Order Code RL34514
The Bureau of Alcohol, Tobacco, Firearms and
Explosives (ATF): Budget and Operations
May 30, 2008
William J. Krouse
Specialist in Domestic Security and Crime Policy
Domestic Social Policy Division

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The Bureau of Alcohol, Tobacco, Firearms and
Explosives (ATF): Budget and Operations
Summary
The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the lead
federal law enforcement agency charged with administering and enforcing federal
laws related to the manufacture, importation, and distribution of firearms and
explosives. Congress transferred ATF’s enforcement and regulatory functions for
firearms and explosives from the Department of the Treasury to the Department of
Justice as part of the Homeland Security Act (P.L. 107-296). ATF is also responsible
for investigating arson cases with a federal nexus, as well as criminal violations of
federal laws governing the manufacture, importation, and distribution of alcohol and
tobacco.
From FY1999 to FY2008, Congress increased ATF appropriations from $541.6
million to nearly $1.008 billion, an increase of 86%. The FY2008 funding includes
$984.1 million for salaries and expenses and $23.5 million for construction. For the
same 10 years, with some fluctuation, ATF staffing increased from 3,969 to 4,880
full-time equivalent (FTE) positions, a 23% increase. Despite increased funding, the
acting ATF Director, Michael Sullivan, recently testified before Congress that ATF
is currently operating under a $37 million shortfall, as funding for ATF salaries and
expenses was not increased for FY2008. Meanwhile, there is an additional $4
million in the House- and Senate-passed FY2008 emergency supplemental
appropriations for ATF operations in Iraq (H.R. 2642). The Senate-passed bill
includes an additional $15 million for “Project Gunrunner,” a Southwest border
initiative to suppress cross-border gun trafficking from the United States to Mexico.
For FY2009, the Administration has requested $1.028 billion and 4,942 FTE
positions for ATF salaries and expenses, or $44 million and 62 FTE positions more
than the amounts appropriated for FY2008 ($984 million). According to ATF, the
FY2009 request would be allocated among ATF budget decision units in the
following amounts: $740 million (72%) for firearms compliance and investigations,
$267.2 million (26%) for arson and explosives investigations, and $20.6 million (2%)
for alcohol and tobacco diversion.
On the Southwest border with Mexico, firearms violence has spiked sharply in
recent years as drug trafficking organizations have reportedly competed for control
of key smuggling corridors into the United States. In March 2008, President Felipe
Calderón called on the United States to increase its efforts to suppress gun trafficking
from the United States into Mexico. During FY2006 and FY2007, ATF dedicated
approximately 100 special agents and 25 industry operations investigators to disrupt
gun trafficking under Project Gunrunner. By the end of FY2008, ATF plans to have
148 special agents and 55 industry operations investigators deployed to the
Southwest border region; the FY2009 request includes an additional $948 thousand
and 6 FTE positions (12 permanent positions) for those purposes. The House Foreign
Affairs Committee has approved a bill (H.R. 6028) that would authorize $73.5
million to be appropriated over three years to increase ATF resources committed to
disrupting the flow of illegal guns into Mexico. Similar authorizations are included
in S. 2867, H.R. 5863, and H.R. 5869. This report will be updated as needed.

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Contents
ATF Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Funding and Staffing, FY1999-FY2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2008 Iraq Supplemental Appropriation . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FY2009 Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Firearms Budget Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Violent Crime and Gangs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Compliance Inspections of Licensed Gun Dealers . . . . . . . . . . . . . . . . 7
Project Gunrunner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Arson and Explosives Budget Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Alcohol and Tobacco Budget Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
List of Tables
Table 1. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)
Appropriations for Salaries and Expenses, FY1999-FY2008 . . . . . . . . . . . . 3

