[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]





    THE RISE OF THE MEXICAN DRUG CARTELS AND U.S. NATIONAL SECURITY

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              JULY 9, 2009

                               __________

                           Serial No. 111-24

                               __________

Printed for the use of the Committee on Oversight and Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform





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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                   EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania      DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York         DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland         JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio             JOHN L. MICA, Florida
JOHN F. TIERNEY, Massachusetts       MARK E. SOUDER, Indiana
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      LYNN A. WESTMORELAND, Georgia
JIM COOPER, Tennessee                PATRICK T. McHENRY, North Carolina
GERALD E. CONNOLLY, Virginia         BRIAN P. BILBRAY, California
MIKE QUIGLEY, Illinois               JIM JORDAN, Ohio
MARCY KAPTUR, Ohio                   JEFF FLAKE, Arizona
ELEANOR HOLMES NORTON, District of   JEFF FORTENBERRY, Nebraska
    Columbia                         JASON CHAFFETZ, Utah
PATRICK J. KENNEDY, Rhode Island     AARON SCHOCK, Illinois
DANNY K. DAVIS, Illinois             ------ ------
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
------ ------

                      Ron Stroman, Staff Director
                Michael McCarthy, Deputy Staff Director
                      Carla Hultberg, Chief Clerk
                  Larry Brady, Minority Staff Director










                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 9, 2009.....................................     1
Statement of:
    Kerlikowske, R. Gil, Director, Office of National Drug 
      Control Policy, Executive Office of the President; Alan 
      Bersin, Assistant Secretary, Office of International 
      Affairs and Special Representative for Border Affairs, U.S. 
      Department of Homeland Security; and Lanny A. Breuer, 
      assistant attorney general, Criminal Division, U.S. 
      Department of Justice......................................    10
        Bersin, Alan.............................................    48
        Breuer, Lanny A..........................................    22
        Kerlikowske, R. Gil......................................    10
    Owen, Todd, Acting Deputy Assistant Commissioner, Office of 
      Field Operations, U.S. Customs and Border Protection, U.S. 
      Department of Homeland Security; Kumar Kibble, Deputy 
      Director, Office of Investigations, U.S. Immigration and 
      Customs Enforcement, U.S. Department of Homeland Security; 
      Anthony P. Placido, Assistant Administrator for 
      Intelligence, Drug Enforcement Administration; William 
      Hoover, Assistant Director for Field Operations, Bureau of 
      Alcohol, Tobacco, Firearms and Explosives, U.S. Department 
      of Justice; and J. Robert McBrien, Associate Director for 
      Investigations and Enforcement, Office of Foreign Assets 
      Control, U.S. Department of Treasury.......................    69
        Hoover, William..........................................    99
        Kibble, Kumar............................................    82
        McBrien, J. Robert.......................................   101
        Owen, Todd...............................................    69
        Placido, Anthony P.......................................    97
Letters, statements, etc., submitted for the record by:
    Bersin, Alan, Assistant Secretary, Office of International 
      Affairs and Special Representative for Border Affairs, U.S. 
      Department of Homeland Security, prepared statement of.....    50
    Breuer, Lanny A., assistant attorney general, Criminal 
      Division, U.S. Department of Justice, prepared statement of    24
    Connolly, Hon. Gerald E., a Representative in Congress from 
      the State of Virginia, prepared statement of...............   121
    Kerlikowske, R. Gil, Director, Office of National Drug 
      Control Policy, Executive Office of the President, prepared 
      statement of...............................................    13
    Kibble, Kumar, Deputy Director, Office of Investigations, 
      U.S. Immigration and Customs Enforcement, U.S. Department 
      of Homeland Security, prepared statement of................    84
    McBrien, J. Robert, Associate Director for Investigations and 
      Enforcement, Office of Foreign Assets Control, U.S. 
      Department of Treasury, prepared statement of..............   104
    Owen, Todd, Acting Deputy Assistant Commissioner, Office of 
      Field Operations, U.S. Customs and Border Protection, U.S. 
      Department of Homeland Security, prepared statement of.....    71
    Towns, Chairman Edolphus, a Representative in Congress from 
      the State of New York, prepared statement of...............     4
    Watson, Hon. Diane E., a Representative in Congress from the 
      State of California, prepared statement of.................   118

