    [House Hearing, 106 Congress]
    [From the U.S. Government Publishing Office]

                   DRUGS IN THE MAIL: HOW CAN IT BE STOPPED?

    =======================================================================

                                    HEARING

                                   before the

                       SUBCOMMITTEE ON CRIMINAL JUSTICE,
                        DRUG POLICY, AND HUMAN RESOURCES

                                     of the

                                  COMMITTEE ON
                               GOVERNMENT REFORM

                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  MAY 26, 2000

                                   __________

                               Serial No. 106-210

                                   __________

           Printed for the use of the Committee on Government Reform

      Available via the World Wide Web: http://www.gpo.gov/congress/house
                          http://www.house.gov/reform

                                     ______

                        U.S. GOVERNMENT PRINTING OFFICE
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                         COMMITTEE ON GOVERNMENT REFORM

                         DAN BURTON, Indiana, Chairman
    BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
    CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
    CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
    ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
    JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
    STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
    JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
    THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
    DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington,
    MARK E. SOUDER, Indiana                  DC
    JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
    STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
    MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
        Carolina                         ROD R. BLAGOJEVICH, Illinois
    BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
    DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
    ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
    LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
    JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
    GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
    DOUG OSE, California                             ------
    PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont
    HELEN CHENOWETH-HAGE, Idaho              (Independent)
    DAVID VITTER, Louisiana

                          Kevin Binger, Staff Director
                     Daniel R. Moll, Deputy Staff Director
               David A. Kass, Deputy Counsel and Parliamentarian
                        Lisa Smith Arafune, Chief Clerk
                     Phil Schiliro, Minority Staff Director
                                     ------

       Subcommittee on Criminal Justice, Drug Policy, and Human Resources

                        JOHN L. MICA, Florida, Chairman
    BOB BARR, Georgia                    PATSY T. MINK, Hawaii
    BENJAMIN A. GILMAN, New York         EDOLPHUS TOWNS, New York
    CHRISTOPHER SHAYS, Connecticut       ELIJAH E. CUMMINGS, Maryland
    ILEANA ROS-LEHTINEN, Florida         DENNIS J. KUCINICH, Ohio
    MARK E. SOUDER, Indiana              ROD R. BLAGOJEVICH, Illinois
    STEVEN C. LaTOURETTE, Ohio           JOHN F. TIERNEY, Massachusetts
    ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
    DOUG OSE, California                 JANICE D. SCHAKOWSKY, Illinois
    DAVID VITTER, Louisiana

                                   Ex Officio

    DAN BURTON, Indiana                  HENRY A. WAXMAN, California
               Sharon Pinkerton, Staff Director and Chief Counsel
                  Carson Nightwine, Professional Staff Member
                               Ryan McKee, Clerk
                        Cherri Branson, Minority Counsel

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on May 26, 2000.....................................     1
    Statement of:
        Keefe, Joseph D., Special Agent in Charge, Special Operations
          Division, Drug Enforcement Administration; Kevin
          Dellicolli, Director, Cyber Smuggling, Office of
          Investigations, U.S. Customs Service; Betsey Durant,
          Director, Office of Trade Programs, Office of Field
          Operations, U.S. Customs Service; and W.K. Williams,
          Assistant Section Chief, Drug Section, Criminal
          Investigative Division, Federal Bureau of Investigation....    10
        Newman, Kenneth, Deputy Chief Postal Inspector for Criminal
          Investigations, U.S. Postal Service; Norman T. Schenk,
          Customs and brokerage manager, United Parcel Service;
          Robert A. Bryden, vice president, Corporate Security, FedEx
          Corp.; James H. Francis, regional manager, security, DHL
          Airways, Inc.; and Walter O'Tormey, manager, Processing
          Operations, U.S. Postal Service............................    51
    Letters, statements, etc., submitted for the record by:
        Bryden, Robert A., vice president, Corporate Security, FedEx
          Corp., prepared statement of...............................    72
        Durant, Betsey, Director, Office of Trade Programs, Office of
          Field Operations, U.S. Customs Service, prepared statement
          of.........................................................    20
        Francis, James H., regional manager, security, DHL Airways,
          Inc., prepared statement of................................    77
        Keefe, Joseph D., Special Agent in Charge, Special Operations
          Division, Drug Enforcement Administration, prepared
          statement of...............................................    13
        Mica, Hon. John L., a Representative in Congress from the
          State of Florida, prepared statement of....................     5
        Newman, Kenneth, Deputy Chief Postal Inspector for Criminal
          Investigations, U.S. Postal Service, prepared statement of.    55
        Schenk, Norman T., Customs and brokerage manager, United
          Parcel Service, prepared statement of......................    64
        Williams, W.K., Assistant Section Chief, Drug Section,
          Criminal Investigative Division, Federal Bureau of
          Investigation, prepared statement of.......................    33

                   DRUGS IN THE MAIL: HOW CAN IT BE STOPPED?

                                  ----------

                              FRIDAY, MAY 26, 2000

                      House of Representatives,
    Subcommittee on Criminal Justice, Drug Policy, and
                                       Human Resources,
                                Committee on Government Reform,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 9:30 a.m., in
    room 2154, Rayburn House Office Building, Hon. John L. Mica
    (chairman of the subcommittee) presiding.
        Present: Representatives Mica, Cummings, and Turner.
        Staff present: Sharon Pinkerton, staff director and chief
    counsel; Charley Diaz, congressional fellow; Carson Nightwine,
    professional staff member; Ryan McKee, clerk; Jason Snyder,
    intern; Cherri Branson, minority counsel; and Jean Gosa,
    minority assistant clerk.
        Mr. Mica. Good morning. I would like to call the
    subcommittee hearing to order. This morning our subcommittee is
    going to look at the problems of drugs in the mail and through
    parcel express and ask the question of how they can be stopped.
    I'm pleased to welcome you as chairman of the Subcommittee on
    Criminal Justice, Drug Policy, and Human Resources. I think
    we'll be joined in just a few minutes by a couple of other
    Members, but we want to go ahead and proceed. We have two full
    panels today, and Members are departing for their districts for
    the Memorial Day recess. But we do have an important issue
    before the subcommittee. The order of business this morning
    will be, first, I will open with an opening statement; and as
    other Members arrive, we'll hear from them, and then we will
    turn to our two panels.
        Today, our subcommittee is conducting an oversight hearing
    on the trafficking of illegal drugs through the U.S. mail
    service and also through private commercial carriers. According
    to recent reports, drug traffickers increasingly are using the
    mail services as a means of bringing illegal narcotics into the
    United States, which is wreaking both death and destruction in
    our States and cities and communities. Some law enforcement
    officials say that the mail system has become a preferred drug
    trafficking office and that odds of success are far too high.
    Today, we will examine this growing problem. We'll review our
    efforts to combat it and consider corrective actions that may
    be needed.
        While we still do not have accurate numbers on the extent
    of this problem, authorities tell us that drug trafficking
    through the mail has dramatically increased over recent years
    and that in fact decisive action may be needed.
        Ironically, one contributing factor in drug traffickers'
    use of the mail may be our tougher law enforcement efforts that
    Congress has supported and funded in recent years. This
    demonstrates that we must always remain vigilant and
    knowledgeable of the very latest trends in drug trade. In a
    subcommittee hearing earlier this year in the district of our
    ranking member, Mrs. Patsy Mink, we learned that law
    enforcement and drug interdiction in Hawaii and from the
    officials there with that port of entry into the United States
    we found that those officials are quite aware and concerned
    regarding this growing problem. And they pointed it out in that
    hearing we conducted there.
        We heard testimony from Mr. Nat Aycox, a port director for
    the U.S. Customs Service in Hawaii, who observed--and let me
    get his quote here from his testimony--``we are seeing both
    courier services throughout the Nation and the mail conditions
    across the Nation having increased interdiction not only in the
    traditional drugs but in the new designer drugs and now in
    prescription drugs and steroids.'' That was his statement
    before our subcommittee. Reflecting this statement, recent news
    reports indicate that the U.S. postal inspectors seized 12,500
    pounds of illegal drugs in 1998. We all know that the drugs
    interdicted were only a small portion of those being trafficked
    through the mail. Just imagine how much is not being stopped.
        One drug that has seen an increase in its distribution and
    transportation through the mail is the drug commonly referred
    to as ecstasy. Large quantities of ecstasy are pouring into the
    United States from Europe. The demand for ecstasy has
    skyrocketed among U.S. teenagers, especially at all-night
    raves, a very popular type of party or club where drug use is
    common if not expected. Because ecstasy is formed into tiny
    tablets and does not require bulky packaging, several dozen
    tablets can be mailed in a standard envelope anywhere in the
    world at relatively low cost and at low risk of being
    intercepted. In fact, I brought a couple of envelopes. You can
    mail a considerable supply of drugs just in a common envelope.
    And we have other packets, this FedEx, U.S. postal express
    mail, some of these larger packages, now provide easy shipment
    for illegal narcotics and unfortunately on an increased basis.
        Because ecstasy again is formed into tiny tablets and
    doesn't require this bulky packaging, it can be transmitted and
    transported by what would normally be legal means through what
    is now illegal distribution. Distribution and trafficking of
    illegal narcotics by mail is creating an incredible challenge
    for our U.S. postal officials. According to U.S. postal service
    numbers, that agency facilitates the exchange of over 206
    billion pieces of domestic mail annually. The various U.S.
    commercial shipping carriers facilitate the exchange of more
    than 2.8 billion domestic letters, packages, and freight
    annually. The sheer volume of letter and package traffic both
    domestic and internationally offers a very attractive way for
    smugglers to attempt to transport and distribute illegal
    narcotics.
        Even Web sites, offering the sale of illegal drugs direct
    buyers to use the mail service and commercial shipping
    companies to transport drugs. I've got one Web site that we
    pulled up a statement from, and this Web site advises do not
    send your orders by overnight express as customs may look at
    it. Regular mail, registered if you like, that's in
    parentheses, is anonymous and safe. And I quote from that Web
    site. Drug traffickers boast that there is less chance of
    detection and arrest by using the mail and that it is in fact
    easier than recruiting and employing individuals to smuggle
    illegal narcotics across national boundaries and State lines.
    This greatly concerns me since I believe that the postal
    service and the Federal Government have an even higher
    obligation to ensure that the U.S. mail is not a tool of drug
    trafficking organizations.
        We cannot allow our Federal Government and the U.S. Postal
    Service to become the drug carriers of choice for our drug
    dealers.
        These increased drug trafficking trends, in fact, impact us
    all, demanding our attention and efforts to improve
    enforcement. In 1999, the Substance Abuse and Mental Health
    Services Administration [SAMHSA], reported that 15,973 people,
    that's Americans, died as a direct result of drug-induced
    causes here in the United States. We've also heard testimony
    right in this room from our drug czar, General McCaffrey, who
    claims that illegal narcotics, when you take into consideration
    all of the deaths as a result of drug abuse and use, kill more
    than 50,000 Americans each year. Without adequate attention and
    action from law enforcement agencies and the full cooperation
    of public agencies and private companies, this trend in
    narcotics trafficking will continue to kill more people in the
    future.
        I want to particularly applaud those in the private sector
    for their helpful actions to date, particularly in working with
    our law enforcement agencies and in conducting their own
    internal counternarcotics operations to help intercept and also
    to stem the flow of drugs through the mail and through package
    services.
        I want to especially recognize UPS, FedEx, and DHL for
    their positive response and actions to request from our law
    enforcement agencies to help in curtailing illegal narcotics
    transport. We'll hear more details about what both the public
    and private sector is doing in that regard, what they've done
    and their plans for the future. One very successful operation
    I'd like to cite is Operation Green Air, which was conducted by
    representatives of our Drug Enforcement Administration [DEA],
    and the U.S. Customs Service working in conjunction with FedEx
    Corp. Operation Green Air was a large scale Mexican-Jamaican
    marijuana trafficking investigation that resulted in the arrest
    of 104 individuals and the seizure of 35,000 pounds of
    marijuana, $4.5 million in assets, and 18 weapons.
        The Federal Government must ensure that the U.S. Postal
    Service over which it has responsibility and oversight is
    prepared and committed to doing everything possible to work
    with our law enforcement agencies and the private sector to
    combat the flow of narcotics through the mail and through
    postal services. I look forward to hearing from our panels
    today as we explore the new and improved ways to stop the
    trafficking of illegal narcotics through the mail and package
    services. It's a responsibility that we all share and a
    commitment we must all make if we are to have any hope at all
    of ever bringing this national drug epidemic we face under
    control.
        I want to thank each of our witnesses for being with us
    today and also sharing your knowledge and insights as to how we
    can do a better job and also make America safer from the
    terrible scourge of illegal narcotics.
        With those comments I'm pleased to yield at this time to
    the gentleman from Texas, Mr. Turner, for an opening statement.
        [The prepared statement of Hon. John L. Mica follows:]
        [GRAPHIC] [TIFF OMITTED] T1623.001

