Summary
International air passengers arriving in the United States are subject to an inspection to ensure they possess legal entry and immigration documents and do not bring in contraband, such as illegal drugs, counterfeit goods, or harmful pests and prohibited agriculture products. With the creation of the Department of Homeland Security (DHS) in 2003, the customs, immigration, and agriculture inspections activities were integrated into one program led by DHS's office of Customs and Border Protection (CBP). However, the three fees--whose collections totaled about $1 billion in fiscal year 2006--linked to these inspections remain statutorily distinct and are coadministered by CBP, Immigration and Customs Enforcement (ICE), both within DHS, and the Department of Agriculture's Animal Plant Health Inspection Service (APHIS). GAO was asked to examine how the fees are set, collected, and distributed, and the benefits and challenges of this process to agencies and stakeholders, including implications of consolidating these fees under the authority of DHS.
The process of setting, collecting, and distributing separate, dissimilar fees creates challenges for agencies and stakeholders. Although air passenger inspections were integrated within CBP, the fees supporting these inspections were created and are still governed by separate, dissimilar authorizing legislation. Two fee amounts are set in statute and one is set by regulation; all are collected by the airlines, deposited into three separate accounts and distributed among the agencies. As a result, the fees are administered and overseen by a complicated network of executive branch agencies and congressional committees, creating a series of challenges. For example, neither CBP nor ICE know whether the fees collected are recovering the full cost of the immigration inspection activities or whether the fees are properly divided between them, because ICE does not have finalized cost calculations for its inspection-related activities. In addition, certain passengers are exempt from some fees but not others, making it difficult for agencies to administer the fees. Further, although airports and airlines play an important role in facilitating inspections and the process of collecting and remitting the fees, opportunities for two-way communication are fragmented and limited, reducing stakeholder buy-in and acceptance of the fees and contributing to confusion about how the three fees work and what activities they may fund. Other challenges are due to the statutory structure of the individual passenger inspection fees. For example, the customs inspection fees are available for limited purposes: not all reimbursable activities may be associated with inspections, and not all inspection activities are reimbursable. However, CBP officials said even if the customs fees were spent on inspection-related activities, they still would only recover about 72 percent of costs in fiscal year 2006. Therefore, customs inspection-related activities are mainly funded by appropriations from general revenues. Further, without auditing each airline, CBP cannot independently verify the amount owed by airlines, partly because airlines are required to remit the fees based on ticket sales rather than passengers transported. CBP said it is developing a legislative proposal that would address these and other challenges by requiring airlines to remit based on passengers transported, but airline industry stakeholders said this change would complicate their collection process and create substantial transition costs. Although a number of options for addressing these fees have been raised, regardless of whether these fees are consolidated in whole, in part, or not at all, certain problems specific to the individual fees can and should be resolved first, and in a manner consistent with principles of effective user fee design, on which GAO has previously reported. Moreover, although partly or fully consolidating the fees under DHS's authority could provide opportunities to address some of the many challenges identified in this report, consolidation in-and-of-itself will not solve all of the problems we have identified.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Susan J. Irving
Government Accountability Office: Financial Management and Assurance
(202) 512-9142
Matters for Congressional Consideration
Recommendation: Congress may wish to consider harmonizing the passenger exemption and statutory definitions across the various inspections fees.
Status: In process
Comments: The 2009 Customs Reauthorization provides an opportunity to review the design of the Customs (COBRA) inspection fees and Merchandise Processing Fee (MPF), including the desired level of cost recovery; and to consider opportunities to better align the customs, immigration, and agriculture quarantine air passenger inspection fees both with each other and with the inspections activities they support. In June 2008 we met with minority and majority Ways and Means staff on these issues. We will continue to monitor the situation and support the legislative process as appropriate.
Recommendation: Congress may wish to consider eliminating the differences among the three fees in the authority to set fee rates.
Status: In process
Comments: The 2009 Customs Reauthorization provides an opportunity to review the design of the Customs (COBRA) inspection fees and Merchandise Processing Fee (MPF), including the desired level of cost recovery; and to consider opportunities to better align the customs, immigration, and agriculture quarantine air passenger inspection fees both with each other and with the inspections activities they support. In June 2008 we met with minority and majority Ways and Means staff on these issues. We will continue to monitor the situation and support the legislative process as appropriate.
Recommendation: Congress may wish to consider whether it wishes the customs fee to be a full cost recovery fee.
Status: In process
Comments: The 2009 Customs Reauthorization provides an opportunity to review the design of the Customs (COBRA) inspection fees and Merchandise Processing Fee (MPF), including the desired level of cost recovery; and to consider opportunities to better align the customs, immigration, and agriculture quarantine air passenger inspection fees both with each other and with the inspections activities they support. In June 2008, we met with minority and majority Ways and Means staff on these issues. We will continue to monitor the situation and support the legislative process as appropriate.