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The Bureau of Alcohol, Tobacco, Firearms
and Explosives (ATF):
Budget and Operations
This report provides an overview of the Bureau of Alcohol, Tobacco, Firearms
and Explosives (ATF) budget and operations, with a focus on the Administration’s
FY2009 budget request for ATF. It will be updated as needed to reflect
congressional action on the FY2009 Commerce, Justice, Science, and Related
Agencies Appropriations bill, the appropriations bill that includes the ATF account.
ATF Mission
Located in the Department of Justice (DOJ), the ATF is the lead federal law
enforcement agency charged with administering and enforcing federal laws related
to the manufacture, importation, and distribution of firearms and explosives. As part
of the Homeland Security Act, Congress transferred ATF’s enforcement and
regulatory functions for firearms and explosives to the DOJ from the Department of
the Treasury, adding “explosives” to ATF’s title.1 ATF is also responsible for
investigating arson cases with a federal nexus, as well as criminal violations of
federal laws governing the manufacture, importation, and distribution of alcohol and
tobacco. The regulatory aspects of those alcohol and tobacco laws are the domain
of the Tax and Trade Bureau (TTB), which was established at Treasury following
ATF’s transfer to DOJ.2
1 P.L. 107-296, 116 Stat. 2135.
2 ATF was originally established as a separate bureau in the Department of the Treasury
(DOT) in 1972 by Treasury Department Order No. 120-1. While ATF traces its origins back
to the first federal tax on distilled spirits in 1791, its firearm regulatory responsibilities can
largely be traced back to the 1934 National Firearms Act (NFA). As the NFA is essentially
a tax law, it was administered initially by the Department of the Treasury’s Bureau of
Internal Revenue (BIR) and its Miscellaneous Tax Unit. In 1942, the firearm enforcement
duties were transferred to BIR’s Alcohol Tax Unit (ATU). In 1952, the BIR was
reorganized and renamed the Internal Revenue Service (IRS) and the firearm and tobacco
programs were transferred to ATU, which was renamed, the Alcohol and Tobacco Tax
Division (ATTD). Following the Gun Control Act of 1968, the ATTD was given
responsibility for explosives as well, and was renamed the Alcohol, Tobacco and Firearms
Division (ATFD). See George Thomas Kurian, Editor in Chief, A Historical Guide to the
U.S. Government, Vicki Herrmann, “Alcohol, Tobacco and Firearms, Bureau of,” (New
York, 1998), pp. 39-41.

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CRS-2
As a law enforcement agency within the DOJ, ATF’s first priority is preventing
terrorist attacks within the United States.3 ATF is responsible for countering the
illegal use and trafficking of firearms and explosives, and the criminal diversion of
alcohol and tobacco products as an illegal source of funding for terrorist activities.
In criminal investigations, ATF agents have reportedly uncovered foreign terrorists
and their supporters bootlegging cigarettes as part of larger terrorist-financing
operations in the United States.4 With those responsibilities, ATF special agents are
partners on DOJ’s Joint Terrorism Task Forces.5
As shown below, however, the lion’s share of ATF’s resources are allocated to
its firearms compliance and investigations program. While the ATF periodically
checks the records of federally licensed gun dealers, the major focus of the firearms
program is the reduction of firearms-related violence.
Funding and Staffing, FY1999-FY2008
From FY1999 to FY2008, Congress increased ATF appropriations from $541.6
million to nearly $1.008 billion, an increase of 86%. The FY2008 funding includes
$984.1 million for salaries and expenses and $23.5 million for construction.
Congress appropriated the latter amount for the construction of an ATF National
Center for Explosives Training and Research. As Table 1 shows, for the same 10
years, with some fluctuation, ATF staffing increased from 3,969 to 4,880 FTE
positions, a 23% increase.6 Of the $984.1 million appropriated for FY2008 for
salaries and expenses, DOJ budget documents indicate that the Administration plans
to allocate the following amounts to ATF’s three budget decision units:
! $708.6 million (72%) towards firearms compliance and
investigations,
! $255.9 million (26%) towards arson and explosives investigations,
and
! $19.7 million (2%) towards alcohol and tobacco diversion efforts.7
3 U.S. Department of Justice, Office of the Attorney General, Stewards of the American
Dream: FY 2007 — FY 2012 Strategic Plan, available at [http://www.usdoj.gov/jmd/mps/
strategic2007-2012/index.html], last accessed on May 13, 2008.
4 Sari Horwitz, “Cigarette Smuggling Linked to Terrorism,” Washington Post, June 8, 2004,
p. A1.
5 U.S. Department of Justice, Office of the Inspector General, The Department of Justice’s
Terrorism Task Forces, I-2005-007, June 2005.
6 These staffing amounts do not reflect FTE positions provided for law enforcement
availability pay (LEAP), overtime pay, or FTE positions funded with reimbursable
resources.
7 Due to rounding, these amounts do not total precisely to $984.1 million. U.S. Department
of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives, Congressional Budget
Submission, Fiscal Year 2009, (February 2008), Exhibit B — Summary of Requirements.