        [GRAPHIC] [TIFF OMITTED] T1623.002

        [GRAPHIC] [TIFF OMITTED] T1623.003

        Mr. Turner. Thank you, Mr. Chairman. First, I want to
    commend you for having this hearing on what is a very serious
    and very difficult problem for us all to deal with. There is,
    of course, no doubt that drug traffickers routinely use the
    mail and private shippers to facilitate transportation of
    illegal drugs, and we know it's a very serious problem. One
    example that came to my attention occurred last year in Hawaii
    where a gentleman, apparently the largest distributor of
    methamphetamine who had ever operated in Hawaii, was arrested
    by the postal inspector and ATF agents; and as a part of that
    arrest, 35 people in a drug ring were halted in their drug
    importation scheme that went on from California to Hawaii. So I
    know just from that one example that there are people out there
    engaged in illegal drug trafficking who are transporting large
    quantities of drugs across borders and within the United
    States, and frankly I'm sure we have no way of knowing whether
    or not we have caught very many of them.
        The numbers that I have show that in 1999 of the 200
    billion pieces of mail handled by the U.S. Postal Service about
    15,000 pounds of illegal drugs were seized. Postal inspectors
    arrested 1,537 people for drug trafficking through the mail and
    seized drug-related proceeds of $6.5 million, 66 vehicles, 227
    firearms, and nine residences. So clearly, we have a very
    serious problem to deal with, and I suspect we're only seeing
    the tip of the iceberg.
        Since we don't know what percentage of the total drug
    traffic may be represented by the seizures they have made, it's
    sometimes very difficult to know the appropriate amount of
    resources to commit to trying to combat this problem. That is
    one of the issues that we hope to address in this hearing
    today. I think that it's important for us all to keep in mind
    that, as we try to interdict drugs that are trafficking through
    the mail and through private carriers, we have to be sensitive
    to the fact that we must not unduly burden the free flow of
    commerce. But this is a very serious problem, one that deserves
    the attention of this committee; and I commend the chairman for
    his leadership on the issue. Thank you, Mr. Chairman.
        Mr. Mica. Thank the gentleman from Texas. Pleased now to
    recognize for an opening statement Mr. Cummings, the gentleman
    from Maryland. You're recognized, sir.
        Mr. Cummings. Thank you very much, Mr. Chairman. And I too
    want to thank you, Mr. Chairman, for holding this hearing.
    Today, we are discussing yet another crafty and deceptive
    method of disbursing drugs which is employed by narcotics
    dealers. They're using postal employees to do their dirty work.
    Drug dealers will stop at nothing to make sure that all of
    those who want drugs can get them. We must do everything we can
    to make sure that no Federal agency of the United States is
    being used by the drug lords or no private corporations either.
    We spend millions of dollars fighting the drug war on the
    streets and in our schools.
        My city of Baltimore has been plagued by heroin and crack
    cocaine problems. I requested Federal funding on behalf of
    Baltimore City for treatment programs, more policeman power,
    and advanced technology to fight this war. No one wants to even
    imagine the Government unintentionally, of course, being a part
    of the problem. As a matter of fact, we're supposed to be
    fighting the problem. And it would be sad to think that U.S.
    tax dollars are being used, supporting a postal service, but
    others using that system to distribute their illegal drugs. Our
    efforts certainly cannot be thwarted by drugs transported by
    mail. I applaud the efforts by law enforcement and others who
    have apprehended mail order dealers. But I think Mr. Turner
    said it quite clearly, we have to be very, very careful when
    addressing these kinds of issues because the public does
    expect, and rightfully so, a certain level of privacy with
    regard to shipments.
        Therefore, I look forward to hearing from our panelists to
    learn what they believe should be done to adequately combat
    this threat to our winning the war on drugs. And again, Mr.
    Chairman, I thank you; and I want to thank the panelists for
    being here on this day before the holiday weekend begins.
        Mr. Mica. Thank you, Mr. Cummings, and thank you for your
    work and dedication to this subcommittee and also the topic of
    illegal narcotics. Mr. Turner moves that the record be left
    open for a period of 3 weeks for additional statements and also
    response to questions that may be posed by the committee to
    witnesses. Without objection so ordered.
        At this time, I want to welcome our first panel. The
    Subcommittee on Criminal Justice, Drug Policy, and Human
    Resources is an investigation and oversight subcommittee of the
    Government Reform Committee. We are an investigative panel of
    Congress. Some of you may be familiar with our proceedings. In
    just a moment I'll swear you in, and we also would like you to
    try to limit your oral presentations before the subcommittee to
    approximately 5 minutes. If you have lengthy statements or
    additional information data or background you'd like to be made
    part of the record, upon request that will be also added to the
    record. So at this time, if you would please stand and be
    sworn.
        [Witnesses sworn.]
        Mr. Mica. The witnesses answered in the affirmative. And in
    this panel we have three witnesses and I guess one back-up
    potential witness. First, we have Mr. Joseph D. Keefe, special
    agent in charge, Special Operations Division of the Drug
    Enforcement Administration. We have Mr. Kevin Dellicolli, and
    he is Director of cyber smuggling, Office of Investigations of
    the U.S. Customs Service and is available, I understand, for
    questions. And Ms. Betsy Durant, she is the Director of the
    Office of Trade Programs, the Office of Field Operations, U.S.
    Customs Service. And Mr. W.K. Williams, Assistant Section Chief
    of the drug section of the Criminal Investigative Division, of
    the Federal Bureau of Investigation. I would like to welcome
    all of the witnesses.
        Again, thank you for being with us. We look forward now to
    your testimony, and I'll start first by recognizing Mr. Joseph
    D. Keefe, special agent in charge of Special Operations
    Division for DEA. Welcome, sir, and you're recognized.

    STATEMENTS OF JOSEPH D. KEEFE, SPECIAL AGENT IN CHARGE, SPECIAL
      OPERATIONS DIVISION, DRUG ENFORCEMENT ADMINISTRATION; KEVIN
           DELLICOLLI, DIRECTOR, CYBER SMUGGLING, OFFICE OF
    INVESTIGATIONS, U.S. CUSTOMS SERVICE; BETSEY DURANT, DIRECTOR,
      OFFICE OF TRADE PROGRAMS, OFFICE OF FIELD OPERATIONS, U.S.
     CUSTOMS SERVICE; AND W.K. WILLIAMS, ASSISTANT SECTION CHIEF,
     DRUG SECTION, CRIMINAL INVESTIGATIVE DIVISION, FEDERAL BUREAU
                            OF INVESTIGATION

        Mr. Keefe. Thank you, sir. Chairman Mica, members of the
    subcommittee, I appreciate the opportunity to appear today to
    discuss the issue of the proliferation of drug trafficking
    through the public and private mail services. I would first
    like to thank the subcommittee for its continued support of the
    Drug Enforcement Administration and overall support of drug law
    enforcement. I have also submitted a statement for the record.
        As you know, drug traffickers are continually looking for
    more creative and innovative means to circumvent and elude law
    enforcement from detecting their illicit contraband. They look
    for new and different ways to transport and distribute their
    illegal drugs. Drug trafficking organizations have learned to
    compartmentalize for security reasons. This is to ensure that
    no individual member if arrested will have knowledge of the
    entire inner workings of the organization.
        Drug traffickers recognize that the transportation of drugs
    is the weakest link in the drug chain. Typically, drugs are
    most vulnerable to detection when they are transported from one
    location to another. As a result of aggressive proactive law
    enforcement operations, these drug trafficking organizations
    have resorted to a number of methods in order to minimize their
    exposure to law enforcement. One such trend is the use of the
    private and public mail service in order to transport and
    distribute illegal drugs. While the misuse of the mail service
    is not necessarily a new trend, there has been an increase in
    the use of the mail in overnight delivery services by various
    drug trafficking groups.
        The use of private parcel conditions provide drug
    trafficking groups the ability to transport illegal drugs
    without utilizing traditional drug couriers. The absence of
    this human element often times hinders interdiction efforts
    because packages that are intercepted routinely have fictitious
    return addresses and are often mailed to post office boxes or
    private mailboxes. And a recently concluded multijurisdictional
    DEA enforcement operation impediments such as these were
    routinely encountered. In addition, computer tracking snafus
    and the use of legitimate corporate account numbers for billing
    purposes further hindered our efforts. In effect this provided
    the sender with the much needed anonymity in the event the
    package is intercepted by law enforcement. In addition, the use
    of overnight delivery services affords traffickers the ability
    to ship their illegal drugs rapidly. In the event an overnight
    delivery package is interdicted, law enforcement officers have
    little or no time to secure a search warrant for the package as
    well as initiate an operational plan to control the delivery of
    the suspected drug package. Drug traffickers grow suspicious in
    any delay in the delivery of these overnight packages and will
    refuse delivery of the parcel fearing law enforcement
    intervention. Due to these and a myriad of other factors,
    investigations of this type require exhaustive preparation and
    coordination among various law enforcement entities to include
    the U.S. Postal Service, the U.S. Customs, the FBI, and the
    various commercial delivery services.
        Historically, DEA has enjoyed an outstanding relationship
    with each of these organizations, which has resulted in
    significant enforcement operations. One such effort of the
    multiagency investigation is named Operation Green Air. On
    April 13, 2000, DEA in conjunction with U.S. Customs Internal
    Revenue Service, U.S. Attorney's Office, State and local law
    enforcement agencies and the Federal Express Corp. culminated
    this 18-month nationwide investigation.
        Operation Green Air targeted a Los Angeles-based marijuana
    trafficking organization which is estimated to have made $30
    million from illegal drug trafficking. Investigation resulted
    in the arrests of 104 individuals, the seizure of 35,000 pounds
    of marijuana, and 4.2 million in U.S. currency and assets. This
    investigation also focused on corrupt FedEx employees in Los
    Angeles; Ft. Lauderdale, FL; Atlanta, GA; New York; and New
    Jersey. Those charged include 25 employees of FedEx Corp.,
    including a FedEx security official in New York City, customer
    service representatives, and drivers.
        Federal complaints and indictments charged various members
    of the organization with the importation and distribution of
    more than 100 tons of marijuana. Furthermore, several of the
    defendants were charged with using FedEx Corp. airplanes,
    trucks, and facilities across the country to ship the marijuana
    with an estimated wholesale value of $140 million.
        The head of this organization exploited FedEx Corp. by
    recruiting FedEx employees as participants in the organization.
    The employees ensured that the marijuana was placed on FedEx
    aircraft for transportation from West Coast to the East Coast,
    provided security for marijuana when the shipments were housed
    in FedEx facilities, and subsequently delivered the marijuana
    to members of the various distribution cells. Other FedEx
    employees manipulated the corporation billing and internal
    accounting procedures in order to conceal the cost and thwart
    any efforts to trace these shipments. The marijuana was always
    shipped in standard size cardboard boxes in order to fit on
    Federal Express aircraft, and the organization often placed
    laundry detergent and other products inside the boxes in an
    effort to conceal the smell of the marijuana.
        The outstanding success of Operation Green Air highlights
    the effectiveness of such cooperative drug investigations and
    serves as an example of what combined law enforcement and
    private industry can accomplish in the fight against drug
    trafficking in this Nation.
        Mr. Chairman, on behalf of the men and women of the drug
    enforcement administration, I would like to thank you for the
    opportunity to testify before this subcommittee today. Let me
    assure you that the DEA will continue to develop and implement
    innovative approaches in order to address the threat posed by
    drug traffickers. We are committed to working cooperatively
    with our law enforcement partners and with private businesses
    and organizations that are dedicated to take a stand against
    those individuals responsible for such criminal activity. At
    this time, I will be happy to entertain any questions you may
    have.
        Mr. Mica. Thank you. We appreciate your remarks and will
    withhold questions until we've heard from all of our witnesses.
        [The prepared statement of Mr. Keefe follows:]
        [GRAPHIC] [TIFF OMITTED] T1623.004

