Federal User Fees:

Key Aspects of International Air Passenger Inspection Fees Should Be Addressed Regardless of Whether Fees Are Consolidated

GAO-07-1131: Published: Sep 24, 2007. Publicly Released: Sep 24, 2007.

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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.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that included a provision authorizing CBP to use customs inspection fees to recover the cost of passenger inspection activites. To date Congress has not acted on this proposal.

    Matter: Congress may wish to consider reviewing the activities that may be reimbursed by the customs fee collections.

  2. Status: Closed - Not Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that included a provision to authorize CBP to set customs inspection fees to recover the full cost of passenger inspections.To date Congress has not acted on this proposal.

    Matter: Congress may wish to consider whether it wishes the customs fee to be a full cost recovery fee.

  3. Status: Closed - Not Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that included a provision to eliminate the fourth quarter remittance requirement for the immigration inspection fee by moving all three inspection fees to monthly remittance schedule. A monthly remittance schedule would allow CBP to reimburse the appropriations that initially funds inspection activities more quickly, making these appropriations available for other activities sooner. Animal and Plant Health Inspection Service (APHIS) officials said they will amend its regulations to be consistent with whatever remittance schedule Customs and Border Protection obtains. To date Congress has not acted on this proposal.

    Matter: Congress may wish to consider eliminating the differences among the three fees in the authority to set fee rates.

  4. Status: Closed - Implemented

    Comments: Congress passed the United States-Colombia Trade Promotion Agreement Implementation Act (PL 112-42) in October 2011, lifting the country exemptions for customs user fees and, as a result, harmonizing the passenger exemptions and statutory exemption definitions across the three inspection fees.

    Matter: Congress may wish to consider harmonizing the passenger exemption and statutory definitions across the various inspections fees.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that would provide authority to CBP to establish a single, common set of airline record-keeping requirements through regulation. Animal and Plant Health Inspection Service (APHIS) officials said they will amend its regulations to be consistent with the record-keeping requirements Customs and Border Protection obtains. To date Congress has not acted on this proposal.

    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 Agriculture

  2. Status: Closed - Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that included a provision authorizing CBP to prescribe rules and regulations as may be necessary to establish an alternative method of liability for inspection fee remittance. Animal and Plant Health Inspection Service (APHIS) officials said that APHIS will amend its regulations to be consistent with whatever penalty authorities Customs and Border Protection obtains. To date Congress has not acted on this proposal.

    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 Agriculture

  3. Status: Closed - Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that included a provision authorizing CBP to prescribe rules and regulations as may be necessary to establish an alternative method of liability for inspection fee remittance. Animal and Plant Health Inspection Service (APHIS) officials said that APHIS will amend its regulations to be consistent with whatever penalty authorities Customs and Border Protection obtains. To date Congress has not acted on this proposal.

    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

  4. Status: Closed - Implemented

    Comments: The Animal and Plant Health Inspection Services (APHIS) reports the agriculture quarantine inspection fee in multiple ways: through the Federal Register Process, through its "user fee" page on its website, and through its regular fee review. In FY 2010, Customs and Border Protection (CBP) issued its FY2010 Biennial User Fee Report. In this report CBP reported on the customs fee and the portion of the immigration fee for which it is responsible. In FY2012 Immigration and Customs Enforcement (ICE)completed its FY2010 and FY2011 immigration inspection cost study. While not in a consolidated format, together CBP, ICE and APHIS provide a comprehensive picture of the customs and agriculture inspection fees.

    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

  5. Status: Closed - Implemented

    Comments: The Animal and Plant Health Inspection Services (APHIS) reports the agriculture quarantine inspection fee in multiple ways: through the Federal Register Process, through its "user fee" page on its website, and through its regular fee review. In FY 2010, Customs and Border Protection (CBP) issued its FY2010 Biennial User Fee Report. In this report CBP reported on the customs fee and the portion of the immigration fee for which it is responsible. In FY2012 Immigration and Customs Enforcement (ICE)completed its FY2010 and FY2011 immigration inspection cost study. While not in a consolidated format, together CBP, ICE and APHIS provide a comprehensive picture of the customs and agriculture inspection fees.

    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 Agriculture

  6. Status: Closed - Not Implemented

    Comments: In 2012 Customs and Border Protection (CBP) Officials said the Airport and Seaport Inspection User Fee Advisory Committee had been suspended but DHS was reviewing a revised charter for the advisory committee that would also clarify the role of CBP, Immigration and Customs Enforcement and the Animal and Plant Health Inspection Service.

