U.S. Customs Service
Prospective Rulings More Timely, but Database Reliability Questions Remain Gao ID: GAO-03-828 August 6, 2003GAO previously reported that the U.S. Customs Service Office of Regulations and Rulings (OR&R) headquarters was not timely in issuing most of its prospective rulings, which establish the duties importers pay on imported goods. The Trade Act of 2002 required GAO to determine whether OR&R has improved the timeliness of its prospective rulings. In addition, GAO determined what actions OR&R took to improve the timeliness of rulings and whether OR&R resolved challenges it faced with the reliability of automated rulings data.
OR&R headquarters improved its response time for issuing prospective rulings since GAO issued a September 2000 report concluding that most rulings were untimely. GAO's review of a sample of prospective ruling request cases opened and closed from February through October 2002 showed that OR&R headquarters completed about 75 percent of these cases within its prior goal of 120 days, with about 64 percent of the cases completed within the 90-day goal mandated by the Customs Commissioner in January 2002. For cases in the latter part of our sample that were opened and closed from July through October 2002, after significant progress had been made in reducing a backlog of ruling requests, OR&R completed an estimated 94 percent of the cases within 90 days. OR&R also reported that it was successful in its efforts to eliminate the February 1, 2002 backlog of 757 ruling requests that had been open more than 90 days. Since the Commissioner's January 2002 mandate to issue rulings within 90 days, OR&R has given ruling requests the highest priority, with increased attention to balancing workloads and increased management oversight. OR&R has also taken other actions to help issue rulings within 90 days and prevent delays. OR&R continued to face data reliability challenges with its automated rulings database. OR&R has taken corrective actions to improve the accuracy and reliability of the database. However, these corrective actions do not provide assurance that OR&R has resolved the data reliability challenges because some of the actions lack specific procedures for their effective implementation.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-03-828, U.S. Customs Service: Prospective Rulings More Timely, but Database Reliability Questions Remain
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Report to Congressional Requesters:
United States General Accounting Office:
GAO:
August 2003:
U.S. Customs Service:
Prospective Rulings More Timely, but Database Reliability Questions
Remain:
GAO-03-828:
GAO Highlights:
Highlights of GAO-03-828, a report to congressional requesters
Why GAO Did This Study:
GAO previously reported that the U.S. Customs Service Office of
Regulations and Rulings (OR&R) headquarters was not timely in issuing
most of its prospective rulings, which establish the duties importers
pay on imported goods. The Trade Act of 2002 required GAO to determine
whether OR&R has improved the timeliness of its prospective rulings.
In addition, GAO determined what actions OR&R took to improve the
timeliness of rulings and whether OR&R resolved challenges it faced
with the reliability of automated rulings data.
What GAO Found:
OR&R headquarters improved its response time for issuing prospective
rulings since GAO issued a September 2000 report concluding that most
rulings were untimely. GAO‘s review of a sample of prospective ruling
request cases opened and closed from February through October 2002
showed that OR&R headquarters completed about 75 percent of these
cases within its prior goal of 120 days, with about 64 percent of the
cases completed within the 90-day goal mandated by the Customs
Commissioner in January 2002. For cases in the latter part of our
sample that were opened and closed from July through October 2002,
after significant progress had been made in reducing a backlog of
ruling requests, OR&R completed an estimated 94 percent of the cases
within 90 days. OR&R also reported that it was successful in its
efforts to eliminate the February 1, 2002 backlog of 757 ruling
requests that had been open more than 90 days.
Since the Commissioner‘s January 2002 mandate to issue rulings within
90 days, OR&R has given ruling requests the highest priority, with
increased attention to balancing workloads and increased management
oversight. OR&R has also taken other actions to help issue rulings
within 90 days and prevent delays.
OR&R continued to face data reliability challenges with its automated
rulings database. OR&R has taken corrective actions to improve the
accuracy and reliability of the database. However, these corrective
actions do not provide assurance that OR&R has resolved the data
reliability challenges because some of the actions lack specific
procedures for their effective implementation.
What GAO Recommends:
GAO recommends that OR&R continue to assess the reliability of
automated rulings data to determine whether recent improvements
sufficiently resolve data reliability challenges. Customs OR&R
generally agreed with our conclusions and recommendation and indicated
it was taking steps to implement it.
www.gao.gov/cgi-bin/getrpt?GAO-03-828.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Seto J. Bagdoyan at
(202) 512-8658 or bagdoyans@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
OR&R Headquarters Improved Response Time for Issuing Prospective
Rulings:
Actions Taken by OR&R Headquarters to Improve the Timeliness of Rulings
and Eliminate the Backlog:
OR&R Has Taken Actions to Improve LCIS Data Reliability, but Challenges
Remain:
Conclusions:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Response Time for OR&R Headquarters Rulings:
OR&R Headquarters Actions on Rulings:
OR&R Data Reliability Challenges:
Trade Community Perspective on OR&R Headquarters Rulings:
Appendix II: Comments from the Bureau of Customs and Border Protection:
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: Timeliness of Prospective Ruling Request Cases Opened and
Closed from February 1, 2002, through October 31, 2002:
Table 2: OR&R Headquarters Ruling Request Backlog, February 1, 2002,
through April 30, 2003:
Table 3: Comparison of LCIS and Case File Data for 281 Prospective
Ruling Request Cases Closed from February 1, 2002, through October 31,
2002:
Table 4: File Review Strata for OR&R Headquarters Cases Categorized as
Prospective Rulings and Closed from February 1, 2002, through October
31, 2002:
Table 5: 95-Percent Confidence Intervals for Estimates to Populations
of Total Cases:
Figure:
Figure 1: Findings of Three GAO Reviews of the Timeliness of
Prospective Ruling Request Cases:
Abbreviations:
COAC: Commercial Operations of the U.S. Customs Service:
LCIS: Legal Case Inventory System:
OR&R: Office of Regulations and Rulings:
SOP: Standard Operating Procedure:
United States General Accounting Office:
Washington, DC 20548:
August 6, 2003:
The Honorable Charles E. Grassley
Chairman
The Honorable Max Baucus
Ranking Member
Committee on Finance
United States Senate:
The Honorable William M. Thomas
Chairman
The Honorable Charles B. Rangel
Ranking Member
Committee on Ways and Means
House of Representatives:
As mandated by the Trade Act of 2002,[Footnote 1] we are providing you
with a report on the U.S. Customs Service's[Footnote 2] Office of
Regulations and Rulings (OR&R) progress in issuing timely prospective
rulings. OR&R issues prospective rulings on such matters as the proper
classification and valuation of imported goods in response to requests
from importers and others. OR&R rulings advise importers of Customs
regulations and assist importers in making marketing and pricing
decisions. Delayed rulings can adversely affect importers' ability to
make plans to import, price, and sell their products. In March 1997, we
testified before the Subcommittee on Trade, House Committee on Ways and
Means that OR&R had not consistently met its timeliness requirement for
classification rulings.[Footnote 3] More recently, in September 2000,
we issued a report also concluding that OR&R's headquarters office in
Washington, D.C., had not issued the majority of its prospective
rulings in a timely manner.[Footnote 4] The Subcommittee on OR&R of the
Treasury Advisory Committee on Commercial Operations of the U.S.
Customs Service (COAC), a private sector group composed of those
affected by Customs' operations, had also expressed concern about the
timeliness of OR&R headquarters rulings in its January 2000 report on
the structure, staffing, and performance of OR&R. Based on concerns
surrounding delayed rulings, in January 2002, the U.S. Customs
Commissioner, on his own initiative, instructed OR&R by memorandum to
issue its rulings within 90 days and eliminate the backlog of ruling
requests that existed.
As required by the Trade Act of 2002, we studied the extent to which
OR&R headquarters has made improvements to decrease the amount of time
taken to issue prospective rulings on the classification, valuation,
and marking of imported goods.[Footnote 5] Specifically, we addressed
the following questions:
* Did OR&R headquarters response time for issuing prospective rulings
on the classification, valuation, and marking of imported goods improve
since our September 2000 report?
* What actions did OR&R headquarters take to improve the timeliness of
its prospective rulings and to eliminate its backlog of ruling request
cases?
* Did OR&R resolve the data reliability challenges it faced with its
Legal Case Inventory System, the automated database used to monitor and
track the timeliness of prospective rulings?
To address these questions, we reviewed files for a sample of 325
cases, from a random sample of 344 cases, categorized as prospective
rulings that were closed by OR&R headquarters from February 1, 2002,
through October 31, 2002, covering the classification, valuation, and
marking of imported goods.[Footnote 6] We interviewed OR&R management
officials and reviewed and collected other pertinent information, such
as procedures established to ensure the consistent recording of data on
ruling cases in the Legal Case Inventory System (LCIS). We also
interviewed the chair of COAC's Subcommittee on OR&R, representatives
of the American Bar Association Customs Law Committee[Footnote 7] and
five selected trade associations (e.g., American Association of
Exporters and Importers) identified as being knowledgeable about OR&R
headquarters prospective rulings, and selected importer
representatives.[Footnote 8] Appendix I discusses our scope and
methodology in greater detail and provides information about our
sampling of cases. We conducted our work between October 2002 and June
2003 in accordance with generally accepted government auditing
standards.
