad shape.
Now, that doesn't say much for the second largest revenue-generating agency in the government that requires others to have their books and records in fine order, that our books and records were in such bad shape that we couldn't be audited. We have come a long way.
Last year we achieved a qualified opinion, which is the next step to having an unqualified opinion, which means without qualification they can say that your records are in good shape. This year we achieved the unqualified opinion under the Chief Financial Officers Act. We have achieved a great deal in that area as well.
I would venture to say, Mr. Chairman, that in the proud 208-year history of this organization, the oldest organization in the whole Federal Government, if you take this 4-year period and stack it against any other 4-year period in that history you would see we have embarked on the most change and most positive, constructive change. We are not there yet. We are in the process of changing a culture as well as organizational charts. But we have laid a solid foundation.
The thing I am particularly proud of, even though we are going on through this period of change trying to improve the way we do business, are the results we have been able to achieve. We have not been getting a lot of additional dollars—the Vice President talks about making a government work better and cost less. I would venture to say if you look at the results we have achieved over the last 4 years we have an organization that today works better and costs less. Over the last 4 years, our budget has increased by 2 percent, and in real terms when you compare it to inflation, our base resources have been reduced by $100 million. But in that timeframe, in that 4 years, with the commercial responsibilities that we have, now for the first time in the history over the last 3 or 4 years we have a measurement system that can tell you, Mr. Chairman, what the compliance rate is for commercial transactions coming into this country. And we have improved over the last 2 years from a rate of about 80 percent to a rate in this past year of 82 percent. That leaves an 18-percent gap. But the most important figure, if you look at it in terms of revenue, we are today collecting 99 percent of the revenue that is owed the Government. There is a 1-percent revenue gap, and we have been able to achieve those improved enforcement results while at the same time having record seizures as far as narcotics are concerned.
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I have stated on many occasions both to the Congress and the public, there is no mission more important that we have to the American people than keeping drugs from crossing our borders. I am the parent of two teenage daughters, my background is in the commercial arena, but no mission has been more important in the last 4 years than keeping drugs out of this country.
We have not solved the drug problem in the United States. At Customs, through Operation Hard Line and Operation Gateway, seizures have increased each year, and last year we seized more than 1 million pounds of narcotics. That is good news and bad news. It is good news in that we are trying to do our job; the bad news is in how serious the problem is. And I am not going to sit here and pretend that we have accomplished everything we need to. But I do think we have laid the foundation for a successful future.
I also hope that as the Congress looks at balancing this budget in the next 6 years that they look at the challenges the Customs Service is facing. The workload is going up and up and up, and no matter how you measure, in terms of number of passengers, number of entries, number of people crossing the borders, or if you measure it in terms of the threat of narcotics, while our budget has remained relatively static, other organizations. For example, Immigration and Naturalization who works side by side with us, their budgets have grown. Ours has not kept pace.
We have tried to work as efficiently and effectively as we can. We have tried to streamline everything we can. We have tightened our belts and we have acted responsibly to put our resources where the threats are. And we have. Over the course of the last 4 years, the Southwest border has been a primary area of threat, as well as, Mr. Shaw knows, southeastern Florida. We have had a tremendous threat over many years. We have tightened our belts in many other areas.
The final comment I would make before turning it over to the Members for questions and answers, is that I am very frustrated by the media attacks that this organization has taken over the past several years and particularly the past several weeks. If you didn't have a chance to see the ''60 Minutes'' piece on the Customs Service, I will tell you I think that piece was terribly unfair. There was an allegation that relates to corruption back in 1990 that was fully investigated on three occasions, but the FBI came in and took a new look at it. Eighteen months before the grand jury, 80 witnesses were called, and at the conclusion of that grand jury no indictments were issued. I think that says something for the integrity of the Customs workforce. We take it seriously and pursue vigorously any instances of corruption.
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Second, the implication was given that we are more concerned about facilitating the movement of trucks across that border to the detriment of the law enforcement mission. In that piece it was alleged that a memorandum was written that asked for expedited treatment of a trucking company that, based on what our own intelligence analysis showed, had a connection to drug smugglers.
I want the Subcommittee to understand that the memorandum was a fabrication. That memorandum was never generated by the individual who allegedly sent it. It was never received by the people who allegedly received it, and we have done everything we could to make sure that trucking company is given the intense examination they deserve.
I would now be happy to answer any questions that you or any of the Members may have.
[The prepared statement follows:]
Statement of Hon. George J. Weise, Commissioner, U.S. Customs Service
Mr. Chairman and Members of the Committee, it is, as always, a pleasure to appear before this Committee to discuss the activities of the Customs Service. During the authorization hearing on March 11th, I had the opportunity to present a broad overview of the many challenges currently being faced by Customs and the strategies that are being used to meet those challenges. In my opening statement, and during our discussions, a number of important issues were touched on, including our number one operational priority: the interdiction of drugs and the disruption and dismantling of drug smuggling organizations. These and other important issues deserve further attention. I look forward to discussing some of them with you today.
Workload
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The U.S. Customs Service is responsible for the screening of all merchandise moving across our borders by commercial or noncommercial means. Last year, the Customs Service collected about $22 billion in revenue for the United States in the form of duties, taxes, and fees and seized over one million pounds of narcotics. It did this while processing over 16 million commercial import entries worth approximately $775 billion and over 440 million arriving travelers. It also took on an increased responsibility of screening passengers and cargo to prevent anti-terrorism attacks.
The Customs Service applied hundreds of laws and regulations concerning tariff and trade and performed the initial checks, processes, and enforcement functions for over 40 federal agencies. Customs performs these tasks by covering over 7,000 miles of land border and staffing over 300 ports of entry.
Customs will have to address increasing workload requirements as international trade and travel arriving and departing our land borders or entering through our airports and seaports grows. In FY 1997, it is estimated that Customs will process 17.2 million commercial import entries valued at approximately $790 billon and 372 million land border passenger arrivals, 71 million air passenger arrivals, and 8 million sea passenger arrivals.
Resource Allocation as a Result of the Reorganization
As you know, in October 1993, I called together a Customs Reorganization Study Team and asked its members to develop the best approach to enable Customs and its employees to make their maximum contribution to the Nation. Being fully aware that demands for service from its customers will continue to increase despite a tight fiscal climate, the study team sought ways to best use its resources.
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In September 1994, they produced a report, People, Processes, and Partnerships which recommended new management approaches and an organizational structure that will enable Customs to meet the challenges of the 21st Century as a more efficient, effective, and adaptable organization. The new management approaches included adopting a process management approach, which requires the identification of core processes, performance measures, and partnerships with customers to improve Customs operations. The new organizational structure would be built from the ground up, with a foundation based on the ports. Central to the plan for the new structure was the concept of reinvestment of the resources freed up by the restructuring of operations. After coordinating with Administration officials and key Congressional leaders, Customs began implementing these changes in late 1994. The organizational change was completed in September 1995, but the fundamental management changes will continue over a long period.
The goal to reduce Headquarters staffing by approximately one-third was also part of the reorganization strategy, and was based on the premise that Headquarters should be focused on policy formulation and oversight, and not deeply involved in day-to-day operational issues. The bulk of the Headquarters reduction will be completed by the end of FY 1997, with the last major component accomplished at the beginning of FY 1998.
Many of the resources freed up by this restructuring have been, and are being, reinvested at the ports and in priority areas such as strategic trade and information technology.
The Customs Modernization Act
The Mod Act promotes and encourages an atmosphere of open communication and cooperation between the U.S. Customs Service and the trade community. In a sense, the Mod Act stresses the significance of the Customs/Trade partnership, when it introduces the philosophies of ''informed compliance'' and ''shared responsibility.'' We no longer subscribe to the ''just do it'' approach. Instead, we have made it a practice to establish new partnership approaches for developing and changing regulations, processes and systems. These approaches emphasize LISTENING to our partners. We solicit input and we listen. To gather input, we conduct public meetings; we attend trade association meetings; and we make drafts of significant system, procedural and regulatory documents available for comment prior to formalizing them. In fact, the National Customs Automation Program (NCAP) of the Mod Act, mandates that for each electronic component, Customs must consult with its trade partners.
