A New Approach to Increase Trade and Security: An Examination of CBP's Public Private Partnerships

11/04/2015

Committee on Homeland Security Subcommittee on Border and Maritime Security

Chairman Miller, Ranking Member Vela, distinguished members of the Subcommittee, thank you for the opportunity to provide this testimony. As President of the National Treasury Employees Union (NTEU), I have the honor of leading a union that represents over 25,000 Customs and Border Protection (CBP) Officers and trade enforcement specialists stationed at 328 land, sea and air ports of entry (POEs) across the United States (U.S.) as well as at 16 Preclearance POEs.

The purpose of this hearing is to explore the expanded role of public private-partnerships as a mechanism to fund additional CBP Officers. NTEU applauds the Subcommittee for recognizing that there is no greater roadblock to legitimate trade and travel efficiency than the lack of sufficient staffing at the ports. Understaffed ports lead to long delays in our travel and commercial lanes as people and cargo wait to enter the U.S. to long delays in our travel and commercial lanes as people and cargo wait to enter U.S. NTEU strongly supported funding to hire an additional 2000 new CBP Officers at the air, sea and land ports of entry provided in the FY 2014 Omnibus bill. NTEU also strongly supports increasing immigration and customs user fees and indexing these user fees to inflation to fund the hiring of additional CBP Officers as identified by CBP’s Workforce Staffing Model.

In any examination of CBP’s public private partnerships, NTEU recognizes first and foremost the role that user fees play to pay for passenger processing, trade enforcement, and facilitation inspection services provided by CBP to international traders and travelers. NTEU strongly supports increasing and indexing to inflation all user fees collected by CBP and depositing these indexed fees into designated user fee accounts to fund the hiring of additional CBP Officers as identified by CBP’s Fiscal Year (FY) 15 Workforce Staffing Model. According to CBP’s FY 2016 Congressional Justification for Salaries and Expenses, despite an increase in appropriated funding for the hiring of 2,000 new CBP Officers, CBP still faces a staffing shortage of 2,700 CBP Officers in FY 2016 and beyond.

For years, NTEU has maintained that delays at the ports result in real losses to the U.S. economy. According to the U.S. Department of the Treasury, more than 50 million Americans work for companies that engage in international trade and, according to a University of Southern California (USC) study, “The Impact on the Economy of Changes in Wait Times at the Ports of Entry”, dated April 4, 2013, for every 1,000 CBP Officers added, the U.S. can increase its gross domestic product by $2 billion, which equates to 33 new private sector jobs per CBP Officer added. This analysis was supplemented by USC in its update entitled “Analysis of Primary Inspection Wait Times at U.S. ports of Entry” published on March 9, 2014. This study found that by adding 14 CBP Officers at 14 inspection sites at 4 international airports, the potential total net impact would increase annual Gross Domestic Product (GDP) by as much as $11.8 million.

Customs User Fees

CBP collects Customs User Fees (CUFs) which include CUFs authorized by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to recover certain costs incurred for processing, among other things, air and sea passengers, and various private and commercial land, sea, air, and rail carriers and shipments. The source of these user fees are commercial vessels, commercial vehicles, rail cars, private aircraft, private vessels, air passengers, sea passengers, cruise vessel passengers, dutiable mail, customs brokers and barge/bulk carriers.

COBRA fees are deposited into the Customs User Fee Account and are designated by statute to pay for services provided to the user, such as 100% of inspectional overtime for passenger and commercial vehicle inspection during overtime shift hours. Of the 23,775 CBP Officers currently funded, COBRA fees fund 2,859 full-time equivalent CBP Officers.

The Administration proposed in both its FY 2015 and FY 2016 budget requests, an increase of $2 in CUFs. If enacted, a $2 increase in CUFs would support the hiring of 900 new CBP Officers. According to NTEU’s calculations indexing CUFs to inflation and depositing that increase into the Customs User Fee Account would support the hiring of approximately 600 new CBP Officers.

Diversion of Customs User Fees

Any increases to the Customs User Fee Account should be properly used for much-needed CBP staffing and not diverted to unrelated projects. Indexing COBRA user fees to inflation would raise $1.4 billion over ten years—a potential $140 million per year funding stream to help pay for the hiring of additional CBP Officers to perform CBP’s national security, law enforcement and trade and travel facilitation missions.

The Senate-approved highway bill, HR 22, includes a provision, Section 52202, that indexes CUFs to inflation, but diverts this funding from the Customs User Fees Account to the General Fund to pay for unrelated infrastructure projects. Again, indexing CUFs to inflation and directing the additional funding to the Customs User Fee Account would support the hiring of new CBP Officers to address the current 2,700 CBP Officer staffing shortage. If HR 22 is enacted with no change to Section 52202, CUF payers would pay $140 million a year in additional COBRA fees, but CBP would not receive one additional dime to fund much needed new CBP Officer personnel.

If Congress is serious about job creation, wait times, international tourism, trade enforcement and facilitation, Congress should reject Section 52202 of HR 22 and instead authorize indexing the COBRA portion of CUFs to inflation and use the increased fees to improve border security and processing.

Immigration User Fees

CBP collects immigration inspection user fees (IUFs) from air and sea passengers traveling to the U.S. Increasing and indexing the IUF will allow CBP to better align air passenger inspection fee revenue with the costs of providing immigration inspection services. Of the 23,775 CBP Officers currently funded, IUFs fund 4,190 CBP Officer positions.