        [GRAPHIC] [TIFF OMITTED] T1623.005

        [GRAPHIC] [TIFF OMITTED] T1623.006

        [GRAPHIC] [TIFF OMITTED] T1623.007

        [GRAPHIC] [TIFF OMITTED] T1623.008

        Mr. Mica. Next, I'd like to recognize Ms. Betsy Durant.
    She's Director of the Office of Trade Programs of the Office of
    Field Operations for U.S. Customs Service. Welcome and you're
    recognized.
        Ms. Durant. Good morning, Mr. Chairman and members of the
    subcommittee. Thank you for the opportunity to present U.S.
    Custom's efforts to prevent the entry of illegal drugs into the
    United States via the mail. I too have a long statement for the
    record. Before I begin to explain what Customs does to combat
    the importation of illicit drugs, I believe it is important to
    relay Customs' core mission activities. The U.S. Customs
    Service is the protector of our Nation's borders. We are
    vigilant against the ever-present threats of narcotics
    smuggling, money laundering, and unwarranted threats against
    American industry.
        On a typical day, Customs officers process 1.3 million
    passengers and nearly 350,000 vehicles at ports and border
    crossings across the country. They seize nearly 4,000 pounds of
    narcotics and about $1 million in ill-gotten proceeds. Customs
    also protects domestic industries from unfair competition,
    keeps tainted and spoiled products from making their way to
    consumers, and defends intellectual property rights and deters
    the corrosive effects of economic fraud.
        Customs is facing a significant narcotics threat in the
    mail. For example, the Oakland, CA, mail facility generated 88
    seizures of opium totaling 923 pounds during the summer of 1999
    alone. Nationwide, this fiscal year to date there have been 132
    seizures of ecstasy. Customs mail facilities have realized a
    450 percent increase in pharmaceutical seizures in fiscal year
    1999, amounting to 9,725 separate seizures.
        Customs faces many significant interdiction challenges at
    the point of entry, primarily in our international mail
    facilities. The growth of these challenges is commensurate with
    the phenomenal growth of the small package delivery industry.
    Customs has found itself wrestling with the way it handles the
    processing of international mail and express consignment
    shipments so that it can provide efficient entry of legal
    shipments while maintaining a strong and effective contraband
    interdiction capability.
        The U.S. Customs Service staffs 14 international mail
    branches at various postal facilities across the United States.
    These facilities process hundreds of millions of flats and
    parcels per year. With less than 220 Customs personnel at these
    facilities, we as with all shipments must take a risk-
    management approach to our day-to-day operations.
        Resources are such that we must make conscious decisions to
    look at some mail but not all mail. Most often this is done by
    choosing to inspect mail from countries that provide a higher
    threat for illegal activity. While the Postal Service is
    required to present all international mail to Customs, the
    selection or targeting process for mail is entirely manual. It
    is also worthy to discuss the issue of examination of export
    shipments of mail. Export shipments originate in the United
    States and are destined to be delivered to a foreign country.
    Customs is hampered by the lack of a clear mandate to search
    outbound mail. Recent court decisions have supported Customs
    claim of inspection of outbound mail. However, a clear
    legislative intent is necessary. We feel strongly that Customs
    and the Postal Service need to work together to fight the
    illegal shipment of contraband across our Nation's borders.
        We know this goal can be realized because we have worked
    closely with the Postal Service in the past to resolve other
    important issues. The next logical step for Customs is to
    obtain automated parcel level manifest information in advance
    of shipment arrival so that we may greatly increase our
    targeting capabilities and our ability to capitalize on
    information. The Postal Service is working to develop
    electronic message data sets that would support such a badly
    needed automated system. This would be similar to the level of
    data that express consignment operators are currently
    performing.
        In summary, Customs believes that the manual nature in
    which the mail arrives and is entered into the United States
    inhibits our ability to interdict prohibited drugs.
        Mr. Chairman, this concludes my oral statement. I will be
    happy to answer any questions that you or the other Members
    will have.
        Mr. Mica. Thank you again. We will withhold questions until
    we've heard from all of our witnesses.
        [The prepared statement of Ms. Durant follows:]
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        Mr. Mica. Our next witness is W.K. Williams. He is the
    Assistant Section Chief of the drug section of the Criminal
    Investigations Division of the FBI. Welcome, sir, and you're
    recognized.
        Mr. Williams. Good morning, Mr. Chairman and members of the
    subcommittee. I am privileged to have this opportunity to
    discuss the growing use of the Internet by drug enterprises
    facilitating their illicit activities. In my testimony today, I
    would like to first give an overview of the threat we face.
    Second, I will identify several investigative initiatives we
    have undertaken to address this unlawful conduct on the
    Internet. And finally, I would like to address several
    investigative and regulatory issues we anticipate or have
    encountered as we have begun to combat this growing crime
    problem.
        I have also submitted a statement for the record.
        Criminal activities perpetrated by international drug
    cartels pose a very serious threat to our national security.
    Their conduct impacts directly on our families and communities
    threatening our very social fabric. Much of the recent growth
    in influence of these major international drug cartels is due
    to the developments in high technology and communications.
        The Internet has brought great benefits to the world, but
    it has also become a powerful medium for drug cartels who use
    technology to facilitate their operations and thwart law
    enforcement. According to a March 18, 1999, article in
    Newsweek, the new drug trafficking organizations in Colombia
    are composed largely of university-trained professionals who
    use satellite telephones and Internet connections to coordinate
    drug shipments. The Washington Post on November 15, 1999,
    described a new generation of Colombian drug traffickers, light
    years ahead of the traditional Medellin and Cali cartels of
    using the Internet and other modern technology who have access
    to highly sophisticated encryption technology, far beyond what
    law enforcement has the capacity to break quickly. These
    findings are consistent with information developed in our own
    field investigations and garnered from our intelligence
    sources.
        U.S. law enforcement and intelligence agencies have
    recently recognized a trend toward use of the Internet by major
    drug trafficking organizations to conduct criminal activities.
    Major Colombian and Mexican drug trafficking organizations rely
    on the Internet as a means of long distance communication. As
    yet there is no definitive evidence that the drug trafficking
    organizations are moving large sums of money through the
    international financial system via the Internet or are
    exploiting the Internet to bypass reporting requirements and
    spend their ill-gotten wealth via electronic commerce. However
    the drug trafficking organizations are passing money laundering
    instructions over the Internet. A survey of FBI field division
    identified over 20 investigations in which the Internet was
    used in some capacity by drug trafficking organizations.
    Similar findings have been noted by our drug enforcement
    administration colleagues.
        While there are numerous ways to communicate over the
    Internet, the most popular are electronic mail, Internet chat
    rooms, instant messaging, and Internet telephony. Each service
    provided the user with a sense of security and a feeling of
    anonymity at an almost nonexistence cost. More and more, major
    Colombian and Mexican drug trafficking organizations are
    instructing their cell members operating within the United
    States to communicate via electronic mail in lieu of
    telephones.
        Internet relay chat and instant messaging allow for
    realtime communication. Computer to computer audio and video
    communications to include conferencing are also being used.
    Drug traffickers in New York, Houston, and Miami can
    communicate via video conferencing with the assurance they are
    speaking with the correct parties and for absolutely no cost
    other than the monthly fees paid to their Internet service
    providers.
        It is not uncommon for drug trafficking organizations to
    provide their cell members with laptop computers as a means of
    communication. In a recent example, a major drug trafficking
    organization supplied one of its cell members with a laptop
    computer to be used for video conferencing while traveling
    outside of the United States. Internet telephony service
    providers maintain gateways for telephone companies to allow
    computer-to-phone communications. The Internet also allows for
    interconnection with no geographical boundaries. We even have
    seen instances where Colombian go-fast boats have been able to
    meet up with their Mexican counterparts in the open ocean by
    communicating via the Internet.
        The World Wide Web, the most used and recognized service
    available on the Internet, is being used to distribute cutting
    agents, drug paraphernalia, and on occasion controlled
    substances. Often these Web sites mail the purchased products
    directly to their customers through personal and parcel
    delivery services.
        The FBI's drug section has embarked on an aggressive
    training program to assist FBI field offices in understanding
    and exploiting the Internet as it relates to drug matters. Our
    drug section is currently instructing FBI field offices about
    the Title III interception and search authorization on the
    Internet specifically as it relates to Title II of the
    Electronic Communications Privacy Act [ECPA] of 1986, stored
    wire and electronic communication and transactional records.
    The training is regionally based and provided to agents of the
    FBI, the DEA, the U.S. Customs Service, as well as to State and
    local law enforcement officers assigned to Federal drug task
    forces. During December 1999, the drug section conducted an
    Internet training seminar in Miami, FL. Additional training
    sessions are scheduled for New York, Houston, and other
    southwest border divisions, in as much as these divisions have
    ongoing drug investigations involving the Internet.
        The use of the Internet by criminals has a host of
    investigative and regulatory issues for the FBI and other
    Federal law enforcement agencies. Many of those issues arise
    from the nature of the Internet. For example, the fact that the
    Internet is worldwide creates numerous legal issues regarding
    jurisdiction. Specifically, under what circumstances could U.S.
    law enforcement conduct transborder searches and seizures for
    evidence located in other sovereigns? How do we effectively
    expedite the preservation and retention of information across
    borders that is by its very nature fleeting? How do we
    effectively investigate and prosecute criminals across borders
    where there is no consistency in legal regimes. And how to
    facilitate expeditiously obtaining and disclosing information
    across borders without negatively impacting our own national
    interests.
        In summary, the rapid growth in new technologies has
    redrawn the communications landscape. As use of the Internet
    continues to increase, so does its exploitation by drug
    trafficking organizations. We in law enforcement share your
    concerns regarding this growing threat and recognize a need to
    redouble our efforts to combat this new challenge.
        Mr. Chairman, that concludes my statement. I would be happy
    to answer any questions that you or any members of the
    subcommittee may have. Thank you.
        Mr. Mica. Thank you for your testimony.
        [The prepared statement of Mr. Williams follows:]
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        Mr. Mica. Mr. Dellicolli, you do not have an opening
    statement; that's correct?
        Mr. Dellicolli. That's correct, Mr. Chairman.
        Mr. Mica. What we'll do is start with our first round of
    questions then. I notice that one of the agencies, Customs, has
    brought some I believe it's evidence or some item that's been
    used for transport. Maybe you could provide the subcommittee
    with some description of what's taking place. Who wants to do
    that? Mr. Dellicolli or Ms. Durant.
        Mr. Dellicolli. I'll do it, Mr. Chairman.
        Mr. Mica. Could you tell us what some of this stuff is that
    you brought with you and how it relates to this topic of
    transporting illegal narcotics?
        Mr. Dellicolli. In this package here we have a stuffed
    animal that contained 10,000 ecstasy tablets that were smuggled
    from Germany. The tablets were actually stuffed inside the
    animal.
        Mr. Mica. How was that transported?
        Mr. Dellicolli. I believe this came in through express mail
    service.
        Ms. Durant. That's correct. It was express.
        Mr. Dellicolli. Excuse me, this was priority mail, U.S.
    mail.
        Mr. Mica. Priority U.S. mail. What was the value of the
    drugs in that shipment? Do you know?
        Mr. Dellicolli. I don't know. Approximately $100,000.
        Mr. Mica. I guess there's two ways to detect this through
    technology or through information that has been passed on.
    What's our process now, technology or intelligence?
        Ms. Durant. I think it's a combination of the two. But we
    firmly believe that technology is probably our greatest initial
    screening asset. We can look with advanced technology, advanced
    manifest information. We can look for anomalies that tip us off
    to knowing what to select in the first place. For example, if
    we have unusual value-to-parcel-weight ratios, or if we have
    intelligence about an address or we've made a seizure before on
    an address, those kinds of things ahead of time can help alert
    us. And that is why we're so adamant about having this parcel
    level manifest information from the mail because we do have
    that advantage from the express consignment.
        Mr. Mica. But you don't have that from the U.S. mail
    service.
        Ms. Durant. We do not have that. We have bag level manifest
    only, which does allow us to at least target countries.
        Mr. Mica. It gives you the country of origin but nothing
    else.
        Ms. Durant. Nothing else, correct.
        Mr. Mica. Maybe you could describe some more of the, again,
    the means by which they've been transporting some of these
    narcotics.
        Mr. Dellicolli. We have several other examples of ecstasy
    tablets that were seized. This one here happens to be 10 grams
    of marijuana that was smuggled in from Mexico in an
    international mail parcel. Very small. Here's the marijuana in
    a letter class through the international mail system.
        Mr. Mica. One of the problems I guess with the designer
    drugs is it requires--well there's very little weight. Some of
    the marijuana comes in bulk, but with designer drugs I'm told
    that you can ship an incredible volume with very little weight.
        Mr. Dellicolli. That's true. And a lot of value at very
    little weight.
        Mr. Mica. Is that what you're seeing more and more of
    coming in, designer drugs through the mail service?
        Mr. Dellicolli. Most of the controlled deliveries that we
    conducted this year so far have been ecstasy, about 35 percent
    of the controlled deliveries.
        Mr. Mica. What are the prime countries of origin? Is there
    some pattern to what's going on?
        Mr. Dellicolli. I believe most of the ecstasy we're seeing
    is coming from the Netherlands, Belgium.
        Mr. Mica. And maybe you could describe a couple more of the
    items you brought with you.
        Mr. Dellicolli. Pretty much we have more of the same. We
    have a lot of ecstasy that came in. There's no packaging here
    with them to describe the means of which they entered, whether
    it was express mail or whether it was the U.S. mail but all of
    these did come in through either express mail or the U.S. mail.
        Mr. Mica. Well, if you were describing the problem, and I
    hate to pick on the U.S. Government and the U.S. mail system,
    but it sounded like most of the problem you're having seen so
    much with the private carriers but with the U.S. mail service.
        Ms. Durant. I don't want to pick on the postal service
    either, but I have to say that we believe that we have a
    problem in both arenas. We have, however tighter controls over
    the express consignment industry because we have the advance
    manifest information and because we have outbound authority in
    the express consignment industry. So we think that it is
    easier; and there's a wider loophole in the mail that we need
    to tighten up, so that we have the ability to at least level
    the playing field. Our seizures in the mail are substantially
    higher than in the express industry.
        Mr. Mica. How would you describe the cooperation of the
    postal service and then the various major private carriers?
        Ms. Durant. The cooperation with the private carriers is
    quite good. They have spent a significant amount of money on
    their own manifest systems, and we don't agree on everything.
    They do reimburse for just about all of our expenses in the
    express industry, and we have ongoing discussions about what
    they should and shouldn't pay for and that sort of thing. But
    we do have an excellent relationship with the postal service.
    They do adamantly oppose outbound search authority for us,
    outbound inspection authority and search authority, and that
    has frankly been a bone of contention between our two
    organizations.
        We also are working closely with them relative to the
    manifest information, and there are some efforts ongoing in
    Europe among postal administrations to develop a manifest
    message, but we would like to accelerate those discussions to
    look for some creative ways even if we just began with express
    mail. And we have reached out to the post office to help us
    explore those opportunities.
        Mr. Mica. Finally, I heard cited by Mr. Dellicolli that the
    Netherlands was one of the major sources of some of the drugs
    coming in. What is the nature of cooperative efforts with law
    enforcement in your agencies since we're getting such a high
    volume from the Netherlands? Maybe you could provide the
    subcommittee with that background. Mr. Dellicolli.
        Mr. Dellicolli. I work in the cyber smuggling center. Most
    of our efforts involve the pharmaceuticals being imported via
    the mail system with--via--they're using the electronic
    commerce, so I'm not that familiar with our operations with
    respect to the ecstasy investigations.
        Ms. Durant. We can provide that for the record.
        Mr. Mica. What about DEA?
        Mr. Keefe. Mr. Chairman, our law enforcement officials have
    met with the Dutch law enforcement officials as well as other
    European counterparts specifically related to ecstasy. We find,
    as was mentioned, in a number of the labs producing, the
    clandestine labs, are the Netherlands, Belgium, and Germany