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The proposed drawback regulations published in the Federal Register this past January represent a major Customs/Trade partnership accomplishment. In a radical departure from the way Customs has traditionally worked with the trade, a team composed of Customs drawback experts, a representative from the Inspector General's Office at Treasury, 11 representatives from several major trade associations (AAEI, the NCBFAA, the API, and the NCITD), and a professional facilitator worked together over an extended period to develop regulations covering the most technical of Customs programs. During this developmental period, the team conducted more than 10 public seminars around the country presenting some 1250 members of the trade community with an opportunity to dialogue with the team. In addition, three drafts of the proposed regulations were made available to the public through Customs Automated Broker Interface and the Customs Electronic Bulletin Board. Copies were also sent out to interested persons upon request. Further, since 1992, Customs met 42 times with various groups representing drawback claimants, exporters, brokers, attorneys and consultants to explain and discuss its proposals.
In view of Customs extensive consultation with groups of interested persons, Customs published the Notice of Proposed Rulemaking (NPRM) on drawback on January 21, 1997, with a 60-day comment period. After a request for extension of the comment period by the AAEI, Customs granted an additional 30-days for the comment period. The comment period has now expired, but Customs received further requests for extension of the comment period from API, NCBFAA, and NCITD. Customs is now reviewing the comments. Clearly, the process of formulating regulatory packages with meaningful input from the trade takes time.
As of May 6, 1997, to implement provisions of the Mod Act, Customs has published 7 final rules and 1 interim rule in the Federal Register and currently has pending 5 NPRMs published in the Federal Register; 6 NPRMs in review at Customs or Treasury; and 4 draft NPRMs posted on Customs Electronic Bulletin Board. In addition, Customs has published seven notices in the Federal Register announcing various National Customs Automation Program tests.
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Automation
The General Accounting Office (GAO) May 1996 report on Customs modernization efforts raised a number of concerns regarding our efforts to redesign and replace the outdated Automated Commercial System (ACS) with a new, more sophisticated system called the Automated Commercial Environment (ACE). Customs has addressed the GAO's findings and feels confident in proceeding with the ACE project.
• Customs has established a management oversight structure that assigns clear accountability for Customs Modernization Act implementation and the development of ACE.
• Customs has awarded a contract for definition of a Customs-wide technical architecture that will produce, by June 1997, a comprehensive set of deliverables based on requirements from all Customs processes.
• Customs has established an Investment Review Board and is on schedule with producing an investment review process for use by the board beginning in July 1997.
• Customs is ensuring that the ACE project strictly conforms to the Customs Systems Development Life Cycle (SDLC) standard, including the production of SDLC required deliverables such as a security plan, completed in July 1996; a short-term project plan which was completed in April 1997; and a comprehensive ACE project plan to be completed by November 1997 and, after approval by senior Customs and Treasury management, made available to committees in February 1998.
We believe these actions not only respond to GAO's recommendations, but also demonstrate our continuing commitment to a productive, well-managed automation program in Customs. GAO's positive findings in their recent follow-up review of their May 1996 report confirm this commitment.
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The primary focus of the ACE project in FY 1997—and the first operational demonstration of ACE—will be implementation of the National Customs Automation Program (NCAP) prototype. Extensive preparatory work has been done at prototype field locations and with the likely trade participants, including the three major U.S. automobile companies. These companies have been partnering with Customs on a number of joint working groups to define prototype procedures. A Federal Register notice was published March 27, 1997, officially announcing the NCAP prototype, describing the requirements for participation, and seeking members of the trade community to participate in the initial test. In response, we have received applications from five major importers.
The prototype will include only a slice of the intended full set of ACE features and will involve a small subset of Customs locations and trade community entities. However, because this prototype will be fully operational (i.e., it will not require parallel entries in the current system) and will handle a relatively high volume of transactions at the involved ports, it will support a meaningful evaluation of the intended benefits of ACE and the underlying trade compliance process. It will allow Customs, Congress, and the trade community to evaluate, in a real-world setting, the potential benefits of ACE within the framework of Customs redesigned trade compliance process.
The NCAP prototype is critical to the future progress with ACE. Only with an operational system can we properly evaluate our development approach and the underlying trade compliance process concepts. Completing the prototype will also give us an excellent yardstick for accurately measuring the time and resources needed to deliver a set of ACE features. This will be invaluable for validating our project planning assumptions. Finally, and most importantly, completing the prototype in a timely fashion will demonstrate the progress toward implementing the Modernization Act which is so urgently desired by Congress and the trade community, as well as Customs.
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The hallmark of ACE is that it moves from a transaction-based approach to an account-based system founded on compliance measurement and predicated on reengineered ways of doing business. Companies cooperating with Customs achieve mutually beneficial outcomes, including raised compliance, minimized data requirements at time of release, and the ability to make payments on a periodic basis. As compliance increases, the cost to Customs and to trade will decrease. The benefits of this approach will include uniform treatment, shorter processing time, more efficient information collection and dissemination, and greater opportunities to fulfill our enforcement mission.
Labor-Management Relations
Just a few days before my last appearance here before this Committee, the GAO released its report on Customs partnership efforts with the National Treasury Employees Union (NTEU), ''Varied Reaction to the Labor-Management Partnership Concept'' (GAO/T–GGD–97–54). I have looked closely at the report and have found many constructive points which will receive close attention.
GAO's findings were generally supportive of our partnership efforts. Its one recommendation was to develop a formal plan for the evaluation of progress and improvements in organizational performance resulting from the labor-management partnership. Customs has taken numerous steps in the past to evaluate and monitor the effects of the partnership. However, as a result of the GAO findings Customs has begun, and will continue in the future, to pursue a more formal evaluation of partnership.
Another issue has been the payment of premium pay for non-work periods. The current Treasury-Postal Appropriation Act temporarily bars payment of Sunday, premium pay or night differential pay for non-work periods such as leave, for employees of the Customs Service and other agencies under the Treasury-Postal Act. We support this provision, and we support making it permanent for all Federal agencies.
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Drug Enforcement Efforts
Customs number one operational priority is the interdiction of drugs and the disruption and dismantling of drug smuggling organizations. As part of an overall narcotics strategy, Customs has developed four objectives, the purpose of which is to provide to Customs enforcement officers the tools and systems they need to improve their ability to interdict narcotics and to investigate smuggling and money laundering organizations.
Customs first objective is to develop, collect, analyze and disseminate actionable intelligence to all levels of federal, state, and local narcotics enforcement agencies. Customs has been at the forefront in developing more useful intelligence, especially as it relates to the Southwest border.
A second objective is to develop and provide information and training to trade and carrier communities to prevent the use of cargo containers and conveyances by smuggling organizations. Programs which are helping Customs meet this objective are the Business Anti-Smuggling Coalition (BASC), the Carrier Initiative Program, and the Land Border Carrier Initiative Program. The BASC is a business-led Customs-supported alliance created to eliminate the use of legitimate business shipments by narcotics traffickers to smuggle illicit drugs. The Carrier initiative programs encourage air, sea, and land border carriers to improve their security practices to prevent narcotics from being placed onboard their conveyances or smuggled in cargo.
Customs third narcotics strategy objective is the development and introduction of technologies to identify concealed smuggled narcotics. Customs recognizes that technology plays a significant role in our ability to remain effective at ports of entry and to thwart smuggling efforts between ports by aircraft and boats. Customs employs a wide range of technological tools to protect our borders, including new and emerging technologies, such as truck x-ray systems, license plate readers, and automated targeting systems.
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Customs fourth objective is the implementation of aggressive covert and overt narcotics investigative programs. Customs involvement in various multi-agency operations, such as ONDCP's High Intensity Drug Trafficking Areas (HIDTA) and the Department of Justice's Organized Crime Drug Enforcement Task Force (OCDETF), has helped us maximize our narcotics interdiction results. Customs is also increasing its investigative emphasis in staging and distribution cities. Choosing to emphasize investigations in these cities will add to our body of knowledge, allowing Customs to interdict more at the border based on prior information. This full circle approach is what we call the ''Investigative Bridge'' and it goes beyond border interdiction and capitalizes on the intelligence and information developed through investigations of smuggling organizations.