Results in Brief:
OR&R headquarters improved its response time for issuing prospective
rulings. Our review of a sample of prospective ruling request cases
opened and closed from February through October 2002 showed that OR&R
headquarters completed about 75 percent of these cases within its prior
timeliness goal of 120 days, and about 64 percent were completed within
OR&R's current goal of 90 days. For cases in the latter part of our
sample (i.e., cases opened and closed from July through October 2002,
after OR&R made significant progress in reducing the size of its ruling
request case backlog), OR&R completed an estimated 94 percent of the
cases within 90 days. We previously reported, in September 2000, that
OR&R headquarters did not meet the goal of 120 days for most of the
cases we reviewed. Representatives of COAC's Subcommittee on OR&R, the
American Bar Association Customs Law Committee, and five trade
associations that we contacted agreed that OR&R headquarters had
improved the timeliness of its rulings. In addition, OR&R headquarters
reported that it was successful in its efforts started in February 2002
to eliminate the backlog of 757 ruling requests that were open (i.e.,
had not been completed) for 90 days or more.
Since the Customs Commissioner's January 2002 mandate to issue rulings
within 90 days, OR&R headquarters managers and attorneys have given
ruling requests the highest priority, with increased attention to
balancing workloads and increased management oversight so that the
Commissioner's mandate is met and delays are prevented. Prior to 2002,
OR&R attorneys spent most of their time on tasks and responsibilities
other than ruling requests, such as providing training, participating
in trade negotiations, and providing advice to other Customs offices.
According to OR&R management, other actions were also taken to help
improve the timeliness of rulings. For example, OR&R rejects ruling
requests more frequently than in the past when needed information is
not provided by importers, and OR&R attorneys started using
teleconferences instead of in-person meetings to discuss ruling
requests with importer representatives. Continuing to give priority to
rulings should help institutionalize and sustain the progress OR&R has
made in improving the timeliness of headquarters prospective rulings.
Our review of prospective ruling request cases showed that LCIS, OR&R's
automated database, continued to face data reliability challenges
potentially hindering its effectiveness as a management tool for
tracking and monitoring the progress and history of cases and measuring
timeliness. For example, our comparison of LCIS data to case files
showed that 88 of the 325 cases we reviewed were inaccurately coded as
rulings in LCIS. In response to recommendations made in our September
2000 report, and to data errors we found during this review, OR&R has
taken corrective actions to improve the accuracy and reliability of
LCIS data, such as developing uniform procedures for recording cases in
LCIS. However, these corrective actions may not resolve the LCIS data
reliability challenges. Although the corrective actions include goals,
such as correctly coding cases and entering timely and accurate
information into the database, some of the actions lack specific
procedures for their effective implementation. For example, OR&R did
not provide specific guidance as to how, when, and by whom the coding
of information letters is to be done. This report contains a
recommendation to the OR&R Assistant Commissioner regarding continued
assessment of LCIS data reliability to determine whether the corrective
actions taken are sufficient.
We provided Customs with a draft of this report for comment. On July
21, 2003, we received written comments from Customs' Acting Director,
Office of Policy and Planning. Customs generally agreed with our
findings and recommendations. However, Customs said that while the
report acknowledges the improvement that OR&R has made in the
timeliness of its rulings, it does not recognize the dramatic
turnaround that OR&R accomplished in eliminating the February 2002
backlog of ruling requests and issuing nearly every prospective ruling
request received since July 2002 within 90 days. Customs also commented
on the steps OR&R has taken to improve LCIS data reliability, including
issuing a policy requiring that OR&R managers verify the accuracy of
LCIS data for each case as it is closed, as recommended in our draft
report. Accordingly, we eliminated this recommendation. Customs also
agreed to continue to assess LCIS' data reliability to determine
whether recent improvements sufficiently corrected past problems.
Customs' written comments are contained in appendix II of this report.
Background:
Customs enforces the nation's trade laws and policies, including
collecting duties on imported merchandise. OR&R plays an important role
in carrying out Customs' trade mission by (1) drafting regulations
implementing U.S. trade laws; (2) issuing rulings on the proper
classification, valuation, marking, and entry of imported goods, as
well as the application of drawback laws (drawbacks involve refunds on
duties of imported merchandise when they are exported from the United
States) and navigation laws (these laws govern the movement of vessels
in international trade), in response to requests from importers and
others; and (3) providing guidance to the trade community and other
Customs offices on their compliance duties under Customs laws, and
other laws enforced by Customs, as well as related regulations. OR&R
provides compliance information to the trade community through various
mechanisms, including issuing regulations, publications, and rulings,
which establish the duty an importer will owe. These rulings advise
importers on how they can stay in compliance with Customs laws and help
them and importers of similar goods make marketing and pricing
decisions by providing information on the cost of importing their
goods. For example, OR&R's prospective classification rulings give both
the requesting importer and importers of similar goods vital
information to help them determine the amounts of the duties and fees
they will be charged when they import their goods. Customs uses its Web
site to disseminate information on completed rulings to the trade
community and communicate other information, such as U.S. import
requirements and how to request a ruling from OR&R. Customs reported
collecting about $19.8 billion in duties in fiscal year 2002.[Footnote
9]
OR&R is headed by an Assistant Commissioner and has offices in
Washington, D.C., and New York. OR&R reported 9,053 prospective ruling
request cases closed in fiscal year 2002, most of which were processed
by its New York office in 30 days or less, according to OR&R officials.
Most of the rulings issued by the New York office concern the
classification of imported goods and generally provide a brief
description the merchandise along with the classification and the duty
rate. OR&R's headquarters office in Washington, D.C., processes cases
that are expected to take longer than 30 days to complete. OR&R
headquarters rulings contain much more elaboration, including a
detailed explanation of the legal basis for the conclusion reached by
OR&R. Ruling requests received in OR&R's New York office that are
considered highly complex or highly sensitive, or that involve novel
issues never presented to Customs before, are referred to OR&R
headquarters for a decision. OR&R reported 815 headquarters prospective
ruling request cases closed in fiscal year 2002, or about 9 percent of
all prospective ruling requests. OR&R had 232 total staff as of October
2002: 117 headquarters staff, including 90 attorneys; and 115 staff in
the New York office, including 93 import specialists (about 45 of which
are national commodity specialists) who classify imported merchandise.
For fiscal year 2002, OR&R's budget was over $23 million.
In January 2002, the Customs Commissioner, in a memorandum to the
Assistant Commissioner for OR&R, set a requirement that rulings were to
be issued within 90 days. The Commissioner noted that timeliness of the
guidance contained in rulings is essential in ensuring compliance with
the law. The Commissioner further instructed the OR&R Assistant
Commissioner to take appropriate measures to eliminate the backlog of
ruling requests that existed. The backlog was to be eliminated by
December 31, 2002, but the Customs Commissioner later changed this
deadline to September 30, 2002.
OR&R uses its automated database, LCIS, to internally track cases,
including rulings, pending before OR&R.[Footnote 10] This system was
designed as a management tool and was to serve as the principal means
for recording and monitoring the progress and history of individual
cases. According to OR&R officials, LCIS became OR&R's principal case
tracking system in 1983 and is used to help ensure that ruling request
cases are closed within 90 days. In our September 2000 report, however,
we concluded that LCIS was not an effective tool for measuring the
timeliness of headquarters rulings because it did not contain accurate
and reliable data, and we recommended actions to address the LCIS data
problems.
OR&R Headquarters Improved Response Time for Issuing Prospective
Rulings:
Our review of a sample of prospective ruling request cases showed that
in response to the Customs Commissioner's January 2002 mandate, OR&R
headquarters improved its response time for issuing prospective
rulings. We previously concluded in September 2000 that OR&R
headquarters did not issue the majority of its prospective rulings in a
timely manner (i.e., within OR&R's 120-day goal). Our work for this
report, on the other hand, demonstrated that OR&R headquarters
completed the majority of its prospective ruling request cases opened
and closed from February through October 2002 within the newly
established goal of 90 days.[Footnote 11] Further, OR&R reported that,
with a few exceptions beyond Customs' control, it had eliminated its
February 2002 backlog of prospective ruling requests that were still
open after 90 days or more. Representatives of COAC's Subcommittee on
OR&R, the American Bar Association Customs Law Committee, and five
trade associations that we contacted agreed that OR&R headquarters had
improved the timeliness of its rulings.
Before 2002, OR&R headquarters had a 120-day goal for processing and
issuing rulings from the date a ruling request was assigned to an OR&R
attorney.[Footnote 12] In March 1997, we testified that OR&R had not
consistently met its 120-day timeliness goal. Specifically, OR&R did
not meet this requirement for 53 percent of the 81 classification cases
closed in 1996 that we reviewed. Later, in September 2000, we reported
that our review of a random sample of 70 case files, representing
approximately 610 prospective rulings, showed that about two-thirds of
the rulings that were requested and issued between January 1, 1997, and
October 26, 1999, were not completed within OR&R's 120-day goal. At the
time, OR&R acknowledged having problems issuing headquarters rulings on
a timely basis and attributed the problems to staffing shortages and
competing workload demands.
To determine the amount of time taken by OR&R headquarters to issue
prospective rulings after the Customs Commissioner established the 90-
day timeliness goal in January 2002, we reviewed files for 124
prospective ruling request cases opened and closed from February 1,
2002, through October 31, 2002.[Footnote 13] Our review showed that
about 75 percent of the cases were completed in 120 days or less, the
old goal, and about 64 percent were completed within 90 days, the new
goal. Table 1 shows the number and percent of cases that took 90 days
or less, from 91 to 120 days, and more than 120 days to complete from
the date they were assigned to OR&R attorneys for processing. As also
shown in table 1, most of the cases resulted in rulings being issued by
OR&R, while some cases resulted in information letters sent to the
requesters and other cases were administratively closed.[Footnote 14]
Table 1: Timeliness of Prospective Ruling Request Cases Opened and
Closed from February 1, 2002, through October 31, 2002:
Action taken: Ruling issued; Number of days taken to complete cases[A]:
90 days or less: 58; Number of days taken to complete cases[A]: 91-120
days: 13; Number of days taken to complete cases[A]: 121 days or more:
28.