 
    THE RISE OF THE MEXICAN DRUG CARTELS AND U.S. NATIONAL SECURITY

                              ----------                              


                         THURSDAY, JULY 9, 2009

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m., in room 
2154, Rayburn House Office Building, Hon. Edolphus Towns 
(chairman of the committee) presiding.
    Present: Representatives Towns, Issa, Kucinich, Tierney, 
Clay, Watson, Lynch, Quigley, Norton, Cuellar, Souder, Bilbray, 
and Jordan.
    Staff present: John Arlington, chief counsel--
investigations; Kevin Barstow, investigative counsel; Craig 
Fischer, investigator; Jean Gosa, clerk; Carla Hultberg, chief 
clerk; Chris Knauer, senior investigator/professional staff 
member; Jesse McCollum, senior advisor; Ophelia Rivas, 
assistant clerk; Christopher Sanders, professional staff 
member; Calvin Webb, ICE detailee; Ronald Stroman, staff 
director; Lawrence Brady, minority staff director; John 
Cuaderes, minority deputy staff director; Jennifer Safavian, 
minority chief counsel for oversight and investigations; Dan 
Blankenburg, minority director of outreach and senior advisor; 
Adam Fromm, minority chief clerk and Member liaison; Kurt 
Bardella, minority press secretary; Tom Alexander, minority 
senior counsel; and Mitchell Kominsky, minority counsel.
    Chairman Towns. The committee will come to order.
    Good morning and thank you all for being here.
    Mexico has long been an important ally and friend of the 
United States. It is this country's third largest trading 
partner, has one of the largest economies in the Americas, and 
remains the third largest source of foreign oil for the U.S. 
market.
    Unfortunately, over the past few years, organized crime has 
made Mexico a major producing and transit state for illegal 
drugs trafficked into the United States. As much as 90 percent 
of all cocaine entering the United States comes through Mexico. 
Criminals in Mexico are now the largest foreign suppliers of 
marijuana and major suppliers of methamphetamine. Apparently, 
crime pays: this criminal enterprise is estimated to produce 
annual revenues ranging from $25 to $40 billion.
    In December 2006, shortly after taking office, Mexican 
President Felipe Calderon began a major crackdown on the drug 
cartels operating in his country. Since then, almost 11,000 
people in Mexico have been killed in drug-related violence. 
Almost daily, reports from Mexico depict killings, acts of 
torture, and kidnapping. And it is getting worse. This past 
June was the deadliest month on record, with over 800 killed in 
drug-related violence.
    In short, in Mexico, drugs and violence are a growth 
industry.
    As a result, Mexico is facing one of the most critical 
security challenges in its history. Many who have had the 
courage to confront the drug cartels have been threatened or 
killed. This includes policemen, soldiers, judges, journalists, 
and even the clergy.
    However, there is some basis for optimism. The courageous 
efforts of President Calderon have resulted in important 
changes. Law enforcement agencies and other Federal officials 
have reported positive developments in their working 
relationships with their Mexican counterparts. They say these 
changes are having a significant effect in addressing the drug 
threat posed to both countries.
    At the same time, there is a front page article in today's 
Washington Post which reads ``Mexico accused of torture in drug 
war: Army using brutality to fight trafficking.'' As the effort 
in Mexico to address the drug threat continues, we must be 
clear that abuses from the state are equally intolerable. I 
will seek to understand more about the facts relating to this 
article as the committee's investigation continues.
    Nevertheless, I believe the drug cartels and their 
associated violence constitute a major threat to security and 
safety along the Southwest border, and have caused major 
disruptions to commercial activities, including international 
trade.
    Because of my growing concerns about this problem, I sent a 
bipartisan team of committee investigators to the Southwest 
border to get a first-hand look at what is happening on the 
ground. Our investigators met with numerous Federal, State, and 
local officials, including law enforcement, military 
intelligence, and others, and observed field operations in both 
daylight and night.
    This hearing was designed as a followup to the staff field 
investigation, to provide the committee with an overview of 
Federal efforts to disrupt and dismantle the Mexican drug 
trade, and to examine whether Federal agencies have sufficient 
tools and capabilities to do the job.
    Over the past few years, there have been nagging questions 
about the effectiveness of Federal policy with regard to the 
Southwest Border. While it is clear that this administration 
takes the drug cartel threat very, very seriously, questions 
remain.
    Just 1 month ago, the administration published a document 
entitled, ``National Southwest Border Counternarcotics 
Strategy.'' This is a blueprint on how the administration will 
address the threats posed by Mexican drug smuggling.
    But the key issue remains, who is in charge?
    We know who is leading the fight in Iraq. We know who is 
leading the fight in Afghanistan. What we don't know is who is 
leading the fight on our own border. Is it the Border Czar? Is 
it the Drug Czar? Will it be the National Guard?
    Perhaps we will obtain a better understanding of this 
question today.
    One more thing before we begin. With us today are top 
representatives from key law enforcement agencies involved in 
the ongoing struggle to address Mexican drug trafficking. The 
work they do is critical both to Unite States national security 
and in helping Mexico in its progress to turning the corner on 
the threats it now confronts. I commend their efforts and I 
look forward to working with them on this critical national 
security matter.
    Thank you.
    [The prepared statement of Chairman Edolphus Towns 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Towns. Before I recognize my ranking member, Mr. 
Issa, for his opening statement, I would like to thank the 
minority for its assistance during this investigation. All of 
the work related to today's hearing was conducted on a 
bipartisan basis. I would like to thank the ranking member for 
his leadership and his staff for continuing to build on this 
important relationship. I look forward to continuing to work 
together on important matters such as today's topic.
    I will now yield to the ranking member, Mr. Darrell Issa, 
for his opening statement. Congressman Issa.
    Mr. Issa. Thank you, Mr. Chairman. But I would have let you 
go on as long as you wanted on that track. [Laughter.]
    As the chairman said, this is a bipartisan issue and it is 
one in which there is no distance between the chairman and 
myself. Our staffs did work closely on it and intend to 
continue. There is no surprise that we will reach different 
conclusions on some of the fixes and some of the things that 
should be done.
    We certainly will reach some differences in the priorities 
of the administration, including its representatives before us 
today, and the two of us. But when it comes to finding the 
facts and to agreeing on the portions that can be agreed on so 
that we can then disagree on very little, I think this 
committee is setting a high standard and I intend to continue 
that.
    Mr. Chairman, I ask unanimous consent that my entire 
opening statement be placed in the record.
    Chairman Towns. Without objection, so ordered.
    Mr. Issa. Thank you.
    With that indulgence, I will take a moment to recognize 
Alan Bersin. I don't know the rest of you as well, but our new 
Border Czar is not new to San Diego, and he is not new to 
dealing with border issues; his work as a U.S. attorney, his 
work in education, his work on the airport.
    Alan, the list of work is too long to do as an 
introduction, but you have been a champion for so many causes 
in San Diego, and I couldn't be more delighted that the 
President has selected you as somebody that rises above 
politics, rises above either party to do what is right for our 
country. So I look forward to your testimony today, and I am 
particularly pleased that the border, as a separate issue is 
getting attention.
    I must admit that the reduction of the Drug Czar from a 
full cabinet level position concerns me deeply. I think it 
sends the wrong message at a time in which your efforts and the 
efforts of the Mexican government are going to be critical. The 
fact that we pulled away, 2\1/2\ years ago, from Plan Colombia, 
we curtailed our support for Plan Colombia and then, on a very 
partisan basis, failed to support the Colombian free trade 
initiative, sends a chilling message to countries who bled so 
long with us in order to eradicate drugs that once literally 
controlled the government in Colombia.
    Today, in Mexico, we have a very brave president who is 
fighting the same battle, and so far appears to be making 
progress. I say that because you are only one key assassination 
away from a dramatic change in Mexico, and we need to 
understand that. We need to understand that the depth of 
corruption in Mexico which has often been well understood, when 
it is in the hands of people with guns and willingness to use 
them--11,000 or so murders this year alone--says a great deal.
    We are going to hear today about the spillover or lack 
thereof, and I believe, as a San Diegan, that people in San 
Diego, at the border, the U.S. attorney and others, are doing a 
good job of doing everything they can to ensure that the 
activity north of the border is disconnected as much as 
possible from the activity south of the border.
    But let's be clear. Whether you are in San Diego or St. 
Louis or Cleveland, you are directly affected by our failure to 
stop narcotics from coming into our country. Every city in 
America and many rural areas have organized crime directly 
linked to those assets being made available and sold.
    Some in my party would say that it is another country's 
problem alone. I am not one of them. Today, with former Speaker 
Denny Hastert, we announced, with many members from this 
committee, a drug task force, one that had been somewhat 
dormant for several years because we felt that we needed to 
work hard to bring new emphasis to this growing problem, but 
also because we want to make sure that the facts are very 
clearly stated to the American people. First of all, we are the 
consumers and we are the suppliers of money. We all take a 
certain amount of blame for the fact that our money ultimately 
leads to these cartels' operations in other countries.
    Additionally, we are going to hear today about guns going 
south while drugs go north. I have no doubt that drugs do go 
south. One of the questions is, is it through the tunnels that 
I have seen personally that move the drugs or is it somehow 
through the border. Would we in fact do any real good if we set 
up an exiting American checkpoint at the border, or would it 
simply be one more burden borne by our Border Patrol people at 
a cost much higher than either the Mexicans doing their job or, 
in fact, would we accomplish very little other than to find a 
small amount of drugs and a small amount of paraphernalia, when 
in fact anything serious in the way of guns or other activities 
are probably going through the very means that bring drugs 
north are also sending things south? And if we didn't find the 
drugs going north, we are just as unlikely to find the guns 
going south.
    Having said that, I look to an awful lot of information we 
don't have every day in San Diego, and I again want to thank 
the chairman, because the only way we are going to really 
support the efforts of this administration and hold the 
administration accountable is on a bipartisan basis. We are off 
to an incredibly good start and I expect it to continue, and I 
yield back.
    Thank you, Mr. Chairman.
    Chairman Towns. Thank you very much, Congressman Issa.
    I would now like to recognize Mr. Tierney to make an 
opening statement, if he would like.
    Mr. Tierney. Thank you, Mr. Chairman. I want to thank you 
and I want to thank again our witnesses for being here this 
morning.
    In March, the Subcommittee on National Security and Foreign 
Affairs had a hearing on the issue of money, guns, and drugs, 
and whether or not the United States inputs were fueling 
violence on the United States-Mexican border. At that hearing, 
we heard testimony about what factors inside the United States 
are contributing to the strength and cruelty of Mexican drug 
cartels.
    The key point that emerged from that hearing, a point that 
I hope will be explored in more depth here today, is that 
continuing to interdict drugs and smugglers on the border will 
be an endless task if we don't address the other related 
aspects of the drug trade. More progress needs to be made in 
three main areas: guns, cash, and the demand for drugs in the 
United States.
    According to some estimates, as many as 90 percent of the 
high-caliber weapons that are being used by drug cartels to 
perpetrate the violence we have seen in the past several years 
originate in the United States. We can't hope to quell the 
violence that has gripped border towns and cities, violence 
that threatens the stability of the Mexican government and the 
safety of our own citizens on the southern border if we do not 
halt the flow of arms into Mexico.
    This is a significant challenge for law enforcement and 
border patrol. In many cases, the manufacture and purchase of 
these weapons may not be illegal. That means we have to check 
the gun flow at the border as well as in the interior of this 
country.
    A second major factor in the drug trade and the rise of 
powerful drug cartels is the cash-flow coming in from the 
United States. We heard testimony at the March hearing that as 
much as $25 billion in bulk cash-flows into Mexico from drug 
sales in the United States each year. One of our witnesses 
testified that Federal law enforcement is hampered by its 
efforts to find and stop these cash-flows by what he called 
antiquated legislation. It also appeared that there may be a 
lack of coordination between the various agencies that have 
jurisdiction in this area. I hope our witnesses today can 
address those issues in more detail as well.
    Finally, we must address the fact that it is the demand for 
drugs here in the United States that has allowed Mexican 
cartels to become profitable. According to some estimates, 90 
percent of the cocaine, heroin, methamphetamine, and marijuana 
purchased and consumed in the United States enter our country 
through Mexico. Americans spend as much as $65 billion annually 
in illegal drugs. There are no simple solutions to the problem, 
but we need to recognize that our internal drug policies and 
our success at curbing the use of these illegal substances in 
the United States can have a profound effect on the stability 
of our neighboring countries and our own national security.
    Before closing, I also want to note that there is a global 
problem, not simply an issue on the United States-Mexican 
border. After the March hearing, we heard testimony that 
cocaine from Mexican cartels is now headed to Europe and to 
Russia. In addition, Mexican and Colombian drug cartels have 
made inroads in West Africa. Our shared border with Mexico 
makes the situation there of particular concern to us, but it 
is just one piece of a global puzzle. I hope that our 
discussion here today can inform our approach to the other 
regions as well.
    So, again, I want to thank you, Mr. Chairman and thank our 
witnesses.
    Chairman Towns. Thank you very much, Congressman Tierney.
    I now yield to Congressman Bilbray.
    Mr. Bilbray. Thank you, Mr. Chairman. Mr. Chairman, let me 
just say, as a lifelong resident of the front terra area, I 
want to thank you for this hearing. It seems that everybody was 
talking about wars that are overseas and far away, but we are 
ignoring our own backyard, where fatalities were skyrocketing, 
where the death rate among law enforcement just south of our 
border was far beyond anything we had seen anywhere else in the 
world. And we just sort of ignored it because it wasn't on the 
radar screen for the media.
    I want to apologize to the other two gentlemen, because I 
have to make a mention of my friend, Mr. Bersin. I just have to 
say to the administration there are disagreements I have, but 
when it comes to the choice of our guy over in San Diego in the 
western sector, no one could have been a better choice than 
Alan, and I want to thank him for being willing to serve again, 
because, as everyone knows, it is not an easy job. You knew 
what you were stepping into. We don't have time for a learning 
curve here, and I want to thank the administration for bringing 
the man back online.
    Mr. Chairman, the one thing that I have just got to say is 
that too often we hear the media talk about the drug cartel, 
drug cartel. We need to change the terminology to the smuggling 
cartels, because we are talking about not only drugs going 
north, but we are talking about guns and money coming south, 
and the same cartel is involved in the illegal alien smuggling. 
It is all a network and a profiteering.
    In fact, I have grown up in an area where we got in the 
habit of seeing illegal's being used as the mule for the 
cartels and the abuses and the high risk involved with illegal 
immigrants because of its relationship to the gun, money 
laundering, and the drug cartels. So I just want to make sure 
that we understand that when we talk about this issue, they are 
all tied together. The cartels have control of the border and 
the illegal crossing for much too long, and I am glad to see us 
address this.
    I am also glad to see this hearing because too many people 
on our side of the border think this is a problem that is 
across the border and it is not going to be a threat to the 
American communities. This is a major threat for all of us 
along the front terra area on both sides of the border and I 
hope I am able to get you photos that I don't think we will 
show in public, but just so the Members understand how bad this 
is.
    When a hospital in my county has somebody walking in with 
two fingers and say, ``is there any way to preserve these 
fingers so that, when we get the hostages back, we can sew them 
back on?'' When you have law enforcement that finds two let me 
just say the remnants of decapitation, this is the kind of 
thing that we are having going on in our neighborhoods not just 
in Tijuana, but in the San Diego County region. It is crossing 
over and now is the time to win this battle, working with 
Mexico, working with Calderon.
    And let me say one thing. President Calderon is the bravest 
elected official I have ever known, and I think that we have to 
give credit to him and we have to throw aside our disagreements 
with Mexico and work with him now, because we either fight this 
battle on Mexican soil and win it or we are going to be 
fighting it on American soil at a much higher cost.
    I appreciate the chance to be able to be here today and 
yield back.
    Chairman Towns. Thank you very much, Congressman Bilbray.
    I would now like to introduce our first panel of witnesses 
testifying today.
    Mr. R. Gil Kerlikowske, Director of the Office of National 
Drug Control Policy, the Executive Office of the President; Mr. 
Lanny A. Breuer, Assistant Attorney General, Criminal Division, 
U.S. Department of Justice; and Mr. Alan Bersin, who has been 
praised all morning here. I want you to know to have 
Congressman Bilbray and, of course, Congressman Issa say 
something nice about you, you must be great. [Laughter.]
    Assistant Secretary for International Affairs and Special 
Representative for Border Affairs, Office of International 
Affairs, U.S. Department of Homeland Security.
    Let me indicate we hear the bells, but we are going to go 
as far as we can, Members.
    Let me just swear all of you in. Would you stand and raise 
your right hands?
    [Witnesses sworn.]
    Chairman Towns. Let the record reflect that all the 
witnesses answered in the affirmative.
    Why don't we start with you, Mr. Kerlikowske. Am I 
pronouncing that correctly?
    Mr. Kerlikowske. Very good. You are excellent in that. 
Thank you.
    Chairman Towns. I practiced all last night. [Laughter.]

STATEMENTS OF R. GIL KERLIKOWSKE, DIRECTOR, OFFICE OF NATIONAL 
 DRUG CONTROL POLICY, EXECUTIVE OFFICE OF THE PRESIDENT; ALAN 
 BERSIN, ASSISTANT SECRETARY, OFFICE OF INTERNATIONAL AFFAIRS 
AND SPECIAL REPRESENTATIVE FOR BORDER AFFAIRS, U.S. DEPARTMENT 
 OF HOMELAND SECURITY; AND LANNY A. BREUER, ASSISTANT ATTORNEY 
     GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE

                STATEMENT OF R. GIL KERLIKOWSKE

    Mr. Kerlikowske. Thank you, Mr. Chairman. I am honored to 
be with you, and certainly Ranking Member Issa, all of the 
committee members that are here today.
    Last month, Secretary Napolitano, Attorney General Holder, 
and I publicly released the strategy that was referenced by the 
chairman. This is a comprehensive interagency plan that was 
developed through the work of the Office of National Drug 
Control, our office, and it was done in a way that ensured all 
of the partners that you see here today being actively involved 
in it.
    This is a plan that is not going to sit on a shelf and 
gather dust; it is being put into action even as we speak, and 
it is being done in partnership also with the courageous and 
dedicated work of Mexico's President Calderon, the investments 
that the U.S. Government has made, and the commitment of all of 
the Federal agencies and the State and local agencies that we 
have talked to.
    To ensure that it is turned into action, the administration 
will soon be announcing a dedicated interagency working group, 
which I will lead, to push forward the full and effective 
implementation of strategy, and that framework is being 
developed. We will provide a public report on the 
implementation of the strategy as part of the administration's 
first national drug control strategy, which will be published 
early next year.
    As part of my oversight responsibilities, my office 
recently identified overarching national drug control strategy 
goals to help guide all of the Federal agencies as they develop 
their policy initiatives, their programmatic efforts, and their 
budget proposals. Over the coming months, ONDCP will be working 
with the Departments of Homeland Security, Justice, State, 
Defense, and others to develop cross-agency performance goals 
and metrics for the Southwest Border Initiative.
    In addition, as the agencies update their strategic plans, 
we will be working with OMB and the Departments and the 
agencies to integrate key Southwest Border priorities that are 
identified in the strategy. This is not only going to ensure 
accountability, but it will make it clear that combating the 
flow of drugs and money and weapons across the Southwest Border 
must be a core element of our Nation's approach to the entire 
drug problem. It is essential that we work together as one team 
to stop the flow of drugs into our country, as well as the 
southbound flow of bulk currency and weapons that fuel drug 
cartel violence.
    To make headway on the full array of border challenges, the 
Congress and the administration are going to need to work very 
closely together. I am looking forward to working with this 
committee and I know that part of the focus that you have 
certainly identified is on accountability, and we are very 
prepared to answer that.
    Before I close, I want to talk for just a moment about how 
vital it is that the Federal Government improves its 
cooperation with State and local partners. I asked the 
directors of the High Intensity Drug Trafficking Areas to meet 
with me along the Southwest Border last month. What the HIDTA 
directors told me and what I believe the members of this 
committee already know is that our front-line State and local 
law enforcement partners have been under enormous strain.
    Bill Lansdowne in San Diego, Bill Colander, the retiring 
sheriff of 50-plus years of law enforcement, have been friends 
for many years, so I listened to this very closely. Although 
the strain is most acute on the border, as the ranking member 
mentioned, clearly this is a national problem, and it affected 
us in Seattle during the 9 years that I was police chief, as 
well as my colleagues in Minnesota and across the country.
    The administration intends to continue to help those law 
enforcement agencies who need it and that are on the border and 
also within the interior, and we are going to keep an intense 
focus on this threat and make a difference.
    The knowledge of local law enforcement, meaning the State, 
County, and city, is a great advantage to the work of the 
Federal Government. When it comes to the critical challenge of 
interdicting the southbound flow of weapons and bulk currency, 
partnership with those agencies is essential, and I think I can 
be of great value in that.
    State and local law enforcement personnel possess unmatched 
knowledge about the organizations that operate within their 
jurisdictions every day. Our law enforcement operations are 
most effective when this knowledge is combined with the skill, 
technology, and resources that the Federal agencies can bring. 
All of us in this administration are committed to pursuing a 
truly national approach to the critical problem.
    Thank you, Chairman Towns. I look forward to answering 
questions.
    [The prepared statement of Mr. Kerlikowske follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Towns. Thank you very much.
    Mr. Breuer.

