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Senate Hearings Before the Committee on Appropriations S. HRG. 105±757 Senate Hearings Before the Committee on Appropriations Treasury and General Government Appropriations Fiscal Year 1999 105th CONGRESS, SECOND SESSION H.R. 4104/S. 2312 DEPARTMENT OF THE TREASURY EXECUTIVE OFFICE OF THE PRESIDENT NONDEPARTMENTAL WITNESSES U.S. POSTAL SERVICE Treasury and General Government Appropriations, 1999 (H.R. 4104/S. 2312) 1 S. HRG. 105±757 TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 1999 HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE ONE HUNDRED FIFTH CONGRESS SECOND SESSION ON H.R. 4104/S. 2312 AN ACT MAKING APPROPRIATIONS FOR THE TREASURY DEPARTMENT, THE UNITED STATES POSTAL SERVICE, THE EXECUTIVE OFFICE OF THE PRESIDENT, AND CERTAIN INDEPENDENT AGENCIES FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1999, AND FOR OTHER PUR- POSES Department of the Treasury Executive Office of the President Nondepartmental witnesses U.S. Postal Service Printed for the use of the Committee on Appropriations ( Available via the World Wide Web: http://www.access.gpo.gov/congress/senate U.S. GOVERNMENT PRINTING OFFICE 46±121 cc WASHINGTON : 1998 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 ISBN 0±16±057868±X COMMITTEE ON APPROPRIATIONS TED STEVENS, Alaska, Chairman THAD COCHRAN, Mississippi ROBERT C. BYRD, West Virginia ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii PETE V. DOMENICI, New Mexico ERNEST F. HOLLINGS, South Carolina CHRISTOPHER S. BOND, Missouri PATRICK J. LEAHY, Vermont SLADE GORTON, Washington DALE BUMPERS, Arkansas MITCH MCCONNELL, Kentucky FRANK R. LAUTENBERG, New Jersey CONRAD BURNS, Montana TOM HARKIN, Iowa RICHARD C. SHELBY, Alabama BARBARA A. MIKULSKI, Maryland JUDD GREGG, New Hampshire HARRY REID, Nevada ROBERT F. BENNETT, Utah HERB KOHL, Wisconsin BEN NIGHTHORSE CAMPBELL, Colorado PATTY MURRAY, Washington LARRY CRAIG, Idaho BYRON DORGAN, North Dakota LAUCH FAIRCLOTH, North Carolina BARBARA BOXER, California KAY BAILEY HUTCHISON, Texas STEVEN J. CORTESE, Staff Director LISA SUTHERLAND, Deputy Staff Director JAMES H. ENGLISH, Minority Staff Director SUBCOMMITTEE ON TREASURY AND GENERAL GOVERNMENT BEN NIGHTHORSE CAMPBELL, Colorado, Chairman RICHARD C. SHELBY, Alabama HERB KOHL, Wisconsin LAUCH FAIRCLOTH, North Carolina BARBARA A. MIKULSKI, Maryland TED STEVENS, Alaska ROBERT C. BYRD, West Virginia ex officio ex officio Professional Staff PATRICIA A. RAYMOND TAMMY PERRIN LULA EDWARDS BARBARA A. RETZLAFF (Minority) ELIZABETH BLEVINS (II) CONTENTS THURSDAY, FEBRUARY 26, 1998 Page Department of the Treasury: Bureau of Alcohol, Tobacco and Firearms ...................................................... 1 U.S. Secret Service ........................................................................................... 1 U.S. Customs Service ....................................................................................... 1 Internal Revenue Service ................................................................................. 75 Federal Law Enforcement Training Center ................................................... 75 Financial Crimes Enforcement Network ........................................................ 75 THURSDAY, MARCH 5, 1998 Department of the Treasury: Internal Revenue Service ...................................... 163 THURSDAY, MARCH 12, 1998 Department of the Treasury: Office of the Secretary ........................................... 269 THURSDAY, MARCH 26, 1998 Executive Office of the President: Office of National Drug Control Policy ......... 313 THURSDAY, APRIL 30, 1998 Department of the Treasury: U.S. Customs Service ............................................. 361 Material submitted subsequent to the conclusion of the hearing ........................ 391 THURSDAY, MAY 7, 1998 Executive Office of the President: Office of Administration ................................ 393 Nondepartmenal witness ........................................................................................ 415 Material submitted subsequent to the conclusion of the hearing ........................ 423 THURSDAY, MAY 14, 1998 Department of the Treasury: Bureau of Alcohol, Tobacco and Firearms ............ 465 Nondepartmental witnesses ............................................................................... 465, 485 Material submitted by independent agency not appearing for formal hear- ings ........................................................................................................................ 519 Nondepartmental witnesses .................................................................................... 