[Senate Report 105-359]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 681
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-359
_______________________________________________________________________


 
                     DRUG FREE BORDERS ACT OF 1998

                                _______
                                

October 1 (legislative day, September 29), 1998.--Ordered to be printed

_______________________________________________________________________


    Mr. Roth, from the Committee on Finance, submitted the following

                              R E P O R T

                        [To accompany H.R. 3809]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which was referred the bill 
(H.R. 3809) to authorize appropriations for the United States 
Customs Service for fiscal years 1999 and 2000, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
 I. Introduction......................................................2
        A. Purpose and Summary...................................     2
        B. Background and Need for Legislation...................     2
        C. Legislative History...................................     5
II. Explanation of the Committee Amendment............................7
        A. Title I--Authorization of Appropriations for United 
            States Customs Service for Enhanced Inspection, Trade 
            Facilitation, and Drug Interdiction..................     8
            1. Section 101--Authorization of Appropriations......     8
            2. Section 102--Cargo Inspection and Narcotics 
                Detection Equipment for the United States-Mexico 
                Border, United States-Canada Border, and Florida 
                and Gulf Coast Seaports..........................     8
            3. Section 103--Peak Hours and Investigative Resource 
                Enhancement for the United States-Mexico Border, 
                the United States-Canada Border, Florida and Gulf 
                Coast Seaports, and the Bahamas..................    10
            4. Section 104--Air and Marine Operation and 
                Maintenance Funding..............................    10
            5. Section 105--Compliance with Performance Plan 
                Requirements.....................................    11
            6. Section 106--Commissioner of Customs Salary.......    11
            7. Section 107--Passenger Preclearance Services......    11
        B. Title II--Customs Performance Report..................    11
III.Vote of the Committee............................................13

IV. Budget Effects of the Bill.......................................14
 V. Regulatory Impact and Other Matters..............................15
VI. Changes in Existing Law Made by the Bill, as Reported............16

                            I. INTRODUCTION

A. Purpose and summary

    H.R. 3809, as amended by the Committee, would authorize 
appropriations necessary to improve Customs' ability to 
interdict drugs and other contraband while improving the entry 
and processing of legitimate commerce at our nation's ports. 
The Committee amendment would also require a study of various 
Customs Service processes in order to provide the Committee on 
Finance with a benchmark against which to judge Customs' 
performance of its primary function of processing legitimate 
commerce, both inbound and outbound, and securing our borders 
against the importation of illegal narcotics and other 
contraband.