                  STATEMENT OF LANNY A. BREUER

    Mr. Breuer. Chairman Towns, Ranking Member Issa, and 
members of the committee, I appreciate the opportunity to 
appear before you today to discuss the Department of Justice's 
important role in the administration's overall strategy to 
address the threats posed by the rise of Mexican drug cartels, 
particularly along our Southwest Border.
    The Justice Department's goal is to systematically 
dismantle these cartels which threaten the national security of 
our Mexican neighbors, pose an organized crime threat to the 
United States, and are responsible for much of the scourge of 
illicit drugs and the increase in violence in Mexico.
    This issue commands priority at the highest level of the 
Department's leadership. As you know, on June 5th, Attorney 
General Holder, Department of Homeland Security Secretary 
Napolitano, and Office of National Drug Control Policy Director 
Kerlikowske released President Obama's National Southwest 
Border Counternarcotics Strategy. The strategy is designed to 
stem the flow of illegal drugs and their illicit proceeds 
across the Southwest Border and to reduce the associated crime 
and violence in the region.
    I look forward to working with Director Kerlikowske and 
Assistant Secretary Bersin, and our many Federal, State, local, 
tribal, and Mexican partners to ensure success of the 
administration's strategy.
    The Justice Department plays a central role in supporting 
the National Southwest Border Counternarcotics Strategy. The 
Department's approach to the Mexican drug cartels is to 
confront them as criminal organizations. To do so, we employ 
extensive and coordinated intelligence capabilities to target 
the largest and most dangerous Mexican drug cartels and focus 
law enforcement resources. Our intelligence-based, prosecutor-
led, multi-agency task forces focus our efforts on the 
investigation, extradition, prosecution, and punishment of key 
cartel leaders.
    As the Department has demonstrated in attacking other major 
criminal enterprises, destroying the leadership and seizing the 
financial infrastructure of the cartels is critical to 
dismantling them. Stemming the flow of guns and money from the 
United States to Mexico is an important aspect of the 
administration's comprehensive approach to the problem. In 
concerted efforts with the Department of Homeland Security and 
other law enforcement entities, we are committed to 
investigating and prosecuting illegal firearms trafficking and 
currency smuggling from the United States into Mexico.
    Another key component to neutralizing the cartels is to 
work closely with the government of Mexico. The Department 
plays an important role in implementing the Merida Initiative, 
including serving as the lead implementer in programs and 
prosecutorial capacity building, asset forfeiture, extradition 
training, and forensics. We continue to work closely with 
Mexico to address the issue of cartel-related public 
corruption, including through investigative assistance. We also 
work together on extraditions of key cartel leaders and other 
fugitives. The Calderon administration has taken bold steps to 
confront this threat, and we are committed to assisting our 
Mexican partners in this fight.
    We believe that the Department has the right comprehensive 
and coordinated strategy to disrupt and dismantle the cartels 
and stem the southbound flow of firearms and cash. The 
strengths of the Department's approach are illustrated by, for 
example, the tremendous successes of Operation Accelerator and 
Project Reckoning, multi-agency, multi-national operations 
targeting the Sinaloa and Gulf Cartels.
    Despite our recent successes, however, we recognize that 
there is much more work to do. Last month, I traveled to the 
Southwest Border, along with my friend, Assistant Secretary 
Bersin, and saw the acute challenges that our brave law 
enforcement personnel confront on a daily basis and how 
intertwined those challenges are.
    The Department is committed to working together with our 
colleagues at ONDCP and DHS, with our State, local, and tribal 
partners, and with the government of Mexico to build on what we 
have done so far, and to develop and implement new ideas and to 
refresh our strategies. The recently signed MOUs between DEA 
and ICE and between ATF and ICE are emblematic of our 
collaborative, coordinated approach to the threats posed by the 
Mexican drug cartels. By continuing to work together, we can 
and will rise to the current challenge.
    Again, thank you for your recognition of this important 
issue and the opportunity to testify today, and I will be happy 
to answer any questions you may have.
    [The prepared statement of Mr. Breuer follows:]

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    Chairman Towns. Thank you very much. Let me say that we 
have votes on the floor and that we will adjourn for 1 hour and 
be able to come back 10 minutes after the last vote, just in 
case we run into some problems over on the floor. But I think 
we should be back in an hour. So at that time we will continue 
with you, Mr. Bersin. We have to vote around here.
    [Recess.]
    Chairman Towns. The committee will reconvene.
    Again, we apologize for the delay, but votes are something 
that we have to do.
    Mr. Bersin.

