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Highlights

America's port infrastructure is vital to U.S. foreign trade and a bulwark for national security. One way the federal government funds port-related programs is to levy user fees. GAO was asked to examine (1) what is known about the way selected fees assessed on air and sea port users are set, collected, used, and reviewed and (2) the effects of these attributes on program operations. GAO examined the Harbor Maintenance Fee (HMF), the Merchandise Processing Fee (MPF), and the Customs, Immigration, and Agricultural Quarantine Inspection (AQI) user fees assessed on air and cruise passengers and commercial vessels using criteria that have often been used to assess user fees and taxes--equity, efficiency, revenue adequacy, and administrative burden.

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Recommendations

Matter for Congressional Consideration

Matter Status Comments
To support the efficiency and equity of the Harbor Maintenance Fee as well as its credibility among stakeholders, Congress should consider reviewing the link between the amount of the HMF and the amount of expenditures for the harbor maintenance program.
Closed - Implemented
Congress is currently reviewing the link between the amount of spending for the harbor maintenance program with harbor maintenance fee revenues. The "Realize America's Maritime Promise (RAMP) Act" (H.R.104, introduced 1/5/11, and S.412, introduced 2/17/2011) would align the level of annual spending from the Harbor Maintenance Trust Fund with levels of collections plus interest. H.R. 104 was referred to the House Rules and House Transportation and Infrastructure committees. S.412 was referred to the Senate Committee on Environment and Public Works.
To support the efficiency and equity of the Harbor Maintenance Fee as well as its credibility among stakeholders, Congress should consider establishing an advisory committee on the HMF and the activities that it funds, that includes payers of the fee.
Closed - Not Implemented
As of August 2012, Congress had not taken action on this matter.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Homeland Security The Secretary of Homeland Security should develop a legislative proposal, in consultation with Congress, to harmonize the customs, immigration, and agricultural quarantine inspections fees. Harmonizing the fees could include (1) eliminating the differences in the way charges for overtime inspections are assessed to commercial vessel operators; (2) raising the cap on customs inspection fees for commercial vessels, in line with the 2007 increase in this fee, so that the cap once again corresponds to a whole number, rather than a fraction of payments; (3) revising the customs passenger and vessel inspection fees so that the inspection activities the fees are authorized to fund are more closely aligned with actual inspection activities; and (4) requiring monthly, rather than quarterly, collection of the customs and immigration inspection sea and air passenger fees.
Closed - Implemented
In fiscal year 2011, the U.S. Customs and Border Protection (CBP) submitted a legislative proposal to consolidate customs and immigration inspection user fees. The proposal would harmonize the fees as GAO recommended.
Department of Homeland Security The Secretary of Homeland Security should direct CBP to automate its systems for collecting commercial vessel fees to reduce the reliance on paper receipts for tracking payments and to support electronic payments, rather than payment by check or cash.
Closed - Not Implemented
As of April 2011, CPB's Office of Administration had completed a feasibility study for the automation of the vessel fee collections and submitted a request to fund the automation of the collections process for these fees. In January 2012, CBP notified GAO that CBP Office of Administration management decided not to pursue funding to implement this recommendation.
Department of Homeland Security The Secretary of Homeland Security should direct CBP to include in its biennial report on the Merchandise Processing Fee information on total program collections relative to total program costs, over time, as well as any recommendations for updating the amount and authorized uses of the fee.
Closed - Implemented
In February 2009, the U.S. Customs and Border Protection's Office of Finance issued its Merchandise Processing Fee Study report. The report includes analyses of fee collections and the costs of merchandise processing activities, over time, and makes recommendations to align authorized activities with current merchandise processing activities.
Department of Homeland Security The Secretary of Homeland Security should assess interest and penalties on late HMF payments for domestic shipments, shipments into foreign trade zones, and sea passengers.
Closed - Implemented
The Department of Homeland Security's U.S. Customs and Border Protection (CBP) has implemented a process to issue interest bills for late Harbor Maintenance Fee payments. As of September 2008, CBP had issued bills for $1,255,173 in late payment interest charges. By implementing a system to assess and collect interest on late HMF payments, CBP has improved oversight of these fee payments and stemmed revenue losses.
Department of Agriculture The Secretary of Agriculture should improve the transparency of the regulatory process of setting the AQI fee rates by providing clearer information about how the rates for each of the fee types (vessel, air passenger, aircraft, etc.) are determined.