It is clear that Customs is making progress in its efforts to combat the illegal flow of drugs. In FY 1996, Customs seized or participated in the seizure of a record 1,000,000 pounds of drugs. This total represents approximately 80% of the heroin, 70% of the cocaine, and 65% of the marijuanca seized or discovered by all Federal law enforcement agencies.
As a result of Operation Hard Line, narcotics seizures on the Southwest border increased 29 percent by total number of incidents (6,956 seizures) and 24 percent by total weight (545,922 pounds of marijuana, 33,308 pounds of cocaine, and 459 pounds of heroin) when compared to FY 1995 totals. The total weight of narcotics seized in commercial cargo on the U.S.-Mexico border in FY 1996 increased 153 percent (56 seizures totaling 39,741 pounds) over FY 1995. Operation Hard Line also checked the dangerous trend of ''port running,'' in which narcotics-laden vehicles were recklessly crashing through Customs checkpoints in order to enter the U.S. without inspection, posing great danger to border officers and innocent civilians.
Following the success of Operation Hard Line on the Southwest border, Customs initiated Operation Gateway to achieve a complete and unified securing of Puerto Rico, the U.S. Virgin Islands, and their surrounding waters and airspace from narcotic smugglers. The Puerto Rico area, according to Customs intelligence reports, has the highest rate of non-commercial maritime and airdrop smuggling activity of any Customs area. Operation Gateway is a cooperative plan that commits a sizable investment of funds, personnel, and equipment by Customs, with support from the Government of Puerto Rico. It is part of Customs overall plan to secure the southern tier of the U.S., from San Juan to San Diego. Since the initiation of Operation Gateway, Customs narcotic enforcement activities in Puerto Rico have increased dramatically. In comparing March 1 through the end of December 1996, to the same nine months in 1995, cocaine seizures have risen 44 percent.
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Measuring Drug Enforcement Success
Customs recognizes the difficulty in quantifying the effect of its enforcement activities. Traditionally, we have relied on seizures to tell the story. But year-to-year seizure statistics alone are an imperfect measure of Customs performance in countering the inflow of narcotics into the U.S.
If, for example, Customs were able to harden the ports of entry to make it virtually impossible to smuggle through a port of entry, our seizure numbers would go down to zero. Based on a traditional measure of success, it could appear that Customs was performing miserably, while in fact it was having its greatest success. Seizure statistics will continue to be an imperfect measure until such time as we can accurately estimate the total amount of narcotics being smuggled into the country.
For our trade and passenger processing operations, Customs has developed estimates of ''compliance,'' that is, statistical projections of the total number of imports or arriving passengers that are in compliance (or, conversely, out of compliance) with the law. These estimates are based on large random samples of imports and passengers. They provide an objective measure of how our outreach, education and enforcement activities together move the trade and traveling community into compliance with the law.
In contrast, the incidence of narcotics smuggling is not predictable or sufficiently frequent to permit the use of random sampling to estimate the total number of possible narcotics smuggling incidents. Customs is working with the Office of National Drug Control Policy to identify different measurement approaches to the interdiction of narcotics and the disruption and dismantling of narcotics smuggling organizations. ONDCP has expressed interest in exploring ways to show that Customs efforts, in such operations as Hard Line and Gateway, are causing displacement in smuggling efforts.
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Customs is also exploring the development of measures that can provide an overall picture of its ''impact'' on smuggling organizations. Conceptually, this means combining intelligence feedback from all agencies, with seizure data, displacement data (air, marine, and at ports of entry), investigative data (narcotics and related money laundering), and other law enforcement agency assessments.
Since 1982, Customs Air Program has been using an ''Air Threat Index'' to gauge its effectiveness in deterring the use of general aviation aircraft for smuggling drugs across the border. This index, which was designed by Stanford Research Institute, is a composite measure of various indicators of general aviation smuggling activity. Annually, these indicators are tallied, weighted according to their reliability in indicating general aviation smuggling activity, and compared to the baseline 1982 level.
As you can see we are looking at a number of alternatives to more effectively measure enforcement effectiveness. We look forward to resolving the measurement issue through further consultations on our strategic plan required by the Results Act. These consultations, begun last year, with Congress, other federal agencies, and interested parties need to result in a set of organizational measures that are acceptable to the Congress, the Administration, and to external parties interested in the Customs Service's enforcement performance.
Anti-Money Laundering Activities
While the interdiction of drugs and the disruption and dismantling of drug smuggling organizations remains our highest priority, Customs also focuses on the most significant international criminal organizations whose corrupt influence impacts global trade, economic and financial systems. Our efforts are not limited to drug-related money laundering but the financial proceeds of all crime.
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Customs has implemented an aggressive strategy to combat money laundering. Customs money laundering investigations yielded $258 million in currency seizures in FY 1996. Customs also made the largest cash seizure to date at the U.S. border—$15 million in Miami, Florida.
Through our strategy, we will continue to enhance our asset identification and forfeiture capabilities with advanced training and the use of more sophisticated computer software for analytical purposes. Customs will also continue to develop information through interaction and training with foreign law enforcement personnel, prosecutors, judges, and legislators through domestic and international anti-money laundering awareness seminars. Finally, Customs will proceed to develop information on international money laundering organizations by participating in long-term advisor programs and cross-border reporting and information exchange programs pertaining to the movement of monetary instruments. Again, the focus will be on detecting the movement of all illicit proceeds, not just narcotic proceeds.
In addition, Customs is currently working with the Financial Crimes Enforcement Network on a regulatory initiative to make foreign bank drafts reportable. This would curtail a frequently used money laundering technique and help investigators trace criminal proceeds that have been reinvested or repatriated back to the U.S.
This concludes my statement for the record. Thank you again for this opportunity to appear before the Committee. Mr. Chairman, we would be happy to answer any questions you may have.
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Chairman CRANE. Thank you very much, George.
Let me ask first about the National Treasury Employees Union's recommendations that the overtime cap be raised from $25,000 to $30,000. What are your thoughts on that?
Mr. WEISE. Mr. Chairman, as you know, this Subcommittee worked for quite a long time in putting together the Customs Officers Pay Reform Amendment, COPRA, legislation that allows for the funding of the Customs inspectors' overtime. An awful lot of work went into that and we have had limited experience. It has only been in effect 2 years now.
I believe that if given the opportunity to work, it is a very equitable program. We ought to give it an opportunity to work, and then look at the whole program before we go making individual changes. Obviously, the inspectors who work side-by-side with the Immigration and Naturalization Service, INS, inspectors are concerned about parity and know the INS inspectors have a $30,000 overtime cap. They feel they are getting discriminate treatment. But the INS inspectors do not have the same benefits of the COPRA bill, and I think we ought to be concerned about parity and equity between the inspectors. I am proud of the work the Customs inspectors do.
But my response is we oughtn't take a piecemeal approach. If we want to look at the payment of inspectors, we ought to look at the overtime cap in a comprehensive way, at the whole program.
Chairman CRANE. How about the issue that I touched upon in my opening statement, relating to Customs employees that are on annual leave or sick leave being eligible for overtime pay? Do you think Congress should do something about that?
Mr. WEISE. Mr. Chairman, I don't believe that any individual ought to be paid a premium pay for not working. I think that is a basic premise. As much as I support the workers in the Customs Service, I don't support that.
Chairman CRANE. Mr. Matsui.
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Mr. MATSUI. Thank you, Mr. Chairman.
George, you have issued, what, six or seven regulations on the Customs Modernization Act. Could you tell me when the implementation of all those will occur, and then, second, whether the importers have any concerns and what kind of concerns they may have about each of those six or seven—what is it, seven?
Mr. WEISE. What I would like to do is supply for the record where we stand with respect to each element of the Modernization Act and speak in more general terms, if I may.
I share your frustration and the frustration of the business community. When I took this position 4 years ago, I wanted everything to be finished within the 4 years before I left. I have been frustrated that it has taken us a little longer, but I want to give the Subcommittee some of the perspective as to some of the reasons that it has taken us longer than expected.
