Report on Waco Attack Will Strengthen Case For Agency Shake-Up

THEIR forerunners were the ``revenooers'' hunting down illicit Ozarks moonshine-makers and the ``untouchables'' who finally nabbed Chicago's Prohibition-era gangster Al Capone for tax evasion.

Yet many Americans had probably never heard of the Bureau of Alcohol, Tobacco, and Firearms before the tragedy last spring near Waco, Texas.

Now, the very existence of the ATF is in jeopardy.

As the agency that launched the initial raid on the Branch Davidian compound, and lost four agents in the firefight that followed, the ATF is taking heavy criticism in the official Treasury Department report on the incident to be released today.

The criticisms are apparently serious enough to instigate the resignation on Monday of Stephen Higgins after 11 years as ATF director. At least two of his deputies are expected to follow him out.

The report comes less than a month after Vice President Al Gore Jr.'s task force on reorganizing government recommended that the ATF be split up and absorbed into the Federal Bureau of Investigation and the Internal Revenue Service.

Close observers of federal law enforcement say that the dramatic failure of the ATF in Waco clearly increases the chance that the agency will be merged out of autonomous existence.

The ATF is one of scores of federal agencies with law enforcement responsibilities. It has shifted shape and mission more than most, however, and has only really existed in its current form since 1972. Its role in policing the markets in guns and explosives has become a prominent element of the war on drug traffickers.

Folding a specialized agency like the ATF into the FBI offers some administrative efficiencies and the possibility of better coordination than between two separate bureaus, according to supporters of the idea, including the Gore task force.

Richard Bennett, a law enforcement expert at American University in Washington, says ``There's absolutely no reason'' except turf battling not to subsume the ATF into the FBI. The case against a merger

But the merger also risks losing the sharp focus and expertise the agency gives to a particular national concern, such as controlling guns, according to skeptics of the merger. ``The more these things get wrapped into one organizational behemoth, the more difficult it is to sharpen the focus on these problems,'' says Mark Moore, an expert on criminal justice and public management at Harvard University's Kennedy School of Government.

The ATF merger will not be addressed until after both the Clinton administration and Congress have dealt with another merger proposal - marrying the Drug Enforcement Administration with the FBI.

Even though the FBI and the DEA are already part of the Justice Department, this merger is bigger, tougher to accomplish politically, and is less likely to happen. Opposition is stiff on Capitol Hill, especially on the committees that deal with Justice Department matters. The administration is not yet speaking with one voice, either. Attorney General Janet Reno has made noncommittal statements on the subject so far.

The ATF merger has roused less intense opposition than the DEA merger so far, but congressional aides say most members have yet to be persuaded.

The ATF is part of the Treasury Department. Under the Gore proposal, the regulatory and revenue functions of ATF would stay in Treasury in the Internal Revenue Service while the law enforcement functions would shift to the FBI in Justice.

The agency has shifted functions and departments before. Its roots are in the militia that George Washington formed after the Whiskey Rebellion of 1794 to collect taxes on distilled spirits. The modern agency, which first achieved full bureau status in 1972, grew out of the post-Prohibition Alcohol Tax Unit of the Bureau of Internal Revenue. Previous attempts failed

The Reagan administration proposed folding the agency into the FBI in 1982, a proposal strongly backed by the gun industry. When the Clinton administration began considering the move within the Gore task force, opposition arose within Justice and Treasury that many believed to have scuttled the plan. But it resurfaced in the Gore report.

The Treasury Department report on the Waco tragedy finds that the ATF special agents who led the raid knew the Davidians had been tipped off to the impending attack beforehand. The agents were under orders to attack only with the element of surprise, and agency officials insisted in the aftermath that they thought they had it.

The report also reportedly blames senior ATF managers for leaving too many decisions to inexperienced agents in Waco.

The failure leaves the agency vulnerable. Scandals and dramatic operational failures, Professor Moore says, tend to send agencies ``into the public-sector equivalent of bankruptcy.''