Customs enforces the nation’s trade laws and policies, including collecting duties on imported merchandise. OR&R plays an important role in carrying out Customs’ trade mission by (1) drafting regulations implementing U.S. trade laws; (2) issuing rulings on the proper classification, valuation, marking, and entry of imported goods, as well as the application of drawback laws (drawbacks involve refunds on duties of imported merchandise when they are exported from the United States) and navigation laws (these laws govern the movement of vessels in international trade), in response to requests from importers and others; and (3) providing guidance to the trade community and other Customs offices on their compliance duties under Customs laws, and other laws enforced by Customs, as well as related regulations. OR&R provides compliance information to the trade community through various mechanisms, including issuing regulations, publications, and rulings, which establish the duty an importer will owe. These rulings advise importers on how they can stay in compliance with Customs laws and help them and importers of similar goods make marketing and pricing decisions by providing information on the cost of importing their goods. For example, OR&R’s prospective classification rulings give both the requesting importer and importers of similar goods vital information to help them determine the amounts of the duties and fees they will be charged when they import their goods. Customs uses its Web site to disseminate information on completed rulings to the trade community and communicate other information, such as U.S. import requirements and how to request a ruling from OR&R. Customs reported collecting about $19.8 billion in duties in fiscal year 2002. OR&R is headed by an Assistant Commissioner and has offices in Washington, D.C., and New York. OR&R reported 9,053 prospective ruling request cases closed in fiscal year 2002, most of which were processed by its New York office in 30 days or less, according to OR&R officials. Most of the rulings issued by the New York office concern the classification of imported goods and generally provide a brief description the merchandise along with the classification and the duty rate. OR&R’s headquarters office in Washington, D.C., processes cases that are expected to take longer than 30 days to complete. OR&R headquarters rulings contain much more elaboration, including a detailed explanation of the legal basis for the conclusion reached by OR&R. Ruling requests received in OR&R’s New York office that are considered highly complex or highly sensitive, or that involve novel issues never presented to Customs before, are referred to OR&R headquarters for a decision. OR&R reported 815 headquarters prospective ruling request cases closed in fiscal year 2002, or about 9 percent of all prospective ruling requests. OR&R had 232 total staff as of October 2002: 117 headquarters staff, including 90 attorneys; and 115 staff in the New York office, including 93 import specialists (about 45 of which are national commodity specialists) who classify imported merchandise. For fiscal year 2002, OR&R’s budget was over $23 million. In January 2002, the Customs Commissioner, in a memorandum to the Assistant Commissioner for OR&R, set a requirement that rulings were to be issued within 90 days. The Commissioner noted that timeliness of the guidance contained in rulings is essential in ensuring compliance with the law. The Commissioner further instructed the OR&R Assistant Commissioner to take appropriate measures to eliminate the backlog of ruling requests that existed. The backlog was to be eliminated by December 31, 2002, but the Customs Commissioner later changed this deadline to September 30, 2002. OR&R uses its automated database, LCIS, to internally track cases, including rulings, pending before OR&R. 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. Further, OR&R reported that, with a few exceptions beyond Customs’ control, it had eliminated its February 2002 backlog of prospective ruling requests that were still open after 90 days or more. Representatives of COAC’s Subcommittee on OR&R, the American Bar Association Customs Law Committee, and five trade associations that we contacted agreed that OR&R headquarters had improved the timeliness of its rulings. Before 2002, OR&R headquarters had a 120-day goal for processing and issuing rulings from the date a ruling request was assigned to an OR&R attorney. 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. Our review showed that about 75 percent of the cases were completed in 120 days or less, the old goal, and about 64 percent were completed within 90 days, the new goal. Table 1 shows the number and percent of cases that took 90 days or less, from 91 to 120 days, and more than 120 days to complete from the date they were assigned to OR&R attorneys for processing. As also shown in table 1, most of the cases resulted in rulings being issued by OR&R, while some cases resulted in information letters sent to the requesters and other cases were administratively closed. Our review of the 124 prospective ruling request case files also indicates that OR&R improved its response time during the latter part of the February through October 2002 time period, after OR&R had made significant progress in reducing the size of the backlog. For the 93 cases in our sample that were opened during the 5-month period from February through June 2002, OR&R completed an estimated 55 percent of the cases within 90 days. In contrast, OR&R completed an estimated 94 percent of the 31 cases in the latter part of our sample, cases opened and closed during the 4-month period from July through October 2002, within 90 days. 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. OR&R reported that its efforts to eliminate the backlog of 757 headquarters ruling request cases open 90 days or more as of February 1, 2002, were successful. Table 2 shows the size of the ruling backlog as reported by OR&R for each month from February 2002 though April 2003. OR&R reported having two prospective ruling request cases that were open 90 days or more as of October 31, 2002, the last date of the cases included in our case file review, and the backlog did not substantially increase through April 30, 2003, when there were 6 such cases. According to OR&R, these cases took more than 90 days for reasons beyond Customs’ control, such as being held at the request of the Department of the Treasury. To determine how long some of the headquarters ruling request backlog cases were open before they were completed, we examined case files for 157 prospective ruling request cases opened before February 1, 2002, and closed from February 1, 2002, through October 31, 2002. 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, with 501 days as the median.