First of all, having served in the capacity I did sitting behind the Members of this respected Subcommittee, one of the things I recall is the business community coming in under prior administrations, talking to us about how often the Customs Service seemed to move too quickly, too hastily, implementing new systems, particularly in the automation arena, that didn't have compatibility with the domestic companies' systems. So to one extent we have perhaps erred on the opposite side.
We have, with respect to all the provisions of the Modernization Act, reached out with a true partnership request to the business community that would have to live with these provisions, to make sure we were taking their needs into account. As a matter of fact, before we issue a proposed regulation of rulemaking, we are putting out on an informal basis a draft that is seeking input so we can take that input into account before we actually move to implementation.
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The second thing that has complicated and delayed some of our moving forward as swiftly as I would like is that, as I indicated before, we have been completely redesigning the basic processes of how we do our work, and we are doing that again in close consultation and partnership with the business community. In doing so, it, for example, has slowed up our progress in implementing the ACE, the automated commercial environment, because we had the old, automated commercial system, which basically automated a manual system. What we want to make sure is when we get ACE into effect, we are redesigning a system from the ground up and moving to more of an account-based system than a transaction-based system. We need to have that developed and designed before we can automate it. We are designing it together. So this is taking longer than we would have liked.
As I said before, if you compare this 4 years of change to any other 4 years, you will see it is rather dramatic. We have changed to the point where one of my senior managers described it as trying to change a tire on an automobile going 60 miles an hour, and we had to consolidate to a certain degree.
There is only so much change one can handle at once. I think we have laid the foundation and we are going to see with this schedule that I will provide to you that we are more likely to get modernization implemented.
[The following was subsequently received:]
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Mr. MATSUI. Thank you.
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I have no further questions.
Chairman CRANE. Mr. Shaw.
Mr. SHAW. Thank you. You looked good sitting behind the Subcommittee and look even better where you are.
I congratulate you on your position and we are certainly glad to have had you there as long as we have.
I want to talk about several issues. One, as I understand it, and I am in total agreement with you about the funding level for Customs, and I do know that your resources are spread thin and I hope that is something we will address. As you know, in south Florida, I have great concern about the loss of some of our marine facilities for Customs, and I understand that is being taken care of and we will have them back to the water.
Also, I am going to ask some questions in the area of pleasure boating and switch to the problems we have in some of our ports down there.
For a number of years now, there has been virtually no Customs inspection of boats returning from the Caribbean into south Florida. That perhaps is true from other parts of the country. What do you see that we can do about that, because as I understand it, from talking to some of your people in the field, that the boaters are sort of getting the feeling there is no sense in even calling in to tell them you are back because they never called in to tell you they were leaving? And that seems, it is sort of a shrug of the shoulder and doesn't seem to accomplish much but saying we are back. What do you say?
Mr. WEISE. There is no question that what you have identified is a tremendous challenge for us.
I recall in 1993, the first year I was Commissioner, during the first budget cycle, I was facing a prospect that people within the administration—this was an OMB process initially—but we had a real fight on our hands in the Congress as well basically we were suggesting the complete elimination of not only our marine program, getting rid of all of our boats, but getting rid of our air program as well. The reason was our seizures in recent years had not been what they had been, because we had been successful in shutting down that area of smuggling. We, in effect, became a victim of our success. We considered it a success at the end of that budget cycle that we were able to maintain only a 25-percent reduction in our air program but we took a 50-percent reduction in our marine program. We went from about 150 to 75 boats.
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One of the things, as I said, is the fear once you take the boats out of the water, the threat is going to recur. I know you are seeing it in your part of the country, in Puerto Rico, in California as well as we have tightened San Diego and the land border. We are seeing more boats come around us, in Brownsville, Texas, too, and the Gulf. We are trying to get more dollars and more boats in the water, but we need to work smarter than just having boats out there trying to randomly pick up smugglers. We need to work more closely with the DEA and others and try to get the best intelligence we can.
I hate to say this on the public record, but I don't know how we can ever have the kind of resources in this environment that really deal with the sheer volume of pleasure boaters we have in an effective way, but we have to have enough of a presence to be a deterrence, to give people a long pause before they attempt to smuggle. We have to catch enough of them to discourage that type of smuggling.
Mr. SHAW. I would submit that we are not at that level.
Mr. WEISE. I agree with you.
Mr. SHAW. And I think we need to go and actually have some check-in requirement at the ports around the country, and always do some intelligence over in the island to see who is there and see if they do report back in. And if there is some random check-in as to what boats are in Bimini or Nassau and they have—somebody receives a letter that says, I hear you are back, why didn't you call us, that might give us some teeth.
I also heard, and I am not going to affirm the validity of the source, but I understand we are going to start doing that same thing with airplanes coming into this country. Is there any thought to——
Mr. WEISE. I think you may be referring to what we have on the northern border, where the risk is significantly less than it is on the southern border. We have a telephonic reporting program on noncommercial aircraft. It is basically in a prototype status. It has been in effect a little under a year and the experience has been good.
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Because the history has been in the prior year before we implemented that, my numbers may be a bit off, but it approximated only 300,000 or 400,000 arrivals and found only 6 instances of wrongdoing. Of those six, only two related to smuggling of narcotics. They were more technical violations.
We face this challenge on the southern border and at other parts of the country. Our resources are not going up, so we have to constantly investigate where we can get the best return for those resources. With the northern border and the threat being rather low we have looked for ways we can create efficiencies there and invest those resources in other areas of the country where the threat is higher.
Mr. SHAW. Well, that seems to make a certain amount of sense, but isn't it true that the importation of heroin is coming in heavily across the Canadian border?
Mr. WEISE. I guess I would quarrel a little bit about whether I would describe it as heavily, but most of the threat on that border is drugs heading north rather than south.
Mr. SHAW. Canada is having a problem with us?
Mr. WEISE. Indeed, there are some problems there.
Mr. SHAW. All right. I want to talk to you now and if I could move into the area of what is going on in some of our ports. I understand that the term of art to use is internal conspiracy to smuggle. And this is about people who work at the ports at various levels. The amount of drugs coming in to the Port of Miami and Port of Everglades is escalating and is a terrible problem.
We have looked into the background and records and the Customs has done a sample at my request of just picking 50 Miami longshoremen. Out of the 50, 36 of them have arrest records. Of these 36 persons, they have had a total of 213 arrests, including 68 drug arrests.
At the Port of Everglades, a sample of 36 longshoremen, 19 had arrest records. Of these 19 persons, 73 arrests including 14 drug arrests. And these are serious.
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Let me tell you, give you one of the subjects from Miami. Arrested for robbery, assault and battery, carrying a concealed weapon, possession of a firearm by a convicted felon, aggravated assault, possession of heroin with intent to distribute, possession of cocaine with intent to sell, possession of heroin with intent to sell, grand theft, petty theft, uttering a forged instrument, forgery of a U.S. Treasury check, possession of cocaine, simple battery, aggravated battery, petty theft. This is one person. I don't see how he has had enough time in his life to have done that.
I have got a list, one of them from Port Everglades in Fort Lauderdale, arrested for arm robbery, assault with intent to commit murder, breaking and entering, disorderly conduct, shoplifting, burglary, dealing with stolen property, possession of cocaine, of course sale of cocaine, and also a case of domestic violence.
Now, I understand in New York that there is a licensing procedure that goes through that actually looks at the background of these people. Are you familiar with that and can you enlighten the Subcommittee on the problem that Customs has with the internal cooperation?
I know from talking to some of your people in south Florida that although you have surveillance cameras within the port, it is easy to stack up freight or containers to block the view long enough for the grab to be made of the illegal contraband coming into the country.
What can you tell us about background checks and things that might help us down in south Florida deal with this? And also enlighten us to arrest backgrounds, felony backgrounds of dock workers throughout the country. I don't think this is just a Florida problem.