B. Background and need for legislation

    The role of the Customs Service has expanded significantly 
since customs officers were first authorized to collect duties 
on goods in 1789. The U.S. Customs Service combines that role 
with the broad responsibility for enforcing a broad range of 
U.S. laws at the border. The Customs Service's enforcement 
responsibilities range from the interdiction of drugs and other 
contraband to the enforcement of U.S. food safety, consumer 
protection, environmental, child labor and intellectual 
property laws, among others.1 Recent Customs Service 
appropriations have included specific direction to expand anti-
terrorism programs, improve the reporting of trade statistics, 
enhance regulatory audit and laboratory services, open new 
ports of entry, and expand services at existing ports. 
According to testimony before the Committee, all told, Customs 
enforces over 400 laws for over 40 U.S. agencies.
---------------------------------------------------------------------------
    \1\ The breadth of Customs' enforcement responsibility is reflected 
in the diverse legislation for which the agency bears either primary or 
partial responsibility for enforcement. Beyond its role in the 
enforcement of the U.S. trade laws contained in Title 19 of the United 
States Code, the Customs Service is now responsible for enforcing 
provisions of, inter alia, the Controlled Substances Act, the Export 
Administration Act, the Endangered Species Act, the Poison Prevention 
Act of 1970, the Wool Products Labeling Act, as well as legislation 
implementing the NAFTA, the Uruguay Round Agreements Act, and other 
trade agreements.
---------------------------------------------------------------------------
    In addition, Customs bears the primary responsibility as 
well for the enforcement of U.S. trade agreements at the 
border. Trade agreements like the North American Free Trade 
Agreement (``NAFTA'') and those concluded as part of the 
Uruguay Round create new and more complex rules of the road for 
importers and exporters. The Customs Service must implement 
those rules that require border enforcement such as new 
country-of-origin and marking rules, as well as provide timely 
guidance to the trade and transport communities that depend on 
such guidance to complete their transactions.
    Over the last ten years, new trade agreements, lower trade 
barriers, and the prolonged expansion of the U.S. economy have 
driven an expansion in United States trade unparalleled in the 
Nation's history. For example, according to testimony before 
the Committee, United States-Canadian trade has doubled since 
the signing of the U.S.-Canada Free Trade Agreement a decade 
ago, from $194 billion in 1987 to $387 billion in 1997. 
Overall, the Customs Service expects that imports through U.S. 
ports will grow 50 percent over the next five years, from $761 
billion to $1.1 trillion. Those figures imply a 10-percent 
annual increase in the number of commercial entries Customs 
will face at U.S. ports of entry.
    While the volume of trade has grown, the threat from drugs 
and other contraband, including the importation of explosives 
or other weapons of terror, has not subsided. While drug use 
overall has declined from 10 years ago, recent statistics 
suggest that it is once again on the rise among the young and 
there has been no decline in the efforts of drug smugglers to 
bring their illegal wares to U.S. shores.Those efforts have, if 
anything, become more sophisticated. Customs has enhanced its drug 
interdiction efforts through comprehensive programs like Operation 
Brass Ring, which has focused on interdiction at all United States 
borders with successful followup investigations. Such efforts have led 
to a significant payoff in increased seizures and arrests.
    The Customs Service has faced the steady expansion of its 
responsibilities and the growth in both legitimate 
international trade and contraband with steadily declining 
resources. According to testimony before the Committee, 
Customs' budget declined over $100 million dollars in real 
terms over the last five years. What that means, in practical 
terms, is that Customs, on a typical day, examines 1.2 million 
passengers, over 320,000 vehicles, 27,000 trucks or containers, 
2,200 aircraft, and 635 vessels with approximately 10 percent 
fewer resources than it had five years ago. On that same day, 
Customs will have seized 2,700 pounds of narcotics, $650,000 in 
illegally transported U.S. currency, $20,000 worth of arms and 
ammunition, $332,000 in vehicles stolen or used in the 
commission of a violation of the customs laws. It will have 
made 56 arrests, 72 narcotics seizures, 10 currency seizures, 
and 112 other enforcement seizures of conveyances, arms and 
ammunition, commercial merchandise, child pornography, and 
other contraband. Again, all that with 10 percent fewer 
resources than it had to perform its functions five years ago.
    Customs has maintained a relatively high level of service 
to persons and cargo entering the United States despite the 
decline in its resources. That has been largely due to reforms 
introduced by the Customs Modernization Act (or ``Mod Act''), 
as it is popularly known, which was passed together with 
legislation implementing the North American Free Trade 
Agreement, and due to reforms introduced by then-Commissioner 
of Customs George Weise. Those reforms led to a radical 
reorganization of the agency made effective in 1995 that 
removed layers of bureaucracy, flattened the management 
structure of the organization, and focused the agency on core 
processes that are its primary functions. The reorganization, 
first formulated in a path-breaking program known as People, 
Processes, and Partnerships, was designed to take advantage of 
the provisions of the Mod Act that imposed a greater burden for 
ensuring compliance onto the importing and exporting community. 
By shifting its focus toward account-based processing for major 
U.S. importers maintaining a strong internal compliance 
program, Customs could shift greater resources to front-line 
inspection and enforcement activities.
    The philosophy behind the reorganization also reinforced 
the enforcement activities of the agency. According to 
testimony before the Committee, by expanding its work with the 
trade and transport community through such programs as the 
Business Anti-Smuggling Coalition, Customs was able to cut off 
contraband at its source in foreign ports and increase the 
efficiency of its own enforcement and interdiction efforts.
    The expansion of Customs' responsibilities and the growing 
volume of trade, combined with the real decline in resources, 
however, has begun to erode seriously Customs' ability to 
handle the daily volume of entries at U.S. ports of entry and 
its enforcement responsibilities. Testimony before the 
Committee underscored the extent to which increased vigilance 
and inspection, together with the lack of available resources 
during peak hours, has significantly disrupted commerce and the 
livelihood of many along both our northern and southern 
borders. Customs and Immigration and Naturalization Service 
under-staffing is now reported to be the number one cause of 
congestion at the border. Despite significant investments in 
new infrastructure at land border crossing on both the northern 
and southern borders, the infrastructure goes unused for lack 
of personnel to open additional traffic lanes during peak 
hours.
    On that point, both government and private sector witnesses 
before the Committee were in accord. Current resource 
constraints are forcing Customs to make choices between trade 
facilitation and enforcement activities on a daily basis. Lanes 
open for commercial traffic often must be closed when a seizure 
takes place in order to provide staff to handle the work 
related to the seizure.
    According to the current Commissioner of Customs, Raymond 
Kelly, the key to meeting Customs' many responsibilities is to 
increase the efficiency of Customs resources through a 
significant investment in new technology and through innovative 
means of cooperation with other agencies and with the business 
community. Investments in technology may take two forms--
investments in information technology that would facilitate the 
processing of commercial traffic while enhancing enforcement 
efforts, and the application of new non-intrusive methods of 
searching vehicles and cargo, principally through the use of x-
ray technology. Testimony from both government and private 
sector witnesses emphasized the perilous state of the outdated 
Customs Service data processing systems and the need for 
implementation of a new system known as the Automated 
Commercial Environment or ``ACE.''
    As testimony before the Committee bears out, however, 
investments in technology are unlikely to address all of 
Customs' problems or even to improve efficiency if they are not 
coupled with an adequately trained workforce capable of 
employing such technological improvements. Plainly, the acute 
problems experienced during peak hours at land entry points 
along the northern and southern borders also require either the 
reallocation or employment of additional personnel.
    On that point, the testimony before the Committee bore out 
the need for expanded inspection personnel at ports of entry 
along both borders and along Florida and Gulf Coasts. At the 
same time, serious questions have been raised by recent General 
Accounting Office studies regarding Customs' ability to 
determine its baseline inspection personnel needs at any 
particular port of entry or throughout the Customs Service as a 
whole. While the need for further inspection personnel is 
clear, the issue of the Customs Service's personnel policies 
will require further scrutiny by the Committee in the future.
    The need for further scrutiny applies with equal force to a 
number of other issues that bear on the efficiency of Customs' 
use of its available resources. Any relative neglect of certain 
basic trade processes, such as classification, valuation, and 
duty drawback, when considering the need for additional 
personnel, could further erode the agency's ability to achieve 
its goals. If the key to future efficiency gains rests as much 
with obtaining the cooperation of major importers and exporters 
under the concept of ``informed compliance'' required by the 
Mod Act, it is not in Customs' interest, either from the 
perspective of alleviating resource constraints or achieving 
high rates of compliance, to undercut the ability of business 
to comply with the law by failing to provide timely, accurate, 
and consistent advice regarding the basic conditions of 
importing into the country.
    The evident problems at the border, coupled with the 
questions raised about the agency's allocation of existing 
resources, suggests a two-step approach. The first step 
consists of authorizing those additional investments in 
technology and personnel needed to eliminate the immediate 
problems Customs faces in performing its functions at the 
border in the near term. The second step will require a 
heightened level of oversight of the agency as it moves forward 
to implement many of the programs it already has under way to 
improve its performance, as well as an assessment of how 
effectively it may make use of additional resources authorized 
by the Committee and Congress to address Customs' short-term 
inspection and enforcement needs.
    The Committee amendment, as discussed in further detail 
below, adopts that approach.