Action taken: Information letter sent; Number of days taken to complete
cases[A]: 90 days or less: 5; Number of days taken to complete
cases[A]: 91-120 days: 0; Number of days taken to complete cases[A]:
121 days or more: 1.
Action taken: Administratively closed; Number of days taken to complete
cases[A]: 90 days or less: 17; Number of days taken to complete
cases[A]: 91-120 days: 1; Number of days taken to complete cases[A]:
121 days or more: 1.
Action taken: Total; Number of days taken to complete cases[A]: 90 days
or less: 80 (64%); Number of days taken to complete cases[A]: 91-120
days: 14 (11%); Number of days taken to complete cases[A]: 121 days or
more: 30 (25%).
Source: GAO review of OR&R headquarters data.
Note: We adjusted the percentages to account for cases that were
missing and that did not meet our criteria (i.e., inaccurately coded as
rulings in LCIS).
[A] Our analysis covers time from the date each ruling request was
assigned to an OR&R attorney for processing to the date OR&R completed
and closed the case.
[End of table]
Our review of the 124 prospective ruling request case files also
indicates that OR&R improved its response time during the latter part
of the February through October 2002 time period, after OR&R had made
significant progress in reducing the size of the backlog. For the 93
cases in our sample that were opened during the 5-month period from
February through June 2002, OR&R completed an estimated 55 percent of
the cases within 90 days. In contrast, OR&R completed an estimated 94
percent of the 31 cases in the latter part of our sample, cases opened
and closed during the 4-month period from July through October 2002,
within 90 days.[Footnote 15]
Figure 1 summarizes the findings regarding the timeliness of OR&R
headquarters prospective ruling request cases in our March 1997
testimony, September 2000 report, and work for this report.
Specifically, figure 1 shows the percent of cases we examined during
each of those reviews that were completed within OR&R's stated goals.
As noted earlier, these percentages are not directly comparable because
the samples and populations covered differ for each of the three
reviews we conducted.
Figure 1: Findings of Three GAO Reviews of the Timeliness of
Prospective Ruling Request Cases:
[See PDF for image]
[End of figure]
OR&R reported that its efforts to eliminate the backlog of 757
headquarters ruling request cases open 90 days or more as of February
1, 2002, were successful. Table 2 shows the size of the ruling backlog
as reported by OR&R for each month from February 2002 though April
2003. OR&R reported having two prospective ruling request cases that
were open 90 days or more as of October 31, 2002, the last date of the
cases included in our case file review, and the backlog did not
substantially increase through April 30, 2003, when there were 6 such
cases. According to OR&R, these cases took more than 90 days for
reasons beyond Customs' control, such as being held at the request of
the Department of the Treasury.
Table 2: OR&R Headquarters Ruling Request Backlog, February 1, 2002,
through April 30, 2003:
Date: February 1, 2002; Number of ruling requests open 90 days or more:
757; Number of ruling requests open less than 90 days: 187.
Date: March 1, 2002; Number of ruling requests open 90 days or more:
672; Number of ruling requests open less than 90 days: 228.
Date: April 1, 2002; Number of ruling requests open 90 days or more:
565; Number of ruling requests open less than 90 days: 254.
Date: May 1, 2002; Number of ruling requests open 90 days or more: 509;
Number of ruling requests open less than 90 days: 277.
Date: June 1, 2002; Number of ruling requests open 90 days or more:
442; Number of ruling requests open less than 90 days: 262.
Date: July 1, 2002; Number of ruling requests open 90 days or more:
448; Number of ruling requests open less than 90 days: 261.
Date: August 1, 2002; Number of ruling requests open 90 days or more:
298; Number of ruling requests open less than 90 days: 217.
Date: September 1, 2002; Number of ruling requests open 90 days or
more: 185; Number of ruling requests open less than 90 days: 191.
Date: October 1, 2002; Number of ruling requests open 90 days or more:
14[A]; Number of ruling requests open less than 90 days: 208.
Date: October 31, 2002; Number of ruling requests open 90 days or more:
2; Number of ruling requests open less than 90 days: 75.
Date: November 30, 2002; Number of ruling requests open 90 days or
more: 3; Number of ruling requests open less than 90 days: 86.
Date: December 31, 2002; Number of ruling requests open 90 days or
more: 5; Number of ruling requests open less than 90 days: 65.
Date: January 31, 2003; Number of ruling requests open 90 days or more:
4; Number of ruling requests open less than 90 days: 66.
Date: February 28, 2003; Number of ruling requests open 90 days or
more: 6; Number of ruling requests open less than 90 days: 62.
Date: March 31, 2003; Number of ruling requests open 90 days or more:
5; Number of ruling requests open less than 90 days: 72.
Date: April 30, 2003; Number of ruling requests open 90 days or more:
6; Number of ruling requests open less than 90 days: 91.
Source: Developed by GAO from OR&R data.
Note: OR&R initially reported the number of all administrative ruling
requests that were open, including cases other than prospective
rulings, such as protest review decisions, decisions on revocations and
modifications to rulings, and internal advice decisions. For October
31, 2002, and later, OR&R reported only the number of open prospective
ruling requests.
[A] According to OR&R, these 14 cases were not yet closed on October 1,
2002, for reasons beyond Customs' control. For example, OR&R officials
said cases were being held at the request of the Treasury Department
because of its involvement with the North American Free Trade Agreement
Working Group on Rules of Origin and at the request of the Committee
for the Implementation of Textile Agreements (an interagency group
chaired by the Department of Commerce).
[End of table]
To determine how long some of the headquarters ruling request backlog
cases were open before they were completed, we examined case files for
157 prospective ruling request cases opened before February 1, 2002,
and closed from February 1, 2002, through October 31, 2002.[Footnote
16] We determined that 131 of these cases were part of OR&R's backlog
of ruling request cases open 90 days or more as of February 1, 2002.
According to OR&R, these 131 cases were among the oldest cases in LCIS
at that time. We determined that the 131 backlog cases took an average
of 581 days to complete, from the date each case was assigned to an
OR&R attorney (before OR&R started its efforts in 2002 to eliminate the
ruling request backlog) until the date each case was closed. The amount
of time taken to complete each of these 131 backlog cases ranged from
136 to 1,586 days,[Footnote 17] with 501 days as the median.
Trade Community Agreed OR&R Improved the Timeliness of Headquarters
Prospective Rulings:
The chair of COAC's Subcommittee on OR&R, as well as representatives of
the American Bar Association Customs Law Committee and five trade
associations we contacted, told us that OR&R started issuing
prospective rulings in 2002 more quickly than in the past. In April
2003, the chair of the COAC subcommittee told us that OR&R's efforts
since February 2002 to eliminate the backlog of rulings and issue
rulings within 90 days of receipt had been "outstanding." All of the
association representatives said that OR&R headquarters had improved
the timeliness of its rulings. One association's representative said
OR&R's new policy of responding to all ruling requests within 90 days
of receipt is a very positive development that should improve OR&R's
responsiveness to the trade community.
Actions Taken by OR&R Headquarters to Improve the Timeliness of Rulings
and Eliminate the Backlog:
Since the Customs Commissioner required in January 2002 that OR&R issue
rulings within 90 days and the existing backlog of ruling requests be
eliminated, OR&R has given ruling requests its highest priority,
according to OR&R officials. OR&R first concentrated its efforts
starting in February 2002 primarily on eliminating the ruling backlog.
Then, starting in July 2002 when significant progress had been made in
reducing the size of the backlog, OR&R intensified its focus on issuing
rulings within 90 days. According to OR&R officials and documentation
we reviewed, OR&R increased the amount of attorney time spent on
rulings to carry out these efforts. OR&R managers also provided
increased oversight to the processing of rulings. In addition, OR&R
took other actions to help address the backlog and issue rulings within
90 days, such as rejecting ruling requests when needed information
could not be quickly obtained and holding teleconferences instead of
face-to-face meetings with importers and their attorneys to discuss
their requests and obtain further information or clarification. OR&R
officials said OR&R will permanently maintain the high-priority status
for rulings and will continue efforts to issue rulings within 90 days.
We believe continuing to give priority to rulings, and continuing to
streamline the processing of rulings, should help institutionalize and
sustain the progress OR&R has made in improving the timeliness of
headquarters prospective rulings.
OR&R reported that nine OR&R attorneys, who had been dividing their
time between OR&R units, were reassigned in February 2002 to work full-
time on rulings within the units that had the largest number of overdue
ruling requests. Also, in July 2002, after the Customs Commissioner
changed the deadline for eliminating the ruling request backlog to
September 30, 2002, ruling cases were assigned to nine additional
attorneys working in OR&R units that did not process rulings. Each of
these nine attorneys had prior experience with rulings, according to an
OR&R report, and they continued to handle their normal workload in
addition to assisting with the elimination of the backlog. In addition,
OR&R delayed the rotation of attorneys among its units while efforts
were being taken to eliminate the ruling request backlog in
2002.[Footnote 18] According to OR&R officials, OR&R managers have
continued to provide sustained attention to balancing attorney
workloads so that rulings are issued within 90 days.
OR&R managers explained to the attorneys that rulings were to be their
highest priority. Previously, the attorneys would likely carry out
other responsibilities and tasks before turning their attention to
processing ruling requests. According to OR&R officials, prior to 2002,
on the basis of priorities established by Customs management, OR&R
attorneys spent a far greater percentage of their time on tasks and
responsibilities other than ruling requests, such as providing domestic
and international training, participating in trade negotiations,
providing advice to other Customs offices, commenting on pending
legislation, and assisting in Customs litigation. OR&R officials told
us that OR&R is fully committed in its strategic planning to
maintaining this high-priority status for rulings on a permanent basis
in order to facilitate legitimate trade and informed compliance by the
trade community.