Mr. WEISE. Again, you have hit on an extremely serious problem, particularly in your part of the country. We are finding a much higher percentage than not of the smuggling attempts that we are able to successfully apprehend. There are internal conspiracies which means we have to get there and get there quickly. Because the way the internal conspiracies work, often the narcotics are put on the shipment, unbeknownst to the legitimate shippers, and taken off by the individuals, the kinds of individuals you have alluded to, before the merchandise actually leaves the docks.
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We have a number of procedures to put in place like making sure the inspectors are not waiting for the luggage to come actually into the terminal, but make sure our people are at plane side and go up into the cargo immediately upon arrival of the plane.
Certainly, there is no question that we have tried hard in our discussions with the airport authority and the airlines to encourage them to do more background checks of the employees. We have what I believe is a very successful program where the airlines have worked with us to ensure that they are minimizing the risk——
Mr. SHAW. As I recall, you grabbed a couple of planes and got their attention?
Mr. WEISE. Yes, and soon after that we got their cooperation.
I am not really aware of the licensing program that you alluded to in New York, but I would certainly be more than happy to work with you and the Subcommittee. We need to find a solution to this. It is a serious problem that needs to be addressed.
Mr. SHAW. The licensing provision, as it was given to me by my staff, it says the port of New Jersey and New York, the New York Waterfront Commission licenses dock workers. The commission was established in 1953 in order to break the Cosa Nostra's stranglehold on the New York and New Jersey harbor.
Many of the Mafia controlled dock workers who were excluded from working on docks after the establishment of the commission. A lot of them traveled south to Florida, and I think perhaps that is a problem that we need to investigate down in our area.
I would suggest, too, that all of the ports that find that they have this problem, you certainly should be doing background checks of people who are in such a position that they can really, almost with absolute safety, go in and grab contraband and just disappear with it before your guys even get in.
Mr. WEISE. Absolutely. We would very much appreciate your assistance in helping to convince some of the other players in this game to work with us, and if we could do something legislatively——
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Mr. SHAW. Mr. Chairman, there is a rather extensive investigative article in the Miami Herald to this and I would ask unanimous consent——
Chairman CRANE. Without objection.
Mr. SHAW [continuing]. To place that in the record of this hearing.
[The information follows:]
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Chairman CRANE. We want to wish you the best in your new life and we appreciate the opportunity we have had to work with you both on the Subcommittee and in your present capacity, and bon voyage.
With that, the Subcommittee will stand in recess until we finish voting. I think we have about 7 minutes left.
[Brief recess.]
Chairman CRANE. The Subcommittee will come back to order.
We want to welcome our next witness, Myles Ambrose, former Commissioner of the U.S. Customs Service.
Welcome, Myles.
STATEMENT OF HON. MYLES J. AMBROSE, ROSS & HARDIES (FORMER COMMISSIONER, U.S. CUSTOMS SERVICE)
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Mr. AMBROSE. Thank you very much, Mr. Chairman. I will summarize my prepared statement. I think it has been furnished to the Subcommittee.
As the former Commissioner of Customs, I am especially pleased to appear before you. As a former Treasury and Justice official, and practicing lawyer, I have had the unique opportunity to observe the work of the Customs Service. It should be noted and clearly stated on the record that despite some recent adverse and unfair publicity, the Service has never been in better hands than those of George Weise. Not only those of us who deal with the Customs Service will miss him, but so will the Nation to which he has devoted 25 years of his life. The appointment of his successor will be a most difficult task.
We have heard much recently about Customs and narcotics, the Mexican border and, indeed, the Mexican Government in its role in stemming the flow of heroin from Mexico. It has required the attention of both Presidents. It has been the subject of much attention by Congress, the press, and the private sector.
I have over the past 40 years been deeply involved in Mexican-American bilateral efforts to increase and improve and reduce the influx of narcotics. My initial efforts in 1959, with former Congressman James Roosevelt, was cochairing a series of bilateral meetings between Mexico and United States officials. These efforts were followed by many meetings over the years, too numerous to enumerate.
All these efforts resulted in only promises to improve cooperation between the two countries, to improve enforcement, and to address the heart of the problem, corruption. Yet we have had few results. The extent of corruption in Mexico is mind-boggling. The profits and sums of money available to traffickers is almost infinite. Unfortunately, the demand for drugs in this country is insatiable.
We need a new approach, one that takes these factors into account and is based on full knowledge of all facets of the problem. The solution must take cognizance of limitations of the government agencies, the complexity of border operations, and the necessity for involvement of the private sector.
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Let me state what I think can and should be done. We need to establish standards by which both the United States and Mexican law enforcement efforts can be objectively measured. We also need to establish procedures that shippers must follow in order to reduce the opportunities for drug smuggling. This will enable us to manage resources and reduce corruption.
We can only succeed if business and government act in partnership. Business must be given incentives to assist government efforts to address the drug problem. In this area of just-in-time inventory, the carrot for business is expedited Customs clearance. This privilege should only be earned by companies that implement the procedures that reduce the possibilities for drug smuggling.
This expedited clearance plan will require careful monitoring on both sides of the border. After all, a substantial portion of the cross-border traffic is from one company to its branch in the other country. Mexican exporters who seek a form of expedited clearance must also subscribe to and implement safeguards which must be rigorously enforced. Both countries should monitor these operations. Mexican exporters who do not have approved established procedures in place must be required to have their goods inspected by Mexican Customs officials with joint U.S. participation prior to crossing the border.
Procedures should also be required to establish advanced information about shipments thereby permitting prescreening for inspection. It will require substantial compliance analysis.
We should also be considering other available technologies such as giant x-ray equipment. With prescreening, we can be much more selective about when and where to employ these devices. With today's volume of trade, the use of risk analysis is absolutely essential.
We should demand a memorandum of understanding with the Mexicans addressing the specific standards expected of the two countries' law enforcement efforts and the procedural safeguards required. If Mexico is serious about getting at this problem, here is a measurable way of judging their cooperation and law enforcement performance. It forces companies on both sides of the border to adopt procedures that reduce the risk of abuse by drug smugglers. It enables the Customs administration to narrow their focus of inspection to high-risk shipments.
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The governments must also have a considerable amount of prior intelligence available so that interdiction efforts can be directed to the most likely areas of exposure. Intelligence gathering should be a primary focus of DEA agents working jointly where necessary with Customs agents and of course the Mexicans. Such overlapping jurisdiction will help reduce the corruption problem. Both countries need more resources to handle both the commercial trade and the narcotics interdiction efforts.
Nothing that I have said is particularly new, but implementation will require resolve and determination. We have all considered various aspects of these proposals at various times, but due to political or financial constraints, we have never implemented such a coordinated plan. Now is the time to do so. We can no longer just pour money into joint enforcement efforts and receive little in return.
Congress and the administration may wish to review our entire border enforcement mechanism. In the reorganization of narcotics enforcement creating the Drug Enforcement Administration in 1973, we also recommended that there be one border control agency under the Customs umbrella. It may be time to revisit this concept.
Now, a few other points in closing. Phil Hughes of UPS will be testifying for the Transportation Coalition and I highly endorse his remarks. Customs has not moved as quickly as it should have to implement the Mod Act. After 3 1/2 years we are still waiting for the raised dollar limit informal entry processing. Other important issues that have not been addressed include manifesting of letters, documents, and the $20 duty waiver for de minimis shipments. Customs recordkeeping requirements must also be finely tuned and tailored to the particular party and type of shipment.
The regulatory audit process is still much too slow and burdensome. The ruling process must be improved and expedited in order to be useful.
Last but not least, the administration should move quickly to fill the enormous void being left by George Weise's departure. We need someone devoted to improving our narcotic interdiction efforts but who is also thoroughly familiar with the complexities of international trade. The next Commissioner must recognize the necessity for a joint partnership with the business community for law enforcement and commercial reasons. When properly done, Customs will be able to apply its resources to the problem areas more effectively.
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Thank you for giving me the opportunity to appear before you. As always, it is an honor and pleasure, and I will be glad to answer any questions that you might have.
