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completion of the study. Preliminarily, however, the review has indicated that there is a wealth of useful information available in the various systems; that these systems each support the missions of the individual agencies and are not generally duplicative; and that law enforcement and intelligence agencies remain especially sensitive about information security.

Questions persist about the utility of, and the ability to develop, a comprehensive, "overlay" intelligence system in the near term. A more realistic approach may be to have representatives of each participating agency accessing their own systems, as necessary. The Department supports systems integration and recognizes it as a long term goal that will enhance information sharing and intelligence analyses aimed at major drug trafficking organizations.

The Department does not plan to ask FINCEN to co-locate with the NDIC. FINCEN already has established its operations at a site in Arlington, Virginia. It is possible that special drug money laundering projects could lead to some detailing of employees back and forth between NDIC and FINCEN.

Q: How does the National Drug Control Strategy address the problem of drug trafficking and abuse in rural areas? Specifically, how have the Justice Department's rural drug enforcement policy and resources changed under the 1990 and 1991 National Drug Control Strategies?

A: The Department of Justice views the National Drug Control Strategies to be sufficiently broad so as to allow a Federal investigative response irrespective of the nature of the geographic area. The assignment of agents are allocated to achieve the most effective results in immobilizing major traffickers and their organizations.

As you know, in general it is our view that law enforcement resource allocations are best made by well-informed executive branch managers rather than through specific legislative directions. The Justice Department will make every effort to make the best management judgments possible regarding resource allocations based upon all available data and within fiscal limits and Congressionally imposed constraints. The High Intensity Drug Trafficking legislation limits our discretion to a certain extent. The purpose of the high intensity drug trafficking area designations is to identify areas experiencing the most serious drug trafficking problems in the Nation in order to select those most appropriate for Federal intervention. While many cities in the United States are experiencing substantial drug problems, it is the drug trafficking activities of organizations headquartered in New York, Miami, Houston, Los Angeles, and operating through the Southwest border area which support much of those drug problems. Since immobilizing major

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traffickers and their organizations is most cost-beneficial to the nation as a whole, the High Intensity program-related agent allocations related resources have been targeted accordingly.

With regard to rural drug enforcement generally, DEA has a minimum presence of three special agents in every state and 57 state/local task forces operating throughout the country. DEA's 1991 budget request includes $8.8 million to fund nine additional state/local task forces. DEA will also increase support to state and local governments by $10 million to eradicate crops frequently grown in rural areas. In addition, the FBI currently has approximately 400 resident agencies located in small - to mid-sized towns and cities across the United States. Agents assigned to resident agencies were involved in 1,029 pending drug investigations as of April 1, 1990. This effort represents 41 percent of the pending FBI cases nationwide.

Through the Discretionary Grant Program, the Department's Bureau of Justice Assistance has and continues to provide technical assistance to many rural local jurisdictions based on their unique needs. BJA has also established a program, "Drug Impacted Small Jurisdictions," to demonstrate effectively drug control strategies which address drug trafficking problems in jurisdictions with populations of 50,000 or less. The enhancement and establishment of over 700 multi-jurisdictional task forces throughout the country, many of which provide drug enforcement resources to small rural areas is worth noting. Small states and localities participate heavily in the Regional Information Sharing System Program, receiving training, technical assistance, investigation resources, and information exchange capabilities. In addition, the Innovative Neighborhood Oriented Policing Program is designed to develop and demonstrate innovative community policing programs that target demand reduction at the neighborhood level in urban and rural areas. New Crime Victims programs will serve both urban and rural areas.

Q: How much of the discretionary portion of the Drug Control and System Improvement Grants will be transferred to or administered by federal agencies other than the Bureau of Justice Assistance? Please provide a complete list of the discretionary grants that will be transferred to or administered by other Justice Department agencies along with a specific explanation for why these grants are being awarded to federal agencies rather than state and local agencies?

A: The Bureau of Justice Assistance administers grant programs to support national drug control efforts and to improve State and local criminal justice systems, particularly law enforcement activities. The Office of Justice Programs (OJP) has developed a program plan for FY 1990 Drug Control and System Improvement Discretionary Grant funds which is designed to assist State and local units of government to implement appropriate elements of

the National Drug Control Strategy and the authorizing legislation.

The Bureau of Justice Assistance is one of five programs offices that exist within the Office of Justice Programs (OJP) organization and appropriation accounts. All of these offices share a common goal, which is to implement the National Drug Control Strategy and to support innovative programs and foster improvements in the Nation's criminal and juvenile justice systems. Therefore, in many instances, BJA programs, as well as those of the other OJP components, are implemented in concert with other OJP offices. Awards may be made to State, local, or public/private agencies.

