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 
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. 

Findings of Three GAO Reviews of the Timeliness of Prospective Ruling Request Cases 

Percent of cases completed 

within 120-day goal

0

25

50

75

100

47

33

75

64

aOR&R headquarters classification cases closed in 1996.

bOR&R headquarters classification, valuation, marking, and drawback cases opened and closed 

between January 1, 1997 and October 26, 1999.

c

OR&R headquarters classification, valuation, and marking cases opened and closed from 

February 1, 2002 through October 31, 2002.

Source: GAO reviews of OR&R headquarters data.

120 days 90 days

GAO

report,

2000b

GAO

report,

2003c

GAO

testimony,

1997a

0

25

50

75

100

0

25

50

75

100

Percent of cases completed 

within 120-day goal

Percent of cases completed within prior

120-day goal and current 90-day goal

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. 

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. 

Highlights of GAO-03-828, a report to 

congressional requesters 

August 2003

U.S. CUSTOMS SERVICE 

Prospective Rulings More Timely, but 

Database Reliability Questions Remain 
Page i GAO-03-828 U.S. Customs Service 

Letter 1

Results in Brief 3

Background 5

OR&R Headquarters Improved Response Time for Issuing 

Prospective Rulings 7

Actions Taken by OR&R Headquarters to Improve the Timeliness 

of Rulings and Eliminate the Backlog 13

OR&R Has Taken Actions to Improve LCIS Data Reliability, but 

Challenges Remain 18

Conclusions 23

Recommendation for Executive Action 23

Agency Comments and Our Evaluation 24

Appendix I Scope and Methodology 26 

Response Time for OR&R Headquarters Rulings 26

OR&R Headquarters Actions on Rulings 28

OR&R Data Reliability Challenges 28

Trade Community Perspective on OR&R Headquarters Rulings 29

Appendix II Comments from the Bureau of Customs and Border 

Protection 31 

Appendix III GAO Contacts and Staff Acknowledgments 36 

GAO Contacts 36

Staff Acknowledgments 36

Tables 

Table 1: Timeliness of Prospective Ruling Request Cases Opened 

and Closed from February 1, 2002, through October 31, 

2002 9

Table 2: OR&R Headquarters Ruling Request Backlog, February 1, 

2002, through April 30, 2003 11

Table 3: Comparison of LCIS and Case File Data for 281 

Prospective Ruling Request Cases Closed from February 1, 

2002, through October 31, 2002 20

Contents 
Page ii GAO-03-828 U.S. Customs Service 

Table 4: File Review Strata for OR&R Headquarters Cases 

Categorized as Prospective Rulings and Closed from 

February 1, 2002, through October 31, 2002 27

Table 5: 95-Percent Confidence Intervals for Estimates to 

Populations of Total Cases 28

Figure 

Figure 1: Findings of Three GAO Reviews of the Timeliness of 

Prospective Ruling Request Cases 10

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 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
Page 1 GAO-03-828 U.S. Customs Service 

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 2002,1

 we are providing you with a report 

on the U.S. Customs Service’s2

 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.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 

 1

P.L. 107-210, sec. 335 (2002). 

2

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. 

3

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). 

United States General Accounting Office 

Washington, DC 20548 
Page 2 GAO-03-828 U.S. Customs Service 

prospective rulings in a timely manner.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.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 

 4

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). 

5

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. 
Page 3 GAO-03-828 U.S. Customs Service 

imported goods.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 Committee7

 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.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. 

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 

 6

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. 

7

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. 

8

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. 

Results in Brief 
Page 4 GAO-03-828 U.S. Customs Service 

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. 
Page 5 GAO-03-828 U.S. Customs Service 

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. 

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 

Background 
Page 6 GAO-03-828 U.S. Customs Service 

how to request a ruling from OR&R. Customs reported collecting about 

$19.8 billion in duties in fiscal year 2002.9

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. 

 9

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. 
Page 7 GAO-03-828 U.S. Customs Service 

OR&R uses its automated database, LCIS, to internally track cases, 

including rulings, pending before OR&R.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. 

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.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. 

 10OR&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. 

11OR&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. 

OR&R Headquarters 

Improved Response 

Time for Issuing 

Prospective Rulings 
Page 8 GAO-03-828 U.S. Customs Service 

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.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, 2002.13 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 

 12A 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. 