                    STATEMENT OF ALAN BERSIN

    Mr. Bersin. Mr. Chairman, Ranking Member Issa, members of 
the committee, thank you for this opportunity.
    The rise of the Mexican drug cartels and U.S. national 
security poses the critical issue clearly and directly. This is 
a subject critical to our Nation and one with which I am 
familiar, having served as the Southwest Border representative 
for the Department of Justice from 1995 to 1998.
    Since my appointment to DHS in mid-April, I have traveled 
to the border and to Mexico five times to meet with U.S. 
officials at the Federal, State, local, and tribal level, as 
well as counterparts in the administration of President Felipe 
Calderon. I have also met, on behalf of the Department, with 
immigrant advocacy groups and civic and business groups along 
the border in Brownsville, Laredo, Del Rio, El Paso, 
Albuquerque, Tucson, Nogales, Phoenix, and San Diego.
    My experience living and working on the border has given me 
an appreciation for the strategic importance of our political 
and law enforcement relationship with Mexico, as well as for 
the gravity of the crisis that we face presently, given the 
rise of the drug cartels on the United States-Mexican border 
and within Mexico itself. It is indeed a crisis, though in 
using that word I note that the Chinese word for crisis is 
written in Mandarin by combining two characters, the character 
for danger and opportunity. Our current crisis certainly 
presents both.
    The danger comes from the fact that the Mexican cartels, 
through violent and corrupt means, have created a national 
security threat to the government of Mexico and, therefore, 
derivatively, to the United States. The power of the cartels is 
alarming. They have polluted the political system of Mexico; 
they have corrupted the legal system. The second element of 
danger is the competition among the cartels, along with the 
Mexican government's attempts to combat them, have led to 
unprecedented violence in the northern states of Mexico, from 
Tamaulipas to Baja, CA, resulting reportedly in more than 
11,000 deaths in the last 3\1/2\ years.
    Our opportunity arises from the historic and courageous 
efforts, indeed, heroic efforts of the Calderon administration, 
first, to fully acknowledge the power of the cartels and, 
second, to willingly confront the stark reality of systematic 
corruption that exists in Mexican law enforcement.
    The U.S. Government has been bold as well. Starting with 
the unqualified acceptance, the consumption of drugs on the 
U.S. side of the border is a major contributing factor to the 
power and influence of Mexican cartels. For the first time, we 
view drugs coming north and guns and bulk cash going south as 
two ends of a single problem. It is not the occasion for finger 
pointing between Mexico and the United States.
    The acknowledgment of a shared problem has paved the way 
for cooperation between DHS, along with DOJ, and the government 
of Mexico that would have been unthinkable 10 years ago, and 
even unsayable 3 years ago. DHS is working in full partnership 
with the government of Mexico to respond to the dangers and the 
opportunities that the current crisis has presented. This is a 
relationship of trust with verification, and one that is 
accepted by both countries on that basis.
    On March 24th, Secretary Napolitano and Deputy Attorney 
General David Ogden announced the President's major Southwest 
Border Initiative, a reallocation of agents, technology, 
equipment, and attention--importantly, attention--to the 
border. Those deployments are now complete.
    DHS has also taken steps to deepen our relationship with 
partner agencies in the government of Mexico. On June 15th, for 
example, Secretary Napolitano signed a Letter of Intent with 
Mexican Finance Secretary Augustine Carstens to guide the 
cooperative efforts of CBP, ICE, and Mexican Customs. DHS 
components also have worked to broaden the bilateral 
relationship in information and intelligence sharing, as well 
as in other areas that are law enforcement sensitive.
    Many have asked me what has changed between my first 
appointment as so-called Border Czar and my current job. The 
security threat on the border has certainly intensified with 
regard to the activities of the drug and other smuggling 
cartels that dot the border. However, I note two positive 
changes within our Government that make me optimistic that we 
will succeed in our efforts to reduce significantly the power 
of the smuggling cartels.
    First, DHS provides a significantly better resource 
capability to confront security issues at the border than was 
the case previously. It also has a unified chain of command 
overseeing our investigation and inspection responsibilities. 
Second, and genuinely, I have been impressed by the extent of 
cooperation that I have witnessed among our Federal agencies, 
exemplified and embodied in the relationship that Director 
Kerlikowske, Assistant Attorney General Breuer, and I have 
forged in short order. This is particularly true on the Merida 
Initiative, the long-term vehicle for expanded cooperation 
between United States-Mexican law enforcement agencies.
    Mr. Chairman, Ranking Member Issa, it has been said that 
the challenge of our time is that the future is not what it 
used to be. When it comes to United States-Mexican 
relationships and the prospect for building on that cooperation 
to deal with Mexican criminal organizations, that is a good 
thing, a very good thing indeed. I look forward to exploring 
this matter further with you and my colleagues in the question 
and answer, Mr. Chairman. Thank you.
    [The prepared statement of Mr. Bersin follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Towns. Thank you very much, Mr. Bersin, for your 
testimony.
    We now will move to the question and answer period.
    I have a broad question, I guess, for you, Mr. Breuer and 
Mr. Bersin. Are we winning the war against the Mexican drug 
cartels?
    Mr. Breuer. Mr. Chairman, we are. That is not to say that 
we don't have much to do, but if you look at the work that has 
occurred with the cartels, Mr. Chairman, with respect to 
operations that we have, whether it is Operation Accelerator, 
Project Reckoning, where we have systematically gone, 
investigated, and prosecuted the cartels, we have extracted 
enormous blows against the Sinaloa Cartel, against the Gulf 
Cartel, we have higher levels of extraditions of drug kingpins 
than ever before. So we are making every effective strategy 
with respect to intelligence-based investigations and 
prosecutions.
    That is not to suggest for a moment that we don't have more 
to do, but the battles among the cartels themselves are showing 
that the pressure that we are putting on them in unison and in 
alliance with President Calderon and his administration I think 
do demonstrate that we are being very effective.
    Chairman Towns. Mr. Bersin.
    Mr. Bersin. Generally, Mr. Chairman, I agree with Mr. 
Breuer that this is a long-term struggle about reducing the 
power of the cartels on the government of Mexico and, 
therefore, turning it from what is currently a national 
security threat into a more conventional law enforcement or 
criminal justice problem. And measured by that standard, I 
think we have a ways to go, but I am in accord with Mr. Breuer, 
for the reasons he stated, that we are making progress and that 
it is measurable progress, and that we can in fact intensify 
what we are doing and that we can continue to see a weakening 
of the cartel power, which now is alarmingly high, as I said in 
my statement.
    Chairman Towns. It has been indicated that the President is 
planning to send National Guard troops to the border. Of 
course, if we send National Guard troops to the border, who 
will be in charge of them?
    Mr. Bersin. Mr. Chairman, the decision whether or not to 
send National Guard in support of law enforcement at the United 
States-Mexican border, indeed, at any border, is a decision 
reserved exclusively for the President. Secretary Gates and 
Secretary Napolitano have been conferring and will be 
developing a recommendation that will be submitted to the 
President, but at end, Mr. Chairman, the mission of the 
decision is a function of Presidential decision, and I am 
confident that in due course that decision will be made one way 
or the other.
    Chairman Towns. What are the implications for U.S. national 
security should the Calderon administration fail in its efforts 
to take on the Mexican drug cartels? What are the stakes for 
both Mexico and the United States? Mr. Breuer, you want to take 
it?
    Mr. Breuer. Mr. Chairman, they are very, very significant. 
Certainly for Mexico, as Assistant Secretary Bersin said, they 
are confronting a national security tremendous challenge right 
now in their battle against the cartels. With respect to us 
right now, it is the equivalent of a major organized crime 
challenge. We cannot permit President Calderon to fail. This 
may be a once in a generation opportunity, his courage and his 
willingness to take on the cartels. So the consequences are 
very extraordinary, and we need to deploy the appropriate 
resources and skill and collaboration to ensure that we do 
everything we can to support the President.
    Chairman Towns. Mr. Bersin, I would like to hear from you 
on that as well.
    Mr. Bersin. I am in agreement with Secretary Napolitano, 
having heard her refer to this window of opportunity. To the 
extent that we are not able to weaken the influence of the 
cartels on the Mexican political system, we will continue to 
see a Mexico that is systematically corrupt in which decisions 
are not being made on the merits, but are rather being made 
because they are bought and paid for.
    That kind of a narco-influenced political system south of 
the border presents a whole series of long-term security 
threats to Mexico, which is why it is so important that we use 
this window of opportunity with the Calderon administration to 
weaken the power of these criminal organizations, these 
smuggling organizations that do enormous damage to our society, 
but even more damage to Mexican society.
    Chairman Towns. What would victory really look like? Let's 
go right down the line. What would it really look like, victory 
for us?
    Mr. Kerlikowske. One of the things that victory in Mexico 
would look like is certainly that President Calderon has, as we 
have in this country, a local law enforcement that is 
professional, highly trained, skilled, possesses the integrity 
to be responsive to the needs of protecting the people rather 
than the heavy use of the military in that country.
    The other thing that I would look at in victory, too, is 
that, as has been remarked to me by representatives from the 
government of Mexico, and that is the increasing addiction 
population or size of the population involved in drug use. As 
all of the members, I believe, of the committee know, the 
traffickers often pay their couriers in product rather than in 
currency. Well, then you are building up a new clientele base. 
We in the United States have to be willing, and have already 
looked at providing resources that work toward the prevention 
end of drug use in that country, but also the treatment end, 
and those are other parts that we hope to play.
    Chairman Towns. I yield to the gentleman from California, 
Congressman Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Mr. Bersin, during your tenure as U.S. attorney, you were 
quite well known for going after the coyotes, literally 
stopping those who traffic in human beings; and along the way 
you did an awful lot of drug charges that they were involved in 
and the mules they carried. Can you give us your opinion of 
current law, particularly 1326, 1324, some of the penalties 
that you have--let me rephrase that, that the U.S. attorney at 
the border areas have as tools today, and are they sufficient?
    Mr. Bersin. Mr. Issa, you raise an important point, 
particularly in this era in which the sharp division that used 
to exist between alien smuggling organizations and drug 
smuggling organizations has been blurred, in part by the 
efforts Mr. Breuer described, the pressure being brought on the 
cartels by U.S. enforcement, but, importantly, by Mexican 
enforcement, but also by the recessionary economy.
    So we begin to see a blurring of those lines, and I 
believe, certainly speaking from the perspective of 10 years 
ago, the series of statutes available to prosecutors--and I 
will defer immediately to Mr. Breuer, since I wear proudly a 
former hat as a prosecutor--but as an enforcement official, I 
would say that 1326 and 1325, which, of course, is a 
misdemeanor, work well. 1324, which is the penalties for alien 
smugglers, is something that, 10 years, was believed to require 
review, and I submit, regardless of how we come out on it, it 
could stand a further review at this point.
    Mr. Issa. Mr. Breuer, basically what I am trying to get to 
is we have had a challenge at the border that I have observed, 
which is that the first several times that you catch a 
trafficker, he gets treated almost as an amateur, like he just 
happened to be stumbling over the border by mistake; it is 60 
days and out, time served. The second time isn't much more. And 
we have had cases of dozens and dozens of times in which we 
cannot get, sometimes because of statute, we can't get the kind 
of enforcement.
    All three of you, do you believe that the Congress should 
be looking into giving you, as prosecutors, and the courts, in 
their determination, at least a greater ability to have the 
lower limits raised and/or give them the ability to have 
tougher sentences even on the first or second time that you 
catch a trafficker, regardless of whether you can actually 
catch him with the drugs?
    Mr. Breuer. Thank you, Congressman. I definitely think it 
is an issue that needs to be explored. I think what we need to 
do is we need to give the tools particularly to our U.S. 
attorneys such as what Secretary Bersin was when he was the 
remarkably effective U.S. attorney in San Diego. I think we 
need to give our U.S. attorneys, particularly in the southwest 
border States, the discretion and the tools so that they can 
effectively and comprehensively deal with the issue.
    But I don't think, candidly, that there is one size fits 
all, and I think we have to give our U.S. attorneys in those 
areas the discretion to prioritize, because, if we are going to 
charge under one aspect of the law such as this, we have to 
then ensure that we have appropriate facilities, whether it is 
prison facilities and other facilities----
    Mr. Issa. Well, let me go back through that.
    Mr. Breuer. Sure.
    Mr. Issa. California has tens of thousands of people who 
are petty criminals and illegal aliens. Are you saying that if 
we wanted to incarcerate every coyote, every person who is 
trafficking either in drugs or in human beings, that you don't 
have the capacity today to incarcerate every single one of 
those people for a significant period of time?
    Mr. Breuer. I think that there would be terrific 
challenges, Congressman. I think that to have the appropriate 
facilities and infrastructure to do that would require a lot. 
And more to the point, as we look at this comprehensive 
approach, what we really want to do is give our U.S. attorneys 
the tools so that we can most effectively dismantle the very 
cartels that you are talking about.
    Mr. Issa. Well, the only tool a prosecutor really has is 
the ability to incarcerate. Any tool short of that is an 
alternate. In other words, if you turn on the rest of your 
cartel, we will not lock you up for 10 years. That is a 
powerful tool. If you turn on your cartel or you are going to 
spend 60 days in the hoosegow, somehow I don't think that is a 
powerful tool.
    So the reason I am asking for this is threefold. First of 
all, should we have it? I think Mr. Bersin was more tending to 
say he wouldn't mind having the stronger tools at his disposal 
and at the judges' disposal to use that as a tool in order to 
get cooperation and, in many cases, incarceration. But the 
bigger question for us up here is are we clogging the system 
with not having comprehensive immigration reform, with not 
having relations with Mexico that allows us to return more of 
their citizens sooner with a full faith belief that they will 
incarcerate them?
    So although my time has expired and I have to be sensitive 
to the limited time, I would like it if you would look at it 
from that standpoint, because we are the Committee on Oversight 
and Government Reform, and we are the first stop in are there 
tools you don't have, either north or south of the border, that 
we could begin shedding light on.
    Mr. Breuer. Congressman, I think you have identified 
exactly, in a very eloquent way, the issue. We absolutely, as a 
component of this, ought to have comprehensive immigration 
reform. There is just absolutely no question. Second, in our 
building of our relationships with the Mexican government and 
President Calderon, a very effective tool, of course, is that 
we, in certain circumstances, do want to be able to return 
people to Mexico and know and have confidence that the Mexican 
government is going to treat them appropriately. So absolutely 
those are parts of the puzzle.
    Chairman Towns. Thank you very much.
    I now yield to the gentleman from Massachusetts, Mr. 
Tierney.
    Mr. Tierney. Thank you, Mr. Chairman.
    Gentlemen, do we fully appreciate the amount of corruption 
and the depth of the corruption that is involved? With the 
large amount of money that is indicated that is involved with 
this that is going into Mexico and the reports that we see 
about corruption in the police departments, corruption in the 
military, corruption in the judicial system, what can we do 
about that? What are we doing about it? And what confidence do 
you have that we are going to get a grip on that? Because 
without taking the profit out of this thing and deal with that 
money, we are just spinning our wheels, right?
    Mr. Breuer. Congressman, it is an enormous challenge, you 
are absolutely right. One of the effective tools that we do 
have and that we hope to do more of is our ability through 
Merida and other initiatives to work with and train law 