Recommendation: Congress may wish to consider reviewing the activities that may be reimbursed by the customs fee collections.
Status: In process
Comments: The 2009 Customs Reauthorization provides an opportunity to review the design of the Customs (COBRA) inspection fees and Merchandise Processing Fee (MPF), including the desired level of cost recovery; and to consider opportunities to better align the customs, immigration, and agriculture quarantine air passenger inspection fees both with each other and with the inspections activities they support. In June 2008, we met with minority and majority Ways and Means staff on these issues. We will continue to monitor the situation and support the legislative process as appropriate.
Recommendations for Executive Action
Recommendation: The Secretaries of Agriculture and Homeland Security should direct Customs and Border protection (CBP), Immigration and Customs Enforcement (ICE), and Animal and Plant health Inspection Service (APHIS) to make information on the estimated cost of inspections as well as the basis for these cost estimates readily available to affected parties to improve the transparency and credibility--and hence the acceptance by stakeholders and payers--of the processes for setting, collecting, and distributing the fees.
Agency Affected: Department of Homeland Security
Status: In process
Comments: Customs and Border Protection (CBP) has included actual and estimated cost information in its Notice of Proposed Rulemaking to increase COBRA fees. It also said it will continue to use the Airport and Seaport user fee Advisory committee to continue to disseminate cost information to the industry twice a year.
Agency Affected: Department of Agriculture
Status: In process
Comments: Animal and Plant health Inspection Service (APHIS) agreed it could make the memorandum of understanding between APHIS and CBP available more widely to better convey how agricultural inspection fees are distributed. It will finalize and produce annually a consolidated report on the total agricultural inspection fee, including budget formulation and performance information. APHIS reiterated that full cost information is available in the Federal Register. We continue to believe that replying solely on the Federal Register for obtaining nonfederal stakeholder input is insufficient, and is an ineffective means of communication. We believe the resulting information and communication gap could be addressed by substantive participation in the Airport and Seaport user Fees Advisory Committee.
Recommendation: The Secretaries of Agriculture and Homeland Security should direct CBP, ICE, and APHIS to collaborate on agendas, presentations, and discussions with stakeholders for the CBP Airport and Seaport Inspections User Fee Advisory Committee (Advisory Committee) meetings in order to improve the usefulness of these meetings for both agencies and fee stakeholders.
Agency Affected: Department of Homeland Security
Status: In process
Comments: Customs and Border Protection (CBP) is communicating with the Department's Policy Directorate, which manages all DHS Advisory Committees, to determine how best to include Animal and Plant health Inspection Service (APHIS) and Immigration and Customs Enforcement (ICE) in the process. APHIS indicated its willingness to participate in these meetings. CBP further noted that it will amend the Committee's charter to formalize ICE and APHIS's participation and will include details on participation in the memorandum of agreements that CBP has with each agency.
Agency Affected: Department of Agriculture
Status: In process
Comments: Animal and Plant health Inspection Service (APHIS) indicated its willingness to participate in these meetings. Customs and Border Protection (CBP) further noted that it will amend the Committee's charter to formalize Immigration and Customs Enforcement (ICE) and APHIS's participation and will include details on participation in the memorandum of agreements that CBP has with each agency.
Recommendation: The Secretaries of Agriculture and Homeland Security should consolidate reporting of the passenger inspection fees, to include the activities and proportion of fees for which CBP, ICE, and APHIS are each responsible to provide a comprehensive picture of the user fees supporting the passenger inspection process.
Agency Affected: Department of Homeland Security
Status: In process
Comments: Customs and Border Protection (CPB) and Animal and Plant health Inspection Service (APHIS) are working on a joint report for the APHIS fees. Once finalized, it will be submitted annually. CBP and APHIS will also discuss data APHIS would need in order to include CBP's portion of the AQI fee in the USDA user fee biennial report. Lastly, CBP agreed to incorporate Immigration and Customs Enforcement's (ICE) share of costs and collections in CBP's annual Immigration user Fee report.
Agency Affected: Department of Agriculture
Status: In process
Comments: We are awaiting further information on the status of this recommendation.
Recommendation: The Secretaries of Agriculture and Homeland Security should develop a legislative proposal in consultation with Congress on a consolidated, graduated penalty system that reflects airline payment history and includes specific administrative procedures regarding when penalties should be invoked in order to improve the effectiveness of the tools for enforcing payment of passenger inspection fees.
Agency Affected: Department of Homeland Security
Status: In process
Comments: Customs and Border Protection (CBP) is addressing this requirement in three ways. 1) Penalties for AQI inspection fees are being included in a draft legislative proposal to consolidate the customs, immigration and the portion of the AQI fees that support CBP's inspection function. 2) For the Customs fees, CBP is in the process of amending bond regulations to include liquidated damages equal to two times the passenger processing fees that were required to be collected but not timely remitted. 3) for the immigration user fee, CBP is exploring the option to add a penalty provision to 8 CFR ?286.7.