    where they're clandestinely producing the ecstasy. I believe
    the Dutch last year seized approximately 35 to 38 of those
    labs, usually very sophisticated labs capable of producing very
    large quantities. It's then smuggled out to various other
    countries in Europe where then I believe it is then shipped,
    transshipped to various--either body carried or through the
    mail services and whatnot into the United States.
        Mr. Mica. We met with the, I believe, the minister of
    justice from the Netherlands and some of the parliamentarians
    there trying to enact some stricter laws. I think they've been
    burnt by the liberal laws, and they know it's become the center
    for both production trafficking; and also with the lower
    penalties, it's a magnet for these folks who want to deal in
    drugs. We may solicit from you some additional information on
    what you would recommend that they need to do as far as
    cooperation, because if that's one of our major sights.
        Finally, what about Mexico? I believe in the hearing that
    raised some of these questions initially that we heard there
    was a transport of some of the designer drugs from Mexico, some
    coming into the United States. Is that the case, Ms. Durant?
        Ms. Durant. Well, the southwest border in general is a huge
    challenge for us in the drug interdiction area. Now our ecstasy
    seizures are up throughout. I do not have specific information
    about Mexico, but I could provide that for the record.
        Mr. Mica. We'd appreciate that. At this time I'd like to
    yield to Mr. Turner.
        Mr. Turner. Thank you, Mr. Chairman. Mr. Dellicolli, when
    you were showing us the stuffed animal here that had $100,000
    worth of narcotics stuffed inside of it, how was that seized?
    Was it a random check, or was it the postal service or the
    private carriers that prompted them to open that package?
        Mr. Dellicolli. It was just a manual inspection conducted
    by our mail facility inspectors.
        Mr. Turner. So this was a postal service express mail?
        Mr. Dellicolli. Yes.
        Ms. Durant. We have x-ray equipment. We do have x-ray
    equipment in our mail facilities that's pretty sophisticated.
    So we do run all the parcels through the x ray and can often
    pick it up that way.
        Mr. Turner. So was it the x ray that prompted the opening
    of that package?
        Mr. Dellicolli. It was detected with the x-ray technology.
        Mr. Turner. And the letter that was mailed from Mexico with
    the marijuana, how was that detected?
        Mr. Dellicolli. Actually from Switzerland and----
        Mr. Turner. I'm sorry.
        Mr. Dellicolli. And I have no information.
        Ms. Durant. Probably the x ray. Probably the x ray.
        Mr. Dellicolli. Maybe dog.
        Ms. Durant. Or the dogs. We have dogs in our mail
    facilities as well.
        Mr. Turner. So every package that comes through the postal
    service goes through this x ray that's coming from abroad.
        Ms. Durant. It goes through, but it goes through fairly
    quickly; and it does enable us to select from those packages,
    and our inspectors are pretty astute who work in the mail
    facilities in doing that. But we do believe having to do it on
    the spot and in that kind of manual mode severely hampers our
    ability to select as many as we probably need to inspect for
    drug smuggling.
        Mr. Turner. What could we do to improve your ability to
    inspect those packages in a time-efficient way?
        Ms. Durant. Well, we truly believe that if we had manifest
    information so that we could use our intelligence and use our
    rules so that we would select more efficiently that we could
    have a greater impact. That and outbound search authority are
    our two major concerns right now.
        Mr. Turner. So you don't run all the packages through this
    x ray; but if you had manifest information, you would be able
    to better select the ones you're going to run through.
        Ms. Durant. We run it all through, but it comes in on
    conveyor belts. So the inspectors are watching it and running
    pretty quickly. So we believe that we would continue to use the
    dogs, we would continue to use x rays as we do in our express
    industry; but we also believe that the technology that's
    available is more efficient for selection than just an
    inspector watching these packages run through the x ray.
        Mr. Turner. I know this is going to be a difficult
    question. I'd really like to have all of your opinions on it.
    But what percentage of narcotics that are flowing through the
    mail do we actually intercept, in your opinion?
        Ms. Durant. I don't believe we know. We have no idea in
    Customs.
        Mr. Turner. Mr. Williams, do you have any estimate on that?
        Mr. Williams. No, sir, I do not. I know that we have had
    investigations also similar to DEA where we have obtained drugs
    transiting through the mail services, both U.S. postal and
    parcel services.
        Mr. Turner. So we don't have any idea of the volume of
    narcotics that are flowing through the mail that are uncaught?
        Mr. Williams. No, sir.
        Mr. Turner. Is there any better technology available that
    we are not applying to trying to inspect these packages than
    the x ray that you referred to?
        Ms. Durant. Well, the x rays are pretty good, and we are
    forever improving those machines. They become more and more
    precise. The drug traffickers are more and more sophisticated
    and look for ways to hide the x ray. And so we are always
    trying to improve it, improve the density levels and those
    sorts of things. But we believe that the combination of the
    nonintrusive technology, the dogs and this advanced manifest
    information, are about the most effective things available to
    us.
        Mr. Turner. Let me ask a little bit more about this ongoing
    dispute you say Customs has with the Postal Service about
    outbound mail. What are the issues there that cause that to be
    a problem?
        Ms. Durant. The Customs Service believes that our lack of
    authority to examine outbound mail is providing an enormous
    loophole for not only drugs but the assets of drugs and money
    laundering.
        We have since the early eighties, and have currently,
    legislation to expressly give us outbound authority. We believe
    that we have that authority; the Post Office does not. I have
    to say that the Post Office has a privacy concern and that has
    been their express concern over all these number of years. But
    we really believe this outbound authority is crucial. It is the
    only area where we do not have search authority is in the mail
    on outbound.
        Mr. Turner. And is the opposition expressed by the Postal
    Service solely on preserving the privacy?
        Ms. Durant. They have expressed that concern. They have
    expressed a concern about the operational impact of outbound
    authority, which is a genuine concern, and we would certainly
    work with them in establishing an MOU, where the outbound mail
    would be delivered, how many resources we would be devoting to
    it, and that sort of thing. But their main express concern is
    that it violates the fourth amendment.
        Mr. Turner. Has there ever been any legislation to try to
    give you that authority?
        Ms. Durant. We have had legislation since the early
    eighties that has not been successful. We do currently have
    legislation pending again in the latest crime bill for outbound
    authority. Yes.
        Mr. Turner. Mr. Williams, what kind of additional resources
    do you need to combat what you described as the growing use of
    the Internet by drug traffickers?
        Mr. Williams. Well, sir, we need not only personnel
    resources, additional personnel resources, we also need
    significant amounts of funding to be able to put into place
    infrastructures that will allow us not only to train our agents
    and other agents in other law enforcement, both Federal and
    State, but then have the ability to create a process where we
    will be able to engage the traffickers who are using the
    Internet through various course-authorized Title 3
    investigations. So it is a resource problem that we will be
    faced with. And I think the other agencies will be likewise.
        Mr. Turner. Would any of the other witnesses like to
    comment on their needs for additional resources to combat this
    problem?
        Mr. Keefe. From DEA's perspective, sir, I would echo Mr.
    Williams' comments as far as our need to attack new technology,
    changing constantly. We used to see people just use hard-line
    telephones. Now we have seen cell phones and sometimes we never
    even know who the people are that are using the phones. We have
    worked numerous investigations, I'm sure everybody here could
    tell you many cases, and now we're going against them also
    using the Internet.
        This technology changes monthly and so it is an issue for
    us in law enforcement both in training, equipment, and in
    authorization to intercept them, sir.
        Mr. Turner. Mr. Dellicolli, did the discovery of the
    $100,000 worth of narcotics in the stuffed animal result in the
    arrest of anyone?
        Mr. Dellicolli. No, no, sir. No, it did not result in an
    arrest. Someone was questioned regarding it, but there was not
    enough probable cause to effect the arrest.
        Mr. Turner. I get the feeling, with none of you being able
    to express an opinion regarding the volume of undetected
    narcotics that travel through the mail, that we may be in a
    position where drug traffickers understand that their use of
    the mail and the fact that a certain percentage is going to be
    detected is just a cost of doing business. And if we are at
    that point, it seems very obvious to me that we need to
    redouble our efforts in order to combat this very, very serious
    problem.
        It seems to me that we better start trying to keep up with
    the drug traffickers and their use of technology. The example
    you cited, Mr. Williams, of the Colombian ring that uses
    university professors and other highly trained individuals
    seems like they have got the edge on us right now. So I
    certainly can appreciate the difficulty of the task each of you
    faces every day, and I would be remiss if I did not commend
    each of you who serve in the positions of responsibility for
    dealing with this problem for the good work and the hard work
    and dedication that you have exhibited.
        And I also want to commend the private carriers for their
    willingness to cooperate. Good corporate citizenship by those
    who are in this industry, I think, is critical in trying to
    combat this problem. And I thank those of you here with the
    private sector for the efforts that you are making. Thank you,
    Mr. Chairman.
        Mr. Mica. I thank the gentleman. I now recognize the
    gentleman from Maryland, Mr. Cummings.
        Mr. Cummings. Thank you very much, Mr. Chairman. I guess
    what I'm trying to figure out is--and just following up on some
    of Mr. Turner's questions, is how we can, as the Congress, help
    you help this country. And Ms. Durant, I want to ask you about
    this manifest.
        Tell us exactly what information would be on the ideal
    manifest?
        Ms. Durant. We would like to have--it's really not a
    tremendous amount of information, but we would need the sender,
    the recipient, and a description of the goods and probably an
    estimate of the value. If we had those basic information,
    particularly a goods description, country of origin, those
    kinds of things, we could use that information to better
    target. We are very heavily automated in Customs and use
    manifest information in all of our targeting efforts and we can
    build rules then to detect anomalies that will then let us know
    in advance. We can do research and analysis so that we can try
    to get ahead of shifts in operations in smuggling. It's just
    provided us with a vast tool, a really, really effective tool
    to become--to increase our efficiency and our effectiveness,
    without disrupting the flow of goods across the borders to the
    legitimate traffickers. It just helps us so much in our
    analysis and selection.
        Mr. Cummings. And you said that the U.S. Postal Service is
    opposed to that?
        Ms. Durant. They are not opposed to it, certainly, but they
    do not agree that we need it--they are working on this message,
    as are we, as technical advisors to this group in Europe
    developing this manifest message. I do believe they have a bit
    of a challenge because other postal administrations would have
    to participate or we would have to come up with some way of
    capturing that information, which we certainly want to explore
    with them and not try to tackle everything at once.
        But we do believe, for example, that in the Express Mail
    environment that information could be available. We could use
    it.
        Mr. Cummings. Now, I can imagine my constituents back in
    Baltimore listening to all of this, and I would bet any amount
    of money when I get back home somebody is going to ask this
    question, so I better ask it myself: Do you all talk? In other
    words, does the Postal Service talk with Customs? And how do
    you come to the conclusions that you just came to?
        Ms. Durant. We do talk. How I know how they feel about it
    is from these talks. I meet with them about----
        Mr. Cummings. I mean other than a hearing like this.
        Ms. Durant. No, we talk informally. We have to talk because
    we have to work together. They have to deliver the mail; we
    have to look at it. We have a shared interest in making sure
    that legitimate trade flows. So we do indeed talk.
        I have a permanent liaison to the Postal Service on my
    staff. He does mail full time. I meet with them about every 3
    months. I have another regular meeting scheduled with them. Our
    agents in the Office of Investigation meet with their
    counterparts in the Postal Service. So we do have a common
    concern about this. I don't want to give the impression that
    they are cavalier in any way about this problem.
        I think we do differ on the approach, and we need to
    continue to talk and work together on that. But we believe that
    we have a different interpretation of our authorities and that
    we do need some clarification from the Congress on what those
    authorities might be.
        Mr. Dellicolli. May I followup?
        Mr. Cummings. Of course.
        Mr. Dellicolli. On the automation side of the question, to
    why automation is important, a significant number of Customs
    seizures are now based on prior information from the Office of
    Investigations, from DEA and the law enforcement people, and to
    be able to apply that prior information we have to have
    automated systems so that we can actually find the information,
    the piece, the package, the parcel that we are looking for.
        We use it a lot with passengers coming into the United
    States. We have information. We have ways of identifying which
    plane a person is going to be on and who that person is when
    they arrive into the arrival area, and we need the same sort of
    ability to be able to find the suspect panel. If we have
    information, now, that the mail is being used for an inbound
    shipment of drugs, pretty much we still have to rely on a lot
    of luck at the mail branches with manual lookouts, and we have
    no way of segregating and focusing on that piece of mail.
        With respect to postal, I would like to say that we do,
    however, even though we have these issues with respect to the
    outbound mail authority, we do work with them on a daily basis.
    I'm the director of the Cyber Smuggling Center. We do a lot of
    investigation of on-line child pornography. We do work hand in
    hand with the Postal Service conducting these investigations.
    We also work very well with respect to controlled deliveries of
    drugs that we do seize inbound with the mail.
        So we do work together. We've just agreed to disagree on
    this point.
        Mr. Cummings. I want to just go back for a moment to the
    stuffed animal. What amount of drugs was in there?
        Mr. Dellicolli. Ten--I have to have it back again. 10,000
    individual dosage units, individual pills, and it has a street
    value of approximately $100,000, I believe.
        Mr. Cummings. And would you hold the stuffed animal up so
    that the C-SPAN audience could see it?
        Mr. Dellicolli. I think this probably came in around Easter
    time.
        Mr. Cummings. And the reason why I wanted to ask about
    this, I'm just curious about this. I think the thing that would
    kind of upset people is when they hear that no one was
    arrested. Not even arrested; is that right?
        Mr. Dellicolli. Well, oftentimes what happens if we see
    something----
        Mr. Cummings. You can put him back in the box.
        Mr. Dellicolli. He makes a better witness. But oftentimes,
    just because someone ships something to the United States that
    is addressed to an individual, that is not probable cause for
    an arrest. Somebody actually has to, you know, accept delivery
    of the parcel, and hopefully then we are actually able to prove
    that they were indeed, the intended recipient of that parcel.
        Oftentimes people refuse to accept delivery of a parcel. It
    is especially critical that if we make a seizure, that we are
    actually able to effect a controlled delivery very quickly.
    Because oftentimes, especially with Express Mail deliveries,
    any delay in them getting their drugs in what they usually feel
    is the appropriate allotted time usually results in them
    refusing to accept the parcel.
        So for instance, if this parcel came in, they knew this
    parcel was shipped and they were expecting delivery on Tuesday.
    And if it was discovered on Tuesday and it took law enforcement
    officials to Friday to obtain a search warrant and conduct the
    controlled delivery, there is a very good chance that the
    parcel wouldn't be accepted. I'm not familiar with the exact
    details of this case, but this is typically what happens.
        Mr. Cummings. So that parcel--and I understand what you
    just said, that you are not familiar with this case, but if
    that parcel was, say, delayed--let's say you picked it up in
    the regular course of things and discovered that there was a
    sizable amount of drugs there, what would you do then?
    Repackage it? Your normal course would be to repackage it and
    then let it go on as fast as you could? Is that it?
        Mr. Dellicolli. That's correct.
        Mr. Cummings. And then you would actually follow it to the
    location?
        Mr. Dellicolli. That's correct. And if it came in with the
    U.S. mails, we would do that in conjunction with the U.S.
    Postal Service, and an actual postal inspector dressed as a
    mail carrier would actually make the delivery of the mail.
        Mr. Cummings. Now the moment that person signed for it and
    said OK, took the package in, that takes you to another level
    as far as your investigation is concerned; is that right?
        Mr. Dellicolli. Yes, I prefer to not get into the
    specifics--but, yes, that's correct.
        Mr. Cummings. I understand. Let me ask you this, going back
    to the U.S. mail. Is it safe to say that they handle about 200
    million pieces of mail a year? The U.S. Postal Service? Anybody
    know that?
        Ms. Durant. I don't. No.
        Mr. Cummings. In other words, they handle a lot more pieces
    of mail than private shippers. Is that a safe statement?
    Anybody?
        Mr. Williams. I do not know.
        Ms. Durant. I don't know.
        Mr. Cummings. Nobody knows? OK. Going to Mr. Keefe, you
    talked about--you mentioned an investigation where there were
    quite a few people arrested. What was the name of that?
        Mr. Keefe. Operation Green Air.