C. Legislative history

    H.R. 3809, as passed by the House of Representatives, built 
upon legislation originally introduced in the Senate as S. 1787 
by Senator Gramm of Texas. The House bill, which was reported 
favorably with amendment by the Committee on Ways and Means, 
was passed by the House on May 19, 1998, and received in the 
Senate and referred to the Committee on Finance on May 20, 
1998.
    The Committee held a hearing on the authorization of 
additional appropriations for the Customs Service on September 
3, 1998. At that hearing, the Committee heard from the Under 
Secretary of Treasury for Enforcement, James Johnson, regarding 
the priority the Administration places on enhancing the Customs 
Service's ability to secure the Nation's borders while 
improving the agency's ability to process legitimate inbound 
and outbound trade. The Committee also heard from Raymond 
Kelly, the Commissioner of Customs, on the specific challenges 
facing the agency and what improvements in technology and 
personnel would be required to address those challenges.
    A panel of private sector panelists, including former 
Commissioner of Customs, George Weise, reinforced the message 
that Customs needs additional resources, both technology and 
personnel, to perform its task adequately in the face of our 
rapidly expanding trade and the continuing war on drugs. At the 
same time, the private sector witnesses raised a number of 
concerns regarding the Customs Service's commercial operations, 
its implementation of what is popularly known as the Customs 
Modernization Act, and the agency's implementation of 
information technology plans in a manner consistent both with 
the agency's goals and the manner in which international 
business is actually conducted by industry.
    By way of further background, the statutory basis for 
authorization of appropriations for Customs is section 301(b) 
of the Customs Procedural Reform and Simplification Act of 1978 
(19 U.S.C. 2075(b)). The 1978 Act, as amended by section 8102 
of the Omnibus Budget and Reconciliation Act of 1986, requires 
separate authorizations and appropriations for salaries and 
expenses related to commercial and non-commercial (i.e., 
enforcement) operations. For purposes of comparison, the 
figures listed below are total figures for salaries and 
expenses.
    The most recent authorization of appropriations for Customs 
took place in 1990 as part of the Customs and Trade Act of 1990 
(Pub. L. No. 101-382). That Act provided $1,247,000 for total 
salaries and expenses and $150,199,000 for air and marine 
interdiction and other operations and maintenance in fiscal 
year 1992. That authorization expired in 1992 and Customs has 
been without a new authorization for appropriations since that 
time.
    Appropriations for Customs for fiscal year 1998 for 
salaries and expenses totaled $1,522,165,000 and $92,758,000 
for air and marine interdiction and other operations and 
maintenance. Total Customs appropriations for fiscal year 1998 
amounted to $1,675,571,000.
    The President's fiscal year 1999 budget request asked for 
$1,638,065,000 for salaries and expenses and an additional 
$98,499,000 for marine and air interdiction and other 
operations and maintenance. Thus far, the House has passed 
legislation appropriating the requested figure. The Senate has 
acted on legislation appropriating a slightly lower amount--
$1,630,273,000--for salaries and expenses and $98,488,000 for 
operations and maintenance, including air and marine 
interdiction, which was the amount requested by the President 
for those activities.
    H.R. 3809, as passed by the House, would authorize a total 
of $1,935,425,584 for salaries and expenses and $98,488,000 for 
marine and air interdiction and other operations and 
maintenance in fiscal year in 1999. For fiscal year 2000, H.R. 
3809 would authorize a total of $2,072,891,328 in salaries and 
expenses for fiscal year 2000 and $101,443,000 for air and 
marine interdiction and other operations and maintenance. That 
represents a total authorization of close to $2.2 billion, a 
substantial increase over the last authorization of 
appropriations in 1992 and an increase of close to $500 million 
over recent budget allocations.
    The Committee held a markup of a proposed substitute 
amendment tabled by the Chairman on September 10, 1998. The 
proposed substitute built on the foundation provided by Senator 
Gramm of Texas in S. 1787, the House-passed measure H.R. 3809, 
and proposals developed by Senators Grassley of Iowa and Graham 
of Florida. The Finance Committee amendment would both 
authorize the appropriations necessary to meet the Customs 
Service's immediate needs and demand greater accountability 
from Customs in the future with respect to the management of 
the resources contained in this and prior authorizing 
legislation.
    In contrast to H.R. 3809 as passed by the House, the 
Committee amendment would apply to fiscal years 2000 and 2001, 
rather than 1999 and 2000. The Committee amendment would 
authorize roughly $52 million more for salaries and expenses in 
the first of the two fiscal years than would H.R. 3809, and 
$130 million more for marine and air interdiction and other 
operations and maintenance than would the House-passed 
legislation.