According to OR&R officials, OR&R managers started giving increased
attention and review to rulings because of their high priority,
including interacting more often with attorneys regarding the
processing of rulings, as well as providing additional oversight and
monitoring of the entire effort, to help ensure that ruling requests
are issued within 90 days. OR&R officials told us that OR&R managers
will continue to give increased attention and review to the rulings
process, and this responsibility is emphasized in OR&R management staff
meetings and in the evaluation of each manager's performance.
OR&R also started providing monthly reports to the Customs Commissioner
regarding the status of its efforts to implement procedural changes to
issue rulings within 90 days and eliminate the backlog, indicative of
the high priority the Commissioner placed on rulings. OR&R officials
said the monthly reports on the status of its work on rulings will
continue to be provided to the Commissioner.
In addition, as part of its efforts in 2002, OR&R drafted procedures to
provide a standardized approach for reviewing, researching, and
finalizing rulings within OR&R. According to OR&R officials, each OR&R
unit previously used its own procedures for processing rulings. OR&R
officials said they believe use of the draft Standard Operating
Procedure (SOP), starting in February 2002, has streamlined their
processes for issuing rulings, helped OR&R's efforts to issue rulings
within 90 days, and will help sustain the elimination of the ruling
backlog.[Footnote 19] In July 2002, OR&R also issued a SOP on the use
of the LCIS. According to OR&R officials, this SOP contains valuable
guidance for attorneys with respect to the processing of ruling
requests, including, for example, specifying that ruling requests are
to be carefully reviewed for completeness when received.
During 2002, OR&R also revised its policy regarding the type of
meetings scheduled with importer representatives if it is considered
that discussions would be helpful in deciding ruling issues or a
decision contrary to that advocated in a ruling request is
contemplated. OR&R officials told us that, previously, such meetings
were typically held in person; but to help meet the 90-day benchmark
for issuing rulings, OR&R attorneys started primarily holding
teleconferences for the discussions. Using teleconferences is
consistent with the federal regulation providing for these
conferences,[Footnote 20] and, according to OR&R officials, saves time
and is as effective as in-person meetings. According to OR&R officials,
in-person meetings are almost always held at OR&R's office, are
logistically harder and more time-consuming to schedule and hold than
teleconferences, and tend to take longer than teleconferences. OR&R
officials noted that in-person meetings used to be scheduled as a
matter of course, and while they have not been entirely eliminated,
OR&R attorneys now have fewer such meetings.
OR&R also took actions intended to reduce the amount of time spent
writing ruling letters that are sent to importers, according to OR&R
officials. Where appropriate, OR&R started using more standardized
language in rulings, often using the same language that was used in
previously issued rulings for similar products. Also, efforts were made
to curtail the length of ruling letters. OR&R officials said that
attorneys were told to be succinct and write only what is needed to
rule on the matter at hand.
OR&R officials said that another change made to help eliminate the
ruling backlog and issue rulings within 90 days was that OR&R started
holding importers making ruling requests to a more rigorous standard
for submitting information. Some ruling requests did not contain all
the information needed, or were insufficiently detailed, for OR&R to
issue a ruling. Previously, OR&R attorneys would generally spend
whatever amount of time it took to communicate with importers and
obtain the needed information, according to OR&R officials. In 2002,
however, rather than keeping cases open while waiting for more
information, OR&R started administratively closing cases or sending
information letters, which provide some information that may be helpful
and often take less time to process than rulings, when missing
information could not be quickly obtained. For administrative closures,
OR&R sends a letter advising the importer that the ruling request case
is being administratively closed and providing the importer with the
reason the ruling request cannot be processed. OR&R also started
generally closing ruling request cases administratively when they are
contingent on other pending decisions, such as decisions for related
rulings, litigation, legislation, or regulations, rather than keeping
such cases open and postponing activity on them.
Trade Community Expressed Some Concerns about OR&R Headquarters
Actions:
Fourteen of 35 importer representatives we interviewed who had
requested prospective rulings, but either did not receive a ruling or
received one that took longer than 120 days to issue,[Footnote 21] were
critical of OR&R's actions in handling their requests. We interviewed
these representatives to obtain their views on how OR&R handled their
requests.
Seven importer representatives we interviewed noted that they disagreed
with reasons generally given by OR&R to administratively close ruling
request cases. In the sample of cases we reviewed, OR&R
administratively closed cases because either the requests involved
current transactions that were not prospective in nature[Footnote 22]
or information needed to issue rulings was missing and could not be
quickly obtained. Four of the 7 importer representatives said that OR&R
administratively closing cases because importation transactions are no
longer prospective is unfair, primarily because OR&R had, in the past,
loosely defined prospective transactions, such as either transactions
that had not yet begun or that had begun and were still in progress.
One representative said that OR&R now seems to define prospective
importation transactions only as those that have not yet begun, but did
not officially alert importers to this change.[Footnote 23] In
addition, 4 of the 7 importer representatives said that OR&R's closing
of cases almost immediately because information is missing is an
inefficient practice. They said that it takes more time for OR&R to
close a case and later receive a resubmitted request with complete
information than it does for OR&R to allow importers to submit
additional information while a case remains open. In response, OR&R
officials said that one of the factors that lead to substantial delays
in issuing rulings prior to 2002 was the willingness of OR&R to hold
cases open while awaiting additional information from importers. OR&R
management decided that it is a more efficient process to
administratively close such cases.
Ten of the 35 importer representatives we interviewed disagreed with
OR&R's decision in 2002 to have telephone discussions instead of in-
person meetings with importers and/or their attorneys to discuss ruling
requests.[Footnote 24] Two of the 10 representatives said they believed
that in the long run, this practice will be more time-consuming for
OR&R than granting in-person meetings. Six of the importer
representatives said that the discussions and the information presented
at in-person meetings have, in their experience, often led OR&R
attorneys to change their contemplated ruling decisions. The
representatives also believe that by having telephone discussions
instead of in-person meetings, OR&R will likely make less informed
ruling decisions, resulting in additional importer protests and
requests for revocations of rulings. In response, OR&R officials said
that OR&R has found conference calls to be a very effective means of
obtaining needed information from importers in addition to informal
contacts between staff attorneys and importers and their
representatives. OR&R officials noted that where the nature of an issue
suggests that an in-person meeting is needed to clarify the matter,
OR&R may still schedule such a meeting.
OR&R Has Taken Actions to Improve LCIS Data Reliability, but Challenges
Remain:
Our review of a sample of 325 OR&R headquarters cases, from a random
sample of 344 cases, closed from February 1, 2002, through October 31,
2002, showed that LCIS continued to face data reliability challenges
potentially hindering its effectiveness as a tool for monitoring cases
and measuring the timeliness of rulings.[Footnote 25] In response to
recommendations we made in our September 2000 report,[Footnote 26] OR&R
completed certain actions by February 2003 to improve the accuracy and
reliability of LCIS data. OR&R also initiated additional corrective
actions based on data errors we found in our case file review. However,
these actions may not sufficiently correct problems with LCIS because
some of the actions lack specific procedures for their effective
implementation. According to our internal control standards, for an
agency to run and control its operations, it must have relevant,
reliable information relating to internal events.[Footnote 27] That
information should be recorded and communicated to management and
others within the agency who need it to carry out their
responsibilities.
LCIS Data Often Inaccurate and Unreliable:
Our comparison of LCIS data to 325 case files showed that LCIS data
were often inaccurate, did not match the case files, or could not be
easily verified. A total of 88 cases were inaccurately coded in LCIS as
rulings. In addition, LCIS data for 153 of the 281 prospective ruling
request cases in the sample either did not match data in the case files
or could not be easily verified because case file data were missing for
at least one of four key data elements (i.e., the "type of case code,"
"case category code," "date assigned," and "date closed").[Footnote 28]
Although OR&R uses LCIS to track the progress of its headquarters
rulings, LCIS is not an effective tool for measuring the timeliness of
rulings when it does not contain accurate and reliable dates.[Footnote
29]
In our review of the 325 OR&R headquarters case files, we found that 44
of the cases did not involve prospective ruling requests and were
inaccurately coded in LCIS as rulings. These 44 inaccurately coded
cases were internal advice decisions, protest reviews, and ruling
revocation and modification decisions. Such cases have different codes
to be entered into LCIS.
Separately, we found that OR&R had not issued rulings for an additional
44 of the remaining 281 prospective ruling request cases. The cases
originated with letters requesting rulings, but OR&R administratively
closed 31 of the cases and issued information letters for the other 13
cases. However, the cases remained inaccurately coded in LCIS as
rulings. We brought the cases to the attention of OR&R management while
reviewing OR&R's case files. OR&R agreed that when the cases were
closed they should no longer have been coded in LCIS as rulings because
rulings were not issued (i.e., the codes should have been changed after
OR&R decided not to issue rulings for these cases). Consequently, OR&R
officials advised us that they had decided to establish a uniform
approach to the coding of such cases, including the identification of
specific codes to be entered into LCIS, and had taken corrective action
on the 44 cases we brought to their attention.
In reviewing the 281 prospective ruling request cases, we also found
that 153 cases had LCIS data for at least one of four key data elements
which either did not match data in the case files or we could not
verify because case file data were missing. Table 3 shows our estimates
of the extent to which these key data elements in LCIS matched, did not
match, or could not be easily verified with data in individual case
files for the 281 prospective ruling requests.[Footnote 30]
Table 3: Comparison of LCIS and Case File Data for 281 Prospective
Ruling Request Cases Closed from February 1, 2002, through October 31,
2002:
Data element: Type of case code; Number of cases where LCIS data
matched case file data[A]: 203; Number of cases where LCIS data did not
match case file data[A]: 20; Number of cases where LCIS data could not
be easily verified[B]: 58.
