Recovery From Airlines of Customs Service Preclearance Cost

The Assistant Secretary of Enforcement and Operations of the Department of the Treasury requested that GAO give its views on a dispute between the Customs Service and the airlines as to what portion, if any, of the cost of the Treasury Enforcement Communications System (TECS) should be included in fees assessed airlines using Customs preclearance services provided at some foreign airports. The U.S. Federal Inspection Service (FIS) conducts preclearance inspections of passengers, crew members, and their baggage at certain foreign international airports prior to their boarding a flight bound for the United States. Because the inspection is conducted on foreign soil, individuals usually do not have to go through U.S. Customs inspection upon arrival in the United States. TECS, a centralized data processing system, has terminals providing access to its centralized computer at a number of ports of entry and at preclearance sites outside the United States. In 1976, Customs adopted regulations prescribing costs to be reimbursed by airlines for passenger preclearance in foreign countries. In 1979, Customs informed the airline industry that the entire cost of TECS at preclearance sites would be billed to the airlines under the authority of the User Charge Statute. The Air Transport Association (ATA) opposed the imposition of the charges. GAO could not conclude that the Customs position was arbitrary or capricious. Customs receives no advantage from conducting the preclearance activity on foreign soil rather than in the United States. The preclearance activity, initiated at the airlines request, resulted in a substantial savings to the airlines permitting them to use their resources better. Therefore, since the airlines were the primary beneficiaries of the service, it was held that Customs may continue to assess user charges against the airlines and recover a portion of the costs, including TECS, that are increased by its conducting passenger preclearance on foreign soil.