    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 Agriculture

  7. Status: Closed - Not Implemented

    Comments: In 2012 Customs and Border Protection (CBP) Officials said the Airport and Seaport Inspection User Fee Advisory Committee had been suspended but DHS was reviewing a revised charter for the advisory committee that would also clarify the role of CBP, Immigration and Customs Enforcement and the Animal and Plant Health Inspection Service.

    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

  8. Status: Closed - Implemented

    Comments: In 2010, Customs and Border Protection (CBP) issued its FY2010 Biennial User Fee Report. In it, CBP reported on the customs fee and the portion of the immigration fee for which it is responsible. In 2012, Immigration and Customs Enforcement (ICE) officials issued its FY2010 and FY2011 immigration fee reviews. Animal Plant Health Inspection Service (APHIS) reports on the agriculture inspection fee in multiple ways: through the Federal Register Process, through its "user fee" page on its website, and through its regular fee review.

    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

  9. Status: Closed - Implemented

    Comments: In 2010, Customs and Border Protection (CBP) issued its FY2010 Biennial User Fee Report. In it, CBP reported on the customs fee and the portion of the immigration fee for which it is responsible. In 2012, Immigration and Customs Enforcement (ICE) officials issued its FY2010 and FY2011 immigration fee reviews. Animal Plant Health Inspection Service (APHIS) reports on the agriculture inspection fee in multiple ways: through the Federal Register Process, through its "user fee" page on its website, and through its regular fee review.

    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 Agriculture

  10. Status: Closed - Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that would provide authority to CBP to establish a single, common set of airline record-keeping requirements through regulation. Animal and Plant Health Inspection Service (APHIS) officials said they will amend its regulations to be consistent with the record-keeping requirements Customs and Border Protection obtains. To date Congress has not acted on this proposal.

    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

  11. Status: Closed - Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that inlcuded a provision to eliminate the fourth quarter remittance requirement for the immigration inspection fee by moving all three inspection fees to monthly remittance schedule. A monthly remittance schedule would allow CBP to reimburse the appropriations that initially funds inspection activities more quickly, making these appropriations available for other activites sooner. Animal and Plant Health Inspection Service (APHIS) officials said they will amend its regulations to be consistent with whatever remittance schedule Customs and Border Protection obtains. To date Congress has not acted on this proposal.

    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

  12. Status: Closed - Not Implemented

    Comments: In the fall of 2012, CBP and ICE officials said they had not developed or implmented a fee-sharing memorandum of understanding to include time frames for when funds would be transferred and to provide for periodic review and update.

    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

  13. Status: Closed - Implemented

    Comments: In fiscal year 2012, both ICE and CBP took steps to determine the extent to which immigration fee collections cover reimbursable activities. Specifically, ICE completed its cost study and found no cost variation for its immigration inspection activities for individuals who arrived aboard an airplane or sea vessel and officials said they intend to continue to analyze air and sea inspection activities together. ICE reported that the combined cost of fee-reimbursable air and sea immigration inspection activities was nearly $112 million for fiscal year 2011. In addition, CBP updated its biennial cost study and found its immigration inspection activity costs for arriving air passengers were higher than the activities for passengers arriving via sea vessel and officials said they intend to continue to analyze air and sea activities separately. CBP reported that its immigration inspection activities cost about $655 million for air passengers and $70 million for sea passengers for fiscal year 2011. According to ICE and CBP, fiscal year 2011 air and sea passenger immigration inspection costs were $837 million and collections were $659 million thus, the total costs exceeded total collections by $178 million. CBP officials said CBP included a proposal to increase the immigration inspection fee in the FY2014 budget.

    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

  14. Status: Closed - 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 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

  15. Status: Closed - Implemented

    Comments: The Animal Health and Plant Inspection (APHIS) and Customs and Border Protection (CBP) reached agreement on 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 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 them in determining their FY2008 projections.

    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 Agriculture

  16. Status: Closed - Implemented

    Comments: The Animal Health and Plant Inspection (APHIS) and Customs and Border Protection (CBP) reached agreement on 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 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 them in determining their FY2008 projections.

    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

  17. Status: Closed - Implemented

    Comments: In fiscal year 2011, Customs and Border Protection (CBP) developed a legislative proposal that inlcuded a provision to eliminate the fourth quarter remittance requirement for the immigration inspection fee by moving all three inspection fees to monthly remittance schedule. A monthly remittance schedule would allow CBP to reimburse the appropriations that initially funds inspection activities more quickly, making these appropriations available for other activites sooner. Animal and Plant Health Inspection Service (APHIS) officials said they will amend its regulations to be consistent with whatever remittance schedule Customs and Border Protection obtains. To date Congress has not acted on this proposal.

    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 Agriculture

 

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