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CRS-3
The acting ATF Director, Michael Sullivan, recently testified before Congress
that the ATF is currently operating under a $37 million shortfall for FY2008, as
funding for salaries and expenses was not increased for this fiscal year when
compared to FY2007.8
Table 1. Bureau of Alcohol, Tobacco, Firearms and Explosives
(ATF) Appropriations for Salaries and Expenses,
FY1999-FY2008
Salaries and Expenses
Fiscal
Appropriation
Full-Time Equivalent
Year
(in $000)
(FTE) Positionsa
Permanent Positions
1999
$541,574
3,969 N/A
2000
$565,959
4,221 4,492
2001
$771,143
4,643 5,049
2002
$823,316
5,029 5,143
2003
$826,801
5,111 5,231
2004
$827,289
4,735b
4,862b
2005
$878,465
4,885 5,073
2006
$911,817
5,040 5,128
2007
$984,097
5,053 5,128
2008
$984,097
4,880c
4,956c
Source: CRS presentation of ATF funding and staffing data presented in Department of Justice budget
submissions to Congress for FY2003-FY2009.
a. A full-time equivalent (FTE) position represents the amount of funding necessary to provide for
a single position for an entire year. Not all positions (new, temporary, and part-time) are fully
funded for the entire year. New positions, for example, are often partially funded, as such
positions are filled incrementally and at some point during the fiscal year. Hence, they do not
require full funding for the first year.
b. The decrease of 376 FTE positions and 369 permanent positions for FY2004, as compared with
FY2003, reflects the funding that remained at the Department of the Treasury for the regulatory
components of ATF, which were designated the Trade and Tax Bureau, when the ATF
enforcement components were transferred to the Department of Justice as the Bureau of
Alcohol, Tobacco, Firearms and Explosives, pursuant to the Homeland Security Act (P.L. 107-
296).
c. The decrease of 173 FTE positions and 172 permanent positions for FY2008, as compared with
FY2007, reflects adjustments to base and other technical adjustments to the ATF budget that
were made to eliminate “hollow” or “unfunded” positions.
8 Congressional Quarterly, Transcript of the “House Appropriations Subcommittee on
Commerce, Justice, Science, and Related Agencies Holds Hearing on the Fiscal 2009
Budget for the Bureau of Alcohol, Tobacco and Firearms,” April 9, 2008.

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CRS-4
Since its transfer to the DOJ in FY2003, ATF has also reported permanent
positions, in addition to FTE positions. The FY2008 appropriation provides for
4,956 permanent positions, including 2,428 special agents, 773 industry operations
investigators (formerly inspectors) and investigative research specialists, and 1,755
“other” positions.9
FY2008 Iraq Supplemental Appropriation
There is reportedly $4 million for ATF in the House- and Senate-passed FY2008
emergency supplemental appropriations for operations in Iraq (H.R. 2642).10
According to DOJ, ATF is establishing an attache office in the U.S. Embassy in
Baghdad.11 This office is charged with a threefold mission to
! create an Iraq Weapons Investigation Cell to investigate and account
for U.S. government-issued munitions;
! establish an ATF Combined Explosives Cell, which will seek to
identify the source countries for explosives recovered in Iraq; and

! engage in targeted investigations of cigarette theft and other diverted
contraband throughout the country.12
Since December 2003, ATF has also been providing post-blast explosives
investigative training to Iraqi police forces.13
The Senate-passed bill also includes an additional $15 million for “Project
Gunrunner,” an initiative to suppress cross-border gun trafficking from the United
States to Mexico, which is described in greater detail below.
FY2009 Request
For FY2009, the Administration has requested $1.028 billion and 4,942 FTE
positions for ATF, or $44 million and 62 FTE positions more than the amounts
appropriated for FY2008 ($984 million).14 Of the difference, $42.8 million and 56
9 Ibid., Exhibit I — Detail of Permanent Positions by Category.
10 For further information, see CRS Report RL34451, Second FY2008 Supplemental
Appropriations for Military Operations, International Affairs, and Other Purposes, by
Stephen Daggett et al.
11 U.S. Department of Justice, “Fact Sheet: Department of Justice Efforts in Iraq,” February
13, 2008.
12 Ibid.
13 Ibid.
14 U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives,
Congressional Budget Submission, Fiscal Year 2009, (February 2008), Exhibit B —
Summary of Requirements.