Data element: Case category code; Number of cases where LCIS data
matched case file data[A]: 210; Number of cases where LCIS data did not
match case file data[A]: 12; Number of cases where LCIS data could not
be easily verified[B]: 59.
Data element: Date assigned; Number of cases where LCIS data matched
case file data[A]: 190; Number of cases where LCIS data did not match
case file data[A]: 64; Number of cases where LCIS data could not be
easily verified[B]: 27.
Data element: Date closed; Number of cases where LCIS data matched case
file data[A]: 264; Number of cases where LCIS data did not match case
file data[A]: 12; Number of cases where LCIS data could not be easily
verified[B]: 5.
Source: GAO review of OR&R files.
[A] We defined a match as any numeric code or date for which the data
recorded in LCIS matched the numeric code or date in the ruling request
case file. For the type of case code and case category code, we
compared LCIS data to the codes written on the Case Assignment sheet in
each case file. For the date assigned and date closed, we compared LCIS
data to all documentation in each case file, including the Case
Assignment sheet, ruling, and Case History form.
[B] "Could not be easily verified" means that the data were missing
from the case files. According to OR&R management, it is possible to
verify the type of case codes and case category codes by examining
documentation in case files, including rulings, that does not
specifically state these codes. We do not have the expertise to make
such determinations and relied on the Case Assignment sheets in the
case files to verify these codes.
[End of table]
OR&R's ability to measure the timeliness of rulings is hindered when
either the date a case is assigned to an attorney for processing or the
date a case is closed is inaccurate in LCIS. These two dates are used
by LCIS to automatically calculate and record the number of days in
progress for each case.[Footnote 31] OR&R managers monitor the
timeliness of rulings using each case's days in progress from the date
a case is assigned. However, LCIS errors with the date assigned and
date closed can be substantial. For example, documents in one case file
we reviewed showed that the case took 157 days from the date assigned
to the date closed, but LCIS showed 35 days in progress for the case.
In another case, we determined from the case file that it took 1,225
days from the date assigned to the date closed, but LCIS showed 587
days in progress.
It Is Uncertain Whether OR&R's Corrective Actions Will Improve LCIS
Data Reliability:
In our September 2000 report, we concluded that LCIS was not an
effective tool for measuring the timeliness of OR&R headquarters
prospective rulings because it did not contain accurate and reliable
data. We recommended that the OR&R Assistant Commissioner take steps
to:
* modify LCIS to enable the system to record and retain key data so
that managers can more readily monitor and track the history of cases;
* provide clear and complete guidance to ensure that staff that use
LCIS understand and consistently interpret the guidance, as well as
train staff on any modifications to LCIS; and:
* establish an ongoing LCIS monitoring system to ensure the quality and
integrity of the data entered and maintained in the system.
In response to our recommendations, OR&R took corrective actions that
were completed by February 13, 2003. Specifically, OR&R developed and
issued a new SOP for LCIS.[Footnote 32] The purpose of the LCIS SOP is
to ensure a consistent process for receiving, acknowledging, assigning,
recording, tracking, updating, signing, and closing ruling cases in
LCIS. For example, the SOP explains how a Case Assignment sheet is to
be used to enter, review, and update data in LCIS.
OR&R also began producing monthly LCIS reports of open and closed cases
and reports for cases nearing or over the 90-day ruling issuance
turnaround benchmark. OR&R managers are to use these reports to
determine case status and resolve barriers to completion. At the same
time, the OR&R managers are to review the monthly reports to help
ensure the accuracy of the information entered into LCIS for these
cases.
Another corrective action taken by OR&R was to conduct training of
employees to ensure that they are familiar with LCIS requirements and
capabilities. A training session was conducted in November 2002, and
two more sessions were planned for fiscal year 2003. In addition,
according to OR&R officials, informal training of employees, such as
new employees and employees transferring among OR&R units, has taken
place on a one-on-one basis.
OR&R initiated additional corrective actions based on LCIS data errors
we found and discussed with an OR&R official as we conducted our case
file review for this report. As discussed earlier, OR&R decided to
establish a uniform approach to the coding of ruling requests that
result in administrative closures or the issuance of information
letters, including the identification of specific codes to be entered
into LCIS. In addition, OR&R units responsible for processing
prospective rulings were instructed to check the accuracy of the LCIS
"type of case code" for all cases closed between October 1, 2002, and
March 3, 2003. The OR&R units compared hard copy documentation to LCIS
data and made the necessary corrections to LCIS. In the future, the
OR&R units are to perform a similar check of a selected percentage of
LCIS data on a quarterly basis.
OR&R's corrective actions to improve the accuracy and reliability of
LCIS data are steps in the right direction, but they do not provide
assurance that LCIS data reliability challenges have been resolved.
Although the corrective actions include goals, some actions lack
specific procedures indicating how the goals will be met. For example,
OR&R's recent decision to establish a uniform approach to the coding of
administrative closures and information letters did not include any
specific guidance as to how and when the coding is to be done and by
whom. According to OR&R management, as of June 2003, the OR&R Assistant
Commissioner was drafting a memorandum to provide such guidance.
In addition, the LCIS SOP does not provide specific and thorough
guidance to ensure consistent recording, updating, and verification of
LCIS data. The SOP directs administrative staff to enter timely and
accurate information into LCIS, but it does not provide detailed
guidance for the verification of LCIS data during the life of a case.
Although the LCIS SOP instructs OR&R attorneys to compare LCIS data
hard-copy summaries to Case Assignment sheets in case files to ensure
that the information matches, the SOP appears to suggest that attorneys
carry out this task before conducting research and other work on cases.
The SOP does not specifically require the verification of LCIS data for
individual cases at other times, such as when each case is closed.
After we discussed this with OR&R officials, the OR&R Assistant
Commissioner issued a memorandum on July 8, 2003, requiring OR&R
managers to verify the accuracy of LCIS data for each case as it is
closed.
Conclusions:
OR&R headquarters improved the timeliness of its prospective rulings
since we issued our September 2000 report concluding that most rulings
were untimely. Starting in February 2002, OR&R gave ruling requests its
highest priority and took other actions to help issue rulings within 90
days and eliminate the backlog of ruling requests that existed. By
continuing to give priority to rulings and continuing to streamline the
processing of rulings, OR&R headquarters may be able to
institutionalize and sustain the progress it has made in improving
timeliness. This would benefit the trade community and help ensure
compliance with U.S. trade law.
LCIS, OR&R's automated database, continued to face data reliability
challenges. OR&R has taken corrective actions to improve the accuracy
and reliability of LCIS data. However, these actions do not provide
assurance that OR&R has resolved its LCIS data reliability challenges
because some of the actions lack specific procedures for their
effective implementation. LCIS needs accurate and reliable data so that
it can effectively serve as an OR&R management tool for recording and
monitoring the progress and history of individual prospective ruling
requests and measuring timeliness. To achieve this, additional
corrective actions may be necessary.
Recommendation for Executive Action:
To help ensure that LCIS data are accurate and that OR&R can reliably
use the database as a management tool to record and monitor prospective
rulings and measure timeliness, we recommend that the OR&R Assistant
Commissioner take steps to continue to assess LCIS data reliability to
determine whether recent improvements sufficiently correct past
problems.
Agency Comments and Our Evaluation:
Customs provided written comments on a draft of this report and
generally agreed with our findings and recommendations. Customs'
comments are contained in appendix II.
While Customs said that the report acknowledges OR&R's improvement in
the timeliness of its rulings, Customs believed the report did not
convey that OR&R has dramatically improved the timeliness of its
rulings and eliminated timeliness as a problem. Customs also said that
the report did not recognize the dramatic turnaround that OR&R
accomplished, including the elimination of the backlog of 757 ruling
requests that existed on February 1, 2002; the issuance of nearly every
prospective ruling request received since July 2002 within 90 days; and
the issuance of nearly every prospective ruling request received since
September 2002 within 70 days. Customs also said that the report did
not sufficiently emphasize that OR&R has maintained its record of
issuing rulings well within the 90-day time frame in the months since
September 30, 2002, when the backlog was eliminated.
We believe that the report appropriately reflects the improvements OR&R
has made in the timeliness of its prospective rulings. Regarding OR&R's
issuance of prospective rulings since September 2002, we did not assess
OR&R's timeliness for cases closed after October 31, 2002. Rather, we
assessed OR&R's timeliness by reviewing the files for prospective
ruling request cases opened and closed from February 2002, when OR&R
started its efforts to issue rulings within 90 days, through October
2002, when we initiated our review. In addition, our report identifies
that OR&R improved its response time for cases in the latter part of
our sample (i.e., cases opened and closed from July through October
2002, after OR&R had made significant progress in reducing the size of
its ruling request backlog), with an estimated 94 percent of these
cases completed within 90 days.
Regarding whether OR&R has eliminated timeliness as a problem, the
scope of our work and the possibility of OR&R changing its priorities
does not allow us to reach this conclusion. We identified, however,
that OR&R continuing to give priority to rulings should help
institutionalize and sustain the progress made in improving the
timeliness of headquarters prospective rulings. In addition, although
Customs said that the report did not recognize the elimination of the
February 2002 backlog of cases open 90 days or more, the report clearly
identified that OR&R reported it had eliminated the backlog, with a few
exceptions that were beyond Customs' control.
