3

cost bond in certain situations. It also extends the deadline for the filing of claims by property owners.

Finally, the bill contains a uniform innocent owner defense. Presently, some civil forfeiture statutes contain no provision allowing even an innocent property owner to resist the forfeiture of his or her property if it was used by another person for an illegal purpose. Other statutes contain conflicting, inconsistent and sometimes inadequate innocent owner provisions. The uniform innocent owner provision is intended to ensure that property will not be forfeited if the owner establishes that he or she did not know of the illegal use of the property or that the owner did what any reasonable person would have done to stop the illegal use of the property once he or she found out about it.

The purpose of this bill is to strengthen and improve the structure and operation of the Nation's asset forfeiture laws. It is not intended to be a revenue raising measure. The Omnibus Budget Reconciliation Act (OBRA) requires that all revenue and direct spending legislation meet a pay-as-you-go requirement. That is, no bill should result in an increase in the deficit; and if it does, it will trigger a sequester if it is not fully offset. The Forfeiture Act of 1996 would increase receipts and direct spending. Considered alone, it meets the pay-as-you-go requirement of OBRA.

Our estimate of the impact of this proposed. bill on the deficit is:

With respect to potential impacts on the criminal justice system, all of the criminal sanctions addressed by this legislation are economic in nature. It does not impose any new penalties involving incarceration, nor does it create any new offenses for which incarceration may be imposed.

It would be appreciated if you would lay this bill before the House of Representatives. An identical proposal has been transmitted to the President of the Senate.

4

The Office of Management and Budget has advised that there is no objection to the presentation of this proposal to the Congress from the standpoint of the Administration's program.

FORFEITURE ACT OF 1996

SECTION-BY-SECTION ANALYSIS

Title I

Section 101 Time for Filing Claim; Waiver of Cost Bond

Under current law, a claimant may file a claim and bond to convert an administrative forfeiture to a judicial one at any time after the property is seized. United States v. $52,800 in U.S. Currency, 33 F.3d 1337 (11th Cir. 1994). But the claim must be filed not later than 20 days from the date of first publication of notice of forfeiture. This requirement, which is applicable to all civil forfeitures based on the customs laws, see 19 U.S.C. § 1608, is much more restrictive than its counterpart in the criminal forfeiture statutes, and has been criticized for giving property owners too narrow an opportunity to exercise their right to a "day in court."

The criminal forfeiture statutes give claimants 30 days from the final date of publication of the notice of forfeiture to file a claim. See e.g. 18 U.S.C. § 1963 (1) (2). This procedure represents a reasonable compromise between the property owner's interest in having a fair opportunity to file a claim in a forfeiture proceeding and the government's interest in expediting the forfeiture process and avoiding unnecessary storage and maintenance costs in the vast majority of forfeiture cases in which no claim is ever filed. Accordingly, section 1608 is amended to replace the 20-day rule with the 30-day rule that governs the filing of claims in criminal forfeiture cases.

In filing the claim, the claimant will have to describe the nature of his or her ownership interest in the property, and how and when it was acquired. This minimal requirement is necessary to discourage the filing of spurious or baseless claims; but it is not intended to place on the seizing agency any duty to evaluate the merits of the claim. To the contrary, the seizing agency will simply transfer the claim to the United States Attorney to take whatever action is appropriate under the law.

The amendment also amends the cost bond requirement presently set forth in 19 U.S.C. § 1608 to make it clear that no bond is required in forma pauperis cases as long as the petition is properly filed with all supporting information. In addition, the amendment authorizes the Attorney General and the Secretary of the Treasury to waive or reduce the cost bond requirement with respect to matters within their respective jurisdiction in categories of cases other than those involving indigency or substantial hardship. This provision will give the Attorney General and the Secretary the opportunity to review the policy reasons for requiring a cost bond and to waive or reduce the bond if those reasons do not apply in a given category of cases.

The amendment also amends current law by allowing the seizing agency to turn the case over to the U.S. Attorney in any district where venue for the judicial forfeiture action would lie, thus reflecting the enactment of the broadened venue and jurisdiction provision in 1992 which no longer limits venue to the district in which the property is located. United States v. $633,021.67 in U.S. Currency, 842 F. Supp. 528 (N.D. Ga. 1993); 28 U.S.C. § 1355 (b).