                      II. EXPLANATION OF THE BILL

    Based on testimony before the Committee, it became clear 
that there are significant delays in the processing of 
passengers and cargo at the Nation's ports of entry and that 
those delays stem, in part, from the need to divert personnel 
from normal commercial operations as enforcement needs arise. 
Testimony before the Committee also suggested the need for 
increased oversight of the agency going forward to ensure full 
implementation of the Customs Modernization Act, strengthen 
partnerships formed between Customs and the trade and transport 
communities that have assisted Customs in both its trade 
facilitation and enforcement activities, and to ensure that 
Customs is adequately prepared to address the challenges it 
confronts in a world of rapidly expanding trade and broader 
enforcement responsibilities.
    That suggested a two-step approach. The first step would 
consist of authorizing those additional investments in 
technology and personnel needed to eliminate the immediate 
problems Customs faces in performing its functions at the 
border in the near term. The second step would involve building 
a foundation for stronger Committee oversight in the future.
    The Committee's amendment to H.R. 3809 adopts that 
approach. As reported by the Finance Committee, H.R. 3809 would 
consist of two titles. The first would authorize additional 
resources for enforcement and trade facilitation at the 
northern and southern borders, and along the Florida and Gulf 
Coasts and address certain other issues relating to Customs' 
Service current operations. The Committee seeks, as did Senator 
Gramm's original bill with respect to the United States land 
borders, to ensure that Customs has the resources needed both 
to ensure stronger enforcement and to alleviate congestion at 
all U.S. ports of entry--which can often last several hours or 
longer--to waiting times of no more than twenty minutes.
    Title II would, by contrast, call on Customs to provide a 
report addressing a number of specific questions designed to 
assist the Committee in discharging its oversight 
responsibilities in the future. Those questions, as reflected 
in the section-by-section analysis, would build on the 
strategic planning process called for under the Government 
Performance and Results Act of 1993. Relying on the most recent 
Customs Service strategic plan, the report called for under 
Title II would call on Customs to identify standards it intends 
to apply to its own performance in achieving the goals 
specified in its own strategic plan, as well as require 
additional information on issues raised in testimony before the 
Committee, in recent General Accounting Office studies, and in 
industry comment on recent Customs initiatives.

