Federal User Fees
Key Aspects of International Air Passenger Inspection Fees Should Be Addressed Regardless of Whether Fees Are Consolidated
GAO-07-1131, 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.
Status Legend:
Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
- In Process
- Open
- Closed - implemented
- Closed - not implemented
Recommendations for Executive Action
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: 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. 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
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 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: Open
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
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 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 Agriculture
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 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 Agriculture
Status: Open
Comments: Reporting and revising the share of immigration inspection fee provided to Customs and Border Protection and Immigration and Customs Enforcement is pending completion of Immigration and Customs Enforcment's (ICE) cost study. As of April 2011, ICE officials said they track and reimburse immigration inspection activities in the following year. Officials said they would provide information about the cost of inspection activities for FY2010. CBP officials said they had not received ICE's cost study or information about ICE's activity costs.
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: Open
Comments: A fee-sharing memorandum of understanding is pending completion of Immigration and Customs Enforcement's (ICE) cost study. As of April 2011, ICE officials said they track and reimburse immigration inspection activities in the following year. Officials said they would provide information about the cost of inspection activities for FY2010. CBP officials said they had not received ICE's cost study or information about ICE's activity costs.
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
Status: Open
Comments: In its FY 2010 Congressional Justification, Customs and Border Protection (CBP) stated that it would include in its legislative proposal a provision to establish a single set of airline record-keeping requirements for all three passenger inspection fees. However, this provision was not included in the legislative proposal provided to GAO. We will continue to follow-up with the agency on its status. Animal and Plant health Inspection Service (APHIS) officials said they will amend its regulations to be consistent with whatever record keeping requirements are established for the customs and immigration fees. 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
Status: Open
Comments: In its FY 2010 Congressional Justification, Customs and Border Protection (CBP) stated that it would include in its legislative proposal a provision to establish a single set of airline record-keeping requirements for all three passenger inspection fees. However, this provision was not included in the legislative proposal provided to GAO. We will continue to follow-up with the agency on its status.
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
Status: Open
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. CBP officials said Immigration and Customs Enforcement (ICE) has not provided CBP with cost information related to the portion of the immigration inspection fee ICE retains. 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
Status: Closed - Implemented
Comments: The Animal and Plant Health Inspection Service (APHIS) expanded the availability of information about its agricultural quarantine inspection (AQI) fees and the basis for these fees through a dedicated page on its public website. Here, APHIS provides detailed information about what the AQI services are, who provides the services, the authority under which AQI charges fees for the services, the current fee rate and the basis for the rate, collection and expenditure status, and scheduled changes to the fees and the services.
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: Open
Comments: Customs and Border Protection (CBP) coordinated with the Department of Homeland Security's (DHS) 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 has moved to amend the Committee's charter to formalize ICE and APHIS's participation and said it would include details on participation in the memorandum of agreements that CBP has with each agency. The charter is under review at DHS.
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: Open
Comments: Customs and Border Protection (CBP) coordinated with the Department of Homeland Security's (DHS) 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 has moved to amend the Committee's charter to formalize ICE and APHIS's participation and said it would include details on participation in the memorandum of agreements that CBP has with each agency. The charter is under review at DHS.
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
Status: Open
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. CBP officials said Immigration and Customs Enforcement (ICE) has not provided CBP with cost information related to the portion of the immigration inspection fee ICE retains. While not in a consolidated format, CBP 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: Congress
Status: Open
Comments: In 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. CBP officials said Immigration and Customs Enforcement (ICE) has not provided CBP with cost information related to the portion of the immigration inspection fee ICE retains. 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. While not consolidated, CBP and Animal Plant Health Inspection Service (APHIS) provide a comprehensive picture of the customs and agriculture inspection fees.
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: 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. 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: Congress
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.
Recommendations for Congressional Consideration
Recommendation: Congress may wish to consider harmonizing the passenger exemption and statutory definitions across the various inspections fees.
Agency Affected: Department of Homeland Security
Status: Closed - Implemented
Comments: Customs and Border Protection submitted a legislative proposal for Congressional consideration in fiscal year 2011 requesting Congress harmonize the passenger exemptions and statutory definitions across the three passenger inspection fees.
Recommendation: Congress may wish to consider eliminating the differences among the three fees in the authority to set fee rates.
Agency Affected: Department of Agriculture
Status: Closed - Implemented
Comments: Customs and Border Protection submitted a legislative proposal for Congressional consideration in fiscal year 2011 requesting Congress eliminate the differences among the three fees in terms of authority to set fee rates.
Recommendation: Congress may wish to consider whether it wishes the customs fee to be a full cost recovery fee.
Agency Affected: Department of Agriculture
Status: Closed - Implemented
Comments: Customs and Border Protection submitted a legislative proposal for Congressional consideration in fiscal year 2011 requesting Congress authorize the agency to set inspection fees to recover the full cost of passenger inspections.
Recommendation: Congress may wish to consider reviewing the activities that may be reimbursed by the customs fee collections.
Agency Affected: Department of Homeland Security
Status: Closed - Not Implemented
Comments: Customs and Border Protection submitted a legislative proposal for Congressional consideration in fiscal year 2011 requesting Congress authorize the alignment of the use of fee collections with the inspection costs.