As Deputy Assistant Commissioner of Investigations Richard Hoglund testified at your previous hearing, the United States Customs Service enforces more than 400 laws for more than 40 U.S. agencies including the Food and Drug Administration and the U.S. Department of Agriculture. Approximately 20-25 percent of the other government agency work that we conduct is in the enforcement of the Food and Drug Administration's statutes and regulations. Customs enforcement of laws that prohibit the importation and exportation, or seizure of merchandise is guided by the direction and orders of administering agencies. We are proud of the service we provide because we know how important food safety is to the American people. Customs must utilize existing resources which are already stretched to carry out the enforcement of these laws in addition to our primary mission which is the interdiction of illegal narcotics.

Preventing the importation of tainted food presents a unique challenge and I will briefly review what actions we have or intend to take to ensure that American citizens are protected from contaminated foods. Unlike the concealment of illegal narcotics in false compartments or within otherwise legitimate merchandise, tainted food can come into the country in plain sight. However, it is difficult to determine, upon initial examination, which imported food will fail FDA standards. This morning in my remarks, I will address the four questions which the Subcommittee posed to me in your invitation letter of August 20th. Those questions are (1) What are the deficiencies in the current food importing process? (2) What specific recommendations does the Customs Service have to improve the safety of imported food? (3) What specific actions is the Customs Service taking in response to the April, 1998 GAO report on food safety? And (4) What other changes should be considered to improve the food import process?

PROCESS IMPROVEMENT INITIATIVES
In response to question one, as you are aware, through Operation Bad Apple, the Customs Service has identified a number of areas in the food importing process that could be better handled. We have reviewed the weaknesses identified by the port of San Francisco and have found that some of these were allegations made by brokers, some were suppositions made by the port, and others were comments on FDA processes of detention and seizure. These short comings can be broken down into three subgroups (1) cargo control (2) coordination issues and (3) sanctions or penalties. Cargo control deficiencies result in such schemes as "Banking" and container switching and also include issues related to the proper destruction of tainted food imports. Coordination problems include the difficulty that Customs and the FDA have had in sharing relevant information on suspect imports. With regard to sanctions, the existing penalty structure may not be strong enough to effectively deter non-compliant importers.

In response to question two, there are a number of recommendations Customs has been considering to improve the safety of imported food. We believe it is necessary to establish better control over the movement of suspect cargo through the use of technologies such as discreet transponders attached to containers. We feel it is also necessary to improve current methods of targeting violative importers through expanded manipulation of existing data. On the regulatory front, we would like to see the FDA's notice of refusal also serve as Custom's notice of delivery. This would significantly cut down on the amount of time necessary to process non-compliant importers. And finally, we think a national interagency team comprised of FDA representatives and Customs trade compliance experts should be established to coordinate our efforts on this front.

In response to question three regarding the GAO findings on food safety, the Customs Service is taking action on those recommendations which affect our responsibilities. This includes (1) better coordination with FDA (2)targeting and cargo control (3) using unique identifiers (4) destroying and/or exporting tainted food, and (5) more appropriate assessment of sanctions against violators. I will address each of those areas in my testimony.

COORDINATION
With regard to coordination with FDA, GAO cited notices of refusal by FDA that were not received or acted upon by the Customs Service. In response to that concern, we are reprogramming our database to extract FDA-issued refusal notices. This will allow us to have a clear list of FDA refused actions without relying on paper copies of such notices transmitted through the mail. As I indicated, we are seeking regulatory authority to have the FDA notice of refusal serve as the Customs redelivery notice which, in so doing, will automatically obligate the Customs surety bond. This will eliminate the need for Customs to send its own notice for each FDA refusal and will facilitate the enforcement process.

TARGETING AND CARGO CONTROL
With respect to targeting and cargo control, Customs is working with FDA to target importers, high risk products, and FDA violative shipments nationally. As we have previously testified, the results of Operation Bad Apple continue to help us target shipments of importers who are involved in schemes to avoid inspection. During Operation Bad Apple, we examined 429 shipments of which 16 percent were found to have discrepancies. This discrepancy rate does not mean that 16 percent of the shipments failed laboratory testing. What it does indicate is that there are discrepancies that can impact Customs targeting of FDA regulated commodities. For example, six countries comprised 40 percent of the detected violations which permits us to focus on importers and commodities from these high-risk countries.

Based on our experience with Operation Bad Apple, Customs and FDA will collaborate on a target list of importers and products for which national initiatives will be established to detect and control FDA-violative shipments. We will use the Customs automated targeting system to subject the shipments to heightened levels of examination and scrutiny. We are more effectively coordinating our efforts at several ports and are experiencing increased success at those ports where interagency teams have been formed. We will look to expand this task force approach.

Although we want to better control food shipments, current resource limitations prevent us from enforcing the laws in the most effective way possible. The FDA does not have its own storage facilities to sample and test food shipments. Accordingly, importers may move their shipments to their own facilities pending FDA final action. The expanded use of Centralized Examination Stations (CES) or bonded warehouses has been suggested. The use of either presents different problems for the Customs Service. There are simply not enough examination stations at this time and those that exist are not equipped with the necessary refrigerated rooms for perishable food to provide the needed storage. Despite these dilemmas, Customs will continue to explore with FDA the use of CESs for Customs sampling of shipments of certain violative and targeted importers.