A. Title I--Authorization of appropriations for enhanced inspection, 
        trade facilitation, and drug interdiction

            1. Section 101--Authorization of appropriations
    The statutory basis for authorization of appropriations for 
Customs is section 301(b) of the Customs Procedural Reform and 
Simplification Act of 1978 (19 U.S.C. 2075(b)). The 1978 Act, 
as amended by section 8102 of the Omnibus Budget and 
Reconciliation Act of 1986, requires separate authorizations 
and appropriations for salaries and expenses related to 
commercial and non-commercial (i.e., enforcement) operations.
    The most recent authorization of appropriations for Customs 
took place in 1990 as part of the Customs and Trade Act of 1990 
(P.L. No. 101-382). That Act provided $1,247,000 for total 
salaries and expenses and $150,199,000 for air and marine 
interdiction in fiscal year 1992. That authorization expired in 
1992 and Customs has been without a new authorization for 
appropriations since that time.
    A House passed authorization in 1997, H.R. 1463 would have 
raised the authorization of appropriations for salaries to a 
total of $1,569,838,000 for fiscal year 1998 and $1,614,465,000 
for fiscal year 1999. Appropriations for Customs for fiscal 
year 1998 for salaries and expenses totaled $1,522,165,000 and 
$92,758,000 for air and marine interdiction.
    Section 101 would authorize additional appropriations for 
enforcement, commercial operations, and air and marine 
interdiction in fiscal years 2000 and 2001. It would also 
require Customs to provide out-year budget projections for 
fiscal years beyond 2001. Specifically, section 101 would amend 
section 301(b) of the Customs Procedural Reform and 
Simplification Act of 1978 to authorize $997,300,584 and 
$1,100,818,328 for drug enforcement and other non-commercial 
operations in fiscal years 2000 and 2001 respectively. Section 
101 would authorize $990,030,000 in fiscal year 2000 and 
$1,009,312,000 in fiscal year 2001 for Customs Service 
commercial operations. Section 101 would, in addition, 
authorize appropriations of $229,001,000 and $176,967,000 for 
air and marine interdiction in fiscal years 2000 and 2001 
respectively.
            2. Section 102--Cargo inspection and narcotics detection 
                    equipment for United States-Mexico border, United 
                    States-Canada border, and Florida and Gulf Coast 
                    seaports
    Section 102 would earmark specific amounts out of the 
totals set out in section 101 to be used for the express 
purpose of narcotics detection at northern and southern land 
border entry points, as well as at Florida and Gulf Coast ports 
of entry. The total authorization for these purposes would be 
$100,036,000 distributed as follows. For the United States-
Mexico Border, the Finance Committee amendment would earmark $6 
million for 8 vehicle and container inspection systems; $11 
million for 5 mobile truck x-rays; $12 million for upgrade of 8 
fixed-site truck x-rays; $7.2 million for 8 pallet x-rays; $1 
million for 200 portable contraband detectors; $600,000 for 50 
contraband detection kits; $500,000 for 25 ultrasonic container 
inspections units; $2.45 million for 7 automated targeting 
systems; $360,000 for 30 rapid tire deflator systems; $480,000 
for 20 portable Treasury Enforcement Communications Systems 
terminals; $1 million for 20 remote watch surveillance cameras; 
$1.254 million for 57 weigh-in-motion sensors; $180,000 for 36 
AM band traffic information radio stations; $1.04 million for 
260 inbound vehicle counters; $950,000 for 38 counter 
surveillance spotter cameras; $390,000 million for 60 inbound 
commercial truck transponders; $1.6 million for 40 narcotics 
vapor and particle detectors; $400,000 for license plate reader 
automatic targeting software; and $1 million for a 
demonstration site for a high-energy relocatable rail car 
inspection system at a shared Defense Department testing 
facility for a two-month period.
    For the United States-Canada Border, the Finance Committee 
amendment would earmark $3 million for 4 vehicle and container 
inspections systems; $8.8 million for 4 mobile truck x-rays; 
$3.6 million for 4 pallet x-rays; $250,000 for 50 portable 
contraband detectors; $300,000 for 25 contraband detection 
kits; $240,000 for 10 portable Treasury Enforcement 
Communications Systems; $400,000 for 10 narcotics vapor and 
particle detectors; $600,000 for 30 fiber optic scopes; 
$250,000 for 50 portable contraband detectors (busters); $3 
million for 10 x-ray vans with particle detectors; $40,000 for 
8 AM loop radio systems; $400,000 for 100 vehicle counters; 
$1.2 million for 12 examination tool trucks; $2.4 million for 3 
dedicated commuter lanes; $1.05 million for 3 automated 
targeting systems; $572,000 for 26 weigh-in motion sensors; and 
$480,000 for 20 portable Treasury Enforcement Communication 
Systems (TECS).
    For the Florida and Gulf Coast Seaports, the Finance 
Committee amendment would provide $4.5 million for 6 vehicle 
and container inspection systems; $11.8 for 5 mobile truck x-
rays; $7.2 million for 8 pallet x-rays; $250,000 for 50 
portable contraband detectors; and $300,000 for 25 contraband 
detection kits.
    Section 102 would authorize $9,923,500 for maintenance and 
support of the equipment identified above and for training of 
personnel to maintain and support such equipment. Section 102 
would allow the Commissioner flexibility in spending the 