[The prepared statement follows:]
Statement of Hon. Myles J. Ambrose, Ross & Hardies (Former Commissioner, U.S. Customs)
Mr. Chairman, Members of the Committee:
As a former Commissioner of Customs, I am especially pleased to appear before you. As a former Treasury and Justice official and prosecutor, and as a practicing lawyer for the past 25 years, I have had the unique opportunity to observe firsthand the work of this extraordinary agency, the United States Customs Service. It should also be noted here and clearly stated on the record, that despite some recent adverse and unfair publicity, the Service has never been in better hands than those of George Weise. Not only those of us who deal with the Customs Service will miss him but so will the nation to which he devoted 25 years of his life. The appointment of his successor will be a most difficult task about which I'll say more later. As the Chairman and Mr. Rangel know, I have somewhat of a personal interest in this matter. Despite this, I believe I can be reasonably objective because of my long association and knowledge of the needs of this agency.
We have heard much recently about Customs and narcotics, the Mexican border and indeed the Mexican Government and its role in stemming the flood of cocaine and heroin from Mexico. It has required the attention of our President and theirs and certainly it has been the subject of much attention by Congress, the press and certainly by those in the private sector.
I have over the past 40 years been deeply involved in Mexican-American bilateral efforts to increase and improve enforcement and reduce the flow of narcotics from that country to ours. My initial efforts in 1959, with former Congressman James Roosevelt, was co-chairing a series of bilateral meetings between Mexican and U.S. officials. These efforts were followed by many meetings over the years—too numerous to enumerate.
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All these efforts resulted in only promises—to improve cooperation between the two countries, to improve enforcement and to address the heart of the problem—corruption. Yet, we have had few results. The extent of corruption in Mexico is mind-boggling—the profits and sums of money available to traffickers are almost infinite. Unfortunately, the demand for drugs in this country is insatiable.
We need a new approach—one that takes these factors into account and one that is based on full knowledge of all facets of the problem. The solution must take cognizance of the limitations of the governmental agencies involved, the enormous complexity of border operations and the necessity for absolute involvement of all segments of the private sector.
Let me briefly state what I think can and should be done.
We need to establish standards by which both U.S. and Mexican law enforcement efforts can be objectively measured. We also need to establish procedures that shippers must follow in order to reduce the opportunities for drug smuggling. This will enable us to manage resources to reduce the potential for corruption.
We can only succeed if business and government act in partnership. But how will we involve business? Business must be given incentives to assist governmental efforts to address the drug problem. In this era of just-in-time inventory, the carrot for business is expedited customs clearance. This privilege can only be earned by companies that implement procedures that reduce the possibilities for drug smuggling and assist governmental efforts. This expedited clearance plan will require careful monitoring of the companies receiving the benefits. It should also be applied on both sides of the border. After all, a substantial portion of the cross-border traffic is from one company to its branch in the other country. Mexican exporters who seek a form of expedited clearance must also subscribe to and implement procedural safeguards which must be vigorously enforced and continually audited. Both countries should jointly monitor these operations. Mexican exporters who do not have approved established procedures in place should be required to have their goods inspected by Mexican customs officials with joint U.S. participation prior to crossing the border.
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Procedures should also be established to require, where possible, advance information about shipments, thereby permitting prescreening for inspection. It will require substantial compliance analysis. We also should be considering other available technology such as giant x-ray equipment. When you have a prescreening program, you can be much more selective about when and where to employ these devices. With today's volume of trade, the use of risk analysis is absolutely essential to effective enforcement. There must be swift and certain punishment for violators.
We should demand a memorandum of understanding with the Mexicans addressing the specific standards expected of the two countries' law enforcement efforts and the procedural safeguards required of the countries' companies. If Mexico is serious about getting at this problem, here is a measurable way of judging their cooperation and law enforcement performance. It also forces companies on both sides of the border to adopt procedures that reduce the risk of abuse by drug smugglers. This will enable the respective customs administrations to narrow their focus of inspection on high risk shipments, which is absolutely necessary given the enormity of cross-border traffic. Again, this plan can only be effective when the participating companies are carefully monitored by established audit procedures.
The governments must also have a considerable amount of prior intelligence available so that interdiction efforts can be directed to the most likely areas of exposure. Intelligence gathering should be a primary focus of Drug Enforcement Administration agents in Mexico working jointly, where necessary, with U.S. Customs agents and, of course, the Mexican officials. Such overlapping jurisdiction will help reduce (unfortunately—not necessarily resolve) the corruption problem. Both countries need more resources to handle both the commercial trade and narcotics interdiction efforts. It will require the full support and partnership of the private sector on both sides of the border.
Nothing that I have said is particularly new but implementation will require resolve and determination. We have all considered various aspects of these proposals at various times but due to political or financial constraints, we have never implemented such a coordinated plan. Now is the time to do so. We can no longer just pour money into joint enforcement efforts and receive little in return.
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Congress and the Administration may wish to review our entire border enforcement mechanism. In the reorganization of narcotics enforcement creating the Drug Enforcement Administration in 1973, we also recommended that there be one border control agency under the Customs umbrella. It may be time to revisit this concept.
Now a few other points in closing. Phil Hughes of UPS will be testifying for the Transportation Coalition, and I heartily endorse his remarks. Customs has not proceeded as quickly as it should have to implement the Mod Act. For example, after 3 1/2 years we are still waiting for the raised dollar limit informal entry processing. This would be an enormous benefit to both commerce and government. Other simple but important provisions that have not yet been addressed include summary manifesting of letters and documents and the $20 duty waiver for de minimis shipments. Customs recordkeeping must also be fine tuned and tailored to the particular party, the type of shipment and take into account automation and electronic storage.
The regulatory audit process is still much too slow and burdensome. It must be improved. The ruling process must be improved and expedited in order to be useful. I understand that Assistant Commissioner Seidel outlined proposals to you in March. Hopefully, they can be adopted quickly.
Last, but certainly not least, the Administration should move quickly to fill the enormous void being left by George Weise's departure. We need someone devoted to improving our narcotics interdiction efforts but who is also thoroughly familiar with the complexities of international trade. The next Commissioner must also recognize the necessity for a joint partnership with the business community for both law enforcement and commercial reasons. When this is properly done, Customs will be able to apply its resources to the problem areas more effectively.
Thank you for giving me this opportunity to appear before you. As always, it is an honor and a pleasure. I will be glad to answer any questions you might have.
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—————
Chairman CRANE. Thank you so much, Myles.
You touched upon that Customs regulatory audit process. How would you improve and expedite it?
Mr. AMBROSE. Well, the same way I have recommended in the past, they improve on the criminal investigators. Set time limits on reports to the supervisors, whether it should be done by regulation between the agency or administrative procedures, but you can't let them go on forever.
And supervisors have to have responsibilities. A report, a preliminary audit report should be set out, say, 30 or 45 days after the commencement of the audit. Forty-five days after that there should be an analysis of where they are going and so forth. So there are standards that have to be met and, unfortunately, that is not the case. We are in the audit now for a client. I think we are in the fifth year of an audit. That makes no sense.
Chairman CRANE. Something I meant to ask George and maybe you can tell me about, do you know anything about the strategies and discussions of interdicting small aircraft that are taking money out of the country involved in the drug trafficking?
Mr. AMBROSE. With all due deference, yes, I know something about it, but 20 years ago, not now.
Chairman CRANE. I was just wondering what the dollar figures were.
Mr. AMBROSE. I wouldn't want to comment on it at this point.
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Chairman CRANE. Is that money divided between Customs and the General Treasury, the money that is seized by Customs?
Mr. AMBROSE. It goes into the General Treasury.
Chairman CRANE. All of it?
Mr. AMBROSE. All of it, unless it has changed.
Mr. SHAW. Would the Chairman yield on that?
Chairman CRANE. Sure.
Mr. SHAW. I heard you mention that a few minutes ago to George. I think that under the RICO, that a lot of police departments, allow you money to stay with the department, and I think this might be a very nice incentive for Customs and it might also be a source of some very badly needed resources to beef up the—I would suggest it is something we might want to look into.
Chairman CRANE. Well, that thought crossed my mind, and I was flying out the door when I was kidding George about putting it all inside Customs' revenues, including, possibly, special bonuses for those participants in the Customs Service who make the apprehensions.