Closed - Implemented
The Department of Agriculture concurred with this recommendation. The USDA Animal and Plant Health Inspection Service (APHIS) has taken steps to update the Agricultural Quarantine Inspection (AQI) fees through the regulatory process. According to APHIS officials, it takes 18 to 24 months on average to clear proposed and final rules through the Federal regulatory process. In May 2012, APHIS completed a comprehensive study of AQI program costs and fees, providing clearer information about how the rates are set for each type of AQI fee. APHIS is now working with Customs and Border Protection (CBP) and consulting with stakeholders on a plan for proposed fee adjustments. APHIS will provide full disclosure of all costs the fees are designed to recover when it publishes the fee proposal in the Federal Register. APHIS officials expect to publish the proposed rule in the summer of 2013.
Department of Agriculture The Secretary of Agriculture should in accordance with OMB Circular No. A-25 guidance and U.S. Department of Agriculture policy, include in AQI fees the indirect and imputed costs currently not considered when setting AQI fee rates and either transfer the appropriate portions of those collections to the general fund of the Treasury as required, or seek Congressional approval to spend these monies on related AQI program costs.
Closed - Implemented
According to the Department of Agriculture (USDA), on February 29, 2008, its Animal and Plant Health Inspection Service (APHIS) implemented a new policy establishing a procedure for the APHIS Financial Management Division to properly identify the amount of unfunded leave costs that should be included in the Agency's biennial user fee report and user fee calculations. In March 2008, APHIS included unfunded leave costs in its user fee calculations for upcoming user fees for fiscal years 2009 through 2013 for the import, export, and quarantine of animals and animal products. Additionally, APHIS is designing new reimbursable overtime fees to recover its costs for unfunded leave, and estimated that the new fees would be effective in the middle of fiscal year 2011. USDA/APHIS has taken steps to update the Agricultural Quarantine Inspection (AQI) user fees through the Federal regulatory process. In May 2012, APHIS completed a comprehensive study of AQI program costs and its proposals to update the fees include imputed costs. APHIS officials expect to publish the proposed rule for the updated fees in the summer of 2013.
Department of Homeland Security Further, the Secretaries of Agriculture and Homeland Security should conduct joint reviews of the customs, immigration, and agricultural quarantine inspection fees and consolidate reporting, to include the activities and proportion of fees for which CBP, Immigration and Customs Enforcement, and Animal and Plant Health Inspection Service are each responsible, to provide a comprehensive picture of the user fees supporting the sea passenger and vessel inspections processes.
Closed - Not Implemented
In response to our recommendation, the U.S. Department of Agriculture/Animal and Plant Health Inspection Service (APHIS) and the Department of Homeland Security's (DHS) U.S. Customs and Border Protection (CBP) conducted joint reviews of the agricultural quarantine inspection fees and reported the information in a single, consolidated report. The U.S. Immigration and Customs Enforcement (ICE) completed a study of its costs to administer the fee in August 2012; however, although the study breaks out total inspection costs by port, the ICE cost study still does not distinguish air inspection costs from sea inspection costs. Therefore, DHS does not have the information needed to provide the comprehensive picture of the immigration fees envisioned in GAO's recommendation.
Department of Agriculture Further, the Secretaries of Agriculture and Homeland Security should conduct joint reviews of the customs, immigration, and agricultural quarantine inspection fees and consolidate reporting, to include the activities and proportion of fees for which CBP, Immigration and Customs Enforcement, and Animal and Plant Health Inspection Service are each responsible, to provide a comprehensive picture of the user fees supporting the sea passenger and vessel inspections processes.
Closed - Implemented
According to the Department of Agriculture (USDA), in response to our recommendation, the USDA's Animal and Plant Health Inspection Service (APHIS) and the Department of Homeland Security's (DHS) U.S. Customs and Border Protection (CBP) conducted joint reviews of the agricultural quarantine inspection fees and reported the information in a single, consolidated report. This joint budget and performance plan reports AQI user fee costs by user fee category including costs for commercial vessel inspections. It also contains staff year, workload measure, and performance data. On July 29, 2008 APHIS also produced a quick reference guide for international arrivals, including vessels and vessel passengers.
Corps of Engineers Further, the Secretaries of Homeland Security and the Army should direct CBP and the Corps to improve oversight of the HMF collections by working together to develop a method for the Corps to provide information on domestic vessel movements to CBP.