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CRS-5
FTE positions are base adjustments.15 For Southwest border enforcement, the
FY2009 request includes a budget enhancement of $948 thousand and 6 FTE
positions (12 permanent positions). According to ATF, the FY2009 request would
be allocated among ATF budget decision units in the following amounts:
! $740 million (72%) for firearms compliance and investigations,
! $267.2 million (26%) for arson and explosives investigations, and
! $20.6 million (2%) for alcohol and tobacco diversion.16
The FY2009 budget request would provide funding for 4,978 permanent positions,
including 2,428 special agents, 785 industry operations investigator and investigative
research specialists, and 1,765 other positions.17
The Administration budget request includes increases for specific purposes by
decision unit. The Southwest border enforcement increase mentioned above is the
only requested ATF budget enhancement for FY2009. Although Congress does not
appropriate monies for the ATF (or any other DOJ agency) by decision unit, the
appropriators often address whether such increases are to be provided in report
language and more rarely in the bill language for the salaries and expenses account
itself. As a consequence, the requested amounts for decision units are binding in the
sense that the appropriators are aware of the increases that were provided for and how
they would affect the decision unit totals. In addition, if funding is shifted from one
decision unit to another, statutory budget reprogramming requirements are usually
triggered, under which the DOJ and its agencies are required to notify and seek the
approval of the Appropriations Committees. ATF budget decision units, or budget
programs, are described in greater detail below.
Firearms Budget Program
ATF’s firearms budget program funds activities related to administering and
enforcing federal laws related to the manufacture, importation, and distribution of
15 For most DOJ agencies, the current Administration has often made “base adjustments”
to the number of FTE and permanent positions that were considered “authorized” (funded
or appropriated for) as part of estimating an agency’s base budget. The base budget
essentially represents an estimated level of resources that an agency would need to provide
the anticipated level of services for the current fiscal year in the next fiscal year. In the past,
base budgets did not include adjustments to the number of permanent positions, and the
number of “authorized” permanent positions was generally static, unless changed by
Congress by increasing or decreasing funding associated with those positions. As happened
in the FY2008 budget cycle, the Administration has periodically (about every 10 years)
proposed eliminating “hollow” positions, for which the modular costs and underlying
assumptions are no longer sufficient to fund those positions. Authorized or funded positions
are generally displayed by job series in a “Table of Organization” in the agency’s budget
submissions to Congress.
16 U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives,
Congressional Budget Submission, Fiscal Year 2009, (February 2008), Exhibit B —
Summary of Requirements.
17 Ibid., Exhibit I — Detail of Permanent Positions by Category.

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CRS-6
firearms. The principal focus of ATF’s firearms-related activities, however, is the
reduction of firearms-related violence. As part of this focus, the ATF has dedicated
increased resources in recent years toward investigating the criminal activities of
violent street gangs, ensuring that federally licensed gun dealers comply with the law,
and suppressing gun trafficking.
Violent Crime and Gangs. As a full partner in the President’s Project Safe
Neighborhoods (PSN), which was initiated in FY2001, ATF has joined with DOJ
attorneys and other federal law enforcement agencies, along with state, local, and
tribal authorities, to investigate and prosecute offenders, with a particular focus on
armed violent and career criminals. ATF also leads the Attorney General’s Violent
Crime Impact Teams (VCITs) in 29 cities18 in an effort to reduce the number of
homicides and other violent crimes committed with firearms.19 According to ATF,
the VCITs assist state and local authorities by
! systematically investigating all firearms-related leads;
! responding to all street recoveries of firearms and interviewing those
involved to determine the source of the firearms;
! targeting and investigating violent and career criminals, and
removing them from the streets;
! infiltrating criminal groups through undercover operations and
confidential informants;
! tracing all recovered guns used in crime to determine their origin;
! imaging and storing all ballistic evidence in the National Integrated
Ballistic Information Network (NIBIN); and
! inspecting and, when appropriate, investigating corrupt federal
firearms licensees.20
18 Those cities are Albuquerque, NM; Atlanta, GA; Baltimore, MD; Baton Rouge, LA;
Birmingham, AL; Camden, NJ; Columbus, OH; Fresno, CA; Greensboro, NC; Hartford, CT;
Houston and Laredo, TX; Las Vegas, NV; Los Angeles, CA; Mesa, AZ; Miami, FL;
Milwaukee, WI; Minneapolis, MN; New Orleans, LA; Orlando, FL; Philadelphia and
Pittsburgh, PA; Richmond, VA; San Bernadino, CA; San Juan, PR; Tampa, FL; Tucson, AZ;
Tulsa, OK; and Washington, D.C.
19 U.S. Department of Justice, Bureau of Alcohol, Tobacco, and Firearms, “ATF Fact Sheet:
ATF-Led Violent Crime Impact Teams Initiative,” May 2007.
20 U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives,
Congressional Budget Submission, Fiscal Year 2007 (February 2006), p. 47.