enforcement in Mexico. We are making great strides with respect 
to training vetted units, units that we have a lot of 
confidence in are in fact not subject to bribery, whether it is 
because, to be vetted, they are subject to polygraphs and a 
kind of background review----
    Mr. Tierney. Do you mind if I interrupt you for a second? 
You are talking about the military as opposed to police there?
    Mr. Breuer. No, I am talking about the police as well. I am 
talking about the police.
    Mr. Tierney. You would agree there is a significant amount 
of fear amongst police officers right there now? No matter how 
much you train them and how much you give them the pay, 
sometimes either going away or taking the money is a lot better 
alternative than having your family violated or be killed 
yourself.
    Mr. Breuer. And that is why it is such an enormous 
challenge. But there are many courageous law enforcement units 
in Mexico and these vetted units are a good representation of 
them.
    Mr. Tierney. Doubtless there are a lot of courageous people 
there, but don't we have to do something about the money, about 
the cash? I mean, if we stop the profit, we stop the cash, we 
are a long way along, I would think. So tell me what are your 
thoughts about the importance of disrupting the cartels' drug 
activity by seizing their money and what are we going to do to 
do that?
    Mr. Breuer. Well, you are right, and I will defer to my 
colleagues here as well, but, of course, what we are doing is, 
from the law enforcement point of view and, of course, at the 
Justice Department we have unparalleled levels of forfeiture 
and seizure of the profits and the money and the possessions of 
the cartel members. Frankly, one of our training programs is to 
teach and incorporate, even in Mexico, the same concept of 
forfeiture and seizure of their assets.
    Mr. Tierney. But don't we have to do that further back the 
line?
    Mr. Bersin, don't you agree?
    Mr. Bersin. Absolutely. Congressman, one of the changes 
that has taken place recently is the frank acknowledgment on 
our end of the bargain that the consumption of drugs in this 
country that generates through trafficking organizations the 
kinds of sums of money that have corrupted Mexican politics and 
its legal system is something that will continue until we get a 
better handle on reducing the demand.
    Mr. Tierney. So how are we going to get that money further 
up the chain while it is in the United States, before it goes 
south?
    Mr. Bersin. With regard to the drug demand reduction, the 
Southwest Border Strategy that was unveiled by the AG, by 
Director Kerlikowske and the Secretary, place a heavy emphasis 
on that and it does so on the border.
    Mr. Tierney. I see that, but there is still, at least in 
the interim, until we all manage to have a heavy effort on 
that, is going to be that cash.
    Mr. Bersin. The cash going south is again another departure 
that has been made by Secretary Napolitano, having CBP and the 
Border Patrol, as well as field office, pay attention to that, 
so that, for the first time, while we had them in the past, we 
have systematic checks going southbound. And this is a project 
that is very much geared to cooperating with Mexico as it 
builds up its enforcement capacity, again, for the first time--
--
    Mr. Tierney. I guess part of my concern is that a couple 
months ago you had sporadic checks going southbound--I think 
much too sporadic to be very effective--and we may not have the 
infrastructure there to really be effective on that. So, again, 
what are you going to do about the infrastructure there to make 
sure that we have a southbound steady impact on that and then 
further back the line? Because by the time it gets to the 
border, with the tunnels--that I hope to get to in a moment--
things of that nature, it may be too late.
    Mr. Bersin. Congressman, you are right that it wasn't until 
mid-April, when the Secretary changed the policy, that we went 
from very sporadic checks to systematic checks from Brownsville 
to San Diego. We need to continue to assess the effectiveness 
of that and particularly to see this as a bridge to Mexican 
capacity to conduct its inspections, which it is now building 
up, again, from Matamoros on the east to Tijuana on the west.
    We need to assess that. Whether or not we should be making 
a major investment in infrastructure to have two southbound 
checks, one United States and one Mexican, is one that 
certainly is on the table, but I think we need to learn a lot 
more about the response to this action.
    Mr. Tierney. Is there anything in the plan about coming 
further back to the chain before things get to the Southwest 
Border?
    Mr. Bersin. No question.
    Mr. Tierney. What aggressively are we going to do with 
that?
    Mr. Kerlikowske. There is a lot of progress. There are a 
couple of things that are being done besides those increased 
searches at the border. They are using local law enforcement to 
help with that, so in Seattle we sent officers trained with 
canines, along with the Sheriff's Department and others, at the 
request of the Federal Government. All of these local law 
enforcement agencies across the country are more than willing 
to do their part to help. That is only one part.
    The other, the High Intensity Drug Trafficking Areas, they 
are in 28 places around the United States. Their mission is to 
disrupt and dismantle those drug trafficking organizations. 
Often, they have the routes in Mexico. They not only seize the 
drugs, make the arrests, work with Federal prosecutors or local 
prosecutors, but they also go after the funds and the money. So 
you are not just stopping the bulk cash at border, you are 
stopping the bulk cash in Seattle and California and other 
places. And there is progress; there is more training being 
done on that.
    In Treasury, FinCEN is working very hard under the new 
credit card act to develop ways of looking at the use of just a 
card that is going to carry thousands of dollars of cash. There 
is a lot more to be done, but there is a lot of progress on 
that front. Choking off the money is the key.
    Mr. Tierney. Thank you, Mr. Chairman.
    Chairman Towns. Gentleman from Illinois, Mr. Quigley.
    Mr. Quigley. Thank you, Mr. Chairman.
    Gentlemen, I know the issue of the National Guard was 
raised broadly earlier. Is it accurate there are about 500 
National Guardsmen on the Southwest Border as we speak?
    Mr. Bersin. There are a complement of National Guard that 
have been engaged in an ongoing project that has been in 
existence for more than two decades in support of law 
enforcement activities, and I believe that number is one that I 
need to confirm. I do know that most of the Guardsmen are 
actually away from the border, engaged in intelligence, 
analytical activities, and the like. But I need to confirm 
whether it is 400 or some smaller number that are actually 
physically on the border today.
    Mr. Quigley. Well, two followups. The first would be the 
activities that they are completing as you talk about, do they 
relate to these drug cartel activities?
    Mr. Bersin. The counterdrug program that has been in 
existence for two decades, and that I am very familiar with 
from my time as a prosecutor in the 1990's, is definitely 
counterdrug in nature. That is the basis that Congress has 
authorized the activity and these are activities that involve 
supporting law enforcement in a variety of ways that are 
consistent with the division between law enforcement and the 
military that served this country well over the years.
    Mr. Quigley. You have probably read about the press 
accounts that discussed the possibility of the administration 
increasing this number of National Guardsmen, perhaps to 
another 1500. Is that your understanding or is that still in 
the planning stages?
    Mr. Bersin. This is all in the discussion stage, as I 
indicated, Congressman, between Secretary Napolitano, Secretary 
Gates. Together, they intend to make a joint recommendation to 
the President, who retains and will make the final decision.
    Mr. Quigley. OK. And excuse me if this has been discussed, 
because we are between votes in two committees here, but we 
have had in previous hearings such as this discussions about 
the conflicts between DEA and ICE, and I understand there has 
been an agreement that was signed on this. What exactly was the 
problem and how does this solve it, and do you sense that it is 
solving that issue?
    Mr. Breuer. Well, what it shows, Congressman, is the issue 
with ICE and DEA, they just entered into a Memorandum of 
Understanding. I think it is fair to say that there is a 
remarkable commitment to work together and that they in fact 
have been working well together, but now what happens is that 
ICE and DEA can work together.
    ICE agents can be designated to pursue drug-related crimes 
that are border related, but they can do that throughout the 
country; and, very importantly, the information that ICE 
gathers in its investigations can be shared in one of our 
remarkable data fusion centers so that all of the information 
from ICE and DEA and other law enforcement is shared together, 
so it comprehensively and effectively can be used to go after 
the cartels.
    Mr. Quigley. And there is perhaps an information loop that 
will follow back to make sure that continues to be the case?
    Mr. Breuer. There is, and there is a very great commitment 
by DEA and ICE, Homeland Security, and the Department of 
Justice to ensure that will happen, and I am quite confident it 
will.
    Mr. Bersin. Congressman, on the second panel you will have 
a working agent from Immigration Customs Information from DHS 
who I think will speak very directly to your inquiry.
    Mr. Breuer. And Assistant Director Placido from the DEA can 
as well, Congressman.
    Mr. Quigley. Time permitting, I guess, the third point 
being we often hear this figure that 90 percent of the guns 
confiscated in this conflict come from the United States. Given 
that we are not necessarily tracing all those guns, perhaps a 
fraction of them, how are we determining that figure?
    Mr. Breuer. Well, I think, Congressman, the precise number 
may be a little bit hard to identify. Of course, you are 
absolutely right, of those guns recovered for which one can 
trace them, I think that number that you have identified is the 
number that has been said, and I think that is right. I think 
the larger issue is that it is inescapable that a very large 
percentage of the guns that are in Mexico today do in fact come 
from the United States, and as we together are joining with our 
friends in Mexico to combat the battle, that is one of the 
issues that we all have to confront here ourselves.
    Mr. Quigley. Why aren't more guns traced? Is it just 
because some of them are untraceable or just the volume makes 
it difficult for ATF to trace?
    Mr. Breuer. Well, Congressman, what may work is in the 
second panel, Billy Hoover of ATF is here. He can, in a much 
more cogent manner than I, explain some of the intricacies 
there. But, of course, when possible, a good number of them 
have been traced. But I think he will be in a better position 
than I to tell you some of the challenges that ATF has found.
    Mr. Quigley. And I appreciate that. We will have a second 
panel.
    Mr. Chairman, just in closing, I suppose it would be easier 
to control that if we continue what the Clinton administration 
did, which was a ban on semiautomatic weapons. It is a lot 
easier to control them if they are not being sold.
    Chairman Towns. The gentleman's time has expired.
    The gentlewoman from Washington, DC.
    Ms. Norton. Well, I would like to pick up where the 
gentleman left off. I was, frankly, embarrassed by the 
performance of our country when the terrible episodes of armed 
conflict some thought might even bring down the Government. It 
may have been somewhat exaggerated.
    Here was the President trying to fight the gun cartels, and 
guess who was supplying the guns? And turns out not only are we 
not configured to find these guns, even with the most 
elementary inspection capacity, but keystone cop fashion, when 
we did some sporadic outbound inspections, they just looked at 
where you were doing them and got their guns out anyway.
    The notion that this country would have been so central to 
the supply of guns, which were in such plentiful supply that it 
was like an army that the Government itself was up against, not 
just a bunch of thugs. They had so much weaponry. So we know we 
are not doing much once you get guns. We know it doesn't take 
much to get them to Mexico.
    I am far more interested in how these thugs so easily pick 
up guns in this country and these guns are being sold. 
Assistant Secretary Breuer, how you could pick up a large cache 
of guns, equip yourself as if you were an army with such force 
that the Government, for a while there, was essentially 
fighting an internal army supplied in no small part by the 
United States of America.
    Now, where do these guns come from? How are they able to 
pick them up in such large numbers? How are they able to get 
out what amounts to enough guns to arm a virtual small army, 
many of them from the United States? And regardless of the 
figures and the notion that, well, a lot of them came from X, 
Y, or Z, you know exactly where they came from, Mr. Breuer.
    And while you may not be able to trace them, you have law 
enforcement jurisdiction in the United States of America, and 
why are you not keeping these guns from being either bought or 
otherwise in such large numbers so that they now arm a small 
army in another country? It is extremely embarrassing. Mexico 
has been, I think, very kind to us.
    I would have been very, very angry at the big kahuna in the 
north that was essentially shipping down arms to kill my people 
while they won't do anything about its own assault weapon ban, 
while nobody in your administration even spoke out about 
illegal guns and the proliferation of guns in our country, 
except the Attorney General did say something about it. So it 
looks like all you have to do is get some guns and you will get 
them across the border very easily, and nobody in the United 
States is doing very much to keep thugs from acquiring those 
guns in the first place.
    I am interested in this country, what you are doing here, 
before you get to the border.
    Mr. Breuer. Well, Congresswoman, I share your concern. I 
want to begin by saying that there are people who are working 
very hard. Our ATF agents are doing an extraordinary job with 
their resources, Congresswoman.
    Ms. Norton. What are they doing? Who is selling the guns? 
Who is selling the guns, sir? Where are the guns coming from?
    Mr. Breuer. Well, I think they are coming from a lot of 
places, Congresswoman. I think they are coming from licensed 
firearm dealers, where you have straw purchasers. The power of 
these cartels is extraordinary and, as you know, their reach is 
great. So we have to dismantle those cartels. But some are 
coming from licensed firearm dealers some on the Southwest 
Border----
    Ms. Norton. Is there nothing you can do about those coming 
from licensed----
    Mr. Breuer. Well, our ATF agents are doing a lot, but they 
have limited resources, Congresswoman.
    Ms. Norton. What are they doing?
    Mr. Breuer. What are they doing? They are going to these 
licensees; they are doing inspections.
    Ms. Norton. Are they doing any undercover work?
    Mr. Breuer. Yes, they are, Congresswoman, they are doing a 
lot, and they are sharing it with lots of agencies. So it is 
not fair to be critical of our agents. With the resources that 
they have, they are doing extraordinary jobs and every day they 
are serving the American people well.
    Ms. Norton. I am critical of your leadership, sir. I don't 
know about your agents. I love the ATF.
    Mr. Breuer. Well, Congresswoman----
    Ms. Norton. I am talking about what it takes to dismantle 
the gun cartel in this country that is not only enabling, but 
making possible----
    Chairman Towns. The gentlewoman's time has expired.
    Let me first thank you for your testimony and again 
apologize for the delay. We will hold the record open. If you 
can get some information for us. The arrest rate seems to be 
very aggressive in terms of what is happening in Mexico, but 
could you get us some information on the convictions? It is one 
thing to make a lot of arrests, but I want to know if we can 
get some information in terms of the percentage in terms of 
convictions, we would appreciate it. We will hold the record 
open for it.
    Mr. Breuer. Absolutely.
    Chairman Towns. That is a good point, too. Lengths of 
sentences as well. Yes, that is a good point.
    So we will hold the record open for that information. Thank 
you very, very much.
    Mr. Breuer. Thank you very much.
    Chairman Towns. Now we will bring up our second panel: Mr. 
Anthony P. Placido, Mr. Kumar Kibble, Mr. Todd Owen, Mr. 
William Hoover, and Mr. Robert McBrien.
    [Pause.]
    Chairman Towns. Would you please rise so I can swear you 
in?
    [Witnesses sworn.]
    Chairman Towns. Let the record reflect that they all 
answered in the affirmative.
    Let me introduce our second panel of witnesses.
    Anthony P. Placido is the Assistant Administrator for 
Intelligence Drug Enforcement Administration, U.S. Department 
of Justice, welcome; Mr. Kumar Kibble, Deputy Director of the 
Office of Investigations, U.S. Immigration and Customs 
Enforcement, U.S. Department of Homeland Security, welcome; Mr. 
Todd Owen, Acting Deputy Assistant Commissioner, Office of 
Field Operations, U.S. Customs and Border Protection, U.S. 
Department of Homeland Security; Mr. William Hoover, Assistant 
Director of Field Operations, Bureau of Alcohol, Tobacco, 
Firearms and Explosives, U.S. Department of Justice; and Mr. J. 
Robert McBrien, Associate Director of Investigations and 
Enforcement, Office of Foreign Assets Control, Department of 
the Treasury.
    Gentlemen, it is our committee policy, of course, that 5 
minutes for your presentation and then you allow us an 
opportunity to raise questions with you. So why don't we just 
go right down the line. I guess, Mr. Owen, you first, and then 
just go right down the line that way, make it a lot easier.