Customs also commented on recent steps OR&R has taken to improve LCIS
data reliability, as outlined in a July 8, 2003, memorandum from the
OR&R Assistant Commissioner to OR&R managers. The memorandum formally
establishes and communicates two corrective actions taken by OR&R to
address LCIS data errors that we identified in the report: verifying
the accuracy of LCIS data on a quarterly basis, and establishing a
uniform approach to coding ruling requests that result in
administrative closures or the issuance of information letters. The
memorandum also requires OR&R managers to verify the accuracy of LCIS
data for each case as it is closed and note their review on the Case
Assignment sheet, which is now to be retained in each case file. We
agree with Customs that this action sufficiently addresses a second
recommendation made in our draft report. Accordingly, we removed this
recommendation. In addition to implementing this recommendation,
Customs also concurred with our remaining recommendation to continue to
assess LCIS data reliability issues and is taking actions to address
it. We believe OR&R's recent actions demonstrate a willingness to
continue to assess and improve data reliability for LCIS.
We are sending copies of this report to the Commissioner of Customs and
interested congressional committees. We will also make copies available
to others upon request. In addition, the report will be available on
GAO's Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact Seto J. Bagdoyan, Assistant Director, at 202-512-8658, or me at
202-512-8777. Other staff are acknowledged in appendix III.
Cathleen A. Berrick,
Acting Director Homeland Security and Justice Issues:
Signed by Cathleen A. Berrick:
[End of section]
Appendix I: Scope and Methodology:
Our scope and methodology for responding to our three objectives,
presented earlier in the report, and carrying out related work is
described in the next sections.
Response Time for OR&R Headquarters Rulings:
To determine whether the Office of Regulations and Rulings (OR&R)
headquarters improved its response time for issuing prospective rulings
on the classification, valuation, and marking of imported goods since
our September 2000 report, we reviewed hard-copy files for a sample of
325 headquarters cases. OR&R had categorized these cases as prospective
rulings involving requests for the classification, valuation, and
marking of imported goods, and they were closed from February 1, 2002,
through October 31, 2002. We attempted to review a random sample of 344
case files, representing 387 cases categorized in OR&R's Legal Case
Inventory system (LCIS) database as prospective rulings, but OR&R staff
could not locate 19 of the files. We grouped the cases into three
categories: those cases that were assigned to OR&R attorneys for
processing before February 1, 2002; cases assigned from February 1,
2002, through June 30, 2002; and cases assigned from July 1, 2002,
through October 31, 2002; with all cases in each of the three
categories closed from February 1, 2002, through October 31, 2002. We
were primarily interested in whether or not the days in progress for
prospective rulings has decreased if they were assigned after February
1, 2002. Days in progress, as defined by OR&R, is measured as the
number of calendar days from the date a case was assigned to an OR&R
attorney for processing (date assigned) until the date that same case
was closed (date closed). We determined the days in progress with data
we collected from OR&R's hard-copy case files and recorded using an
electronic data collection instrument.
We obtained from OR&R a listing of cases categorized as prospective
rulings, which OR&R extracted from its LCIS database and put on an
electronic spreadsheet. We narrowed down this population so that it
consisted of only cases categorized as prospective rulings that were
closed from February 1, 2002, through October 31, 2002. These
prospective ruling cases involved the classification, valuation, and
marking of imported goods and were from OR&R's Textile Branch, General
Classification Branch, Value Branch, and Special Classification and
Marking Branch. We excluded other prospective ruling cases that the
Trade Act of 2002 did not require us to study. Our sampling units are
each individual prospective ruling request case. There were a total of
387 cases categorized in the LCIS database as prospective rulings
covering the classification, valuation, and marking of imported goods
that were from these four OR&R branches and were closed between
February 1, 2002, and October 31, 2002.
In conducting the file review, we used a random list of the 387 cases
to ensure a random sample regardless of whether or not we would be able
to review all of the cases, and we reviewed 325 of the 387 cases (as
noted earlier, we attempted to review a random sample of 344 of the 387
cases, but OR&R staff could not locate files for 19 cases). Table 4
provides details of the strata samples and population.
Table 4: File Review Strata for OR&R Headquarters Cases Categorized as
Prospective Rulings and Closed from February 1, 2002, through October
31, 2002:
Strata: 1; Time period: Cases assigned before February 1, 2002; Total
cases: 229; Cases randomly selected: 186; Cases reviewed: 175.
Strata: 2; Time period: Cases assigned between February 1, 2002, and
June 30, 2002; Total cases: 125; Cases randomly selected: 125; Cases
reviewed: 117.
Strata: 3; Time period: Cases assigned between July 1, 2002, and
October 31, 2002; Total cases: 33; Cases randomly selected: 33; Cases
reviewed: 33.
Strata: Total; Total cases: 387; Cases randomly
selected: 344; Cases reviewed: 325.
Source: GAO data.
[End of table]
Our probability samples allow us to make estimates to the populations
of total cases for each of the three time periods. Because we used
random sampling, the results obtained are subject to some uncertainty
or sampling error. The sampling error can be expressed in terms of
confidence levels and ranges. The confidence level indicates the degree
of confidence that can be placed in the estimates derived from the
samples. The range is a pair of values derived from the sample data, an
upper and lower limit, between which the actual population values might
be found. Our samples were designed so that the sampling error around
the estimates of percentages would not be greater than 5 percentage
points at the 95-percent confidence level. Thus, if all cases in our
populations had been examined, the chances are 95 out of 100 that the
results obtained would be included in the range formed by adding or
subtracting no more than 5 percentage points from the sample estimates.
Table 5 provides the 95-percent confidence intervals for each of the
estimates to the populations of total cases that we made in this
report.
Table 5: 95-Percent Confidence Intervals for Estimates to Populations
of Total Cases:
Estimate: 75%; Confidence interval: 66.9% - 82.7%; Report page number:
3.
Estimate: 64%; Confidence interval: 60.1% - 68.0%; Report page number:
3.
Estimate: 94%; Confidence interval: 79.8% - 99.3%; Report page number:
3.
Estimate: 75%; Confidence interval: 66.9% - 82.7%; Report page number:
8.
Estimate: 64%; Confidence interval: 60.1% - 68.0%; Report page number:
8.
Estimate: 64%; Confidence interval: 60.1% - 68.0%; Report page number:
9.
Estimate: 11%; Confidence interval: 6.4% - 18.3%; Report page number:
9.
Estimate: 25%; Confidence interval: 17.3% - 33.1%; Report page number:
9.
Estimate: 55%; Confidence interval: 49.7% - 60.0%; Report page number:
9.
Estimate: 94%; Confidence interval: 79.8% - 99.3%; Report page number:
9.
Estimate: 581 days average; Confidence interval: 553 - 609 days; Report
page number: 11.
Estimate: 501 days median; Confidence interval: 463 - 540 days; Report
page number: 11.
Source: GAO data.
[End of table]
OR&R Headquarters Actions on Rulings:
To determine what actions OR&R headquarters took to improve the
timeliness of its prospective rulings and eliminate its backlog of
ruling request cases, we interviewed OR&R management officials and
collected and reviewed pertinent documentation (e.g., OR&R reports to
the Commissioner regarding the status of efforts to implement
procedural changes to issue rulings within 90 days and eliminate the
backlog; the July 2002 draft Standard Operating Procedure intended to
provide a standardized approach for processing and issuing
rulings[Footnote 33]).
OR&R Data Reliability Challenges:
To determine whether OR&R resolved the data reliability challenges it
faced with LCIS, we interviewed OR&R management officials; reviewed
case file information for our sample of 325 OR&R headquarters cases
categorized in LCIS as prospective rulings; and collected and reviewed
other available information, such as the July 2002 Standard Operating
Procedure intended to ensure a consistent process for receiving,
acknowledging, assigning, recording, tracking, updating, signing, and
closing ruling cases in LCIS.
In reviewing OR&R's case files for our sample of cases and noting
discrepancies with LCIS data for "type of case code," "case category
code," "date assigned," and "date closed," we did not discuss each case
with OR&R officials to determine the reasons that case file data did
not match LCIS data or data were missing from case files. To do so
would have been a time-consuming and complex task, for us as well as
OR&R, with little likelihood of determining the reason for each
discrepancy. In carrying out the work for our September 2000 report on
OR&R headquarters rulings, we asked OR&R officials to explain the
reasons for discrepancies as part of our methodology. However, we
reported that we could not always identify the reasons why LCIS data
were inaccurate for the cases we reviewed.
Trade Community Perspective on OR&R Headquarters Rulings:
We also obtained the trade community's perspective on OR&R
headquarters' prospective rulings. We interviewed the chair of the
Subcommittee on OR&R of the Treasury Advisory Committee on Commercial
Operations of the U.S. Customs Service (COAC), representatives of
selected associations, and selected importer representatives. The trade
representatives we interviewed are not a representative, national
sample from which we can make estimates to the entire trade community.
We did not independently validate or verify the accuracy or reliability
of information they provided.
We conducted a telephone interview with the chair of COAC's
Subcommittee on OR&R. We also conducted telephone interviews with
representatives of the American Bar Association Customs Law
Committee[Footnote 34] and five trade associations suggested to us by
congressional staff and identified by the media and other sources as
being knowledgeable about OR&R headquarters' prospective rulings: the
American Association of Exporters & Importers; Business Alliance for
Customs Modernization; International Mass Retail Association; Joint
Industry Group Import Committee; and National Customs Brokers &
Forwarders Association of America.