        Mr. Cummings. And from your description of it, it sounded
    like you all had some pretty good intelligence.
        Mr. Keefe. We developed that intelligence as it went on. As
    I said, it was an 18-month investigation. And we worked the
    intelligence through and worked very closely with the FedEx
    Corp. security people through that time so that we could
    successfully conclude that investigation, sir.
        Mr. Cummings. Do you all spend a lot of your effort, time,
    and money with regard to intelligence operations? I mean, we
    are hearing about the dogs, we are hearing about the detection
    devices. And certainly intelligence. And I'm just wondering,
    when you look at your successful efforts with regard to these
    kinds of crimes, do you find that--I mean, I'm sure
    intelligence is quite expensive and I'm just wondering how much
    of a role it plays in successfully bringing these folks to
    justice.
        Mr. Keefe. I think intelligence--maybe I should try and
    understand exactly what we mean by intelligence, whether it is
    human intelligence, intelligence----
        Mr. Cummings. I'm dealing with human intelligence. I'm just
    saying getting information that something is about to happen,
    and getting information and hearing about it, because the
    operation that you described was very interesting because it
    sounded like a lot of people were involved. When you say you
    got 25 people that were FedEx employees and they were hiding
    all kinds of information, that sounds very intricate and it
    sounded as if somebody had to have some pretty good information
    to get to where you got to.
        Mr. Keefe. It started originally in an investigation in
    Boston, MA where they first ran into Jamaican traffickers who
    were traffickers in marijuana. Through the Boston office
    sharing their information, the investigation extended to New
    York. Ultimately, to Los Angeles. In Los Angeles, we started
    working very closely with the FedEx representatives there.
    Then, from the Los Angeles investigation, we branched out to
    Atlanta, GA; Fort Lauderdale, FL; Newark; and back to New York
    City again.
        And that's what I mean by the intelligence and the flowing
    and the sharing of that information with Customs was involved
    with that also and the Internal Revenue Service and many State
    and local officers. So it was like you mentioned, sir, bringing
    that intelligence together, sharing it, working together and
    taking the best efforts we can to culminate successfully the
    investigation.
        Mr. Cummings. You may have mentioned this, but how many
    convictions did you get out of that operation?
        Mr. Keefe. These people were just arrested in April, sir.
    So I'm not quite sure who--I know some have pled, but I
    couldn't tell you exactly.
        Mr. Cummings. OK. One other thing that I was just curious
    about, you know. I take it that the U.S. Postal Service
    believes that these manifests going back to you, Ms. Durant,
    would violate the fourth amendment privacy search and seizure
    guidelines. What are your attorneys telling you about that? I'm
    sure you all have attorneys that advise you; is that right?
        Ms. Durant. We do, indeed. We believe that our search
    authority gives us outbound authority. The manifest information
    is on inbound, which is where we would begin, is authorized
    legally, and the Postal Service does not dispute that. I think
    it's more of a matter of how we would do it and at what cost
    and the issue with the other postal administrations around the
    world.
        I don't think we have a legal issue with the manifest
    information or even so much a privacy issue. It's more of a
    logistics, cost, how we do it kind of issue.
        On the outbound authority, they have a serious legal
    concern. We believe that 31 USC 5317 provides Customs with
    warrantless border search authority in and out. The Post Office
    believes that the privacy concerns overtake that, the fourth
    amendment concerns that they have on outbound. They do not
    dispute search authority inbound. So what we believe is
    necessary is express authority from the Congress for outbound
    search authority.
        Mr. Cummings. I take it, you know, one of the things that
    we talk about up here on this side of the--up here quite a bit
    is that we don't--we try to project into the future and ask
    ourselves where will we be 5 years from now? Will we be having
    the same conversations? Will we be addressing problems that
    have gotten worse?
        And you know, I'd just ask you all, Ms. Durant, without
    that clarification that you just talked about, I take it that
    if you were to project 5 to 10 years in the future, let's say
    10 years in the future, our problem would be far worse; is that
    correct?
        Ms. Durant. We believe to be true, sir, yes.
        Mr. Cummings. Why do you say that?
        Ms. Durant. Well, there's just such growth in the drug
    problem. And this loophole on the outbound authority is
    providing, we believe, as one of the members mentioned, these
    drug traffickers and money launderers aren't stupid, and they
    don't think that we do not search outbound mail. And so it's
    just clear to us that it would continue to provide a very big
    loophole for them and that the use of it would increase.
        Mr. Dellicolli. May I followup on that?
        Mr. Cummings. Yes, please.
        Mr. Dellicolli. Thank you, sir. The other reason is the
    Internet. As electronic commerce becomes more and more a part
    of the fabric of doing business in the United States, it is
    also going to become, more and more, a way of introducing
    prohibited merchandise, regardless of what that is, into the
    United States? We are seeing it with on-line pharmaceuticals.
    We are seeing it with intellectual property rights. As
    electronic commerce becomes the way we do business, the Express
    Mail companies and the U.S. mail are going to become the means
    for those products to move.
        The Internet puts the source directly in touch with the
    supplier. The only piece missing now is how you get it from
    point A to point B, and we're seeing that now. The explosion in
    the pharmaceuticals is a direct result of on-line
    pharmaceutical sales. Seizures went from approximately 2,000 in
    1998 to almost 10,000 in 1999, a 450 percent increase. And we
    attribute that to on-line pharmaceuticals.
        So as more and more people learn how electronic commerce
    works and how--the drug traffickers learn how the electronic
    commerce sector works, it is going to be mixed up with
    legitimate and illegitimate business.
        Mr. Cummings. Finally, I just too want to take a moment to
    thank all of you for first of all being here, but I also want
    to thank you for what you do every day to try to make our
    country the very best that it can be.
        The chairman has heard me say it many times: In my
    neighborhood I get to see the end result of drugs and the
    effects that they can have on families and have on communities
    and children.
        And I know that you all work every day, every hour, trying
    to make a difference, and I know it's very, very difficult and
    that's why I applaud the chairman for holding this hearing
    because we do want to do everything in our power to help you do
    your jobs. And so we stand open and that's why we needed to
    hear from you today. And again I thank you.
        Mr. Mica. Thank you, Mr. Cummings. We not only have the
    problem of illegal narcotics coming in by mail and postal or
    parcel packaging, I'm told that in a single 4-pound letter
    class parcel box of this size, you can--you can put
    approximately $180,000 in hundred dollar bills. Mr. Williams
    testified about the problem of money going out. And this is
    also a very convenient method; is that correct? These are the
    figures that I've been given, Mr. Williams?
        Mr. Williams. Yes, sir, that's approximately correct in
    terms of the amount of money in large denominations that can be
    inserted into those type packages. Yes, sir.
        Mr. Mica. And is that a growing problem, Ms. Durant? I
    mean, we've been concentrating on drugs coming in but drugs
    generate an incredible amount of money, cash. Are we seeing an
    increase in cash being transported by this method?
        Mr. Dellicolli. In the past 2 years, Customs has seized--
    it's in our long statement--Customs has seized $17 million from
    Express Mail in outbound operations. But because we don't have
    the authority to search outbound mail without probable cause--
    --
        Mr. Mica. One of the things that we have done, Ms. Durant,
    working with Customs when we have been made aware of some of
    the problems in trying to detect illegal narcotics coming into
    the border, is to get additional equipment, technology, in
    place. One of the things we've done in the last year or 2 is
    encourage R&D and also some new equipment at our borders. And
    some of that is being put in place as we speak.
        Some of that's ion scanning equipment as opposed, I guess,
    to just the radar. Do you have any of that equipment in place?
    Are you utilizing ion scanning?
        Ms. Durant. We are utilizing all the equipment provided to
    us. And we do have a very big R&D unit. I would have to provide
    that for the record. I don't know.
        Mr. Mica. If you could, we'd like to know.
        You said that because of the sheer volume and increasing
    responsibilities of Customs to check both mail and also private
    parcels, that you either need more personnel or more
    technology; is that correct?
        Ms. Durant. Customs is feeling pretty overwhelmed on all
    fronts, yes, with the increase.
        Mr. Mica. Can you tell me if you have a line item request
    or a specific request, then, for additional equipment to cover
    either private parcel examination with this equipment or postal
    examination?
        Ms. Durant. I would have to check for sure. I know we have
    submitted information. I don't know how far it's gotten in our
    request. I don't know how far it's gotten.
        Mr. Mica. I'm not sure about that, but we do need to check
    with that. We need to talk to Mr. Kelly about it and see that
    we cover our bases there with this equipment and we can make
    that happen, I think.
        We've heard a great deal about conflicts between the
    agencies, and also some problems with the law. I'm wondering, I
    guess with the Internet we've heard problems about advance in
    technology and also in transport today. And we've heard about,
    again, interagency conflict. But what about the law in regard
    to keeping up with this combination of Internet and also
    trafficking using the mails, which I guess illegal use of the
    mails, we have penalties. But are the penalties and the law
    keeping up with technology? Mr. Williams?
        Mr. Williams. Sir, one of the areas that we believe that
    some congressional clarification can be provided to is the ECPA
    act, which as we know when it was originally drafted in 1986,
    related to a facility in terms of if you look at the PIN
    register trap and trace statute that's contained therein. Now,
    with the Internet, questions about whether or not that truly
    applies or how it's going to be applied is going to arise.
        Also with the Internet communications, does a local
    prosecutor, for instance, have to seek a court order in all the
    districts in which the communications have passed and are
    stored in? It's an area of uncertainty at this particular point
    in terms of how you go and obtain information timely from
    various locales where information may be stored on the Internet
    where it resides. That's an area that needs some look, if you
    would, by Congress.
        All of the major drug trafficking organizations, and we
    look at them, are businesses. They're in it, it is a business.
    They have people who are specifically responsible for
    communications and obtaining the best and the most high-tech
    communication that they can find. We have seen the evolution of
    this use from the cell phone to the pager to the satellite
    phones, encryption, and to the Internet itself now.
        So I think there has to be some look at how law enforcement
    is going to be able to respond to this ever-increasing use of
    high technology and if our laws are keeping up with the
    advances in technology. In terms of penalties, for instance,
    the selling of law enforcement badges over the Internet
    basically under the statute is a misdemeanor. And, of course,
    you are well aware it's being done, but it is still a
    misdemeanor. But look at the potential harm that this
    particular act can cause not only with security but with
    credibility of the institutions. So, yes.
        Mr. Mica. Mr. Keefe, are you seeing disparity between the
    law, technology, and problems that we have in keeping up?
        Mr. Keefe. I would agree with Mr. Williams. A lot of it,
    too, is we have to, as investigators, become educated working
    with the prosecutors so that we understand what laws there are
    available now for us to work on to attack the Internet through
    what we refer to as a Title 3 wiretap process. I think there is
    a lot of education that has to go along with that and so the
    laws need to be changed. As you know, the Title 3 Omnibus Crime
    Control Act of 1968 has only been changed once, so it has to be
    looked at to see how technology has changed and how we in law
    enforcement can work with it.
        Mr. Mica. Mr. Cummings and I always like to hold these
    hearings, but we like to see some tangible results so I'm going
    to ask the staff. I think Mr. Cummings would agree with me and
    Mrs. Mink, I would have a conversation with her, that we bring
    together these agencies informally. A little task force we'll
    put together and we'll do an assessment of how operationally we
    can do a better job, and I would like to have an assessment of
    equipment that's needed of a very short cycle here in
    appropriations.
        But if we're missing equipment or we need R&D for equipment
    to get on line to help solve this problem, we'll do that. So
    from an operational standpoint, we want your recommendations
    for the subcommittee. And I'll ask the staff no later than by
    the end of June to have this--have a meeting.
        And then I'd like the legal and technical people to come
    forward from DEA, from Customs, from FBI and any other agencies
    and provide us with an outline of how we can better craft the
    laws to deal with the situation we are facing. So we have
    something tangible come out of this and something that can
    hopefully make a difference. Is that agreed, Mr. Cummings?
        Mr. Cummings. Mr. Chairman, just a moment. I agree with you
    completely. We've said it often that we'll come together, and
    the question is what do we have after all the dust settles? We
    just had a session where we kind of aired some problems, but
    the question becomes what kind of results do we get?
        And I agree with you and I applaud you for that, and I'm
    hoping that--I know that we will get maximum cooperation from
    the agencies because I think every single Member of Congress
    wants to do everything that we can to make sure that we, as I
    said a little bit earlier, help you help us. And so thank you,
    Mr. Chairman. I look forward to those meetings and I look
    forward to receiving the list, the equipment that you're
    talking about also.
        Mr. Mica. Thank you. I don't have a lot of time to get into
    it now, but we also have been made aware of, as a subcommittee
    in Congress also, that we are having problems with diplomatic
    pouches, diplomatic mail from some U.S. Embassies and others.
    We had an incident where drugs were being transported and other
    contraband. We need to look at how we are approaching that both
    from our Embassies and from our military personnel and
    installations. And I would like some response back to the
    subcommittee on how we are tackling that problem.
        Once again, on behalf of the subcommittee, we do appreciate
    your efforts. We do try to assist DEA, Customs, FBI and other
    law enforcement agencies and all those involved in this tough
    effort. We applaud you, again, and look forward to your
    cooperation. Mr. Cummings.
        Mr. Cummings. Yes, Mr. Chairman, I just wanted to make
    sure, and you just talked about the things that we, the
    followup that we will be doing, but one of the issues that came
    up, and I'm just wondering whether this is covered under what
    you were saying, this whole issue of the Netherlands and
    cooperation from other countries and what we could possibly do
    in working with maybe other committees, working with the--our
    agencies. I just did not know whether those kinds of issues
    were covered under what you're talking about, or whether you
    were just sort of leaving that out?
        Mr. Mica. Well, I would like to pursue that. We have had
    meetings with the Minister of Justice. We also have coming, I
    believe within the next 2 weeks, representatives from the
    European Parliament, of which I am certain because we have had
    discussions with everyone, in particular Netherlands, because
    it had some difficulty. Actually, the new Netherlands delegates
    there are much more willing to take some steps to bring the
    situation under control. We had some problems with the previous
    representatives.
        So I think at that meeting, and we can also meet with the
    Netherlands Ambassador and convey additional interest and
    concern to the Minister of Justice who was willing to cooperate
    with us. But they've got to toughen their laws and they know
    that. And they also have to close down some of these
    operations. But we will make that also an agenda item, Mr.
    Cummings.
        Mr. Cummings. Thank you very much Mr. Chairman.
        Mr. Mica. Thank you. Again, thank you. There being no
    further business before the subcommittee, I'll excuse these
    witnesses at this time. And again we appreciate your
    cooperation.
        I call the second panel this morning. The second panel this
    morning consists of Mr. Kenneth Newman who is the Deputy Chief
    Postal Inspector for Criminal Investigations with the U.S.
    Postal Service. Mr. Norman T. Schenk, and he is the Customs and
    Brokerage Manager for the United Parcel Service. Mr. Robert A.
    Bryden, and he is vice president for Corporate Security of
    FedEx Corp. And Mr. James H. Francis, and he's the regional
    manager for Security with DHL Airways, Inc. Pleased to welcome
    these four witnesses this morning.
        Again, this, is an investigations and oversight
    subcommittee of Congress. We will swear you in in just a
    second, and also if you have lengthy statements or information
    background that you'd like to have made part of the record, we
    will do so upon request. Remain standing.
        We have a fifth person. Could the fifth person identify
    himself?
        Mr. O'Tormey. Walter O'Tormey.
        Mr. Mica. And your position?
        Mr. O'Tormey. Manager of Processing Operations for the U.S.
    Postal Service.
        Mr. Mica. OK. Thank you. Would you please raise your right
    hands.
        [Witnesses sworn.]
        Mr. Mica. All of the witnesses answered in the affirmative.
    And again, sir, if you could identify yourself one more time
    for the record. I don't have you on the witness list.
        Mr. O'Tormey. Sure, Mr. Chairman. My name is Walter
    O'Tormey. Last name is spelled O- apostrophe -T-O-R-M-E-Y. My
    title is Manager of Processing Operations for the U.S. Postal
    Service. I work out of Washington, DC.
        Thank you. First witness I will recognize is Mr. Kenneth
    Newman. He's the Deputy Chief Postal Inspector for Criminal
    Investigations with the U.S. Postal Service. Welcome, sir, and
    you're recognized.