amounts specified in section 102 if he were to find 
technologically superior equipment designed for the same 
purpose was available. In addition, section 102 would allow 
some room for reallocation (not to exceed 10 percent) among the 
various enumerated items within any geographic areas identified 
above as needed.
            3. Section 103--Peak hours and investigative resource 
                    enhancement for the United States-Mexico border, 
                    the United States-Canada border, Florida and Gulf 
                    Coast seaports, and the Bahamas
    Section 103 would authorize a net increase in personnel to 
enhance Customs' ability to address peak loads at various 
points of entry and to increase investigative personnel 
dedicated to the interdiction of drugs and other contraband. 
Appropriations under that authority would be earmarked as 
follows: a net increase of 535 inspectors, 120 special agents, 
and 10 intelligence analysts for the United States-Mexican 
border and 375 inspectors for the United States-Canada border 
in order to open all primary lanes on such border during peak 
hours; a net increase of 285 inspectors and canine enforcement 
officers to be distributed at large cargo facilities in order 
to reduce commercial waiting times on the United States-Mexico 
border; a net increase of 125 inspectors to be distributed at 
large cargo facilities as needed to process and screen cargo 
(including rail cargo) and reduce commercial waiting times on 
the United States-Canada border; a net increase of 40 
inspectors at sea ports in southeast Florida to process and 
screen cargo; a net increase of 70 special agents, 23 
intelligence agents, 9 support staff, and the necessary 
equipment to enhance investigation efforts targeted at internal 
conspiracies at the Nation's sea ports; a net increase of 360 
special agents, 30 intelligence analysts, and additional 
resources for use in ports that have jurisdiction over major 
metropolitan drug or narcotics distribution and/or 
transportation centers; a net increase of 2 special agents to 
staff a Customs attache office in Nassau, Bahamas; a net 
increase of 62 special agents and 8 intelligence analysts for 
maritime smuggling investigations and interdiction operations; 
and a net increase of 50 positions and additional resources to 
staff adequately the Office of Internal Affairs to enhance 
investigation of anti-corruption efforts.
    With respect to the addition of 125 inspectors for the 
United States-Canada border, the Committee considered the 
question of whether increasing the number ofinspectors created 
a corresponding need for additional investigative personnel to respond 
to the expected resulting increase in investigative work from increased 
inspections. The Committee concluded that additional investigative 
resources would be needed and, for purposes of considering such 
requirements in future authorizations, asked the Customs Service to 
provide an estimate of the number of special agents and intelligence 
analysts that would be needed to complement the increase in 
investigative personnel on the northern border that are authorized by 
the Committee amendment.
    Section 103 would also authorize the additional funds 
necessary to cover the cost incurred as a result of the 
increase in personnel hired pursuant to that provision of the 
authorizing legislation.
            4. Section 104--Air and marine operation and maintenance 
                    funding
    Section 104 would earmark additional amounts out of the 
totals set out in section 101 to improve the Customs Service's 
air and marine interdiction efforts as follows. For fiscal year 
2000, the Finance Committee amendment would authorize $96.5 
million for restoration or replacement of aging aircraft, $15 
million for increased air interdiction and investigative 
support activities, and $19.013 million for marine vessel 
replacement and related equipment. For fiscal year 2001, the 
Finance Committee amendment would authorize $36.5 million for 
aircraft restoration and replacement, $15 million for increased 
air interdiction and investigative support activities, and 
$24.024 million for marine vessel replacement and related 
equipment.
            5. Section 105--Compliance with performance plan 
                    requirements
    Section 105 would require Customs to establish specific 
performance goals, performance indicators, and other standards 
for the additional activities enumerated in sections 102-104 as 
a part of developing its annual performance plan in order to 
allow both Customs and the Committee to assess the value added 
to Customs efforts by these authorizations.
            6. Section 106--Commissioner of Customs salary
    Section 106 would authorize an increase in the Customs 
Commissioner's pay to a rate commensurate with other U.S. 
government officials of similar rank and responsibility. 
Section 106 would apply to fiscal year 1999 and those that 
follow.
            7. Section 107--Passenger preclearance services
    Section 107 would direct Customs to continue to provide 
passenger pre-clearance at air transport facilities in Canada 
which it has provided in the past. Section 107 would authorize 
the appropriation of additional funds necessary to cover the 
costs of such pre-clearance services that are not covered by 
funds provided by the customs user fees under section 13031 of 
the Consolidated Omnibus Budget Reconciliation Act of 1985.