We attempted to conduct structured telephone interviews with a
judgmental sample of 76 importer representatives who had requested
rulings from OR&R to obtain their views on how OR&R handled their
requests and to ask whether OR&R's response had adversely affected the
importers. We successfully interviewed 35 of these importer
representatives; the remaining 41 either did not return our messages,
did not answer our questions, or could not be contacted at the
telephone number we obtained from OR&R files. For the interviews, we
selected importer representatives who were involved with ruling request
cases in our sample that were either untimely, administratively closed,
or resulted in an information letter.
We conducted our work between October 2002 and June 2003 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Bureau of Customs and Border Protection:
U.S. CUSTOMS AND BORDER PROTECTION
Department of Homeland Security:
Memorandum:
July 21, 2003:
MEMORANDUM FOR CATHLEEN BERRICK:
U.S. GENERAL ACCOUNTING OFFICE:
FROM: Acting Director:
Office of Policy and Planning:
SUBJECT: GAO Draft Report Entitled "U.S. Customs Service: Prospective
Rulings More Timely, but Database Reliability Questions Remain":
Thank you for transmitting a draft copy of the General Accounting
Office (GAO) report entitled "U.S. Customs Service: Prospective Rulings
More Timely, but Database Reliability Questions Remain" and for
providing an opportunity to review and comment on the report.
While the report acknowledges Customs efforts with this program, we
believe that the report does not recognize the dramatic turnaround that
was accomplished by the Office of Regulations and Rulings (OR&R)
including:
1) the elimination of a backlog of 757 rulings requests identified in
February 2002, by September 30, 2002;
2) the issuance of nearly every prospective ruling request within 90
days since July 2002; and:
3) the issuance of nearly every prospective ruling request within 70
days since September 30, 2002.
The Bureau of Customs and Border Protection (CBP) has taken a number of
steps to address the issues of data reliability identified during your
review. On July 8, 2003, Assistant Commissioner Michael Schmitz issued
a policy that required that each OR&R manager verify the accuracy of
LCIS data for each case as it is closed - a requirement extends to all
cases that are in the LCIS system. Since this action addresses GAO's
second recommendation, we suggest that this recommendation be removed
from this report. Further details of the steps taken to address GAO's
findings and recommendations are outlined in the attached document.
We have determined that the information in the audit report does not
warrant protection under the Freedom of Information Act.
If you have any questions regarding these comments, please do not
hesitate to contact me at (202) 927-1507.
Brenda B. Smith:
Signed by Brenda B. Smith:
Attachment:
Bureau of Customs and Border Protection:
Comments on Report by the General Accounting Office on "U.S. Customs
Service: Prospective Rulings More Timely, But Database Reliability
Questions Remain":
Timeliness of Rulings:
GAO has acknowledged the improvement that the Office of Regulations and
Rulings (OR&R) has made in the timeliness of its rulings. In our view,
however, the GAO report fails to convey that OR&R has dramatically
improved the timeliness of its rulings and has eliminated timeliness as
a problem. This is particularly true in the executive summary found in
the Results in Brief section.
As was mentioned in the cover memo, this report does not recognize with
sufficient emphasis the dramatic turnaround that was accomplished by
OR&R in the year 2002. Specifically, the report does not highlight:
1) the elimination by September 30, 2002 of a backlog of 757 rulings
requests that existed as of February 1, 2002,
2) that commencing in July 2002 nearly every prospective ruling request
received was issued within 90 days and:
3) that since September 30. 2002, nearly every prospective ruling
request received was issued within 70 days.
In addition, the GAO report does not sufficiently emphasize that in the
months since the elimination of the backlog in September 30, 2002, OR&R
has maintained its outstanding record of issuing rulings well within
the ninety day time frame. As a result, while the reader is made aware
that some progress has been made on the timeliness of rulings, there is
nothing to convey that the problem has been overcome. Indeed the GAO
Report focuses more on the timeliness issue as reflected in the backlog
on February 1, 2002 rather than the elimination of that backlog and the
continued maintenance of a less than ninety day response time.
The continued maintenance of this high level of performance goes to the
essence of the question of the timeliness of the rulings issued. These
major accomplishments by OR&R address the heart of the problem that
gave rise to the Congressional mandate given to GAO in the Trade Act of
2002. These accomplishments also demonstrate how well OR&R responded to
Commissioner Bonner's leadership on this issue. The report should more
prominently reflect the success that the agency has demonstrated on
these issues. At the very least, the Results in Brief Section should
contain the following conclusions found in the body of the report on
pages 7 and 9:
Our work for this report demonstrated that OR&R headquarters completed
the majority of its prospective ruling request cases opened and closed
from February through October 2002 within the newly established goal of
90 days. Further, OR&R reported that, with a few exceptions beyond
Customs' control, it had eliminated its February 2002 backlog of
prospective ruling requests that were still open after 90 days or more.
(GAO report at page 7):
...for the four month period from July 2002 through October 2002 OR&R
completed an estimated 94 percent of prospective rulings within 90
days.
(GAO report at page 9):
LCIS Data Reliability:
With respect to the GAO Report's discussion of the data reliability
issues for LCIS, we wish to point out that in addition to the
corrective actions that are identified in the GAO Report, we have taken
other important corrective actions. These actions are embodied in the
memorandum of July 8, 2002, from OR&R Assistant Commissioner Michael T.
Schmitz, which institutes a number of measures that will improve the
reliability of LCIS data. The corrective actions include a requirement
that each OR&R manager verify the accuracy of LCIS data of each and
every case when the case is closed and note that conclusion on the case
assignment sheet. This is precisely what is recommended by the GAO
report. Moreover, we note that this requirement is not limited to LCIS
prospective rulings cases but extends to all cases that are in the LCIS
system.
In addition, OR&R has instituted a system of verification of LCIS data
on a quarterly basis in order to improve the reliability of data with
respect to cases already closed and prospectively to act as a second
verification of the LCIS data. Finally, we have formally communicated
the proper codes for cases which are administratively closed and for
information letters so that uniformity will be achieved.
These steps, taken together, should provide GAO with assurance that
LCIS reliability will be improved. Accordingly, we respectfully request
that the GAO Report be revised to take these corrective actions into
account.
Corrective Action for GAO's Recommendations:
GAO Recommendation: We recommend that the OR&R Assistant Commissioner
take steps to continue to assess LCIS data reliability to determine
whether recent improvements sufficiently correct past problems:
CBP Response: Concur:
CBP notes that it has issued a memorandum dated July 8, 2003, copy
attached, which takes the following actions:
* Requires the retention of the case assignment sheet.
This is directly responsive to the conclusion on page 19 of the GAO
Report that certain LCIS data elements either did not match or could
not be verified. While our view was that the data elements could be
verified without the case assignment sheet, we adopted the implicit
recommendation on this issue so that verification will be facilitated.
* Specified the proper codes for cases which are administratively closed
and for information letters and requires verification of these codes
when a case is closed.
This responds directly to the observation on page 21 of the GAO Report
on the coding of these types of cases. As a result of the July 8, 2003
memorandum, OR&R management has put into place a mechanism that assures
that these codes will be properly reflected.
* Institutes a system of verification of LCIS data on a quarterly basis
in order to improve the reliability of LCIS data both with respect to
cases already closed and for future cases.
This will add a second documented verification of LCIS data.
GAO Recommendation: We recommend that the OR&R Assistant Commissioner
take steps to require that OR&R managers verify the accuracy of LCIS
rulings data for individual cases as each case is closed by comparing
the LCIS data to the case files to ensure that the information matches.
CBP Response: Concur:
CBP notes that the Assistant Commissioner's memo of July 8, 2003,
requires precisely the action recommended by GAO: i.e., that each OR&R
manager verify the accuracy of LCIS data for each case as it is closed.
Moreover, we note that this requirement is not limited to LCIS
prospective rulings cases but extends to all cases that are in the LCIS
system. Accordingly, since this recommendation has already been complied
with, we suggest that this recommendation be removed from this report.
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Cathleen A. Berrick 202-512-8777 Seto J. Bagdoyan 202-512-8658:
Staff Acknowledgments:
In addition to those named above, Ronald G. Viereck, Brian J. Lipman,
Kristy N. Brown, Elizabeth Neidert, Michele C. Fejfar, Kriti Bhandari,
Nathan A. Morris, Elizabeth A. Laffoon, and Ann H. Finley made key
contributions to this report.
FOOTNOTES
[1] P.L. 107-210, sec. 335 (2002).
[2] The American Bar Association is not a trade association. However,
the association's Customs Law Committee is concerned with the full
range of laws and regulations administered by the Customs Service in
connection with the importation and exportation of merchandise. The
Committee provides information, educational programs and materials,
and a forum for reviewing, advising, commenting on, and participating
in the development of Customs laws, regulations, and practices.
[3] While our work was being conducted, the U.S. Customs Service was
transferred from the Department of the Treasury to the Department of
Homeland Security and is now known as the Bureau of Customs and Border
Protection. For this report, we refer to the agency as Customs.
[4] U.S. General Accounting Office, U.S. Customs Service: Office of
Regulations and Rulings Has Yet to Establish Performance Measures, GAO/
T-NSIAD-97-115 (Washington, D.C.: Mar. 11, 1997).
[5] U.S. General Accounting Office, U.S. Customs Service: OR&R Needs to
Resolve Timeliness and Data Problems Involving Headquarters Rulings,
GAO/GGD-00-181 (Washington, D.C.: Sept. 7, 2000).
[6] Classification rulings involve the classification of goods within
the U.S. Harmonized Tariff Schedule (which provides duty rates for
goods); valuation rulings involve the valuations of goods; and rulings
on marking are those concerning country-of-origin issues, such as the
clarity of the marking of goods so that buyers can determine where
products are made.