    STATEMENTS OF KENNETH NEWMAN, DEPUTY CHIEF POSTAL INSPECTOR FOR
    CRIMINAL INVESTIGATIONS, U.S. POSTAL SERVICE; NORMAN T. SCHENK,
    CUSTOMS AND BROKERAGE MANAGER, UNITED PARCEL SERVICE; ROBERT A.
    BRYDEN, VICE PRESIDENT, CORPORATE SECURITY, FedEx CORP.; JAMES
    H. FRANCIS, REGIONAL MANAGER, SECURITY, DHL AIRWAYS, INC.; AND
     WALTER O'TORMEY, MANAGER, PROCESSING OPERATIONS, U.S. POSTAL
                                SERVICE

        Mr. Newman. Good morning, Chairman Mica and members of the
    subcommittee.
        Mr. Mica. Pull that up, Mr. Newman, as close as you can.
    Thank you.
        Mr. Newman. I appreciate the opportunity to appear before
    you today to report on the efforts and accomplishments of the
    Postal Inspection Service. These relate to the identification
    of drugs transported through the U.S. mails, and our
    investigative efforts to have the drug traffickers prosecuted.
    I have previously provided a written statement for the record.
        I want to thank you, Chairman Mica, for your longstanding
    involvement in the war on drugs and for scheduling this hearing
    to address an issue of primary concern to the national law
    enforcement community.
        The U.S. Postal Inspection Service is the primary law
    enforcement arm of the U.S. Postal Service, enforcing over 200
    Federal criminal and civil statutes. We are responsible for
    protecting postal employees, the U.S. mails, postal facilities,
    and for protecting customers from being victimized by
    fraudulent schemes or other crimes involving the mail.
        We also work to rid the mail of drug trafficking, mail
    bombs, and perhaps one of the most despicable crimes, the
    sexual exploitation of children.
        For many years postal inspectors have played a key role in
    the war on drugs. The objectives of our narcotics
    investigations program are to reduce the mailing of illegal
    narcotics and dangerous drugs and their proceeds, to protect
    postal delivery employees from violence related to drug
    trafficking, to keep illegally mailed narcotics from harming
    American citizens, and to preserve the integrity of the U.S.
    mail.
        Every day, postal inspectors, in cooperation with our law
    enforcement counterparts, are conducting narcotics
    investigations. Both scheduled and unscheduled interdictions
    are conducted to identify and remove narcotics from the mails
    to develop intelligence and identify trends.
        Each year we also establish national initiatives. From 1997
    through 1999, the Inspection Service narcotics interdictions
    conducted nationwide resulted in the seizure of 8,617 packages
    containing controlled substances and over $15 million. During
    fiscal year 1999, postal inspectors arrested over 1,500
    individuals for drug trafficking via the mail.
        This year, a nationwide interdiction effort named Operation
    Spring Break was conducted at 62 locations. The operation was
    conducted in two phases and netted over 185 seized parcels,
    $428,000 in cash, over 1,900 pounds of marijuana, cocaine, and
    other controlled substances, and 50 arrests.
        The Inspection Service has a long history of working with
    Federal, State and local law enforcement agencies in combating
    the proliferation of dangerous drugs in America. Obviously, our
    focus has been on the use of the mails as a vehicle for
    trafficking drugs and drug proceeds. This focus has led to a
    joint effort with local and State law enforcement on an
    informal basis with individual cases and task force
    cooperation. Regular joint efforts have been held and conducted
    in conjunction with the U.S. Customs Service. Formalized
    jurisdiction has been established with the Drug Enforcement
    Administration in the form of a Memorandum of Understanding.
        The Inspection Service relies on the following major
    initiatives and programs to conduct investigations of the
    mailing of illegal and dangerous drugs.
        Task forces. Postal inspectors along with local, State, and
    Federal law enforcement agencies, are members of organized
    crime and drug enforcement task forces as well as other
    multiagency task forces. These also include the security
    components from private carriers.
        Working with the National Guard. Currently the Inspection
    Service has 42 National Guard personnel working in our program.
    They work in 45 locations within 15 of our 18 divisions and at
    FinCEN. We also gather local intelligence and work very closely
    with narcotics squads in metropolitan areas.
        Seizure information and controlled delivery data, both from
    the U.S. mail and private carriers, is entered into the
    national prohibited mailings--narcotics data base. A national
    postal money order data base is also utilized to analyze the
    use of postal money orders as a vehicle to launder drug
    proceeds. At FinCEN, we have two Inspection Service employees
    working at that unit.
        The Inspection Service is involved in the high-intensity
    financial crime area initiatives in New York, New Jersey, Los
    Angeles, San Juan and the southwestern United States. And
    inspectors serve and participate on suspicious activity report
    review teams to exchange intelligence with other agencies.
        The Inspection Service has continued to work with various
    law enforcement agencies in what have been identified as high-
    intensity drug traffic areas.
        Our ongoing review of Express Mail labels helps to identify
    outbound parcels destined for foreign addresses that may
    contain drug money. New York inspectors have pioneered this
    technique and have provided training for postal inspectors
    nationwide.
        As a further enhancement of our international efforts, the
    chief postal inspector chairs the Postal Security Action Group
    of the Universal Postal Union. That is a specialized agency of
    the United Nations. This group comprises postal security
    experts from 48 member and 28 observer countries which meet
    twice a year to discuss, formulate, and implement initiatives
    to improve security and integrity of the mail. Each year PSAG
    coordinates airport security reviews at major gateway airports,
    regional training courses in security matters, to include drugs
    in the mail and money laundering, and maintains a network of
    security specialists throughout the world.
        The Postal Inspection Service will continue to provide
    investigative resources and leadership in its campaign to end
    the shipment of illegal drugs in the mail. We are committed to
    that goal. And our efforts have been fruitful. But more can be
    done.
        In February 1998, Attorney General Janet Reno expressed an
    interest in addressing the issue of smuggling drugs through the
    mails and private carriers. Because of our experience in this
    area, the Inspection Service was asked to be part of a joint
    working group with DEA, the FBI, Customs, Federal Express, UPS,
    AirBorne, Emory, DHL and Federal and State prosecutors. In
    March 1999, the group recommended to the Attorney General that
    the Department of Justice implement a national initiative to
    pool resources, talents, and ideas to attack this problem in a
    coordinated fashion.
        The initiative was to balance the concerns of law
    enforcement while accommodating the diverse and often seemingly
    contradictory concerns of private industry. Unfortunately, that
    effort lost momentum.
        Over the past few weeks, we have approached DEA and they
    have agreed to help us restart and lead that initiative. I
    would like to invite the private carrier services here this
    morning to rejoin us as well. The Postmaster General has
    directed the Chief Postal Inspector and I to meet with the
    Commissioner of Customs to address a variety of mutual
    concerns. We met recently with Customs senior staff and look
    forward to hearing back from them regarding their participation
    in this important initiative.
        Mr. Chairman, I would like to ask for your endorsement and
    support of this effort.
        Again, I would like to extend my appreciation to the
    subcommittee and Chairman Mica for the opportunity to be here
    today, and I am available certainly to answer questions.
        Mr. Mica. Thank you, and we will defer questions until we
    have heard from all of the witnesses.
        [The prepared statement of Mr. Newman follows:]
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        Mr. Mica. Our next witness is Norman T. Schenk, and he is
    the Customs and brokerage manager for UPS. Welcome, and you're
    recognized, sir.
        Mr. Schenk. Thank you, Mr. Chairman. I appreciate the
    opportunity to appear before you today.
        I'm here to discuss how UPS works with the Customs Service
    to interdict narcotics and other illicit merchandise. Mr.
    Chairman, our efforts in this area are extensive but our
    philosophy is simple. UPS is committed to building the business
    connections of the next century, but we are committed in equal
    measure to ensuring those connections are used to deliver
    packages, not poison. When customers entrust parcels to UPS, we
    want them to be confident they will be shipped swiftly and
    delivered on time. But if drug dealers attempt to use our
    network to ship contraband, whether it be drugs or dollars, we
    want them to be certain they will be caught swiftly and they
    will do time.
        Our partnership with the Customs Service has dramatically
    curtailed the flow of contraband. Today, Mr. Chairman, we urge
    you to ensure that the Customs Service has the 21st century
    tools it needs to maintain the extraordinary growth of commerce
    in this new millennium. Last year, the United States received
    21 million commercial shipments. By 2004, that number is
    projected to climb to 50 million. Customs simply cannot inspect
    each shipment by hand.
        Mr. Chairman, full funding of the new automation system
    known as ACE, the Automated Commercial Environment, is
    essential for Customs to keep pace with the growth of commerce.
        No technology can enable the Customs Service to inspect 50
    million shipments, but ACE can help Customs leverage the power
    of information to target its inspections efficiently and
    precisely.
        Our own experience at UPS shows the difference such a
    system will make. Our advanced electronic manifesting procedure
    provides Customs with extensive information from the
    destination of a parcel to a description of its contents on
    every package we transport to the United States before it
    arrives at a UPS facility.
        This information gives Customs a comprehensive electronic
    data base that enables it to spot patterns, pinpoint suspicious
    packages, and move swiftly. Full funding of ACE will give the
    Customs Service a similar tool, one becoming more essential
    with every shipment that arrives on our shores.
        In addition to our work with Customs, UPS conducts an
    aggressive and thorough drug interdiction program of our own.
    We train delivery drivers to spot packages that may contain
    illegal drugs. We screen for suspicious parcels. We routinely
    work with the other law enforcement agencies like the FBI, DEA,
    and State and local authorities, including providing them
    information about any offender we identify.
        UPS works closely with Customs officials at our major hubs
    at our own expense, as the law requires. We also work with
    Customs, especially through our tracking system, to target and
    search outbound UPS shipments. Our partnership with Customs has
    produced concrete results. During 1999, Customs' blitzes
    conducted with canine units and x-ray equipment resulted in no
    significant drug seizures at our main facility in Louisville,
    KY. Blitzes last week in Houston and last July in Ontario, CA
    also discovered no contraband. A subsequent blitz of the same
    California facility did turn up one illegal shipment, a single
    box of Cuban cigars.
        Mr. Chairman, we undertake these actions, and more, because
    it is our legal responsibility. But even more important, we do
    it because it is our moral responsibility. At UPS, our mission
    is building the business connections of the 21st century. But
    our vision is broader than parcels. It is ultimately about
    people. About people and a world drawn closer together through
    commerce and communication. Drugs have no place in that vision,
    Mr. Chairman, and no place in a single UPS vehicle or aboard a
    single UPS airplane. At UPS we like to say we run the tightest
    ship in the shipping business. We are also committed in
    partnership with the Customs Service to running a clean ship.
        I would be pleased to answer any questions and thank you
    for your time.
        Mr. Mica. Thank you. And we will get back with questions
    when we have heard from all the witnesses.
        [The prepared statement of Mr. Schenk follows:]
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        Mr. Mica. Next we will hear from Robert A. Bryden, and he
    is vice president of Corporate Security for FedEx Corp.
    Welcome, and you're recognized, sir.
        Mr. Bryden. Thank you, Mr. Chairman, distinguished members
    of the subcommittee. It is a pleasure to be here today to talk
    about this important topic. For me it is a pleasure with two
    distinct ends to it. One is it's an honor to be here
    representing the over 200,000 employees and contractors in the
    FedEx family. Second, a little over 4 years ago, I retired from
    the U.S. Department of Justice as the Chief of Operations for
    DEA. As such, I have some degree of knowledge in the topic that
    you're discussing today, and a high degree of interest in that
    as you can expect after a career that lasted a little over 23
    years.
        I think it's an important topic and I think the airing that
    you are giving it today is an important initiative. FedEx is
    proud to be part of this.
        I also have a formal statement that I've submitted and I
    would ask that you accept that into the record.
        Mr. Mica. Without objection, it will be part of the record.
        Mr. Bryden. Thank you. I think very briefly I could
    summarize what I've heard from the law enforcement agencies
    today and what the FedEx view on this important topic is. We
    believe that, first and foremost, our first line of defense is
    a well-trained, motivated, and dedicated work force. We believe
    that we have that in FedEx and that recent experiences with DEA
    and Customs have highlighted the fact that our employees are
    well trained and able to spot suspicious packages with a high
    degree of confidence.
        You heard about Operation Green Air earlier today. And
    FedEx is proud to have been part of that and able to work
    cooperatively with law enforcement agencies, which we've done
    for many, many years.
        I think another link that's important to remember is we
    have to have that strong cooperative relationship with law
    enforcement agencies. Like all of the private companies that
    are represented here today, and others, we operate in more than
    one jurisdiction. So that strong relationship with Federal
    agencies that have the ability to prosecute cases across
    governmental lines is certainly an important one.
        Our company and others, I'm sure, have a zero tolerance for
    employees or others that would use our system to violate the
    law. Drug trafficking is a terrible plague on our society that
    has affected probably every industry that we can imagine and
    every segment of our society. Our company believes very deeply
    that we have a strong civic responsibility to work with law
    enforcement, with the Congress, and with everyone in this
    country to move forward in our efforts to limit those options
    available to drug traffickers.
        At times we put ourselves at immediate risk, as we did,
    quite candidly, to some degree in the Green Air Operation.
    Normally, when FedEx discovers illegal drug trafficking in our
    system, our normal process would be to investigate it
    internally, bring in the local law enforcement organizations
    that might have jurisdiction, then immediately at the
    conclusion of our internal investigation terminate any
    employees that were found to have been involved and to have
    violated that confidence that we place in them.
        In the instance of Green Air, we were asked by DEA and
    Customs not to take that action and to let them continue that
    investigation for a period of time so that they would be able
    to uncover the full scope of that illegal criminal
    organization. We were happy to do that, even though our normal
    preference would have been to put a stop to it immediately and
    terminate the employees found to have violated law, rules,
    regulations, and our procedures.
        I think, though, that at the end, that investigation showed
    not only that our system worked, but that we had a very close
    and fruitful working relationship with the Federal law
    enforcement agencies, and hopefully that we made a statement to
    those that would try to use our system in the future that we
    have some very good systems when working with law enforcement
    that make it very difficult for them to be successful over the
    long term.
        I think another important thing for you to look at, and you
    have heard some of that today, is the issue of intelligence
    sharing and intelligence gathering. Certainly, my career in
    Federal drug law enforcement, and now in private security,
    leads me to believe that intelligence is integral to any
    operation to penetrate illegal activities. And I think that
    private industry does have a role to play in cooperating with
    law enforcement, to help give them information that they need
    when they need it and when they request it. And at FedEx, we
    are happy to have the technology available to provide to them
    data that helps them conclude many of their investigations in a
    very positive manner.
        And I think finally, Mr. Chairman, and distinguished