523 (III) TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 1999 THURSDAY, FEBRUARY 26, 1998 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, DC. The subcommittee met at 1:35 p.m., in room SD±124, Dirksen Senate Office Building, Hon. Ben Nighthorse Campbell (chairman) presiding. Present: Senators Campbell, Faircloth, and Kohl. DEPARTMENT OF THE TREASURY STATEMENT OF RAYMOND W. KELLY, UNDER SECRETARY, LAW EN- FORCEMENT DIVISION BUREAU OF ALCOHOL, TOBACCO AND FIREARMS STATEMENT OF JOHN W. MAGAW, DIRECTOR U.S. SECRET SERVICE STATEMENT OF LEWIS C. MERLETTI, DIRECTOR U.S. CUSTOMS SERVICE STATEMENT OF SAMUEL H. BANKS, ACTING COMMISSIONER OPENING REMARKS Senator CAMPBELL. The Treasury Subcommittee will be in order. Good afternoon. Today is the first hearing on the fiscal year 1999 budget for the Subcommittee on Treasury and General Govern- ment. We are focusing on the law enforcement component of the Department of the Treasury, 40 percent of all the Federal law en- forcement moneys within Treasury. There are some new faces with us this morning. Lew Merletti was appointed Director of the Secret Service in June of last year. We welcome him. Sam Banks is Acting Commissioner of the Cus- toms Service, until the President's nominee can be confirmed by the Senate. Ralph Basham took over at the helm of the Federal Law Enforcement Training Center just this month, and William Baity is with us representing the Financial Crimes Enforcement Network. As you can tell from the witness list this afternoon, the Treasury Law Enforcement Bureau will cover a very wide scope. (1) 2 As some of you know, I was in law enforcement myself years ago as a deputy sheriff and a volunteer counselor in a Federal peniten- tiary, and I was the head of the board of directors for a halfway house years ago back in Sacramento. I have perhaps a little broad- er outlook on what we should be doing in law enforcement, and it is just as difficult now as it was back then for law enforcement offi- cers who face many new threats. The technology that is coming on- line is getting more and more expensive. Today, we will hear from the agencies on the front lines about their needs for fiscal year 1999. Some of them will have new initia- tives for consideration, while others are requesting funding just to continue current operations. On our first panel today, they are already seated, are Mr. Ray- mond Kelly, Mr. Magaw, Mr. Banks, and Mr. Merletti. PREPARED STATEMENT I know that my colleague, Senator Kohl, has to open another hearing in a little while. So I am going to put my total statement in the record, and I will just go ahead and yield to you, Senator. [The statement follows:] PREPARED STATEMENT OF SENATOR CAMPBELL Good afternoon. Today is the first hearing on the fiscal year 1999 budget for the Subcommittee on Treasury and General Government. We are focusing on the law enforcement component of the Department of the TreasuryÐ40 percent of all Fed- eral law enforcement is within Treasury. There are some new faces with us this morning. Lew Merletti was appointed Di- rector of the Secret Service in June of last year. Sam Banks is Acting Commissioner of the Customs Service until the President's nominee can be confirmed by the Senate. Ralph Basham took over the helm at the Federal Law Enforcement Training Cen- ter just this month. And William Baity is with us representing the Financial Crimes Enforcement Network. As I mentioned before, 40 percent of all Federal law enforcement is part of the Department of the Treasury. As you can tell from our witness list this afternoon, the Treasury law enforcement bureaus cover a wide scope. As some of you know, I have been in law enforcement myself. I was a deputy sher- iff and a volunteer counselor at Folsom. I was head of the board of directors of a halfway house in Sacramento. As difficult as it was back then, our law enforcement officers face many new threats nowÐand the technology to fight crimes is getting more and more expensive. Today we will hear from the agencies on the front lines about their needs for fis- cal year 1999. Some of them have new initiatives for consideration while others are requesting funding just to continue current operations. On our first panel today will be Treasury Under Secretary Raymond W. Kelly. This position was created only a few years ago as a way to emphasize the impor- tance of law enforcement within Treasury. Mr. Kelly oversees the Treasury law en- forcement bureaus and agencies, with the exception of the IRS Criminal Investiga- tion Division. As a side note, Mr. Kelly has been nominated by the President to be the new Commissioner of the Customs Service. With us again this year is John W. Magaw, Director of the Bureau of Alcohol, Tobacco and Firearms. Most people think of ATF in terms of guns, but they have many other responsibilities. ATF collects about $13 billion
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