STATEMENTS OF TODD OWEN, ACTING DEPUTY ASSISTANT COMMISSIONER, 
OFFICE OF FIELD OPERATIONS, U.S. CUSTOMS AND BORDER PROTECTION, 
  U.S. DEPARTMENT OF HOMELAND SECURITY; KUMAR KIBBLE, DEPUTY 
   DIRECTOR, OFFICE OF INVESTIGATIONS, U.S. IMMIGRATION AND 
  CUSTOMS ENFORCEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY; 
 ANTHONY P. PLACIDO, ASSISTANT ADMINISTRATOR FOR INTELLIGENCE, 
  DRUG ENFORCEMENT ADMINISTRATION; WILLIAM HOOVER, ASSISTANT 
  DIRECTOR FOR FIELD OPERATIONS, BUREAU OF ALCOHOL, TOBACCO, 
  FIREARMS AND EXPLOSIVES, U.S. DEPARTMENT OF JUSTICE; AND J. 
   ROBERT McBRIEN, ASSOCIATE DIRECTOR FOR INVESTIGATIONS AND 
ENFORCEMENT, OFFICE OF FOREIGN ASSETS CONTROL, U.S. DEPARTMENT 
                          OF TREASURY

                     STATEMENT OF TODD OWEN

    Mr. Owen. Good afternoon, Chairman Towns, Ranking Member 
Issa, distinguished members of the committee. Good afternoon. 
Thank you for the opportunity to be here today to discuss the 
efforts that U.S. Customs and Border Protection is undertaking 
to secure our Nation. I am pleased to be here with my 
colleagues from ICE, DEA, ATF, and OFAC.
    I would also like to express my gratitude to the Congress 
for its continued support of the mission and people of CBP. 
Among the numerous priorities that were recognized in the 
American Recovery and Reinvestment Act of 2009, Congress 
provided CBP with $680 million for greatly needed improvements 
to our aging infrastructure at our ports of entry, to enhance 
our tactical communications equipment, and upgrade our non-
intrusive inspection technologies. This funding will allow CBP 
to more efficiently meet our twin goals of border security and 
facilitation.
    CBP has taken significant steps to protect Americans from 
the many threats that face our Nation. This afternoon, I would 
like to focus my remarks on the violence along the Southwest 
Border, particularly in regards to the outbound enforcement 
activities occurring at the ports of entry.
    The campaign of violence being waged by drug cartels in 
Mexico remains a major concern. Illegal drugs, money, and 
weapons flow both ways across our border and link the United 
States and Mexico in this battle. In response to this threat, 
the Department of Homeland Security has implemented a Southwest 
Border Security Strategy and CBP's Office of Field Operations 
is responsible for implementing this strategy at our ports of 
entry.
    We in CBP Field Operations have taken significant action on 
the Southwest Border, having enhanced our outbound enforcement 
efforts through the deployment of additional manpower, 
equipment, and technology. On a regular and recurring basis, 
teams of CBP officers, CBP border patrol agents, special agents 
from ICE and other Federal agencies, along with our State and 
local law enforcement partners, are now conducting outbound 
inspections at our ports of entry with a focus on interdicting 
firearms and currency heading into Mexico.
    CBP's mobile response teams are also quickly utilized to 
shift personnel between the ports of entry to further disrupt 
outbound smuggling efforts. These personnel are supported by 
non-intrusive inspection equipment which allows us to quickly 
scan a conveyance for the presence of anomalies, anomalies 
which may indicate contraband of some sort.
    CBP Field Operations currently deploys 227 large-scale 
inspection systems to our ports of entry, 91 of which are along 
the Southwest Border. Many of these systems are mobile, which 
can and are being used in our outbound interdiction efforts as 
well. And CBP is again grateful for the $100 million in 
stimulus funding which will allow us to upgrade our NII 
systems.
    We are also deploying dual detection canines, which are 
trained to detect both currency and firearms. We are adding 
additional canine assets to the Southwest Border throughout the 
summer as these teams come out from the academy in Front Royal, 
VA, and these detection tools will again allow our officers to 
quickly scan the southbound traffic looking for bulk cash, 
currency, and firearms.
    We are seeing the success of these increased outbound 
interdiction efforts. Since CBP began these initiatives with 
our partners on March 12th, we have seized more than $15.8 
million in illicit currency destined for Mexico. We are also 
pursuing activities which increase support and collaboration 
with our Mexican counterpart. At United States and Mexican 
border crossings, joint operations with Mexican Customs have 
begun and more are planned in an effort to better coordinate 
the inspection of travelers and cargo leaving the United States 
heading into Mexico.
    Chairman Towns, Ranking Member Issa, members of the 
committee, thank you for your support that CBP has had in 
meeting many of our border security responsibilities. I thank 
you for the opportunity to be here this afternoon and would be 
happy to address any of your questions.
    [The prepared statement of Mr. Owen follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Towns. Thank you very much for your testimony, Mr. 
Owen.
    Mr. Kibble.

                   STATEMENT OF KUMAR KIBBLE

    Mr. Kibble. Chairman Towns, Ranking Member Issa, and 
distinguished members of the committee, on behalf of Secretary 
Napolitano and Assistant Secretary Morton, I would like to 
thank you for the opportunity to discuss ICE's role in securing 
the border through the investigation and enforcement of the 
Nation's immigration and customs laws.
    As the primary investigative agency within DHS, ICE targets 
transnational criminal networks and terrorist organizations 
that might exploit potential vulnerabilities at our borders. 
Our partnerships are essential to this effort. ICE recently 
strengthened two of these crucial partnerships by renegotiating 
agreements with the DEA and the ATF. These agreements will 
improve and enhance information sharing and promote effective 
coordination.
    The violence along our Southwest Border requires a 
comprehensive and collaborative effort. On March 24th, the 
Departments of Homeland Security, Justice, and State announced 
the Southwest Border Initiative designed to crack down on 
Mexican drug cartels. This initiative was augmented by the 
recently released 2009 National Southwest Border 
Counternarcotics Strategy.
    Since the March announcement, we have seen significant 
increases in seizures of drugs and currency compared to the 
same time period in 2008. During the period between the March 
announcement and June 23rd of this year, ICE and CBP together 
have increased narcotics and U.S. currency seizures by over 40 
percent.
    ICE continues to work with its Federal partners to 
collaborate in various ways. For example, in 2005, DHS created 
the Border Enforcement Security Task Force. The 15 BESTs are a 
series of ICE-led multi-agency task forces that identify, 
disrupt, and dismantle criminal organizations posing 
significant threats to border security. Since 2005, the BESTs 
have reported over 4,000 criminal arrests and seized over 
200,000 pounds of narcotics, over 2500 weapons, and over 
370,000 rounds of ammunition, including $26 million in U.S. 
currency and monetary instruments.
    One recent success story was exemplified through a joint 
BEST investigation between ICE, ATF, and the El Paso Police 
Department, which led to the indictment of four individuals 
attempting to purchase and illegally export weapons and 
ammunition out of the United States. The weapons they attempted 
to purchase and smuggle included 300 AR-15 rifles, 300 short-
barrel .223 caliber rifles, 10 Barrett .50 caliber sniper 
rifles, two 40 millimeter grenade machine guns, and 20 handguns 
with silencers, as well as a large amount of ammunition. The 
firearms would have had a total street value of over half a 
million dollars.
    Given the success of the BEST model, ICE has shifted 
investigators to these task forces and doubled the number of 
agents working on BESTs along the Southwest Border from 95 to 
190. This greatly expands our ability to work with State and 
local law enforcement on cartel-related crime occurring on the 
U.S. side of the border.
    A large number of weapons recovered in Mexico's drug wars 
are smuggled illegally into Mexico from the United States. 
Clearly, stopping this flow must be an urgent priority, and ICE 
is uniquely positioned to address this challenge. In June 2008, 
ICE, along with CBP and other Federal, State, and local 
partners, launched Operation Armas Cruzadas. Since its 
inception, Armas Cruzadas has resulted in the seizure of 1,600 
weapons, more than $6.4 million, and over 180,000 rounds of 
ammunition, and the arrest of 386 individuals.
    In addition to addressing weapons smuggling, ICE has 
partnered with CBP through Operation Firewall to combat the 
illegal movement of cash across the Southwest Border. Since its 
inception, Firewall has resulted in the seizure of over $210 
million, including over $65 million seized overseas and 475 
arrests.
    ICE also recently established the Trade Transparency Unit 
with Mexico to identify cross-border trade anomalies, which are 
often indicative of trade-based money laundering schemes. Under 
this initiative, ICE and its partners in cooperating countries 
exchange import and export data and financial information. 
These efforts have led to more than $50 million in cash seized 
during the last fiscal year.
    We proactively attack groups engaged in human smuggling and 
trafficking by initiating investigations beyond the borders. 
ICE is a major participant in and supporter of the Interagency 
Human Smuggling and Trafficking Center, which targets human 
smugglers, traffickers, and terrorist travel facilitators. We 
have identified various methods and routes used by criminal 
networks to smuggle people into the United States.
    To target these methods and routes, ICE, in partnership 
with DOJ, formed the Extraterritorial Criminal Travel Strike 
Force in June 2006, combining our investigative, prosecutorial, 
and intelligence resources to target, disrupt, and dismantle 
foreign-based criminal travel networks. Complementary to the 
ECT program is the pivotal role ICE continues to play as a co-
chair of the targeting project of the Interagency Working Group 
on Alien Smuggling.
    In conclusion, ICE is committed to working with this 
committee and Congress to address the significant challenges we 
face to secure the border through the enforcement of our 
Nation's immigration and customs laws. I thank the committee 
for its support of ICE and our law enforcement mission, and I 
would be pleased to answer any questions you may have.
    [The prepared statement of Mr. Kibble follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Towns. Thank you very much, Mr. Kibble.
    Mr. Placido.