B. Title II--Customs performance report

    Title II would require Customs to report to the Committees 
on Finance of the Senate and Ways and Means of the House within 
120 days of enactment of the legislation on the topics 
enumerated below. The goal of the report is to build on the 
strategic planning process called for under the Government 
Performance and Results Act of 1993 and the annual performance 
reports called for under section 105 of this legislation and 
set a baseline for Committee oversight of the Customs Service's 
performance in the future. Topics on which Customs would be 
required to report would include--
    A. Identifying Objectives and Setting Priorities--Customs 
would be obliged to outline means for identifying enforcement 
priorities and trade facilitation objectives, provide reasons 
for choosing the objectives identified in the Customs Service's 
most recent strategic plan, and define performance standards 
against which the Committee might assess Customs' efforts to 
reach the goals outlined in its strategic plan.
    B. Implementation of the Customs Modernization Act--Customs 
would be required to provide an overview of its implementation 
to date of title VI of the North American Free Trade Agreement 
Implementation Act, commonly known as the Customs Modernization 
Act or ``Mod Act,'' together with an explanation for any 
elements that remain incomplete, a review of the effectiveness 
of the informed compliance strategy in obtaining higher levels 
of effective compliance among the trade community, particularly 
in priority industries that have been the focus of Customs' 
most intense efforts at ensuring compliance under the Mod Act, 
and a summary of the results of the initial compliance 
assessments conducted by Customs as part of the agency's 
informed compliance initiative.
    C. Improving Commercial Operations--The Committee amendment 
would call on Customs to identify standards to be applied in 
assessing the performance andefficiency of core trade 
commercial operations, including entry and inspection procedures, 
classification, valuation, country-of-origin determinations, and duty 
drawback determinations, to develop proposals for improving Customs 
performance in these areas in order to eliminate lengthy delays in 
obtaining rulings in those core areas, and to outline alternative 
strategies designed to ensure that United States importers and 
exporters, customs brokers, carriers and other members of the 
international trade community have the information necessary to carry 
out their compliance responsibilities under the Customs Modernization 
Act and plan their business operations accordingly.
    D. Review of Enforcement Responsibilities--The Committee 
amendment would require Customs to provide an overview of 
Customs Service enforcement responsibilities, an assessment of 
the degree to which the current functions of Customs overlap 
with other agencies, and a review of the ways in which the 
Customs Service could avoid duplication of effort in those 
areas and free resources to focus on Customs' primary 
commercial operations and enforcement responsibilities. The 
assessment should incorporate specific ways in which Customs 
can tailor its efforts to promote greater efficiency in the 
allocation of its resources and enhance interagency 
cooperation. The Committee amendment also calls on Customs to 
provide a description of the methods used to ensure against any 
misuse of the personal search authority with respect to persons 
entering the United States at authorized ports of entry. The 
Committee's intent is to assess the adequacy of those 
safeguards in order to ensure against the abuse of the personal 
search authority in the context of what may otherwise be the 
legitimate identification of high risk persons or cargo 
entering the United States.
    E. Comprehensive Drug Interdiction Strategy--The Committee 
amendment would oblige Customs to outline a comprehensive 
strategy for Customs' role in U.S. drug interdiction efforts, 
clarify the respective roles of the Customs Service and other 
cooperating agencies, including the Drug Enforcement 
Administration, Federal Bureau of Investigation, Coast Guard, 
and intelligence community, identify Customs functions that 
belong within the unique competence of the agency and those 
functions that could be better performed by other agencies, and 
indicate how Customs expects to allocate the additional drug 
interdiction resources authorized by this legislation in the 
regions identified.
    F. Enhancing Cooperation with the Trade Community--The 
Committee amendment would ask Customs to identify ways to 
expand cooperation with United States importers and customs 
brokers, United States and foreign carriers, and other members 
of the international trade and transport communities to improve 
detection of contraband at its source in the foreign port, 
enhance information flow between Customs and industry in order 
to achieve greater awareness of potential compliance threats, 
improve the design and efficiency of Customs commercial 
operations, foster account-based management of customs 
compliance, eliminate unnecessary regulatory burdens, and 
establish standards for industry best practices in customs 
compliance.
    G. Allocation of Resources--The Committee amendment asks 
Customs to outline the basis for Customs current allocation of 
inspection and investigative personnel and identify steps taken 
to ensure that Customs can detect any misallocation of such 
resources among various ports and has the means for 
reallocating resources within the agency to meet particular 
enforcement demands or commercial operation needs.
    H. Automation and Information Technology--The Committee 
amendment would ask Customs to identify its current and future 
automation needs, particularly the current state of the 
Automated Commercial System and the status of implementation of 
the proposed replacement, the Automated Commercial Environment, 
to outline a comprehensive strategy for reaching Customs 
information technology goals, provide an explanation of the 
replacement system's architecture and how that architecture 
best serves Customs core functions, identify comparable public 
and private sector automation projects that might be used as a 
benchmark against which Customs progress toward its information 
technology goals might be judged, to estimate total projected 
costs for each automation project currently under way and to 
provide a timetable for implementation, and to summarize 
options for financing each such automation project;
    I. Personnel Policies--The Committee amendment would 
require Customs to provide an overview of current personnel 
practices, including performance standards, criteria used for 
promotion and termination, processes for investigating 
complaints of bias or sexual harassment, criteria used for 
conducting internal investigations, summaries of the number of 
and reasons for internal investigations, existence of any 
protection for whistle blowers within the Customs Service, and 
programs designed for discovering and eliminating corruption 
within the agency. The amendment would also require Customs to 
identify workforce needs for the future and training needed to 
ensure Customs personnel stay abreast of developments in 
international business operations and international trade that 
affect Customs operations, as well as to identify any instances 
in which current personnel policies or practices may impede 
achievement of Customs' goals with respect to both its primary 
responsibilities of ensuring the facilitation of trade moving 
through the nation's ports and the enforcement of the U.S. 
customs laws.

