House Panel Backs ATF Fee, at a Discount

Director Carl J. Truscott faces a $19 million cost overrun on a new headquarters building. (Joshua Roberts - Getty Images)

The House Appropriations Committee approved a new fee for manufacturing and importing explosives this week, prompting objections from industry groups but at least a tentative sigh of relief from the Bureau of Alcohol, Tobacco, Firearms and Explosives.

The debate over the fee comes at a time of mounting budget difficulties for ATF, which is already facing rising costs on a new headquarters building in Washington. Cost overruns on that project attributed to decisions by the agency's director, Carl J. Truscott, and other expenditures are the subject of an investigation by the Justice Department inspector general.

The Bush administration proposed a 2-cent-per-pound fee on explosives to generate $120 million of ATF's proposed $980 million budget in 2007. The Appropriations committee cut the fee back to half a cent -- or $30 million -- and funded the rest of ATF's requested budget from other sources.

But committee staffers concede that even the smaller fee may not be approved by the full House, where many lawmakers believe such charges should be formally authorized by Congress before they are implemented. Lawmakers rejected a similar attempt by the administration last year, and the explosives and mining industries oppose the idea as a de facto tax increase.

"To force ATF to create a tax-collections division or whatever it would be to fund their inspection regime just doesn't make sense," said Chris Ronay, president of the Institute of Makers of Explosives, a Washington lobbying group. "It's unnecessary and problematic."

Truscott told lawmakers in late April that losing the explosives fee would have a "significant effect" on the agency, but he declined to say whether that would include layoffs or other cutbacks. About a week later, however, Truscott told ATF managers meeting in Denver that there could be some layoffs if the fee is not approved, according to senior ATF officials who were present or familiar with the remarks.

The comments sent shock waves through the small Justice Department agency, which includes about 2,400 special agents and 2,500 other employees.

Several senior ATF officials, who requested anonymity for fear of retaliation, said ATF's budget could be crippled without the explosives fee at a time when terrorists are seeking materials for bombs. The officials also criticized Truscott's handling of the budget dispute, saying he should have been more aggressive with Congress in explaining the agency's funding needs.

ATF spokeswoman Sheree L. Mixell -- speaking before the House committee acted Wednesday -- said Truscott made it clear to lawmakers that loss of the funding would have a significant impact but that it was too early to address specifics. She declined to comment on Truscott's remarks about layoffs.

Truscott and Attorney General Alberto R. Gonzales have come under sharp questioning in recent months from key members of the House Appropriations subcommittee that oversees the ATF. Chairman Frank R. Wolf (R-Va.) faulted Truscott and other officials for not seeking to work the issue out with the panel.

"To say that you're going to offset something by $120 million and put it in a budget and get it printed and not come up and work for, it would be like somebody saying that I'm really for something but I do nothing about it," Wolf told Truscott in April.

Senior subcommittee Democrat Alan B. Mollohan (W.Va.), whose home state would be hard hit by an explosives fee, questioned whether the program would actually raise as much money as predicted.

Gonzales defended the explosives fee, testifying earlier this year that "it is appropriate to have the industry pay for the costs of implementing" new rules for the sale and importation of explosives.

ATF has been buffeted by allegations that Truscott approved or proposed hundreds of thousands of dollars in unnecessary upgrades to the new ATF headquarters. The building, due to open later this year, is at least $19 million over budget.

Inspector General Glenn A. Fine has opened an investigation into complaints over that project and other spending, questioning dozens of ATF officials earlier this year, according to several officials who have been interviewed. In addition to the construction project, investigators have questioned ATF employees about a costly trip that Truscott and others took to London last year and about allegations that ATF staff members helped assemble a school video report for a relative of Truscott's, according to the officials.

Mixell said she could not comment on the inspector general's inquiry. Truscott has declined to talk about the allegations.