13In 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. 
Page 9 GAO-03-828 U.S. Customs Service 

in information letters sent to the requesters and other cases were 

administratively closed.14

Table 1: Timeliness of Prospective Ruling Request Cases Opened and Closed from 

February 1, 2002, through October 31, 2002 

Number of days taken to complete casesa

Action taken 90 days or less 

91–120 

days

121 days or 

more

Ruling issued 58 13 28

Information letter sent 5 0 1

Administratively closed 17 1 1

Total 80 (64%) 14 (11%) 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. 

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 

 14Some 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. 
Page 10 GAO-03-828 U.S. Customs Service 

during the 4-month period from July through October 2002, within 

90 days.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 

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 

 15Our 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. 

Percent of cases completed 

within 120-day goal

0

25

50

75

100

47

33

75

64

aOR&R headquarters classification cases closed in 1996.

bOR&R headquarters classification, valuation, marking, and drawback cases opened and closed 

between January 1, 1997 and October 26, 1999.

c

OR&R headquarters classification, valuation, and marking cases opened and closed from 

February 1, 2002 through October 31, 2002.

Source: GAO reviews of OR&R headquarters data.

120 days 90 days

GAO

report,

2000b

GAO

report,

2003c

GAO

testimony,

1997a

0

25

50

75

100

0

25

50

75

100

Percent of cases completed 

within 120-day goal

Percent of cases completed within prior

120-day goal and current 90-day goal
Page 11 GAO-03-828 U.S. Customs Service 

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 

Number of ruling requests 

open 90 days or more 

Number of ruling requests 

open less than 90 days

February 1, 2002 757 187

March 1, 2002 672 228

April 1, 2002 565 254

May 1, 2002 509 277

June 1, 2002 442 262

July 1, 2002 448 261

August 1, 2002 298 217

September 1, 2002 185 191

October 1, 2002 14a 208

October 31, 2002 2 75

November 30, 2002 3 86

December 31, 2002 5 65

January 31, 2003 4 66

February 28, 2003 6 62

March 31, 2003 5 72

April 30, 2003 6 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). 

To determine how long some of the headquarters ruling request backlog 

cases were open before they were completed, we examined case files for 
Page 12 GAO-03-828 U.S. Customs Service 

157 prospective ruling request cases opened before February 1, 2002, and 

closed from February 1, 2002, through October 31, 2002.16 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,17

with 501 days as the median. 

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. 

 16In 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. 

17This 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. 

Trade Community Agreed 

OR&R Improved the 

Timeliness of 

Headquarters Prospective 

Rulings 
Page 13 GAO-03-828 U.S. Customs Service 

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 fulltime 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 2002.18 According to 

 18OR&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. 

Actions Taken by 

OR&R Headquarters 

to Improve the 

Timeliness of Rulings 

and Eliminate the 

Backlog 
Page 14 GAO-03-828 U.S. Customs Service 

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), 
Page 15 GAO-03-828 U.S. Customs Service 

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.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,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 inperson 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. 

 19According 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. 

20This 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). 
Page 16 GAO-03-828 U.S. Customs Service 

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. 

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,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 

 21For 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. 

Trade Community 

Expressed Some Concerns 

about OR&R Headquarters 

Actions 
Page 17 GAO-03-828 U.S. Customs Service 

were not prospective in nature22 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.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 inperson meetings with importers and/or their attorneys to discuss ruling 

requests.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 inperson meetings. Six of the importer representatives said that the 

discussions and the information presented at in-person meetings have, in 

 22For 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. 

23Federal 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). 

24Three of these 10 importer representatives also disagreed with reasons given by OR&R to 

administratively close ruling request cases. 
Page 18 GAO-03-828 U.S. Customs Service 

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. 

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.25 In response to recommendations we 

made in our September 2000 report,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.27 That information 

should be recorded and communicated to management and others within 

the agency who need it to carry out their responsibilities. 

 25We 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. 

26Our case file review for our September 2000 report showed that most of the cases had 

missing or incorrect data in LCIS. 

27U.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). 

OR&R Has Taken 

Actions to Improve 

LCIS Data Reliability, 

but Challenges 

Remain 
Page 19 GAO-03-828 U.S. Customs Service 

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”).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.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 

 28Our 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. 