                       III. Vote of the Committee

    In compliance with section 133 of the Legislative 
Reorganization Act of 1946, the Committee states that H.R. 
3809, as amended, was ordered reported favorably on the basis 
of a unanimous voice vote on September 10, 1998.

                     IV. Budget Effects of the Bill

    In compliance with sections 308 and 403 of the 
Congressional Budget Act of 1974, and paragraph 11(a) of rule 
XXVI of the Standing Rules of the Senate, the following letter 
has been received from the Congressional Budget Office on the 
budgetary impact of the legislation:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 1, 1998.
Hon. William V. Roth, Jr.,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3809, the Drug 
Free Borders Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               congressional budget office cost estimate

H.R. 3809--Drug Free Borders Act of 1998

    Summary: H.R. 3809 would authorize appropriations for 2000 
and 2001 for the U.S. Customs Service, including funds for 
salaries and expenses, acquisitions, and the interdiction 
program. In addition, the act would make several changes to the 
laws that govern the operation of the Customs Service, 
including provisions regarding customs inspection services.
    Assuming appropriation of the authorized amounts, CBO 
estimates that implementing H.R. 3809 would cost about $4.5 
billion over the 1999-2003 period. CBO estimates that H.R. 3809 
would increase direct spending by about $2 million annually, so 
pay-as-you-go procedures would apply. The legislation contains 
no intergovernmental or private-sector mandates as defined in 
the Unfunded Mandates Reform Act (UMRA) and would have no 
impact on the budgets of state, local, or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3809 is shown in the following table. 
For the purposes of this estimate, CBO assumes that the amounts 
authorized by the act will be appropriated by the start of each 
fiscal year and that outlays generally will follow the 
historical spending rates for the authorized activities. We 
expect that some funds will be spent more slowly than the 
historical rates because the act would provide substantial 
increases in authorizations relative to current funding levels. 
The costs of this legislation fall within budget function 750 
(administration of justice).

                                    [By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION
Spending under current law:
    Estimated budget authority \1\........................    1,715    1,734        0        0        0        0
    Estimated outlays.....................................    1,712    1,730      194        0        0        0
Proposed changes:
    Authorization level...................................        0        0    2,216    2,287        0        0
    Estimated outlays.....................................        0        0    1,782    2,310      412        0
Spending under H.R. 3809:
    Authorization level \1\...............................    1,715    1,734    2,216    2,287        0        0
    Estimated outlays.....................................    1,712    1,730    1,976    2,310      412        0
                                           CHANGES IN DIRECT SPENDING
Estimated budget authority................................        0        2        2        2        2        2
Estimated outlays.........................................        0        2        2        2        2        2
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year for the Customs Service's salaries and expenses and
  air interdiction accounts. The 1999 level is the total for those accounts that would be provided by the Senate
  in S. 2312, the Treasury and General Government Appropriations Act. A conference agreement for that
  appropriation act is pending.

    H.R. 3809 would direct the Customs Service to increase the 
level of inspection services provided to commercial aircraft 
passengers arriving in the United States from Canada. The 
Customs Service expects that these costs would be paid out of a 
direct spending account (that is, from funds not subject to 
annual appropriation). Based on information from the Customs 
Service, CBO estimates that this provision would increase 
direct spending by about $2 million annually.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. CBO 
estimates that enacting H.R. 3809 would increase direct 
spending by about $2 million annually, beginning in fiscal year 
1999. The act would not affect governmental receipts.
    Intergovernmental and private-sector impact: H.R. 3809 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would have no impact on the budgets of 
state, local, or tribal governments.
    Previous CBO estimate: On May 18, 1998, CBO prepared a cost 
estimate for H.R. 3809, as ordered reported by the House 
Committee on Ways and Means on May 14, 1998. That legislation 
authorized total appropriations of about $4.2 billion for the 
fiscal years 1999 and 2000. CBO estimated that the House 
version of H.R. 3809 would increase direct spending by less 
than $500,000 annually. The House version would not require the 
Customs Service to increase inspection services for aircraft 
arrivals from Canada (as would be required under the Senate 
version).
    Estimate prepared by: Mark Grabowicz.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                 V. Regulatory Impact and Other Matters

    In compliance with paragraph 11(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
legislation will not significantly regulate any individuals or 
businesses, will not impact personal privacy of individuals, 
and will not result in any significant additional paperwork.

                      VI. Changes to Existing Law

    In the opinion of the Committee, it is necessary, in order 
to expedite the business of the Senate, to dispense with the 
requirements of paragraph 12 of rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).