Closed - Implemented
As of April 2011, according to the Department of Homeland Security, Customs and Border Protection (CBP) receives quarterly reports of domestic shipping information from the U.S. Army Corps of Engineers (Corps). CBP uses this information to improve collection efforts related to compliance with the the Harbor Maintenance Fee (HMF), resulting in increased HMF collections.
Department of Homeland Security Further, the Secretaries of Homeland Security and the Army should direct CBP and the Corps to improve oversight of the HMF collections by working together to develop a method for the Corps to provide information on domestic vessel movements to CBP.
Closed - Implemented
As of April 2011, according to the Department of Homeland Security, Customs and Border Protection (CBP) receives quarterly reports of domestic shipping information from the U.S. Army Corps of Engineers (Corps). CBP uses this information to improve collection efforts related to compliance with the the Harbor Maintenance Fee (HMF), resulting in increased HMF collections.
Department of Homeland Security Further, the Secretaries of Homeland Security and the Army should direct CBP and the Corps to improve oversight of the HMF collections by working together to develop a method for the Corps to provide referrals of audit candidates to the CBP Office of Regulatory Audit to be considered in the context of CBP's risk-based system for selecting audit candidates.
Closed - Implemented
As of April 2010 Custom and Border Protection (CBP) and the U.S. Corps of Engineers (Corps) finalized a template for the Corps to use in providing referrals of audit candidates. In 2010 and 2011, CBP's Office of Regulatory Audit solicited potential audit referrals from the Corps for inclusion in its Annual Audit Plan.
Corps of Engineers Further, the Secretaries of Homeland Security and the Army should direct CBP and the Corps to improve oversight of the HMF collections by working together to develop a method for the Corps to provide referrals of audit candidates to the CBP Office of Regulatory Audit to be considered in the context of CBP's risk-based system for selecting audit candidates.
Closed - Implemented
As of April 2010 Custom and Border Protection (CBP) and the U.S. Corps of Engineers (Corps) finalized a template for the Corps to use in providing referrals of audit candidates. In 2010 and 2011, CBP's Office of Regulatory Audit solicited potential audit referrals from the Corps for inclusion in its Annual Audit Plan.
Corps of Engineers Further, the Secretaries of Homeland Security and the Army should direct CBP and the Corps to improve oversight of the HMF collections by working together to develop information on CBP's costs to collect and administer the HMF, for inclusion in the Corps' annual report to Congress on the Harbor Maintenance Trust Fund.
Closed - Implemented
In July 2012, U.S. Customs and Border Protection (CBP) provided information on CBP's costs of collecting the Harbor Maintenance Fee to the U.S. Army Corps of Engineers (Corps). According to Corps officials, they have included this cost information in the 2011 report on the Harbor Maintenance Trust Fund.
Department of Homeland Security Further, the Secretaries of Homeland Security and the Army should direct CBP and the Corps to improve oversight of the HMF collections by working together to develop information on CBP's costs to collect and administer the HMF, for inclusion in the Corps' annual report to Congress on the Harbor Maintenance Trust Fund.
Closed - Implemented
As of April 2010, U.S. Customs and Border Protection (CBP) had completed a preliminary analysis identifying CBP costs of administering the Harbor Maintenance Fee (HMF), and had plans to meet with U.S. Army Corps of Engineers representatives to discuss these costs. CBP listed its total costs for collecting the HMF in its May 2010 User Fee Biennial Report. In July 2012, CBP provided information on the costs of collecting the HMF to the Corps. According to Corps officials, they will include this cost information in the 2011 report on the Harbor Maintenance Trust Fund, which they expect will be completed by the fall of 2012.
Corps of Engineers Further, the Secretaries of Homeland Security and the Army should direct CBP and the Corps to improve oversight of the HMF collections by working together to develop an annual budget request for CBP-related salaries and expenses equal to, rather than in excess of, CBP's actual costs associated with collecting the HMF.
Closed - Implemented
U.S. Customs and Border Protection (CBP) reviewed the cost to CBP of collecting the Harbor Maintenance Fee. In its fiscal year 2011 budget request, CBP requested reimbursement from the Harbor Maintenance Trust Fund consistent with this analysis.
Department of Homeland Security Further, the Secretaries of Homeland Security and the Army should direct CBP and the Corps to improve oversight of the HMF collections by working together to develop an annual budget request for CBP-related salaries and expenses equal to, rather than in excess of, CBP's actual costs associated with collecting the HMF.
Closed - Implemented
U.S. Customs and Border Protection (CBP) reviewed the cost to CBP of collecting the Harbor Maintenance Fee. In its fiscal year 2011 budget request, CBP requested reimbursement from the Harbor Maintenance Trust Fund consistent with this analysis.

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