As for bonded warehouses, under current law Customs does not have the authority to require a bonded warehouse entry. In addition, there are operational disincentives peculiar to bonded warehouses. Even if we could require their use, Customs does not have the resources to provide continuous supervision over them. As a result, importers would still have access to their shipments and we would be unable to assure that switching of merchandise awaiting FDA examination would not still occur.

UNIQUE IDENTIFIERS
Customs is developing enhanced technology that will allow us to track shipping containers from the place of unlading to the Centralized Examination Station. New technology as the aforementioned transponders, will help us track shipping containers from the place of unlading to the examination station. In the coming months, we will test this technology at ports with high volumes of suspect food shipments.

DESTRUCTION AND/OR EXPORTATION OF TAINTED FOODS
Now, when the FDA refuses a food shipment, we work with the importer, under the law, to destroy or ensure exportation of that shipment. Should an importer select destruction as an option, the destruction does not necessarily take place at a Customs port of entry. The destruction may occur, for example, at a landfill or at an incineration plant. It is difficult to determine whether a shipment presented for destruction is the actual shipment that was imported and tested because the shipment remained in the physical control of the importer. Another challenge we face is that every port does not have the resources to send an inspector to witness every destruction. Some of our ports do witness all destructions. We estimate that there are approximately 10,000 FDA required destructions conducted in a year.

If an importer selects exportation as an option, as stated above Customs is working with FDA to target high-risk shipments for heightened levels of verification of exportation or destruction. Customs will disseminate examination guidelines along with designated targets to all of our inspection personnel to aid in this process. Once we have confirmed the exportation of food that has failed testing, the possibility remains that the importer may try to re-import the food. This is a complicated issue for FDA and us, and we will consult with FDA to review their policy on this subject and do all that we can to ensure that rejected food is not brought back into the United States.

SANCTIONS
With regard to sanctions, we are seeking regulatory authority in these cases to demand more than three times the value in liquidated damages. When an importer fails to destroy or export an FDA-refused product, Customs currently assess a claim for liquidated damages in an amount equal to three times the entered value of the refused merchandise. In addition, for repeat violators, we will consider requiring a separate bond for each shipment entered by the high-risk importers.

In addition to liquidated damages under the import bond, Customs has the authority to assess monetary penalties equal to the domestic or market value of the violative merchandise. These penalties can be and have been assessed in situations where FDA-refused products failed to be exported or destroyed, including those instances where substitution of the refused product is discovered. We will work with FDA to pursue a more aggressive use of monetary penalties.

While Customs does have the authority to immediately seize food declared by FDA to be tainted, the statute under which seizure can be made requires forfeiture to be declared by the District Court. This is a cumbersome process. By contrast, the statute under which FDA refuses admission granting the importer a 90-day period to export or destroy that merchandise is less cumbersome. Due to the complicated procedure in the District Court, FDA generally allows export or destruction.

In cases of switching merchandise, Customs can seize the substituted goods on the basis that they will aid in the illegal importation of the refused violative product. Customs also has authority to seize conveyances that are used to aid in the introduction of any violative product into the commerce.

Finally, we are continuing our investigative efforts into food safety violations. As we inquire into the activities of importers, our investigative efforts often result in indictments, arrests, and convictions of , and fines against those making false statements, smuggling, or conspiring against the United States. The most serious violations and repeat violators have been and will continue to be criminally prosecuted. Various criminal statutes related to smuggling, false statements, and conspiracy are available for use against serious or repetitive violators.

Since September 1993, Customs has conducted some 134 criminal investigations related to the importation of tainted or prohibited food. Currently we are conducting several ongoing criminal investigations in conjunction with the FDA. These investigations involve such schemes as the attempted re-importation of tainted food which had originally been denied entry in the United States, as well as foods that have been mislabeled to avoid mandatory FDA inspection. We intend to pursue our investigative activities in this area and work closely with the Department of Justice to ensure those involved in illegal activities are prosecuted to the full extent of the law.

Finally, in response to question four, I will reiterate a point I made earlier. Our role in the issue before the Subcommittee today is not that of the "lead" agency, but rather as an agency brought into assist with the enforcement of policy initiated by another agency. In this regard, I will defer to the expertise of the FDA in determining other necessary changes to improve the food import process.

CONCLUSION
As I conclude my testimony, I can assure the Subcommittee that the safety of the nation's food supply is important to the U.S. Customs Service. We will continue to do everything we can with existing resources and in cooperation with FDA to keep Americans safe from tainted and contaminated foods. We will target individuals and organizations that persist in importing tainted food. We will also continue to explore changes to the bond regulations that will provide more stringent deterrents.

Madam Chairwoman, this completes my prepared remarks. I am accompanied today by Mr. Philip Metzger of our Office of Field Operations, who also appeared before the Subcommittee at your last hearing. We will be happy to answer any questions you or the members of the Subcommittee may have.