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CRS-7
Under the VCIT initiative, defendants referred by ATF for prosecution in gang-
related investigations have increased from 403 in FY2000 to 4,381 in FY2007, nearly
a tenfold increase.21
Compliance Inspections of Licensed Gun Dealers. ATF inspects
federal firearms licensees (FFLs) to monitor their compliance with the Gun Control
Act (GCA)22 and to prevent the diversion of firearms from legal to illegal channels
of commerce. In the past, despite its crime-fighting mission, ATF’s business
relationships with the firearms industry and larger gun-owning community have been
a perennial source of tension, which from time to time has been the subject of
congressional oversight.23 Nevertheless, under current law, ATF Special Agents and
Industry Operations Inspectors are authorized to inspect or examine the inventory and
records of an FFL without search warrants under three scenarios:24
! in the course of a reasonable inquiry during the course of a criminal
investigation of a person or persons other than the FFL;
! to ensure compliance with the record keeping requirements of the
GCA — not more than once during any 12-month period, or at any
time with respect to records relating to a firearm involved in a
criminal investigation that is traced to the licensee; or
! when such an inspection or examination is required for determining
the disposition of one or more firearms in the course of a criminal
investigation.
In July 2004, the DOJ Office of Inspector General (OIG) reported on ATF
inspections of FFLs. Among other things, the OIG reported that ATF inspected the
operations of 4.5% of the 104,000 FFLs in FY2002.25 According to ATF, 10,106
21 U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives,
Congressional Budget Submission, Fiscal Year 2009 (February 2008), p. 22.
22 18 U.S.C. Chapter 44, §921 et seq.
23 For example, in the 109th Congress, the House Judiciary Crime subcommittee held two
oversight hearings examining ATF firearms enforcement operations at gun shows in
Richmond, Virginia, in 2005. ATF agents reportedly provided state and local law
enforcement officers with confidential information from background check forms (ATF
Form 4473s), so that those officers could perform residency checks on persons who had
otherwise legally purchased firearms at those gun shows. Questions were also raised as to
whether ATF agents had profiled gun purchasers at those gun shows on the basis of race,
ethnicity, and gender. See U.S. Congress, House of Representatives, Committee on the
Judiciary, Subcommittee on Crime, Terrorism, and Homeland Security, Oversight Hearing
on the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE) Parts I & II: Gun
Show Enforcement, February 15 and 28, 2006. Also see Department of Justice, Office of
the Inspector General, The Bureau of Alcohol, Tobacco, Firearms and Explosives’
Investigative Operations at Gun Shows, I-2007-007, June 2007.
24 18 U.S.C. § 923(g)(1)(B).
25 U.S. Department of Justice, Office of the Inspector General, Inspections of Firearms
(continued...)