Agency Affected: Department of Agriculture
Status: In process
Comments: Animal and Plant Health Inspection Service (APHIS) will amend its regulations to be consistent with whatever penalty authorities Customs and Border Protection obtains.
Recommendation: The Secretaries of Agriculture and Homeland Security should develop a legislative proposal in consultation with Congress on a single, common set of airline record-keeping requirements for all three passenger inspection fees that reflects the consolidated audit function for these fees and reduces the administrative burden on airlines.
Agency Affected: Department of Homeland Security
Status: In process
Comments: Customs and Border Protection (CBP) is addressing the in a draft legislative proposal to consolidate the customs, immigration and the portion of the AQI fees that support CBP's inspection function. Recordkeeping requirements would be contained in regulations to implement the consolidated fee and would be consistent with APHIS's requirements for its portion of the agriculture inspection fee.
Agency Affected: Department of Agriculture
Status: In process
Comments: Animal and Plant health Inspection Service (APHIS) plans to propose a five-year retention requirement for its records. If Customs and Border Protection (CBP) obtains authority to change its recordkeeping requirements to something other than the 5-year period CBP has requested, APHIS will again amend its regulations to be consistent with whatever penalty authorities CBP obtains.
Recommendation: The Secretaries of Agriculture and Homeland Security should develop a legislative proposal in consultation with Congress to eliminate key differences among the fourth quarter remittance requirement for the immigration fee.
Agency Affected: Department of Homeland Security
Status: In process
Comments: Customs and Border Protection (CBP) is addressing the in a draft legislative proposal to consolidate the customs, immigration and the portion of the AQI fees that support CBP's inspection function. The proposal contains a provision to switch to monthly remittance which CBP notes would eliminate this problem.
Agency Affected: Department of Agriculture
Status: In process
Comments: Customs and Border Protection (CBP) is addressing the in a draft legislative proposal to consolidate the customs, immigration and the portion of the AQI fees that support CBP's inspection function. The proposal contains a provision to switch to monthly remittance which CBP notes would eliminate this problem.
Recommendation: The Secretaries of Agriculture and Homeland Security should develop and implement common assumptions used to forecast the collections of agriculture quarantine inspection activities in order to more closely tie the fee rate to CBP's and APHIS's agriculture fee distribution to actual collections.
Agency Affected: Department of Homeland Security
Status: Implemented
Comments: Animal Health and Plant Inspection (APHIS) and Customs and Border Protection (CBP) reached agreement on the forecasting assumptions, specifically the passenger volume growth rate and inflation rate to be used in forecasting the user fee collections of agricultural quarantine inspection activities. The fees are shared among the between APHIS and CBP for their respective agriculture quarantine inspection activities. APHIS and CBP officials agreed to these new growth rates in September 2007 and used in determining their FY2008 projections.
Agency Affected: Department of Agriculture
Status: In process
Comments: Customs and Border Protection and Animal and Plant health Inspection Service (APHIS) said they will implement a common set of forecasting assumptions.
Recommendation: The Secretary of Homeland Security should develop and implement formal written guidance on factors to be considered in selecting airlines for audit, including factors intended to reflect the risk of non- or incomplete payment.
Agency Affected: Department of Homeland Security
Status: Implemented
Comments: Customs and Border Protection (CBP) and the Animal Health and Plant Inspection Service (APHIS) approved formal, written guidance listing the elements to be included in conducting an audit assessment, including factors to determine the risk of non or incomplete payment. These audit assessments determine which airlines' customs, immigration, and agriculture quarantine passenger inspection user fee remittances will be selected for audit, which is CBP's only method for verifying that a company is complying with the respective user fee statutes. The guidance was approved December 6, 2007.
Recommendation: The Secretary of Homeland Security should complete development of and report on ICE's activity costs to ensure the immigration fee is divided between ICE and CBP according to their respective proportion of immigration inspection activity costs. Further, if the study shows that immigration activity costs exceed collections, develop a legislative proposal in consultation with Congress to adjust the immigration fee to recover costs as closely as possible, per statute.
Agency Affected: Department of Homeland Security
Status: In process
Comments: We are awaiting further information on the status of Immigration and Customs Enforcement's (ICE) cost review.
Recommendation: The Secretary of Homeland Security should direct CBP and ICE to develop and implement a fee-sharing memorandum of understanding (MOU) to include time frames for when funds would be transferred and to provide for periodic review and update.
Agency Affected: Department of Homeland Security
Status: In process
Comments: Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) will address this recommendation upon completion of ICE's cost study.