Other changes in the wording of § 1608 are merely for the purpose of clarity. Except as explicitly described above, the amendments are not intended to alter the ways in which seizing agencies process administrative forfeitures or turn them over to the U.S. Attorney when a claim and cost bond are filed.

Historically, courts had in rem jurisdiction only over property located within the judicial district. Since 1986, however, Congress has enacted a number of jurisdictional and venue statutes permitting the courts to exercise authority over property located in other districts under certain circumstances. See 28 U.S.C. § 1355 (b) (authorizing forfeiture over property in other districts where act giving rise to the forfeiture occurred in district where the court is located); 18 U.S.C. § 981 (h) (creating expanded venue and jurisdiction over property located elsewhere that is related to a criminal prosecution pending in the district); 28 U.S.c. § 1355 (d) (authorizing nationwide service of process in forfeiture cases)

Many older statutes and rules, however, still contain language reflecting the old within-the-district requirements. These technical amendments bring those provisions up to date in accordance with the new venue and jurisdictional statutes. Indeed, several courts have already held that nationwide service of process provisions necessarily override Rule E (3) (a). See United States v. Parcel I, Beginning at a Stake, 731 F. Supp. 1348, 1352 (S.D. Ill. 1990); United States v. Premises Known as Lots 50 & 51, 681 F. Supp. 309, 313 (E.D.N.C. 1988). The amendment is therefore intended merely to remove any ambiguity resulting from Congress's previous omission in conforming Rule E and the other amended provisions to § 1355 (d) as they apply to forfeiture cases.

Section 103 Judicial Review of Administrative Forfeitures

Administrative forfeitures are generally not subject to judicial review. See 19 U.S.C. § 1609 (b) ("a declaration of forfeiture under this section shall have the same force and effect as a final decree and order of forfeiture in a judicial forfeiture proceeding in a district court"). Thus, if a claimant fails to file a claim opposing an administrative forfeiture

action, he may not subsequently ask a court to review the declaration of forfeiture on the merits. Linarez v. Department of Justice, 2 F.3d 208, 213 (7th Cir. 1993) ("A forfeiture cannot be challenged in district court under any legal theory if the claims could have been raised in an administrative proceeding, but were not.").

Fundamental fairness, however, requires that a claimant have the opportunity to attack an administrative forfeiture on the ground that the he did not file a timely claim because the government failed to provide him with notice of the administrative action. In such cases, it is appropriate for a court to determine if the government complied with the statutory notice provisions set forth in § 1607, and if not, to allow the claimant to file a claim in accordance with § 1608 notwithstanding the expiration of the claims period. See United States v. Woodall, 12 F.3d 791, 793 (8th Cir. 1993).

Under current law, however, it is unclear what statute gives the district courts jurisdiction to review due process challenges to administrative forfeiture; indeed, plaintiffs have attempted to base claims on a variety of provisions including the Tucker Act, 28 U.S.C. § 1346 (a) (2); the Federal Tort Claims Act, 28 U.S.C. 1346 (b); the Administrative Procedures Act, 5 U.S.C. § 702; Rule 41 (e) of the Federal Rules of Criminal Procedure; 28 U.S.C. § 1356; and the Fourth and Fifth Amendments to the Constitution. See Wright v. United States, F. Supp.

1995 WL 649560 (S.D.N.Y. Nov. 3, 1995). This has led to widespread confusion as different procedures are applied in different cases, including different statutes of limitations depending on the statute employed. See Williams v. DEA, 51 F.3d 732 (7th Cir. 1995) (applying two-year statute of limitations but noting that the contours of the exercise of the court's equitable jurisdiction are "largely undefined"); Demma v. United States, 1995 WL 642831 (N.D. Ill. Oct. 31, 1995) (applying six-year statute of limitations to Tucker Act theory).

This amendment establishes a uniform procedure for litigating due process issues in accordance with the leading cases. See Toure v. United States, 24 F.3d 444 (2d Cir. 1994); Woodall, supra. Under this procedure, which is intended to be the exclusive procedure for challenging administrative forfeiture declarations, a claimant who establishes that the government failed to comply with the statutory notice requirements would be entitled to have the administrative forfeiture set aside so that he may file a claim and cost bond and force the government to initiate a judicial forfeiture action. If the property itself has already been disposed of, the claim would be made against a sum of money of equivalent value. See Republic National Bank v. United States, 113 S. Ct. 554 (1992). To invoke the jurisdiction of the district court under this provision, an action to set aside a declaration of forfeiture would have to be filed within