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CRS-8
firearms compliance inspections were conducted in FY2007, covering about 9.3%
of the nearly 109,000 FFLs in that fiscal year.26
Project Gunrunner. On the Southwest border with Mexico, firearms
violence has reportedly spiked sharply in recent years as drug trafficking
organizations (DTOs) have competed for control of key smuggling corridors into the
United States.27 Beginning in December 2006, Mexican President Felipe Calderón
responded by deploying elements of the Mexican Army and federal police to trouble
spots around Mexico, including on the northern frontier.28 The DTO’s, however, are
reportedly buying semiautomatic versions of AK-47 and AR-15-style assault rifles,
other military style firearms, and .50 caliber sniper rifles in the United States.29 With
those rifles and other small arms, the DTOs are reportedly achieving parity in terms
of firepower in shootouts with the Mexican Army and law enforcement.30 In March
2008, President Calderón called upon the United States to increase its efforts to
suppress the flow of U.S. firearms into Mexico.31
ATF reports that there are 6,647 FFLs in the United States operating in the
Southwest border region of Texas, New Mexico, Arizona, and California.32
Moreover, DTOs are increasingly sending surrogates (straw purchasers) across the
border to buy 10 to 20 military-style firearms at a time from FFLs.33 The firearms are
reportedly routinely smuggled into Mexico in smaller shipments of four or five
firearms as part of a process known as the “ant run.”34
During FY2006 and FY2007, ATF dedicated approximately 100 special agents
and 25 industry operations investigators to a Southwest border initiative known as
“Project Gunrunner” to disrupt the illegal flow of guns from the United States to
25 (...continued)
Dealers by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Report Number I-
2004-005, (July 2004), p. xi.
26 U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives,
Congressional Budget Submission, Fiscal Year 2008, (February 2007), p. 29.
27 Anna Gilmour, “Gulf War — Pressure Mounts on Mexico’s Gulf Cartel,” Jane’s
Intelligence Review, December 3, 2007.
28 Ibid.
29 Sara Miller Llana, “US Guns Arm Mexico’s Drug Wars,” Christian Science Monitor, July
19, 2007, p. 1.
30 Oscar Becera, “Firing Line — Tracking Mexico’s Illegal Weapons,” Jane’s Intelligence
Review, April 28, 2008.
31 Ibid.
32 ATF briefing provided to CRS on May 5, 2008.
33 Straw purchases occur when guns are purchased from licensed gun dealers by eligible
persons and then knowingly transferred to prohibited persons. Straw purchases are illegal
under U.S. law (18 U.S.C. § 924(a)(1)(A)).
34 Oscar Becera, “Firing Line — Tracking Mexico’s Illegal Weapons,” Jane’s Intelligence
Review, April 28, 2008.

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CRS-9
Mexico. In FY2007, ATF agents investigated 187 firearms trafficking cases and
recommended 465 defendants for prosecution.35 By the end of FY2008, ATF plans
to have 148 special agents and 55 industry operations investigators deployed to the
Southwest border to bolster that initiative at a conservatively estimated cost of $32.2
million.36 In addition, the ATF FY2009 budget request includes $948 thousand to
fund 12 industry operations investigator positions to bolster efforts already underway
as part of Project Gunrunner.37 This is the only program increase/budget
enhancement in the ATF FY2009 budget request.
ATF also maintains a foreign attache in Mexico City to administer an Electronic
Trace Submission System (ETSS), also known as the eTrace program, for Mexican
law enforcement authorities. From FY2005 through FY2007, ATF traced just over
11,700 firearms recovered by Mexican authorities, and approximately 90% of those
firearms were traced back to the United States.38 In January 2008, ATF announced
that e-Trace technology would be deployed to an additional nine U.S. consulates in
Mexico (Mérida, Juarez, Monterrey, Nogales, Hermosillo, Guadalajara, Tijuana,
Matamoros, and Nueva Laredo).39 The number of traces performed by ATF for
Mexican authorities this fiscal year, FY2008, has increased markedly. For example,
from March 10 to April 9, 2008, ATF has traced nearly 2,000 firearms recovered by
Mexican authorities, as compared with the 11,700 firearms traced over a three-year
period, FY2005-FY2007.40 Successful firearm traces are instrumental in developing
investigative leads in homicide and gun trafficking cases. According to ATF, some
of those cases uncover corrupt FFLs who are involved in larger criminal conspiracies
to smuggle firearms into Mexico.41
On May 14, 2008, the House Committee on Foreign Affairs ordered reported
the Mérida Initiative to Combat Illicit Narcotics and Reduce Organized Crime
Authorization Act of 2008 (H.R. 6028). This bill would authorize to be appropriated
over three years, for FY2008 through FY2010, a total of $73.5 million to increase the
number of ATF positions dedicated to Project Gunrunner ($45 million) and assign
ATF agents to Mexico ($28.5 million). Similar authorizations are included in the
35 Statement of William Hoover, Assistant Director for Field Operations, Bureau of Alcohol,
Tobacco, Firearms and Explosives, before the Subcommittee on the Western Hemisphere,
Committee on Foreign Affairs, House of Representatives, concerning “U.S. Obligations
under the Mérida Initiative,” February 7, 2008.
36 CRS conversations with Bureau of Alcohol, Tobacco, Firearms and Explosives, Office
of Legislative Affairs, May 14, 2008.
37 U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives,
Congressional Budget Submission, Fiscal Year 2009 (February 2008), Exhibit C — Program
Increases/Offsets by Decision Unit.
38 ATF briefing provided to CRS on May 5, 2008.
39 Bureau of Alcohol, Tobacco, Firearms and Explosives, Office of Public Affairs, “ATF
Expands Efforts to Combat Illegal Flow of Firearms to Mexico,” January 16, 2008.
40 ATF briefing provided to CRS on May 5, 2008.
41 Ibid.