Mr. AMBROSE. I am sure the Customs Service would enjoy that suggestion.
Chairman CRANE. Well, I will happily yield to you, Clay.
Mr. SHAW. Thank you, Mr. Chairman.
I would like to question you following up on the question I had with the Commissioner, and that is in your experience as the Executive Director of Waterfront in New York Harbor, I made reference to some of the screening that was going on up there and licensing. Could you tell me a little bit about how that works——
Mr. AMBROSE. Well, I haven't looked at that in a few years. It is a contact between the State of New York and New Jersey. It licenses companies, as such. They must meet certain standards of character, integrity, financial ability, and so forth. Then it licenses checkers.
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Checkers are the ones responsible for ascertaining the validity of the cargoes and registers longshoremen. Checkers who have felony convictions cannot be checkers; it is as simple as that. Longshoremen, if they can demonstrate the fact that they have cleaned up their act, in effect, can be registered as longshoremen. It has had remarkable success.
As you know, I don't think New York has been used as a major entrance point for narcotics in 30 years, obviously. I mean, obviously, some comes through but it doesn't come through in any degree, and the waterfront is pretty well controlled.
Now, the airports, at one point there was an attempt by the New York legislature to extend this to the airports but it went down the drain. I do not know what the current status is. I would suggest if you are having that kind of a problem, the people you mentioned before in that criminal record department could never work on the New York waterfront.
Mr. SHAW. Yes, they shouldn't work in Florida, either.
Mr. AMBROSE. I don't doubt it.
Mr. SHAW. Was this done by the legislature?
Mr. AMBROSE. It was passed by both legislatures and had to be approved by Congress.
Mr. SHAW. We wouldn't have that problem in Florida, not by State contact.
Mr. AMBROSE. You could do it by legislative fiat.
Mr. SHAW. I wonder if it could be done at the local level, by whomever runs the port?
Mr. AMBROSE. I guess it could. Virtually every aspect of this licensing program has been challenged and I think three cases went to the Supreme Court of the United States when I was Director, and I don't think there are any prohibitions left that you would have to worry about, given the type of situation that was there. I don't know who owns Port Everglades, for example.
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Mr. SHAW. Broward County does.
Mr. AMBROSE. Well, then I think Broward County could implement a system.
Chairman CRANE. Mr. Neal.
Mr. NEAL. Mr. Ambrose, I thought in your comments that you framed the dilemma pretty well, even in one instance when inadvertently you mentioned drug demand and spoke of the limits of government action. When we talk about interdiction, it seems to me we miss the aspect of demand here in the United States.
What kind of incentives do you think we might provide to businesspeople to do a better job in assisting us?
Mr. AMBROSE. You mean to reduce demand?
Mr. NEAL. Well, certainly to reduce supply, but if you want to offer something on demand I would entertain that as well.
Mr. AMBROSE. It has always been a conundrum. You don't have users without the supply of narcotics; you don't have the expansion of the narcotic-using population without substantial narcotics. We have never, to my knowledge, come up with a panacea for restricting the demand of narcotics. It is mostly a family situation, it is mostly the way children are raised, and so forth.
I do think, however, that business can be very much involved in the interdiction effort, which is what I have suggested, and we have lots of small programs that are starting.
I am suggesting that the program that I put in here about a mandated program from the President of the United States right on down where certain standards under a memorandum has to be matched or have to be met so we can say to the Mexicans, you no longer can give us all this boloney about all the work you have been doing when we know damned well you are not, and we have known they have not for so many years now that we ought to stop it and stop listening to pious platitudes and do something.
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Mr. NEAL. Do you think that ought to be a reasonable demand in free trade discussions?
Mr. AMBROSE. You are asking for a political question and I will give you a political answer, yes.
Mr. NEAL. Those of us who opposed NAFTA, part of the opposition that we offered is that somehow the Mexicans were not taking our argument very seriously. Mr. Rangel has done a great job over many years of that issue of drug interdiction and demand as well.
Mr. AMBROSE. I know he has been Chairman of the Committee, and Congressman Ben Gilman.
First of all, I am not opposed to NAFTA. I think it was a good step forward, but be that as it may, I still think that the idea of them meeting objective standards to stop the flow of narcotics, to do something about stopping corruption within their own society and their own government, can be done and can be one of our demands—just as we are demanding with the Chinese on human rights.
Our DEA would suggest that about 70 percent of illicit drug trafficking that occurs in America comes through Mexico. I talked to a former DEA official this morning and he thinks it is going to 90 percent. Mexico is now the prime source of heroin. Heroin is shooting up again as it did in the early sixties, and we have a lot to do that we are not doing.
Chairman CRANE. Thank you.
Mr. SHAW. Mr. Chairman, could I ask one thing. This Mexico thing really fascinates me. I have seen in visiting other countries and discussing with several administrations, not just this administration, it is my opinion that one of the biggest problems we have in dealing with these countries that are supplying the narcotics that are used as transshipment areas into the United States is our own State Department. You go to these countries and everybody seems to be—wants to keep everybody else happy—and nobody is hitting on those hard issues that you are talking about, and that is that we want performance, we demand performance. And I think that it is time to take off the gloves and it sounds from your remarks that you are pretty much in agreement with me. There has to be performance standards that are met if you want normalized relations, particularly favored relations as we have NAFTA.
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I also supported NAFTA but I have begun to have second thoughts, but that is neither here nor there.
Mr. AMBROSE. I tend to agree. This is an awful conundrum.
Let me say, when I was commissioner at Customs, they never threw out any red carpets to welcome me to the State Department.
Chairman CRANE. Thank you very much, Myles.
I would now like to introduce our next panel of witnesses from the U.S. General Accounting Office, the first being Norm Rabkin, the Director of the GAO, and Linda Koontz, Associate Director of the Information Resources Management Division. In the interest of time, I would ask that you try and keep your oral testimony to 5 minutes, but we will include all printed matter in the statements into the record.
STATEMENT OF NORMAN J. RABKIN, DIRECTOR, ADMINISTRATION OF JUSTICE ISSUES, GENERAL GOVERNMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY WALTER RAHEB, LOS ANGELES OFFICE
Mr. RABKIN. Thank you, Mr. Chairman. With me on my right is Walter Raheb from our Los Angeles office who has assisted me in carrying out a lot of work we have done for this Subcommittee on the Customs Service.
I am pleased to be here this afternoon to discuss work we have done for the Subcommittee addressing Customs' drug interdiction efforts, labor-management partnership concepts, and issues related to inspectional overtime. My testimony is based primarily on products we have issued on each of these subjects since 1991.
Our September 1996 report on Customs' drug interdiction efforts identify and describe the key elements, resources, costs, and performance measures of Customs' national drug interdiction program. It also focused on the drug activities at the investigative offices and selected
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ports in the Miami and San Diego areas.
Among other things, we pointed out that Customs had about 11,000 inspectors, special agents, and other staff involved in its drug interdiction program, that its drug interdiction and investigations budget has averaged about $575 million a year since fiscal year 1990, that its Operation Hard Line was a special effort to address drug smuggling first along the Southwest border and then the whole southern tier of the country, and we pointed out that Customs relied on traditional measures such as the number of seizures and number of arrests to gauge the success of its program, and it was trying to develop some nontraditional measures to more appropriately reflect the success that it was having.
Our report also discussed the challenges that Customs was facing in its drug interdiction mission. For example, we pointed out that Customs' major challenge was to carry out its drug interdiction and trade enforcement missions while facilitating the flow of persons and cargo across the border.
In March 1997 testimony before this Subcommittee, we discussed labor-management issues within Customs, as you recall. In June 1994 Customs and the National Treasury Employees Union entered into a partnership agreement that established 19 goals, set up a National Partnership Council, and stated that the union will participate in agency meetings that affect the workforce.
To assess how this concept was being implemented, we conducted work at headquarters, five Customs management centers, 11 ports of entry around the country, NTEU's national office, and seven local union chapters. Most of Customs' managers and union chapter presidents we interviewed characterized their relationship under the partnership concept as better, while first-line supervisors' views were more evenly distributed between much better and much worse.