[7] We attempted to review a random sample of 344 OR&R case files,
representing 387 cases categorized as prospective rulings, but OR&R
staff could not locate 19 of the files.
[8] The American Bar Association Customs Law Committee is concerned
with the full range of laws and regulations administered by the Customs
Service in connection with the importation and exportation of
merchandise. The Committee provides information, educational programs
and materials, and a forum for reviewing, advising, commenting on, and
participating in the development of Customs laws, regulations, and
practices.
[9] We attempted to conduct structured telephone interviews with a
judgmental sample of 76 importer representatives. We successfully
interviewed 35 of these importer representatives; the remaining 41
either did not return our messages, did not answer our questions, or
could not be contacted at the telephone number we obtained from OR&R
files.
[10] Performance and Annual Report, Fiscal Year 2002, U.S. Customs
Service. This report contains Customs Fiscal Year 2002 Financial
Statements, unaudited, which includes total duties collected.
[11] OR&R processes other types of cases in addition to prospective
rulings, such as internal advice decisions, protest reviews, and ruling
revocation and modification decisions. OR&R uses LCIS to track all such
cases.
[12] OR&R headquarters improvement in its response time for issuing
prospective rulings (i.e., the improvement in the percentage of cases
that met OR&R's 120-day goal) cannot be quantified by comparing the
percentage for the OR&R headquarters cases included in this review to
the percentages for the cases included in our March 1997 testimony and
September 2000 report. The percentages are not directly comparable
because the samples and populations covered differ for each of the
three reviews we conducted. For example, our March 1997 testimony
discussed the percentage of classification cases (and not valuation or
marking cases) that met the 120-day goal, while our September 2000
report included drawbacks (not considered by OR&R to be prospective
cases) along with classification, valuation, and marking cases. While
we cannot directly compare percentages, we compared the conclusions
reached in our prior work, to arrive at our current conclusion that
OR&R improved the timeliness of its prospective rulings.
[13] A 1989 Customs directive, which applied solely to classification
rulings, stated that rulings that were referred to OR&R headquarters--
i.e., those deemed to be the most complex and sensitive--were to be
issued within 120 days of the date of receipt by Customs. According to
OR&R officials, ruling requests are typically assigned to attorneys
within a few days of receipt at headquarters, and the date of
assignment (referred to as the "date assigned" in LCIS) has been used
to start the 120-day clock for all types of rulings since about 1996.
[14] In our sample of 325 cases categorized by OR&R as prospective
rulings, 150 cases were opened and closed from February 1, 2002, though
October 31, 2002 (the remaining 175 cases were opened before February
1, 2002). We attempted to review all of the 150 cases. However, 26 of
these 150 cases did not meet our criteria (i.e., these cases were not
ruling requests but were miscoded in LCIS). The 124 ruling request
cases we reviewed allow us to make estimates to the entire population
of prospective ruling cases opened and closed from February 1, 2002,
though October 31, 2002. We determined the amount of time that OR&R
took to process each of the cases using data we collected from OR&R's
hard-copy case files.
[15] Some cases in our review resulted in an information letter while
other cases were closed administratively. An information letter may be
sent to an importer instead of a ruling letter if the importer's
request lacks needed information or is insufficiently detailed to
permit a ruling but OR&R can provide other helpful information.
According to federal regulation (19 C.F.R. Part 177.1(d)(2)), an
information letter is "a written statement issued by the Customs
Service that does no more than call attention to a well-established
interpretation or principle of Customs law, without applying it to a
specific set of facts." According to OR&R officials, an information
letter often takes less time to process than a ruling. OR&R may
administratively close a ruling request case for various reasons, such
as if needed information is missing that cannot be quickly obtained or
the ruling request involves a current transaction that is not
prospective in nature and a ruling would be inappropriate. OR&R sends a
letter notifying the importer of the administrative closure and the
reason the ruling request cannot be processed.
[16] Our analysis of prospective ruling request cases opened and closed
from July 1, 2002, through October 31, 2002, is limited because our
sample does not include cases closed after October 31, 2002. However,
OR&R data, which we did not independently verify, suggest that OR&R
continued to issue most of its rulings within 90 days after October 31,
2002, as shown in table 2.
[17] In our sample of 325 cases categorized by OR&R as prospective
rulings, 175 cases were opened before February 1, 2002, and closed from
February 1, 2002, though October 31, 2002 (the remaining 150 cases were
opened and closed from February 1, 2002, through October 31, 2002). We
attempted to review all of the 175 cases. However, 18 of these cases
did not meet our criteria (i.e., these cases were not ruling requests
but were miscoded in LCIS), and we reviewed 157 cases. We determined
the amount of time that OR&R took to process each of the cases using
data we collected from OR&R's hard-copy case files.
[18] This range of days is for only those cases for which we could
identify the days in progress and does not include cases that had
missing data.
[19] OR&R has a rotation policy in which, approximately every 18
months, attorneys are asked to specify whether they wish to rotate to a
new OR&R unit in order to learn and master the various substantive
legal areas within the office. Rotation also satisfies the diversity
criterion in the current OR&R Attorneys GS-14 Promotion Plan. OR&R
management noted that the policy of rotating attorneys is contingent on
OR&R's staffing needs and that it was decided not to rotate attorneys
while efforts were being taken to eliminate the ruling request backlog
in 2002. According to OR&R, with the successful elimination of the
ruling backlog, an attorney rotation took place in April 2003.
[20] According OR&R officials, the SOP was being used by OR&R but was
still in draft form as of June 2003. The OR&R officials noted that the
latest version of the draft SOP was dated June 2003, and the final
version was expected to be issued by August 2003.
[21] This regulation provides that: "A person submitting a request for
a ruling and desiring an opportunity to orally discuss the issue or
issues involved should indicate that desire in writing at the time the
ruling request is filed." 19 C.F.R. 177.4(a). "If a request for a
conference is granted, the person making the request will be notified
of the time and place of the conference." 19 C.F.R. 177.4(b).
[22] For the interviews, we selected importer representatives who were
involved with ruling request cases in our sample that were either
untimely, administratively closed, or resulted in an information
letter. The 35 representatives we interviewed were involved with 41
ruling requests that were in the sample of 325 cases we reviewed.
[23] For 8 of 31 prospective ruling request cases we reviewed that OR&R
had administratively closed, OR&R explained to the importers that the
importation transactions were current and not prospective and advised
them to seek internal advice. Similarly, for 3 of 13 prospective ruling
request cases we reviewed that resulted in an information letter, OR&R
advised the importers to seek internal advice. Internal advice is a
type of OR&R headquarters decision which has the same effect as a
ruling, but it is given for current transactions (i.e., goods are at a
Customs port or have already entered the country) when an importer
disputes a decision made at a port and asks OR&R headquarters for a
decision. OR&R's 90-day goal for issuing rulings does not apply to its
issuance of internal advice.
[24] Federal regulation defines a prospective transaction as "—one that
is contemplated or is currently being undertaken and has not resulted
in any arrival or the filing of any entry or other document, or in any
other act to bring the transaction, or any part of it, under the
jurisdiction of any Customs office." 19 C.F.R. 177.1(d)(3).
[25] Three of these 10 importer representatives also disagreed with
reasons given by OR&R to administratively close ruling request cases.
[26] We attempted to review a random sample of 344 OR&R headquarters
case files, representing 387 cases categorized as prospective rulings,
but OR&R staff could not locate 19 of the files. The 387 cases were
categorized in LCIS as prospective rulings involving the
classification, valuation, and marking of imported goods.
[27] Our case file review for our September 2000 report showed that
most of the cases had missing or incorrect data in LCIS.
[28] U.S. General Accounting Office, Standards for Internal Control in
the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov.
1999); Internal Control Management and Evaluation Tool, GAO-01-1008G
(Washington, D.C.: Aug. 2001).
[29] Our comparison of data from the case files with corresponding data
in LCIS focused on four pieces of information that are required data
elements in LCIS and that are key to tracking OR&R cases and
determining the number of days each case has been in progress: (1) type
of case code--a numeric code used to define each type of case received
and recorded in LCIS, such as a ruling case or an internal advice case;
(2) case category code--a numeric code used in LCIS to further define
the unique circumstances regarding an individual case, such as further
defining a ruling as a valuation case; (3) date assigned--the actual
date a case is assigned to an OR&R attorney, starting the clock used
for the 90-day turnaround benchmark; and (4) date closed--the actual
date a case is closed, which may involve actions such as issuing a
ruling, administratively closing a case, or issuing an information
letter.
[30] In our calculations of the amount of time that OR&R took to
process ruling request cases, we used data that we collected from
OR&R's hard-copy case files containing documents showing the dates
cases were assigned to attorneys and the dates cases were closed. We
did not use LCIS data for these calculations.
[31] Because our review focused on prospective rulings, the 44 OR&R
headquarters cases (of the 325 cases in our sample) that were not
ruling requests, but were incorrectly coded in LCIS as rulings, did not
meet our sample criteria. Therefore, we did not review the case files
of these 44 cases as thoroughly as the 281 prospective ruling request
cases, and we did not compare their case category codes, dates
assigned, and dates closed.
[32] Days in progress is the number of calendar days from the date a
case is assigned to an OR&R attorney for processing to the date the
case is closed. Days in progress is automatically determined by LCIS.
[33] U.S. Customs Service Office of Regulations and Rulings, Standard
Operating Procedure, Subject: Using the Legal Case Inventory System
(LCIS) to Control & Track Rulings, Date: July 10, 2002.
[34] According OR&R officials, the SOP was being used by OR&R but was
still in draft form as of June 2003. The OR&R officials noted that the
latest version of the draft SOP was dated June 2003, and the final
version was expected to be issued by August 2003.
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