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CRS-10
Southwest Border Violence Reduction Act of 2008 (S. 2867, H.R. 5863, and H.R.
5869).
Arson and Explosives Budget Program
ATF’s arson and explosives budget program covers activities related to
administering and enforcing federal laws governing the manufacture, importation,
and distribution of explosives, as well as investigating arson cases with a federal
nexus. Among law enforcement agencies, the ATF is recognized for its investigative
expertise in responding to both arson and explosive incidents. The Attorney General
(AG), for example, made the ATF responsible for maintaining a consolidated
database of all arson and explosive incidents that occur in the United States.
Reportedly, as part of the department’s law enforcement information-sharing
program, this and other databases are to be linked and made Web-accessible, and first
responders anywhere in the United States are to have access to critical information
about arson and explosive cases nationwide.42
Congress made ATF responsible for more closely regulating the explosives
industry in the United States under the Safe Explosives Act.43 The Act made ATF
responsible for fully investigating all explosive thefts and losses, as well as providing
background checks for licensees and permittees to prevent prohibited persons from
acquiring explosives. This Act also requires ATF to inspect explosive licensees and
permittees every three years to ensure that all explosive materials are properly stored
and accounted for. ATF reports that there are about 12,000 licensees and permittees
nationwide, so that to comply with the Act, about 4,000 inspections would need to
be conducted by ATF annually.44 According to ATF, 3,291 explosives compliance
inspections were conducted in FY2007, or about 28% of licensees/permittees.45 The
FY2009 budget request includes no new resources for this program, as compared
with FY2008.
In March 2005, the DOJ OIG reported that ATF could improve its
implementation of the Safe Explosives Act. The OIG also found “critical
deficiencies” in the background check and clearance process designed to prevent
prohibited persons from gaining access to explosives.46
42 The Federal Bureau of Investigation reportedly continues to maintain its own bomb data
center despite the AG’s memorandum. See Jerry Markon, “FBI, ATF Battle for Control of
Cases: Cooperation Lags Despite Merger,” Washington Post, May 10, 2008, p. A1.
43 P.L. 107-296, 116 Stat. 2280.
44 U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives,
Congressional Budget Submission, Fiscal Year 2007 (February 2006), p. 53.
45 U.S. Department of Justice, Bureau of Alcohol, Tobacco, Firearms and Explosives,
Congressional Budget Submission, Fiscal Year 2009 (February 2008), p. 48.
46 U.S. Department of Justice, Office of the Inspector General, Review of the Bureau of
Alcohol, Tobacco, Firearms and Explosives’ Implementation of the Safe Explosives Act,
Report Number I-2005-005, (March 2005), p. 37.

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CRS-11
Alcohol and Tobacco Budget Program
The ATF alcohol and tobacco budget program covers expenses related to agency
efforts to counter a rising trend in the illegal diversion of tobacco products, as well
as the illegal movement of distilled alcohol products. According to the General
Accounting Office (now the Government Accountability Office), the illegal diversion
and smuggling of cigarettes in the United States results in an unknown but significant
loss in tax revenues.47 In addition, ATF criminal intelligence indicates that cigarette
bootlegging is a lucrative criminal venture that terrorist groups have used and would
possibly use in the future to finance their activities.48 The FY2009 budget request
includes no new resources for this program, as compared with FY2008
47 U.S. General Accounting Office, Cigarette Smuggling: Federal Law Enforcement Efforts
and Seizures Increasing, GAO-04-641 (May 2004), p. 7.
48 Ibid., p. 7.

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