Customs managers and supervisors as well as union representatives provided similar comments about the advantages of the partnership concept, citing faster problem resolution, improved communications, and mutual involvement in decisions. However, comments on the disadvantages of the partnership concept revealed no clearly shared views. For example, managers and supervisors generally stated that they felt all issues must be bargained with the union before any action could be taken, and union officials generally indicated that managers wanted to choose when they included the union in decisions and when they did not.
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Customs didn't have any formal plans to evaluate the impact of this partnership concept on its mission, and we concluded that since partnership was about 3 years old at that time, it was appropriate for Customs to start plans to more formally evaluate it.
On the subject of inspectional overtime, in 1991, we reported that overtime pay to Customs inspectors had increased from about $57 million in fiscal year 1985 to about $103 million in fiscal year 1990, and we pointed out one cause of this growth was Customs' focus on ensuring that inspectors did not exceed the $25,000 pay cap that was instituted by Congress in 1983, and Customs' disregard of the individual overtime assignments that build to the cap. We pointed out that many Customs inspectors were receiving overtime payments for work they did not perform because of the way the system was designed.
Customs' overtime system was based on conditions existing in 1911, when the Act was originally passed. Then, it was not typical for ports to operate outside their regular hours, especially on Sundays and holidays, and we recommended that legislation be amended so the overtime pay would more directly be linked to the actual hours worked.
In 1993, the Customs Officers Pay Reform amendments was Congress' response to our recommendations. They were intended to more closely match earnings to hours worked. However, the Treasury Inspector General reported in September 1996 that although COPRA reduced direct spending associated with overtime pay, it caused a significant increase in the costs associated with night differential pay in fiscal years 1995 and 1996.
Congress dealt with that problem by including restrictive language in Customs' appropriations for fiscal year 1997, and the administration has introduced similar language in the budget request for fiscal year 1998.
Mr. Chairman, this completes my statement, and I will be happy to answer questions at your leisure.
[The prepared statement follows:]
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Statement of Norman J. Rabkin, Director, Administration of Justice Issues, General Government Division, U.S. General Accounting Office
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today at this Customs oversight hearing to discuss work we have done for this Subcommittee addressing Customs' drug interdiction efforts, labor-management partnership concept, and issues related to inspectional overtime. Our testimony is based primarily on products we have issued on each of these subjects since 1991.
Created in 1789, the U.S. Customs Service is one of the federal government's oldest agencies. Although its original mission was to collect revenue, Customs' mission has expanded to include ensuring that all goods and persons entering and exiting the United States do so in accordance with all U.S. laws and regulations. Moreover, a major goal of Customs is to prevent the smuggling of drugs into the country by creating an effective drug interdiction, intelligence, and investigation capability that disrupts and dismantles smuggling organizations.
As of January 1997, Customs performed its mission with a workforce of about 19,500 personnel at its headquarters, 20 Customs Management Centers, 20 Special Agent-in-Charge (SAC) offices, and 301 ports of entry around the country. Customs collects revenues in excess of $23 billion annually while processing the estimated 14 million import entries and 450 million people who enter the country each year.
Drug Interdiction
In September 1996, we issued a report to this Subcommittee on the drug interdiction efforts of the Customs Service.(see footnote 1) As one of the more than 50 federal agencies involved in the War on Drugs, Customs is responsible for stopping the flow of illegal drugs across the nation's borders. In addition to routine inspections to search passengers, cargo, and conveyances for illegal drugs moving through U.S. ports, Customs' drug interdiction program includes investigations and other activities unique to specific ports.
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Our report identified and described the key elements, resources, costs, and performance measures of Customs' national drug interdiction program, as well as those of its investigative offices and selected ports in the Miami and San Diego areas.
Customs has two key organizational elements in its drug interdiction program. First, the Office of Field Operations has over 6,600 inspectors and 527 canine enforcement officers who perform inspections at the 301 air, land, and sea ports around the country. Inspectors use an array of technology in their search for drugs, such as an X-ray system for trucks and trailers, X-ray machines for containerized cargo, and fiber-optic scopes to examine gas tanks and other enclosed spaces. Inspectors also target persons, cargo, and conveyances for examination using manifest reviews and databases such as the Treasury Enforcement Communications System, which contains information on suspected smugglers.
Second, the Office of Investigations has about 2,500 special agents, about half of whom are authorized to react to and investigate drug seizures at ports and develop cases that implicate drug smuggling operations. Investigations also is responsible for about 1,100 personnel in aviation, marine, and intelligence units, which support the drug interdiction mission. The aviation unit supports foreign interdiction operations, interdicts and apprehends air smugglers, and supports other Customs and federal, state, and local law enforcement efforts. Marine units interdict, investigate, and apprehend violators that smuggle drugs into the United States via commercial and pleasure vessels. To assist in performing these missions, the aviation and marine units have 78 vessels, 77 airplanes, and 39 helicopters. The intelligence unit supports Customs' management and all field elements; this involves developing assessments of drug smuggling threats for various parts of the country. For example, threat assessments of the Southwest border led, in part, to the Customs Commissioner's support for creating a major national initiative, Operation Hard Line,(see footnote 2) for the Southwest border.
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Customs reported to the Office of National Drug Control Policy that its combined budget for drug interdiction and investigations averaged about $575 million for fiscal years 1990 to 1996. In fiscal year 1995, its drug interdiction budget was about 38 percent and its drug investigations budget was about 3 percent of the federal drug control budget.
Customs has traditionally measured the output from its drug interdiction effort by the resulting number of seizures, arrests, indictments, and convictions. For example, in fiscal year 1995, Customs reported about 2,200 cocaine seizures, about 900 heroin seizures, and about 10,000 marijuana seizures—these seizures accounted for over 50 percent of all drugs seized by federal agencies. It also reported participating in the seizure of an additional 13 percent of the total drugs seized.
These traditional measures, however, track activity, not outcome or effectiveness. Customs has sought to develop nontraditional measures for use in assessing the effectiveness of its drug strategy initiative. For example, Customs is testing a program designed to estimate the number of drug smugglers entering the ports, thus providing it with a baseline from which to measure how effective its inspectors have been at targeting drug smugglers at the ports. At the time of our report, the program was implemented at major air and land border ports.
Our September 1996 report also described drug interdiction activities at major ports in the Miami and San Diego areas. It provided information on the ports, estimates of the resources Customs had invested in drug interdiction and investigation activities there, and traditional measures of its success. In addition, we described a special cargo entry program at the Otay Mesa, California cargo port. The program, called Line Release, was designed to expedite the release and tracking of low-risk, high-volume shipments. Under the Line Release program, Customs is to prescreen manufacturers, importers, brokers, and shippers in an attempt to ensure they are low risk for drug smuggling; Line Release participants are required to pass five intensive examinations and meet a minimum requirement of 50 shipments per year. Although the program has been criticized for allowing trucks to enter the United States from Mexico without inspection, our work showed that vehicles participating in the Line Release program were subject to the same special enforcement operations as non-Line Release vehicles, and were inspected more frequently through these operations than were non-Line Release vehicles.
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Finally, our report discussed the challenges Customs was facing in its drug interdiction mission. First, we pointed out that Customs' major challenge was to effectively carry out its drug interdiction and trade enforcement missions while facilitating the flow of persons and cargo across the borders. Customs has to perform these missions despite continuous and extensive threats from drug smugglers along the border.
Second, because its financial information systems are not designed to account for costs by mission component, Customs has to estimate the amount it is spending for drug interdiction overall. This reduces Customs' ability to determine whether allocation of additional resources at specific ports or in a specific region has produced commensurate benefits. Customs officials told us that they were developing mission-and performance-based budgets, in accordance with Department of the Treasury directives, that would enable them to determine with greater reliability the costs of drug interdiction activities throughout Customs.
Third, Customs—like other law enforcement agencies engaged in the fight against drug smuggling—has attempted to develop performance measures. Traditional output measures do not allow officials to gauge the effectiveness of drug interdiction activities. Even the new, nontraditional measures being developed may not allow Customs to assess, over time, whether increased efforts are producing better outcomes.
Labor-Management Partnership Concept
In Ma