                STATEMENT OF ANTHONY P. PLACIDO

    Mr. Placido. Thank you, Mr. Chairman. Chairman, Ranking 
Member Issa, I appreciate the opportunity to represent the 
views of the Drug Enforcement Administration on this important 
issue regarding the rise of criminality in Mexican cartels and 
their implications for U.S. national security.
    As the lead agency for enforcing the drug laws of the 
United States, DEA is keenly aware of the critical requirement 
to break the power and impunity of transnational crime groups 
such as the Mexican cartels. These groups not only supply 
enormous quantities of illicit drugs to our country, with 
adverse consequences in terms of addiction, lost productivity, 
and related social costs, but, left unchecked, threaten 
regional stability because they undermine respect for the rule 
of law, diminish public confidence in government institutions, 
and promote lawlessness through corruption, intimidation, and 
violence.
    The good news is that, together with our highly committed 
and increasingly capable Mexican partners and the generous 
support of Congress through the Merida Initiative, we are 
bringing unprecedented pressure against these cartels in 
helping fortify Mexico's criminal justice system to assure that 
these gains can be sustained over time.
    The drug trade in Mexico has been rife with violence for 
decades. However, intentionally gruesome drug-related violence, 
kidnapping, torture, and murder have remained at elevated 
levels since President Calderon initiated his bold, 
comprehensive program to break the power of the cartels. And I 
believe they have distributed some of the photos that 
demonstrate the extent of that brutality.
    Mr. Issa. Mr. Chairman, I would ask unanimous consent that 
they be placed in the record but not shown, because they are 
literally too gruesome, I think, for open showing. I think the 
gentleman would agree.
    Chairman Towns. Without objection, so ordered.
    Mr. Placido. Mexican cities along our Southwest Border, 
such as Juarez and Tijuana, have witnessed spectacular violence 
despite the fact that El Paso and San Diego are among some of 
the safest cities in America. Drug-related killings in Mexico 
have escalated from approximately 1,200 in 2006 to more than 
6,200 in 2008, and during the first 6 months of this year there 
have been approximately 3,600, putting it on par to exceed last 
year's numbers.
    In the past, the violence was largely confined to persons 
engaged in the drug trade. But there has been a disturbing new 
trend wherein Mexican military and law enforcement officials 
are being intentionally targeted by the cartels. Moreover, in 
an effort intended to break the will of the government of 
Mexico to confront these vicious criminals, the mutilated the 
decapitated bodies of the victims are frequently left with 
signs warning of even greater violence.
    Even if this carnage can be confined to Mexican territory, 
it has adverse consequences to U.S. national security. There is 
justifiable concern that the violence plaguing Mexico will 
spill across our border and have an even more pronounced effect 
on Americans.
    The U.S. interagency has attempted to distinguish between 
the criminal-on-criminal violence that has always been 
associated with the drug trade and the new phenomenon of 
retaliatory violence against Mexican officials and 
institutions. Accordingly, we have defined spillover violence 
to entail deliberate attacks by the cartel on U.S. Government 
personnel, whether in the United States or Mexico, innocent 
civilians in the United States, or U.S. Government facilities, 
including our embassies and consulates. Based on this 
definition, we have not yet seen a significant level of 
spillover violence; however, as you have heard, we must, and 
are, building contingency plans for the worst case scenario.
    Moreover, I would reemphasize that even if confined to 
Mexico, the drug-related violence seriously undermines respect 
for the rule of law and degrades confidence in Mexican 
institutions. By extension, instability in Mexico has serious 
national security implications here at home, as well as adverse 
consequences in Central America and beyond. DEA continues to 
work in cooperation with its Federal, State, local, and foreign 
counterparts to address these threats.
    DEA's organizational attack strategy is an attempt to 
systematically disrupt and dismantle the command and control 
elements of these criminal syndicates. Key to this strategy is 
sharing information in coordination with our counterparts 
through the Special Operations Division, the OCDETF Fusion 
Center, and the El Paso Intelligence Center.
    In Mexico, DEA has the largest U.S. law enforcement 
presence, and its partnership with the Calderon administration 
is mounting sustained attacks against these cartels. The 
disruption and dismantle of these organizations, the denial of 
proceeds, and the seizure of their assets significantly impact 
the ability of these cartels to exercise influence and further 
destabilize the region. Projects Reckoning and Operation 
Accelerator are recent examples of this collaboration. While 
these collaborative operations are intended to break the power 
of the cartels, in the short-term they also exacerbate the 
violence in Mexico.
    Briefly, I would also like to address an issue of concern 
that was recently highlighted by the GAO pertaining to 
collaboration and cooperation between ICE and DEA. As someone 
who began my career with then U.S. Customs Service, now ICE, I 
want to underscore the importance of cooperation in law 
enforcement and DEA's unwavering support for the recently 
signed Interagency Cooperation Agreement between DEA and ICE.
    Both Secretary Napolitano and Attorney General Holder have 
made clear that this agreement is the most efficient and 
effective way to promote interagency coordination and 
cooperation. The agreement addresses the concerns of both 
agencies, without the need for legislative action, by allowing 
the cross-designation of an unlimited number of ICE agents to 
employ Title 21 investigative authority and also strengthens 
information sharing and coordination protocols.
    Chairman Towns, Ranking Member Issa, members of the 
committee, I thank you for the opportunity to testify and stand 
ready to answer questions.
    Chairman Towns. Thank you very much for your testimony.
    Mr. Hoover.

                  STATEMENT OF WILLIAM HOOVER

    Mr. Hoover. Thank you, sir.
    Chairman Towns, Congressman Bilbray, and other 
distinguished members of the committee, I am William Hoover, 
Acting Deputy Director of the Bureau of Alcohol, Tobacco, 
Firearms and Explosives. On behalf of Acting Director Ken 
Melson, I am honored to appear before you today to discuss 
ATF's ongoing role of disrupting firearms from being illegally 
trafficked from the United States into Mexico and working to 
reduce the associated violence along the border.
    For over 30 years, ATF has been protecting our citizens and 
communities from violent criminals and criminal organizations 
by safeguarding them from the illegal use of both firearms and 
explosives. We are responsible for both regulating the firearms 
and explosive industries and enforcing the criminal laws 
relating to those commodities.
    ATF has the experience, expertise, and commitment to 
investigate and disrupt groups and individuals who obtain guns 
in the United States and illegally traffic them into Mexico in 
facilitation of the drug trade. The combination of ATF's crime-
fighting expertise, specific statutory and regulatory 
authority, analytical capability, and strategic partnerships is 
used to combat firearms trafficking both along the U.S. borders 
and throughout our nation.
    We know we do not fight this battle alone. Last week, ATF 
hosted a violent crime and arms trafficking summit in 
Albuquerque, NM. This conference was monumental in establishing 
a formal partnership between ATF and ICE. At this conference, a 
Memorandum of Understanding was signed by the leaders of both 
agencies, establishing how we will work together on 
investigations regarding firearms trafficking. This agreement 
also establishes a notification process that each agency will 
follow while conducting these investigations.
    ATF's strategy for disrupting the flow of firearms to 
Mexico through Project Gunrunner has referred over 882 cases 
for prosecution, involving 1,838 defendants. Those cases 
include 415 for firearms trafficking, which involved 1,135 
defendants and an estimated 13,382 firearms. ATF has said that 
90 percent of the firearms seized in Mexico and traced come 
from the United States. The GAO report that was published in 
June 2009 concurred with our findings.
    We have established that the greatest proportion of 
firearms trafficked to Mexico originate out of the States along 
the Southwest Border. Additionally, trace data shows that 
traffickers are also acquiring firearms from other States as 
far east as Florida and as far north and west as Washington 
State. Additionally, Mexican officials have seen an increase in 
the number of explosive devices used in these violent attacks. 
ATF agents and explosives experts work with the Mexican 
military and law enforcement to identify and determine where 
these devices and components originate.
    Along the Southwest Border, ATF's Project Gunrunner 
includes approximately 148 special agents dedicated to 
investigating firearms trafficking on a full-time basis and 59 
industry operations investigators responsible for conducting 
regulatory inspections of federally licensed gun dealers, known 
as FFLs. We recently sent over 100 additional personnel to the 
Houston Field Division to support our effort against the 
trafficking of firearms to Mexico. In addition, ATF has 
received a total of $25 million in new funding in fiscal year 
2009 and in fiscal year 2010 for Project Gunrunner.
    As the sole agency that regulates FFLs, roughly 7,000 of 
which are along the Southwest Border, ATF has the statutory 
authority to inspect and examine the records and inventory of 
licensees, looking for firearms trafficking trends and 
patterns, and revoking the license of those who are complicit 
in firearms trafficking. For instance, ATF used its regulatory 
authority to review the records of an FFL that received close 
to 2,000 firearms, removed their serial numbers, and trafficked 
them to Mexico with the aid of a co-conspirator located in 
Mexico.
    A key component of ATF's strategy to curtail firearms 
trafficking to Mexico is the tracing of firearms seized in both 
countries. Our analysis of this aggregate trace data can reveal 
trafficking trends and networks showing where the guns are 
being purchased and who is purchasing them.
    Let me share an example of how trace data can identify a 
firearms trafficker.
    ATF's analysis of a trace data linked a man living in a 
U.S. city along the border to three crime guns recovered at 
three different crime scenes in Mexico. Further investigation 
uncovered that he was the purchaser of a fourth firearm 
recovered at yet another crime scene in Mexico, and that he had 
purchased over 100 AR-15 type receivers and 7 additional 
firearms within a short time span using nine different FFL 
wholesale distributors as sources for his guns.
    In April 2008, ATF seized 80 firearms from the suspect and 
learned that he was manufacturing guns in his home. He sold 
over 100 guns alone to an individual who is suspected of being 
linked to a cartel. Investigative leads are being pursued and 
charges are pending.
    Last, I would like to mention ATF's operational presence at 
the El Paso Intelligence Center, located in El Paso, TX. EPIC 
is certainly one of the most valuable tools for intelligence 
sharing and coordination in multi-agency efforts to curb 
violence and firearms trafficking activities along the 
Southwest Border. At EPIC, we operate what is known as the ATF 
Gun Desk. The mission of the Gun Desk is to identify and 
analyze all firearms and explosives-related data acquired and 
collected from law enforcement and open source. This would 
include Mexican military and law enforcement, and also U.S. law 
enforcement assets operating on both sides of the border.
    We at ATF will continue with our efforts along the 
Southwest Border and will harvest our partnerships with not 
only our law enforcement partners within the United States, but 
will continue to work with the Mexican officials in Mexico to 
obtain more information to better understand the flow of 
firearms from our country into theirs.
    Chairman Towns, Congressman Bilbray, and other 
distinguished members of the committee, on behalf of the men 
and women of ATF, I thank you and your staff for your continued 
support of our crucial work. With the backing of this 
committee, ATF can continue to fight violent crime in the 
Nation's cities and on the border, making our Nation even more 
secure. I look forward to your questions.
    Chairman Towns. Thank you very much, Mr. Hoover, for your 
testimony.
    Mr. McBrien.