29In 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. 

LCIS Data Often 

Inaccurate and 

Unreliable 
Page 20 GAO-03-828 U.S. Customs Service 

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.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 

Number of cases 

where LCIS data 

matched case file 

dataa

Number of cases 

where LCIS data 

did not match case 

file dataa

Number of cases 

where LCIS data 

could not be 

easily verifiedb

Type of case code 203 20 58

Case category code 210 12 59

Date assigned 190 64 27

Date closed 264 12 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. 

 30Because 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. 
Page 21 GAO-03-828 U.S. Customs Service 

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.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. 

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.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, 

 31Days 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. 

32U.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. 

It Is Uncertain Whether 

OR&R’s Corrective Actions 

Will Improve LCIS Data 

Reliability 
Page 22 GAO-03-828 U.S. Customs Service 

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 oneon-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. 
Page 23 GAO-03-828 U.S. Customs Service 

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. 

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. 

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 

Conclusions 

Recommendation for 

Executive Action 
Page 24 GAO-03-828 U.S. Customs Service 

determine whether recent improvements sufficiently correct past 

problems. 

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 

Agency Comments 

and Our Evaluation 
Page 25 GAO-03-828 U.S. Customs Service 

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 
Appendix I: Scope and Methodology 

Page 26 GAO-03-828 U.S. Customs Service 

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. 

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. 

Appendix I: Scope and Methodology 

Response Time for 

OR&R Headquarters 

Rulings 
Appendix I: Scope and Methodology 

Page 27 GAO-03-828 U.S. Customs Service 

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 Time period 

Total 

cases 

Cases 

randomly 

selected

Cases 

reviewed

1 Cases assigned before February 1, 

2002 

229 186 175

2 Cases assigned between February 

1, 2002, and June 30, 2002 

125 125 117

3 Cases assigned between July 1, 

2002, and October 31, 2002 

33 33 33

Total 387 344 325

Source: GAO data. 

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. 
Appendix I: Scope and Methodology 

Page 28 GAO-03-828 U.S. Customs Service 

Table 5: 95-Percent Confidence Intervals for Estimates to Populations of Total 

Cases 

Estimate Confidence interval Report page number

75% 66.9% - 82.7% 3

64% 60.1% - 68.0% 3

94% 79.8% - 99.3% 3

75% 66.9% - 82.7% 8

64% 60.1% - 68.0% 8

64% 60.1% - 68.0% 9

11% 6.4% - 18.3% 9

25% 17.3% - 33.1% 9

55% 49.7% - 60.0% 9

94% 79.8% - 99.3% 9

581 days average 553 - 609 days 11

501 days median 463 - 540 days 11

Source: GAO data. 

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 rulings1

). 

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. 

 1

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. 

OR&R Headquarters 

Actions on Rulings 

OR&R Data Reliability 

Challenges 
Appendix I: Scope and Methodology 

Page 29 GAO-03-828 U.S. Customs Service 

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. 

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 Committee2

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. 

 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. 

Trade Community 

Perspective on OR&R 

Headquarters Rulings 
Appendix I: Scope and Methodology 

Page 30 GAO-03-828 U.S. Customs Service 

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. 
Appendix II: Comments from the Bureau of Customs and Border Protection 

Page 31 GAO-03-828 U.S. Customs Service 

Appendix II: Comments from the Bureau of 

Customs and Border Protection 
Appendix II: Comments from the Bureau of Customs and Border Protection 

Page 32 GAO-03-828 U.S. Customs Service 
Appendix II: Comments from the Bureau of Customs and Border Protection 

Page 33 GAO-03-828 U.S. Customs Service 
Appendix II: Comments from the Bureau of Customs and Border Protection 

Page 34 GAO-03-828 U.S. Customs Service 
Appendix II: Comments from the Bureau of Customs and Border Protection 

Page 35 GAO-03-828 U.S. Customs Service 
Appendix III: GAO Contacts and Staff Acknowledgments 

Page 36 GAO-03-828 U.S. Customs Service 

Cathleen A. Berrick 202-512-8777 

Seto J. Bagdoyan 202-512-8658 

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. 

Appendix III: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Staff 

Acknowledgments 

(440166) 
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