    Members, the issue of technology is important for private
    companies as well as for the law enforcement agencies. You
    heard testimony earlier today from the agencies about how
    technology is leaping forward and putting a strain on law
    enforcement agencies. We in private industry and at FedEx are
    very proud of our ability to keep up with that technology and
    think that our technology is a strong leg on the stool, if you
    will, to help law enforcement do what they have to do to keep
    our country safe.
        Mr. Chairman, that concludes my informal remarks and I
    appreciate the opportunity of being with you today.
        Mr. Mica. Thank you.
        [The prepared statement of Mr. Bryden follows:]
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        Mr. Mica. And we'll hear now from James H. Francis, and he
    is the regional manager of security for DHL airways. Welcome,
    sir, and you're recognized.
        Mr. Francis. Thank you, Mr. Chairman, members of the
    subcommittee. As noted, my name is James H. Francis, and I do
    represent DHL Airways here today. I am employed with them as
    regional security manager for the Southwestern United States.
        DHL Airways is an express consignment air carrier and in
    conjunction with its sister company, DHL International,
    comprises an international shipping network known as DHL
    Worldwide Express.
        DHL Worldwide Express maintains a network of 2,341 offices
    located in 234 countries located throughout the world. DHL
    ships to approximately 635,000 destinations worldwide, and
    within the United States DHL maintains 284 offices manned by
    over 10,000 employees. Shipments enter and exit the United
    States via one of DHL's seven gateways. On average, more than
    1.2 million pounds of customer shipments move through our
    Cincinnati, OH-based central hub on a nightly basis.
        Given the complexity of the world marketplace, we are
    consistently challenged with problems associated with the
    attempted shipment of illegal drugs within the DHL network.
    DHL's first line of defense in our war against shipment of
    illegal drugs is the integrity of our employees. DHL conducts
    exhaustive background investigation of our employees that
    handle customer shipments.
        These background investigations including complete reviews
    for the employees former residences, former employments and a
    criminal conviction check, DHL meets or exceeds all of the
    background investigation requirements of the Department of
    Transportation, FAA, U.S. Postal Service, and U.S. Customs
    Service. We also utilize prehire drug screens to further assess
    a protective employee's fitness for employment.
        After hire, DHL employees are subject to random drug
    screens and annual criminal conviction record checks. Our
    attention to hiring good people with strong character is
    integral in eliminating the possibility of drug corruption
    within our workplace. DHL also maintains a comprehensive
    shipment inspection program. DHL performs thousands of shipment
    inspections on a daily basis. DHL trains its employees to
    inspect all shipments that meet a certain profile criteria for
    contraband, i.e., illegal drugs.
        Our shipment inspection program routinely leads to
    discovery of such contraband and eventual provision of
    notification and assistance to law enforcement. The DHL
    security department via its regional managers maintains
    constant liaison with local State and Federal law enforcement.
    DHL has frequently assisted the FBI, DEA, U.S. postal
    inspectors, and U.S. Customs Service with ongoing criminal
    matters where subjects of Federal investigations have utilized
    or attempted to utilize the DHL network.
        This assistance has led to numerous criminal drug
    convictions, seizures of illicit drugs, forfeitures totaling in
    the millions of dollars. In the Southwestern United States
    alone, DHL assisted law enforcement on more than 30 occasions
    in the last 12 months. This assistance has lead to dozens of
    criminal convictions and recoveries in excess of $3 million.
        DHL believes the best way to combat drugs in the mail is
    through a continued partnership with local State and Federal
    law enforcement. We specifically encourage law enforcement to
    better learn our network and the way that DHL does business.
    Through a more comprehensive understanding of the way that we
    conduct business, law enforcement can better know how DHL can
    help them solve specific drug problems. Further, DHL recommends
    that law enforcement communicate their concerns and needs more
    effectively directly with our security professionals.
        We fully understand the need to know concept of information
    dissemination. However, if we are to assist you effectively,
    there are situations where we need to have more than just a
    casual briefing. Shipping in today's world has a myriad of
    complexities, many of which can thwart an investigation. By
    knowing what your specific goals are, we can provide you in law
    enforcement with our very best effort.
        In conclusion, DHL Airways is a committed partner with the
    U.S. Government when it comes to eliminating illegal drugs from
    the mails. We expect the Government to recognize that our full
    cooperation is tempered by our concern for employees' safety,
    civil liability, and public perception issues. We stand ready
    to assist the Government in continued efforts to combat this
    menace. Thank you, Chairman Mica.
        [The prepared statement of Mr. Francis follows:]
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        Mr. Mica. Thank you. I thank each of you for your testimony
    and participation with our subcommittee today. Let me turn
    first to Mr. Newman for some questions. And Mr. Newman is with
    the Postal Service. You outlined for the subcommittee, Mr.
    Newman, I guess a task force or joint working group that was
    put together. Was that 1998?
        Mr. Newman. That is correct, Mr. Chairman. It was initiated
    in 1998. I believe their last report was in March 1999.
        Mr. Mica. But that group was put together by the Department
    of Justice or who? Did you all initiate that?
        Mr. Newman. No, it was the Department of Justice.
        Mr. Mica. And you worked for, I guess, somewhere in the
    neighborhood of a year and came up with conclusions and
    recommendations. Is that correct?
        Mr. Newman. That's correct.
        Mr. Mica. And did you testify that as of March 1999 they
    were submitted to the Attorney General, the recommendations. Is
    that also correct?
        Mr. Newman. I'm not sure whether they directly went to the
    Attorney General; but this working group did issue a position
    paper, and it was sent to the Department of Justice. They were
    leading this initiative. We were part of it. And it's been my
    opinion on it right now is that it lost momentum toward the end
    of 1999.
        Mr. Mica. So what was the tangible result?
        Mr. Newman. There was a position paper that talked about
    how this group could come together and build on local
    relationships, as some of the other witnesses have said; and I
    can tell you myself from having just returned from 10 years in
    the field, we do have a wonderful working relationships in
    local cities and environments and metropolitan areas. We have
    not seen that necessarily on a national basis. And the idea was
    to build on those local successes and see if the national
    organizations could make some recommendations and hopefully
    some positive changes.
        Mr. Mica. Could you provide this subcommittee with a copy
    of those recommendations?
        Mr. Newman. We certainly will.
        Mr. Mica. For the most part, it seems like not much was
    done after March 1999.
        Mr. Newman. Our last correspondence, I believe, was
    actually in October, expressing our concern that the momentum
    had been lost. And since I've arrived, I've tried to restart it
    and see if we can establish some further impetus and support
    for carrying this on.
        Mr. Mica. That group included, I believe, UPS, maybe FedEx
    and some of the others. Are you all aware of that group, Mr.
    Schenk or Mr. Bryden? Did you all participate or your company
    you were with participate?
        Mr. Schenk. I am not aware of that participation.
        Mr. Bryden. Mr. Chairman, I'm not aware either; but I'm
    very new to the company so it could have happened.
        Mr. Newman. My correspondence indicates that they all were,
    but some of the names and players have changed since that time.
        Mr. Mica. OK. Well, that does concern me that that has sort
    of dropped off the radar screen, given the situation we find
    ourselves in with the Internet, with more parcel service, with
    more the global economy and more package and mail transshipment
    between countries; and I think we'll have to take a very close
    look at what those recommendations were and see if we can pick
    up the ball on that.
        Raised by customs and some of the other officials, the
    question of conflict between customs and U.S. Postal Service on
    outbound mail and the inspection and regulations law related to
    outbound mail. Can you describe postal service's position on
    that?
        Mr. Newman. Yes, sir. The postal service opposes the
    warrantless access to outbound mail because we believe there
    are alternatives. The courts that have considered this matter
    have recognized the U.S. mail as a special entity. The mail is
    different from correspondence that is carried by private
    carriers because it's carried by the Federal Government. As the
    custodian of the U.S. mail entrusted to us, we believe that
    Federal search warrants are the appropriate means for access to
    the mail.
        We are faced with the delicate balance, though, between
    defending our borders and protecting the privacy rights of our
    citizens. Whereas here, though, there appears to be a workable
    middle ground that allows access to outbound mail by Federal
    search warrant, the Postal Service believes that the Government
    should protect citizens' rights unless all alternatives prove
    entirely unworkable.
        We remain committed to working with law enforcement. As the
    track record of successful joint investigations indicates,
    there currently is a viable working alternative to random
    warrantless search of outbound mail. If in the future Congress
    determines that regulatory and legislative changes are
    necessary, we would certainly like to be part of the
    discussions and the development and implementation of new
    procedures.
        Mr. Mica. You don't have a specific legislative
    recommendation for us today or that you could present to the
    subcommittee?
        Mr. Newman. Not today, sir.
        Mr. Mica. Do you feel also that the law needs to be updated
    given, again, the new global marketplace that we find ourselves
    in with technology, with globalization? Is that the opinion of
    the U.S. Postal Service?
        Mr. Newman. I think we believe that there are other
    alternatives that need to be explored. And that's one of the
    things that we would like this national initiative to look at.
    We believe through task forces, focused interdiction programs,
    and the very effective use of intelligence, data systems and
    then obtaining Federal search warrants that we can be very
    successful.
        Mr. Mica. Are you familiar enough with the recommendations
    of the task force to know if there were any suggested changes
    in law, or is it strictly administrative and operational
    cooperative procedures that were discussed as recommendations?
        Mr. Newman. I do not have that information right now, Mr.
    Chairman. I will provide that.
        Mr. Mica. If you could. I'll turn to the private sector.
    You all are involved in a very dynamic marketplace. I've seen
    some of your operations which are incredible testament to free
    enterprise and ingenuity. I don't know if you've ever had a
    chance, Mr. Cummings; but it really is incredible, and they
    make a profit too, which is unique sometimes as opposed to
    government operations. But it sounds like you've taken some
    steps to go after problems that have been identified,
    cooperated with law enforcement agencies. I want your
    perspective on two things: Are there changes that you see that
    are necessary in law given technology, given the global
    marketplace, given the sheer volume? And the other thing is
    there's something that we're not doing to assist you that we
    could do as a Congress, maybe in the way of technology, R&D,
    some of you spoke a little bit to. Maybe we'll start with Mr.
    Shank. Two questions.
        Mr. Schenk. Mr. Chairman, first on what you could do to
    help in this particular area, as mentioned in the testimony is
    supporting the funding for ACE. I know at UPS we have invested
    millions in sophisticated computer systems to help not only in
    the handling and processing of our package but also to work
    with the Government agencies and U.S. Customs to help them with
    screening. We provide them with a lot of information. However,
    if Customs cannot move forward with their computer systems,
    it's going to be very difficult to bring that together. So we
    would encourage the committee for support for Customs for their
    ACE.
        Mr. Mica. What about the law? Adequate?
        Mr. Schenk. To be honest with you, I'm not really prepared
    to answer the legal side of it.
        Mr. Mica. Maybe you could look at that and/or have your
    legal folks look at it, too.
        I heard raised by one of the witnesses, too--maybe it was
    DHL--a question of liability and problems that you all might
    have as far as taking steps to assist us but yet get yourself
    into difficulty. Mr. Francis.
        Mr. Francis. Yes, sir. At DHL we try to balance ourselves,
    if you will, between being a good citizen and a private
    corporation. Obviously, we have concerns with the public
    perception that we're becoming an agent of the U.S. Government.
    Consequently, we're a for-profit corporation with the motive of
    making money for investors, and consequently we like to stay
    focused on that. But we do embrace the concept of being a good
    citizen, especially with regard to the interdiction of drugs.
    And we do work to cooperate, do everything that we can to
    assist local, State, and Federal law enforcement to that end.
        Mr. Mica. Well, my question, though, is--and you raised
    some of that. I could pull it out of your testimony--maybe it's
    something like Good Samaritan, you know, the guy that goes
    comes along and tries to help and then finds himself involved
    in some litigation for being a Good Samaritan. Do you have
    specifics or maybe you could provide this subcommittee or your
    counsel can of how we can assist you in that area?
        Mr. Francis. I would best serve the committee by deferring
    this to our legal counsel and have him respond.
        Mr. Mica. We would appreciate that. Mr. Bryden.
        Mr. Bryden. I have two answers for you. First, being new to
    the company, I would like to have the opportunity to consult
    with others in the corporation and give you a more full
    response because seldom do we get an offer of what Congress can
    do to help private industry that's so generous. So I would like
    to take full advantage of that. I can tell you in just my short
    time with the company that I have seen what I think is
    tremendous ability to assist law enforcement and coming from a
    law enforcement background I'm impressed with that. I think the
    Green Air operation was a good example of that. And so nothing
    jumps out in my mind in terms of laws or any other techniques
    that would assist our company at this point. But I think there
    are others in the company that have worked on this issue much
    longer, and I'd like to avail their expertise on that to the
    committee.
        Mr. Mica. Thank you. And we'd appreciate, again, any
    recommendations, suggestions as far as how we can--if it isn't
    with changing the laws or regulations, if there's something
    procedurally that's being done. Let me, if I may, Mr. Cummings,
    one more question for U.S. Postal Service and then I'll defer
    to you. Have you been involved or has the Postal Service been
    involved with discussions with the Office of Drug Control
    Policy or the drug czar on any of the problems that have been
    discussed here today about shipment, about recommendations from
    the task force, about controlling money through the mails?
        Mr. Newman. Mr. Chairman, I have met with the general at a
    brief luncheon meeting, and we do need to have some further
    discussions. I arrived in Washington in January and was very
    fortunate to have an opportunity to have an early meeting with
    him, but I certainly do need to talk to him again. I have not
    shared anything from that proposed initiative with him.
        Mr. Mica. Just finally, procedurally, with U.S. Postal
    Service and U.S. Customs Service, you both are conducting drug
    investigations and investigations of illegal transport of
    illegal substances. Is that correct? Are you both conducting
    these? Is there an independent inspection by postal authorities
    and then a Customs on incoming international parcels and mail?
        Mr. Newman. No. It's done by U.S. Customs Service on
    incoming mail.
        Mr. Mica. Totally by the Customs Service?
        Mr. Newman. The actual inspection and clearing. It's
    inspected and cleared by Customs Service.
        Mr. Mica. But my point is you have a wealth of U.S. mail
    inspectors and investigators. So you're also doing some of
    this, or are you leaving all of this up to Customs?
        Mr. Newman. No. After an inspection, if in fact a
    suspicious item is detected, then the field agents, postal
    inspectors and Customs agents in the office of destination
    would then take it from there. And on a daily basis, we are
    working very closely with Customs agents on those
    investigations and the term used earlier controlled deliveries