                 STATEMENT OF J. ROBERT McBRIEN

    Mr. McBrien. Mr. Chairman, Mr. Bilbray, other members of 
the committee, I am pleased to be here today on behalf of the 
Office of Foreign Assets Control of the Treasury Department. I 
will try to compress the statement as we go through it for the 
interest of time and so that we can get into the questions and 
answers.
    The Office of Foreign Assets Control's mission is to 
enforce economic sanctions in support of U.S. foreign policy 
and national security. In the particular instance of Mexico, we 
are talking about using the tool of the Foreign Narcotics 
Kingpin Designation Act, which Congress passed in 1999. The 
Kingpin Act has been used in responding to the threat in Mexico 
since the year 2000, when the first kingpins were named by, at 
that time, President Bush, and we have continued to use it 
since that time. So OFAC's involvement in the fight against the 
drug trafficking organizations in Mexico is not something new, 
it is something we have been doing, even with the small 
resources that we have.
    The authorities delegated to OFAC are national security and 
foreign policy tools that provide power and leverage against a 
foreign country, regime, or non-state actors such as foreign 
narcotics traffickers and terrorists. One of our most powerful 
instruments, Specially Designated Nationals List [SDN], is used 
to identify, expose, isolate, and disrupt or incapacitate a 
foreign adversary with the intended result of denying them 
access to the U.S. financial and commercial system, and 
immobilizing their resources. OFAC's authorities are 
administrative in nature, but for persons subject to U.S. 
jurisdiction, violating OFAC sanctions carries both civil and 
criminal penalties.
    Every year since the Kingpin Act was passed, the presence 
of the United States has added more kingpins to the list. These 
kingpins are across the world; it is not only Mexico, although 
Mexico is roughly 50 percent of those that have been named. 
This year, President Obama moved from the usual June 1st date 
in which the statute asked that there be a report made, and 
acted early and, on April 15th, named three of the Mexican 
cartels that are currently at the center of much of the 
violence that is going on. We named the Los Zetas, the Sinaloa 
Cartel, and La Familia Michoacana. Then again in June we named 
more kingpins, except those were not involving Mexico.
    These are referred to by OFAC as Tier 1 traffickers. While 
the President identifies the Tier 1 traffickers, OFAC has been 
delegated the authority to designate for sanctions those 
working for or on behalf of, or owned or controlled by, or 
materially assisting the Tier 1 traffickers. Now, this is the 
real meat of the counternarcotics sanctions. These Tier 2s, 
which we also call derivative designations, include the money 
laundered, the family members complicit in narcotics 
trafficking activities, the criminal members of the 
organization, the transportation cells, the logistics, 
procurement, and communication cells that make up the financial 
and support networks of drug trafficking organizations.
    Since 1999, the President has identified 82 Tier 1 
traffickers, 37 of which are Mexican. In that same time, OFAC 
has identified 251 Tier 2 designations in Mexico. In addition 
to that, under the program on which the Kingpin Act was 
conceptually based, which is our sanctions against Colombian 
traffickers under another authority, the International 
Emergency Economic Powers Act, we have also, under the 
Colombian program, in recent times, named 30 Mexican entities 
or individuals who are also involved in the Colombia-to-Mexico 
part of the drug trade. So the total over these last several 
years is 288 persons, entities and individuals, that have been 
named by OFAC for the blocking of their assets and the 
prohibition on their activities.
    I am going to skip through parts of this and just get down 
to some of the nitty gritty here. I said at the outset that our 
objective is to identify and expose and isolate and 
delegitimize, immobilize, disrupt, dismantle--however we can do 
it--the drug trafficking organizations; and we do this by going 
after the heads of the organizations, key players of the 
organizations, and perhaps, most important--and this again goes 
back to the meat of it--the networks, the key nodes, the choke 
points, the whole support structure that makes up a cartel; not 
just the people who are moving the drugs, but all the 
businesses, the infiltrations of the legitimate business world, 
the front companies that give them their backbone. Our 
objective is to go after that backbone and try to break it.
    Ultimately, we hope to be able to expose, halt, and even 
reverse the penetration of the legitimate economy through our 
actions. At the same time that we are doing this, we are 
working collaboratively with all of our colleagues. All of the 
agencies that are at this table are working with OFAC on these 
projects. We have relied on and are heavily integrated with 
DEA, and have been from the very beginning. I cannot say enough 
for the work that they have done to enable us to carry out our 
part of the program against the drug trafficking organizations 
in Mexico.
    At the same time that we are doing this with our 
colleagues, we have, since the Calderon administration came 
into power, been working very closely with the Mexicans on an 
ever-escalating basis, and we are continuing to do that.
    I would like to just conclude, if I may, with noting that 
the Kingpin Act provides a powerful mechanism for acting 
against the threat to the United States posed by foreign 
narcotics cartels, whether in Mexico or elsewhere. In the case 
of our southern neighbor, OFAC's employment of the Kingpin Act 
authorities provides a growing opportunity for partnership in 
combating the scourge of the drug trafficking organizations. It 
is a force multiplier; it presents opportunities not only 
supportive efforts by DEA and other U.S. criminal enforcement 
agencies----
    Chairman Towns. Mr. McBrien, I am going to have to ask you 
summarize.
    Mr. McBrien. Yes, sir. That is actually what I am doing 
right now, sir.
    But we are also supporting Mexican authorities. It is an 
important element in achieving a unity of effort among U.S. 
Federal, State, and----
    Chairman Towns. What I am really saying is your 5 minutes 
are up.
    Mr. McBrien [continuing]. Local agencies.
    Mr. Chairman, I very much appreciate that hint and I thank 
you for the opportunity to be here today, and we would be glad 
to hear any questions you may have and try to answer them for 
you.
    [The prepared statement of Mr. McBrien follows:]

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    Chairman Towns. Thank you so much for your testimony. Thank 
you.
    To the Members, we have votes again. I understand there are 
three votes. What I would like to do, if we can finish the 
panel, because we do not know whether there will be some 
procedural votes or not, so we are not sure how long it will 
take. So what I would like to do, I would like to yield myself 
2 minutes and then yield the ranking member 2 minutes and then 
yield you 2 minutes, and then we will be able to sort of finish 
up without having to delay them for the next hour or so.
    So let me begin by, first of all, asking, you know, the 
average person has difficulty relating to the fact that we have 
problems in terms of the drug problems in Mexico. What do we 
say to the average person out there that we are concerned about 
what is happening in Mexico? How do we really explain that? 
Anyone. I guess Mr. Placido or Mr. Kibble. How do we explain to 
them our interest and our concerns?
    Mr. Placido. Certainly. Sir, it is an excellent question 
and I would answer it this way, that there is no country on the 
face of the earth that is probably more important to the United 
States than Mexico is to us. We share not only a common border, 
but immigration issues, trade, economy, the air we breathe, the 
water we drink, the water we use for irrigation and 
agriculture.
    We are closely intertwined, and the national security 
implications of corruption, intimidation, violence, and 
instability in Mexico threaten us gravely because of our 
integrated economy and the integrated nature of our societies. 
I think it is not only a source of drugs, much of the drugs 
that are consumed and abused in the United States, but 
instability south of our border creates problems on a much 
broader scale.
    Chairman Towns. Yes, go ahead, Mr. Kibble.
    Mr. Kibble. Sir, the one thing I would add is it also, from 
the homeland security standpoint, represents a vulnerability in 
terms of our borders, and we have to be concerned that any 
smuggling network that can arbitrarily introduce contraband 
across our borders, we have to be concerned about them either 
knowingly or unknowingly facilitating the introduction of 
national security threats into the homeland. So, for those 
reasons, from the ICE perspective and the cross-border criminal 
network perspective, we need to leverage all of our efforts 
collectively to shut down these networks.
    Chairman Towns. I yield to the gentleman from California.
    Mr. Bilbray. I appreciate ICE's comments about anything and 
anyone who crosses the border without being checked is a 
potential threat. So we have to tie that together.
    I am going to ask about the Merida Initiative, but, up 
front, the laundering of the profits is something we don't talk 
enough about, and we have traditionally RICO provisions here--
and anybody can jump into this--the requiring viable 
identification at the time that any individual opens a bank 
account.
    The previous administration not only did not enforce it, 
but endorsed bank accounts being opened with less than secure 
identification. You know exactly what I am talking about. Are 
we doing anything to shut down that opportunity to have 
thousands of bank accounts opened up to where we really don't 
know who opened those accounts? Are we going back and 
addressing these issues where we are requiring now a viable ID 
be issued before we open an account, the way it used to be 
before the previous administration? Anybody want to comment on 
that?
    Mr. McBrien. Mr. Bilbray, I am from Treasury, but I have to 
admit that I am not in a position to comment on that because 
that is not part of what the Office of Foreign Assets Control 
deals with.
    Mr. Bilbray. I just tell you in San Diego it is a hot issue 
that you can go to any consulate, get a consulate card without 
any ID to prove that you are who you say you want to be; and 
not only were the banks allowing it, but they were condoned by 
the Bush administration, opening these accounts with no 
oversight to prove that this was a viable ID. Why have a law if 
we are not going to apply it to everybody? So I raise that.
    What are we doing with the Merida Initiative? I am very 
concerned about two things. Anyone who participates in Mexico 
in our process, they and their families are going to be 
suspect. Is there anybody here who can talk about this openly 
and how we are cooperating and how we are training and how we 
are supplying Mexico to win the war on their soil before it 
gets to ours?
    Mr. Placido. Certainly, sir. Excellent question. I think, 
as was said on the first panel, there was concern that--I think 
the way it was characterized is we are one assassination away 
from having the Merida plan fail. I don't know that I would go 
that far, but I would certainly say that the Mexican partners 
with whom we work are extraordinarily vulnerable for their 
participation with us and for their bold and decisive actions 
against the cartels.
    In response to that, there is a great deal of work going on 
and, under Merida, some of the things that are going on are 
executive protection plans and training for senior level 
officials; of course, the vetting that has been discussed in 
terms of the integrity and the capability of the people that we 
work with; but there is also institution building, and I think 
that is the long-term piece of this, is to buildup and develop 
the courts and the prosecutor cadre so that they take on this 
problem internally in their own country and break the impunity 
of these criminal organizations is the long-term solution.
    Mr. Bilbray. Mr. Chairman, I know my time has expired. I 
want to point out that one of the crisis--to show you how tough 
it is--to hold court, you have to hide the identity of the 
judge, because they not only assassinate judges, they 
assassinate families.
    I am going to make a public statement. I think the Merida 
Initiative should bring young people in from the central part 
of Mexico and the south, bring them into the United States, we 
train them here, we keep them here until they are able to do 
their operations, because as soon as you identify them in 
Mexico, their family and they are at risk; and as soon as you 
leave them long periods of time in that environment, they are 
susceptible for influence by the cartels.
    So, as a layman who has worked on criminal justice issues 
along the border a long time, I think we need to be serious 
about bringing these young men into the United States, train 
them, keep them here, and allow them to do their job in Mexico 
when they need to be done, but protect them and their families 
while they are doing those jobs.
    Thank you very much, Mr. Chairman. I appreciate it.
    Chairman Towns. Thank you very much.
    We are running out of time here, we have to go vote.
    What can we do to assist you in making certain that you are 
very successful in your endeavors? What can the Congress do? In 
other words, let's switch roles for a moment.
    Mr. Placido. Well, sir, Mr. Chairman, I appreciate the 
question. I think the first thing all the witnesses at this 
table would have to say is we support the President's budget.
    But clearly resource constraints are an issue that face us. 
With $1.4 billion over 3 years projected in the Merida 
Initiative to assist the governments of Mexico and Central 
America, there has been relatively little spent on the domestic 
side of this equation to help the U.S. agencies that must work 
with them. We are doing the best that we can to prioritize our 
resources and work within the existing budget constraints, but 
it is difficult to increase the operational temp of our foreign 
counterparts without a corresponding ability to do something on 
the U.S. side.
    Mr. Bilbray. You want to comment on the lack of jail space?
    Mr. Placido. Outside of my bailiwick, sir.
    Mr. Bilbray. Anybody want to comment on that? OK, for the 
record, we are grossly deficient where we have to choose 
winners and losers, and this is not a time to do that.
    Thank you, Mr. Chairman. I appreciate the hearing.
    Chairman Towns. Thank you very much.
    Just quickly for the record, DEA and ICE, you guys getting 
along now? [Laughter.]
    Mr. Placido. Yes, we are, sir.
    Chairman Towns. We purposely put you together. Thank you 
very much.
    Mr. Bilbray. So you are not deporting his mother? That is 
nice of him.
    Chairman Towns. Let me just say, first of all, that 
completes the questioning of this panel. Of course, I would 
like to give the Members an opportunity to put their opening 
statements in the record. Without objection, so ordered.
    Let me just thank all of you witnesses and Members who 
attended this hearing today. Please let the record demonstrate 
my submission of a binder with the documents relating to this 
hearing. Without objection, I enter this binder into the 
committee record.
    Without objection, the committee stands adjourned. Thank 
you so much for coming.
    [Whereupon, at 2:18 p.m., the committee was adjourned.]
    [The prepared statements of Hon. Diane E. Watson and Hon. 
Gerald E. Connolly and additional information submitted for the 
hearing record follow:]

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