There are instances where utilizing existing Federal expertise will more directly and cost-effectively serve the interests of states, and localities. For example, the Drug Use Forecasting Program and the monitoring of independent evaluations of BJA programs are funded by BJA and carried out by the National Institute of Justice. Another example would be the national training in asset forfeiture which has been provided by the FBI. Finally, collaborative agreements with other Federal agencies may be particularly appropriate in light of BJA's statutory mandate "to support national drug control policies”.

A analysis of 1989 drug discretionary obligations by type of recipient and fiscal year 1990 projected obligations based on the Program Plan is provided:

A list of the Discretionary Grants that will be transferred to, or administered by other Justice Department agencies is attached for your review.

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QUESTIONS FROM SENATOR METZENBAUM

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Q: The fiscal year 1990 appropriation for the Antitrust Division includes $20 million to be generated by a new filing fee for premerger filings required under Hart-Scott-Rodino. I understand that the division predicts a serious shortfall in revenues which may lead to the firing of recently hired attorneys because the level of merger activity has been much lower than anticipated when the appropriations bill was approved last fall. How large will the revenue shortfall be and what would be the impact on the Antitrust Division's staffing for this year?

A: Based on the collections to date, total filing fee revenues to the Division in 1990 are currently projected to be $14.5 million. This will result in a shortfall of $5.5 million below the $20 million originally projected to be received from filing fees. Recent changes in market structure, in particular the collapse of the "junk bond" market, have affected the number of filings being received.

When the Division received its annual appropriation last November, providing authority for a potential $5 million increase over base level funding, the Division initiated an ambitious recruitment program to provide 60 attorneys and related support staff to augment enforcement efforts in both criminal and merger investigations and litigation. The Division also participated in the Attorney General's Honor Program for hiring recent law school graduates and, under this effort, 31 new attorneys will arrive this fall.

As a result of the projected shortfall, the Division has now imposed a hiring freeze on all lateral (i.e., non-Honor Program) hiring. Among the group of 60 new employees who were to be hired based upon projected filing fee revenues, several had reported prior to the imposition of the hiring freeze. Those who had not received formal offers of employment prior to the freeze have had offers withheld pending clarification of the Division's funding posture. Immediately before announcement of the hiring freeze, Division officials had come close to completing the review of hundreds of attorney and support staff applications, conducted many interviews, and were prepared to make offers to a number of individuals. These offers have been indefinitely delayed due to the funding shortfall.

All 31 attorneys who have received employment commitments under the Honor Program normally would report in August or September after they take a bar exam. If necessary due to funding constraints, they will be requested to report at the beginning of FY 1991. To delay entry of these new, recentlygraduated attorneys will delay the work of the Division and possibly create personal financial hardship for them.

In the course of restructuring its spending to adjust to the projected deficit of $5.5 million, the Division does not expect to fire any recently-hired attorneys. However, without additional funding in 1990, it is possible that the Division may have to consider a furlough involving all employees for some period. The Division clearly cannot afford any staffing increase without additional funding. In addition, without additional funding, the Division will be unable to replace those employees who leave the Division during the balance of the year. At present, the Division anticipates 87 vacant positions at year's end. The ultimate result would be a reduction in the staff resources available to further the Division's mission.

Q: What has been the experience of the division this year now that one-third of its budget must come from filing fees?

A: In 1990, approximately 38 percent of the Antitrust Division's authorized resources are dependent on premerger filing fees. Such a heavy reliance on filing fees creates serious difficulties in planning for budget expenditures and requires very conservative staffing and spending despite the apparent increase in funding.

The number of premerger filings submitted for clearance in any one year appears to be unpredictable, as it rests on economic developments and trends, tax policy changes, and perceptions and plans of corporate decision-makers that are difficult to project with any accuracy. Until this year, filings had been steadily increasing, with a major surge in 1987 and a return to steady growth in 1988 and 1989. The drop in filings so far in 1990 was not foreseen, although several reasonable explanations have been offered in hindsight. It is very difficult to plan expenditures against fee income until more experience with merger trends is gained in the current market environment.

With 38 percent of the Division's budget resting on an unpredictable income source, the Division is placed in a very difficult position. It has been authorized to increase staffing based upon funding projections, but it must necessarily proceed conservatively, so that staffing levels are based on worst-case projections, rather than on full budget authority. Indeed, faced with a dramatic reduction of anticipated revenues, even a worstcase initial budget may be inadequate and require drastic

adjustment. If income from fee collections could be carried over from year to year, this will be helpful to the extent that carryover amounts are sufficient to fund the difference between best and worst case fee collection projections.

The Division has a recognized need for additional staffing but cannot hire to desired levels based on filing fee income without reasonable assurance of income levels. Initial hopes of even moderate additional staffing with which to expand and