    if those are in fact appropriate.
        Mr. Mica. Thank you. Mr. Cummings.
        Mr. Cummings. Mr. Newman, picking up where the chairman
    left off, I'm just curious--the Customs people a little bit
    earlier talked at length about the need for manifest
    information. They seemed to indicate that the postal service
    had some concerns about that. And do you?
        Mr. Newman. Sir, if I could, I've asked Mr. O'Tormey to be
    here with me today. Mail processing operations is not my area
    of expertise. If I could defer to him.
        Mr. Cummings. Be happy to.
        Mr. O'Tormey. Mr. Cummings, yes, we do. We have no control
    over it at the origin point. We are dealing with approximately
    185 countries around the world that shipped this past year
    inbound 11 million parcels to us. So we have very small amounts
    coming from various countries. We have no knowledge of the
    shippers because they originate in these countries, and some of
    those postal administrations are both private and they are the
    public. We have some difficulty with this issue. But we're
    willing to work with the Customs.
        Mr. Cummings. To what degree are you willing to work? I
    guess why I'm asking that is because, I mean, if there's
    something that we can do to make the job of detecting these
    illegal packages easier, if we can make a dent in it, it would
    be good to at least step in that direction. I was just
    wondering what are the possibilities that you see and things
    that you might be willing to do.
        Mr. O'Tormey. Mr. Cummings, I think it needs to be tied in
    some data bases and some information and some of the profiling
    that they've talked about such that we can target it and work
    with them to accomplish that. We think it can be done. But we
    need to tie that in with other sources of information, other
    profiles that we have and some data base and the computer
    systems that we have.
        Mr. Cummings. Mr. Bryden, I know you're new to the job, but
    I was just curious with regard to this Operation Green Air. I'm
    sure you've been briefed on it. But I'm wondering if that
    operation, without getting into too much detail, did FedEx
    learn some things in that operation that you could have changed
    to safeguard your system more? I mean, were you able to learn
    some things from it, or were the results of what you found out
    basically human beings taking advantage of a certain situation
    and just disobeying the law? Are you following what I'm saying?
        Mr. Bryden. Yes.
        Mr. Cummings. I guess when you have an investigation, you
    can see internal problems, things that you can do to make a
    system tighter. I was just wondering. What kind of conclusions
    did you all come to?
        Mr. Bryden. Well, I think we came to several conclusions. I
    think your question is an excellent one. First all, I think
    it's important to note that it was a FedEx employee who noticed
    a suspicious package going through our system in Los Angeles
    that first got FedEx involved in that investigation. And this
    employee through their training and previous experience on the
    job was able to spot a package without telling you exactly how,
    and to pull that package off of our system and call in one of
    our security experts to take a look at the package. That
    security officer then determined that it was probably
    contraband drugs and immediately called the drug enforcement
    administration. The DEA agents showed up and because as you
    heard earlier testimony they had seen some activity in Boston
    and I believe New York, but certainly we weren't aware of at
    that point in time. So DEA asked us not to take that normal
    action that I explained to you about doing an immediate
    investigation and terminating any employees that might have
    violated our policies. So it was at that point in July 1998
    based on one of our employees who noticed a package that got
    FedEx involved in that investigation.
        DEA certainly had information available to them that we did
    not have. All we knew is that they thought that the scope of
    that operation was such that they really wanted to let our
    system be used essentially over an 18- to 20-month period. Now
    you can imagine, Congressman, that was in some ways a difficult
    corporate decision to make because we pride ourselves on our
    employees and their motivation and the fact that they're
    trained to do nothing but take care of our customers' packages
    and handle them very quickly and efficiently.
        But because of the scope and the seriousness with which DEA
    and Customs asked us to assist them on this, we were happy to
    do it. But we did learn some things as we went through this.
    And I think also the Federal agencies learned some things. For
    instance, I mean that investigation was as large as it was
    because our systems were able to identify previous shipments
    that had been used by this drug trafficking organization based
    on our technological availability of data; that we would go
    back and research. So without that technology that we have in
    our tracking and tracing system this case would not have been
    as large as it was explained to you today because they--law
    enforcement agencies simply do not have the capability of
    looking in our system and finding out what transpired. So it
    was a great example of public-private partnership, and I think
    they learned that certainly FedEx have a great capability to
    assist them.
        What we learned is that we place a great deal of
    responsibility and confidence in our employees, and we're very
    proud of this. In this instance, unfortunately, we had some
    employees that chose to violate the law and to violate the
    confidence that we place in them to handle our customers'
    packages. I don't know of much we can do to regulate that other
    than hire good people, train them well, compensate them well,
    keep them highly motivated. With over 200,000 employees we're
    going to have some that make bad decisions. We're always
    disappointed when it's one employee, certainly in this instance
    it was more than that.
        We intend to sit down with DEA again and do an after-action
    kind of a damage assessment with them to more fully understand
    what they saw that they could share with us that would help us
    tighten our system. Clearly, we saw some things regarding
    technology and the availability of it to employees that has
    given us some ways to tighten up our internal procedures.
        Mr. Cummings. I'm sure it was a difficult decision to--
    won't you talk about cooperating and letting, basically, the
    Federal Government sort of infiltrate your system. I agree with
    you that probably the benefits that came out of that for all of
    us are probably substantial. You know, I think it's good that
    you did that. And I would take it that I guess the company is
    probably a little bit better off now. I'm sure they sent a
    chilling message.
        Mr. Bryden. We certainly hope so. We agree exactly with
    you. I think our corporation did the right thing in that
    instance; and although it was a little painful to know that we
    had some employees that were involved in things they shouldn't
    have been in, getting to the bottom of it and exposing the full
    scope of the operation was important to us as good corporate
    citizens. And I hope that, as you say, it does make an
    impression on people who would use the private systems of all
    of our companies represented here today. We don't want that
    kind of contraband in our system. We work cooperatively just as
    law enforcement does with each other to also try to find ways
    to better help law enforcement stop that happening.
        Mr. Cummings. Mr. Schenk, you mentioned a little earlier
    you said that there were two or you may have mentioned three
    occasions where you went in--I forgot the words you used to
    describe it--putting the Federal folk into your facilities.
    What did you call that?
        Mr. Schenk. Blitzes.
        Mr. Cummings. Blitzes. I knew it was a football term, but I
    couldn't remember what it was. Your blitzes. They weren't able
    to find anything except a box of cigars on occasion. What do
    you attribute that to? Are you trying to say that your system
    is so good, and people know it's so good that that's why they
    weren't able to find anything?
        Mr. Schenk. Well, Mr. Cummings, I wouldn't be naive to say
    that we're perfect in terms of everything coming in. However, I
    think what it comes down to is corporate responsibility and
    leadership. Just as UPS has been out in the forefront on this
    e-commerce explosion, actually we've taken the same approach a
    while back with regards to drug interdiction. Again, it goes
    back to our systems technology that we've developed and up
    front and trying to keep these things out of our systems. Most
    of our customers are good customers, and those are the
    customers that we want. But we've invited customs and worked
    with them consistently on these blitzes to show that we're
    trying to be as compliant as possible.
        Mr. Cummings. Mr. Newman, let me just come back to you. The
    chairman asked a few questions about this commission set up by
    the Justice Department. And I think you said that there was
    some type of letter of recommendation, recommendations with
    regard to various issues. Did you serve on that committee?
        Mr. Newman. No, I did not. One of my predecessors did.
        Mr. Cummings. I see. Mr. O'Tormey, are you familiar with
    that at all?
        Mr. O'Tormey. No, I am not, Mr. Cummings.
        Mr. Cummings. I guess what I'm concerned about is I asked
    Customs a little bit earlier whether the agencies talked. I'm
    sure you may all have heard that question. I think the chairman
    was getting to this too, is where there are situations where
    the agencies can sit down and with the private sector and
    whoever else may be involved in this and come up with
    solutions, it's good. So often I think what happens is that
    Congress finds itself acting on things that maybe some of which
    could be addressed on the agency level. So it just seemed like
    it was a good idea, sounded like it was going in the right
    direction, and then for whatever reason like you said it got
    kind of thrown off course.
        Hopefully, we can, Mr. Chairman, we can look into that
    since we had apparently a mechanism that was moving forward.
    And there was a letter of recommendation, recommendations--it
    seems only logical that we might want to instead of reinventing
    the wheel maybe we might want to take a look at that and see
    how we could possibly along with doing many other things make
    sure that that vehicle is in place and moving forward.
        I think we also heard from Mr. Bryden and Mr. Schenk that
    they seem to have no problem with it. And I know that they may
    not be totally familiar; but it just seems like in listening to
    all the testimony--I don't mean to leave you out Mr. Francis--
    but it seems to me that if we have, I mean, when I listen to
    the testimony of all our witnesses, they all seem to be
    concerned about getting to this problem. And if we had that
    kind of mechanism set up, then I'd really like to see what we
    could do about making sure we resurrect it in hopes that we can
    address this problem from a lot of different angles. Because it
    is multifaceted. I think that the solutions must be
    multifaceted also. With that, Mr. Chairman, I am going to thank
    you.
        Mr. Mica. I thank the gentleman. And I'll be glad to cosign
    a letter. I think we should inquire of the Attorney General,
    the Department of Justice, the status of those recommendations
    and if those recommendations have not been implemented why not
    and how long before we get this whole process moving forward.
    And we do not want to reinvent the wheel. We just want to make
    sure that the wheel is rolling and moving in the right
    direction.
        I just have a couple of final quick questions. It's my
    understanding you have about 4,500 postal inspectors. Is there
    a specific division or number of inspectors that are dedicated
    to working on the problem of illegal narcotics?
        Mr. Newman. Mr. Chairman, we have 2,000 postal inspectors.
    We also have a uniformed force of police officers. But they are
    not necessarily involved in this. So we have 2,000 postal
    inspectors who are investigators, and of that approximately 111
    workyears are committed nationwide to our narcotics program.
        Mr. Mica. OK. Thank you. I also ended my questioning with
    one of the other panels about the problem that's recently been
    brought to our attention of shipments of illegal narcotics
    through some of the diplomatic mail or by our people posted
    overseas. Do you have specific information or could you provide
    us with what you're trying to do to bring some of this under
    control and also enforce the laws in that regard?
        Mr. Newman. Certainly. I think there was a case that was
    noted earlier, and that was a case that was worked with the
    U.S. Customs Service and the postal inspectors. It was a great
    cooperative effort. And I will need to, though, get back to you
    with specifics about what we're doing in the future in that
    area.
        Mr. Mica. And we focused most of our attention on drugs
    coming in from other countries and money going out to drug
    dealers located abroad. But we do have the problem of domestic
    transporting and use of the mail and the Postal Service for
    transporting State to State or local on the domestic market. I
    think it would be best if you provided the subcommittee for the
    record what steps you're taking to see that we have adequate
    enforcement and in going after illegal narcotics in the
    domestic mail within the confines of privacy and other
    restraints I know you work under. Would that be possible?
        Mr. Newman. Certainly. Yes, sir.
        Mr. Mica. All right. Mr. Cummings did you have anything
    further?
        Mr. Cummings. Just one question. Mr. Newman, when you all--
    when you suspect a package has an illegal substance in it, you
    automatically go outside of the agency? Is that right, Mr.
    O'Tormey.
        Mr. Newman. That would probably be my answer. I would be
    the person to answer, excuse me. If in fact it's a domestic
    item, we would obtain a Federal search warrant and then based
    on the local agreements, the local jurisdiction, the local law
    enforcement groups that we work with, we would then initiate an
    investigation. And it may take a variety of steps, controlled
    delivery. We may do additional intelligence gathering. We may
    do a variety of things with the local narcotics resources or
    the other Federal agencies in that particular area.
        Mr. Cummings. Thank you very much. I want to thank all of
    you for what you're doing. I said that to the other panel. And
    as I said before, we've got to work together to address this
    problem. But we really do appreciate what you all are doing.
    And you know in that light I just hope that we can all have
    this maximum cooperation since we're all on the same team.
    Thank you very much. And thank you, Mr. Chairman.
        Mr. Mica. Thank you, Mr. Cummings. I do want to also
    express my gratitude to the witnesses on this panel for your
    cooperation, the private sector folks, the U.S. Postal Service
    dealing with a very difficult and challenging problem we face.
    But we appreciate your response to us and also your responding
    to some of the questions that we have asked. And also for your
    future cooperation. I think we can do a much better job with
    everyone working together.
        So we'll excuse the second panel, and that does conclude
    our business for today. I would like to announce for the
    Members and for the record that the subcommittee will continue
    its series of national field hearings and on Tuesday, May 30,
    we will be in New Orleans at the request of a member of this
    panel, Mr. Vitter. A hearing on school drug testing, I believe,
    at 10 a.m. in New Orleans. On June 1, Thursday, in Orlando, FL,
    down in my area at my request we'll be looking at the problem
    of club drugs and some of the designer drugs and get an update
    on the situation in central Florida.
        I appreciate the panel's assistance in the past in looking
    at the problem we've experienced in my own back yard in central
    Florida. And June 5, just before we return, on Monday morning
    in Dallas, TX, at the request of Congressman Sessions and the
    title of that hearing will be ``Preventing Drugs in School in
    Dallas, TX.'' Again, we'll be leaving the record open here for
    responses. Mr. Cummings.
        Mr. Cummings. I just want to take a moment, Mr. Chairman,
    to say so long to Cherri Branson on our side, who for a number
    of years has been staffing this subcommittee. I want to thank
    you for all that you have done to make our jobs easier. It is
    so often we are the ones that end up looking good, and it's
    because of the work of staff that make it all possible. So as
    you move on to higher ground making a lot more money, and
    moving forward, we just want to thank you on behalf of this
    side, and I'm sure of the entire committee.
        Mr. Mica. Well, I do also want to wish you well. We thank
    you for your bipartisan cooperation. I think we've made a
    number of significant steps forward with our subcommittee and
    only because of your hard work. So everyone from this side of
    the aisle wishes you all the best and thank you for your great
    efforts on behalf of the committee, the subcommittee, Congress
    and the American people. Good luck.
        Ms. Branson. Thank you.
        Mr. Mica. There being no further business to come before
    the subcommittee on Criminal Justice, Drug Policy, and Human
    Resources today, this hearing is adjourned.
        [Whereupon, at 12:10 p.m., the subcommittee was adjourned.]
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