In March, 1972, the domain of the White House had been effectively extended over all elements of the narcotics program except those in the Treasury Department. The Nixon strategists had succeeded through the creation of new offices in divorcing most of the domestic operations of BNDD agents from the control of Ingersoll, who had been reduced through these maneuvers to little more than a public spokesman for his own bureau. Rossides, however, still remained to be dealt with at the Treasury Department. Ehrlichman and Krogh thus planned, at the March 28 meeting of the Cabinet Committee on International Narcotics Control, to emasculate what remained of Rossides's power by announcing a presidential decision to curtail the overseas operations of customs agents and place them under the direct control of the cabinet committee, of which Krogh was executive director (and which, for all practical purposes, he ran single-handedly). Rossides, however, was not to be so easily defeated: he persuaded Secretary of the Treasury Connally to intervene. The day of the meeting, Connally "pulled an end play," according to Krogh, by walking straight past Ehrlichman into the president's office and then emerging arm in arm with him later. In the few minutes that intervened Connally had persuaded the president to reverse the entire decision urged on him by Ehrlichman and Krogh. At the opening of the meeting the president announced that Customs was to be allowed to send additional agents overseas to investigate narcotics cases, and that the earlier guidelines restricting Customs were to be eased. Krogh realized that he had seriously underestimated the determination of Rossides, but it was only a minor defeat for the Domestic Council and a Pyrrhic victory for the Treasury Department.

Claiming that the narcotics program was again fragmented among the Bureau of Customs, the Internal Revenue Service, the Bureau of Narcotics and Dangerous Drugs, and the new offices, the White House ordered plans to be drawn up for a new superagency into which all the competing law-enforcement agencies involved in the drug program could be merged. In effect, this new agency would be little more than an expansion of the ODALE concept: the investigative agents of the Bureau of Customs and the Bureau of Narcotics and Dangerous Drugs would be merged into this new agency along with prosecutors who handled narcotics cases. The Office of National Narcotics Intelligence would also be folded into this new agency. In size, it would resemble a smaller version of the Federal Bureau of Investigation; it would have both extraordinary search authority (deriving from that of customs agents) and electronic-surveillance powers. It would also have liaisons with the target-selection committee of the Internal Revenue Service and the Central Intelligence Agency. Reorganization Plan Number Two, as the new scheme was officially called, would also allow the White House to replace all the top civil servants and careerists with White House loyalists. Not only would this new agency be free of bureaucratic restraints but it would be headed by Ambrose, according to some speculation. It was also assumed by certain members of the White House staff that Sullivan, Liddy, and Hunt would play important roles in the intelligence-gathering activities of this new unit.

Rossides foresaw that the creation of this new superagency would eliminate all the checks and balances that traditionally limited law-enforcement operations in the field of narcotics, and, although nominally located in the Department of Justice, it would give the White House de facto control over strike forces and investigative agents. In the battle of memoranda that followed, Rossides argued that ODALE "was ill conceived, alienated local enforcement officials and was counterproductive," and that "consolidating these vast powers destroys traditional checks and balances [and) violate[s the fundamental American criminal justice concept of separation of the investigating function and the prosecuting function." The White House, however, moved ahead with its consolidation. A three-man hearing board was set up to hear the objections of Rossides, Ingersoll, and others, but since two of its members, Donald Santarelli and Geoffrey Sheppard, were close colleagues of Krogh's and committed to the "reorganization," all objections were easily overridden. (The third member of the panel, Mark Alger, a staff member of the Office of Management and Budget, also approved the consolidation on grounds that it was more "efficient"—which no doubt it was.) To be sure, Congress had the power to veto an executive reorganization plan, but in an election year few Congressmen were willing to oppose a new federal effort to reduce the national heroin epidemic. Without effective resistance the White House would be in control of a major investigative agency soon after the election.

Moreover, the reorganization plan would abolish John Ingersoll's position as director of the Bureau of Narcotics and Dangerous Drugs. Furthermore, Connally, who was resigning as secretary of the treasury to head the Democrats for Nixon committee, reluctantly agreed to replace Rossides as assistant secretary of the treasury for law enforcement with one of Krogh's young staff assistants on the Domestic Council, Edward Morgan. It was also planned that Caulfield, who had helped plan the "private detective agency" for the White House, would be given a controlling position in the Alcohol, Tobacco and Firearms enforcement unit of the Treasury Department. Vernon "Mike" Acree, a former IRS official who had shown a willingness to cooperate with the White House, was chosen to succeed Ambrose as commissioner of customs. A number of other loyalists from the Office of Management and Budget (OMB) were selected for other key positions in the Treasury Department. And the key position of director of the new investigative superagency for "drug enforcement" could be tendered to someone who could be closely counted on by the White House.

On May 2, 1972, J. Edgar Hoover died, and Clyde Tolson, who had been Hoover's right-hand man, offered to resign. The White House immediately saw a possibility of realizing its long-term ambition of controlling that crucial investigative agency and appointed L. Patrick Gray, a former office manager of the Nixon election campaign, as acting director of the FBI. There were still powerful inspectors and executives in that bureau whom the Nixon administration could not count on, but with the help of William Sullivan the White House strategists hoped that after the election campaign was concluded, these men would be replaced by loyalists. Thus, by the spring of 1972, the Nixon administration approached its objective of controlling the investigative agencies of the government, and consolidating power.