According to CBP’s FY 2016 Congressional Justification, IUF collections will remain stagnant in comparison to immigration costs. In FY 2015, IUFs raised about $630 million, while CBP’s actual costs to provide immigration inspections totaled about $830 million—thereby allowing CBP to recover only 76% of total costs. IUF rates were last increased from $6 to $7 in November 2001. The FY 2016 budget requests a $2 increase in the IUF. The additional revenue generated by this $2 fee increase would support over 1,400 new CBP Officers.

Reimbursable Service Agreements

In recent years, in order to find alternative sources of funding to address serious CBP Officers and Agriculture Specialist staffing shortages, CBP received authorization and has entered into reimbursable service agreements (RSAs) with the private sector as well as with state and local government entities. These organizations reimburse CBP for additional inspection services including overtime pay and the hiring of new personnel that in the past has been paid for entirely by user fees or appropriated funding. According to CBP, since the program began in 2013, CBP has entered into agreements with 21 stakeholders, providing more than 112,000 additional processing hours for incoming commercial and cargo traffic at a cost of nearly $13 million to these public and private sector partners.

Section 560 of the FY 2013 DHS appropriations bill authorized CBP to enter into five reimbursable fee agreements for a 5-year term with the City of El Paso land port of entry, the City of Houston Airport System; Dallas/Fort Worth International Airport; Miami-Dade County; and the South Texas Assets Consortium (STAC.) It should be noted that agricultural inspectional services are not eligible for reimbursement under the Section 560 program, as it is limited to “customs and immigration” inspectional services such as salaries, benefits , relocation expenses, travel costs and overtime as necessary at the City of El Paso land ports and solely to overtime at the three air ports of entry.

An expansion of the Section 560 RSA CBP pilot program was authorized by Section 559 of the Consolidated Appropriations Act of 2014, P.L. 113-76. Section 559 expanded on the Section 560 RSAs by allowing for increased services at newly selected ports, to include customs, immigration, agricultural processing and border security services. Because of the need for CBP Agriculture Specialists to process incoming produce, STAC quit the 560 program and applied for the 559 program. Under Section 560, RSAs were limited to CBP Officer overtime and staffing, except in the air environment where only CBP Officer overtime reimbursement is allowed. Under both Section 560 and 559, reimbursement for the hiring of additional CBP Officer and CBP Agriculture Specialist positions is allowed at sea and land ports, but only overtime reimbursement is allowed at airports.

The new Section 559 has no restriction on the number of RSAs for sea and land ports and no limits on the terms of agreement for customs, agricultural processing, border security services and immigrations inspection -related services. These costs may include salaries, benefits, administration, transportation, relocation expenses and overtime expenses incurred as a result of the services requested.

NTEU’s RSA Concerns

NTEU believes that the RSA program would be unnecessary if Congress authorized user fees collected to be indexed to inflation and the additional funding provided by indexing be used as set forth in existing statute. Diverting the difference in the amount of CUFs collected currently and the additional amount indexed to inflation to non-CBP related projects will both increase the cost to the private sector by escalating the current level of CUFs paid over the next ten years, and by compelling the private sector to separately fund, through these RSAs, CBP inspectional staffing and overtime.

NTEU also believes that the RSA program is a band aid approach and cannot replace the need for Congress to either authorize an increase in COBRA and immigration user fees indexed to inflation or to authorize increased appropriations to hire additional new CBP Officers to adequately address CBP staffing needs.

Further, NTEU strongly believes that CBP should not enter into a RSA if it would negatively impact or alter services funded under any Appropriations Acts, or it is provided from any Treasury account derived by the collection of fees. RSAs simply cannot replace CBP appropriated or user fee funding--making CBP a “pay to play” agency. NTEU has serious concerns about. the a significant component of “pay to play” in CBP’s new Preclearance expansion program.

NTEU also believes that the use of RSAs to fund CBP staffing shortages raises significant equity and other issues, which calls for an engaged Congress conducting active oversight.

For example:

• How does CBP insure that RSAs are not only available to ports of entry with wealthy private sector partners? (When RSAs were first considered, there was a proposal to require 30% of the total RSA funds collected be reserved for ports with greatest need, not just those that have partners with the greatest ability to pay.)

• How does CBP ensure that RSA funds pay for the hiring of new CBP Officer and Agriculture Specialist personnel and are not simply used to pay for relocating existing CBP personnel from other ports (robbing from Port A to staff Port B without hiring additional staff)?

• How does CBP ensure a long-term public-private funding stream? ((When RSAs were first considered, there was a proposal to have RSA paid up front for ten years over 3 installments.)

There are also some port locations where staffing shortages are so severe currently, that even entering into a RSA program may be problematic. In 2009, there were approximately 10.7 million international travelers processed at New York’s John F. Kennedy airport (JFK). By the end of 2015, it is estimated that JFK will process 14.5 million passengers, a 30% increase in mission critical work over a six year period. Over this same period, NTEU estimates that there has been a net gain of approximately 100 officers to process over 3.5 million additional travelers.

For the last two years JFK management has received overtime cap waivers for CBP Officers compelling these officers to work 12, 13 or 15 hour shifts day after day for months on end. Officers were required to come in hours before their shifts, to stay an indeterminate number of hours after their shifts (in the same day) and compelled to come in for more overtime hours on their regular days off as well.

The majority of CBP Officers are already working all allowable overtime, much of which is involuntary. All CBP Officers are aware that overtime assignments are an aspect of their jobs. However, long periods of overtime hours can severely disrupt an officer’s family life, morale and ultimately their job performance protecting our nation.

CBP is currently negotiating separate RSAs with British Airways and American Airways at JFK. In this situation where existing Officers’ overtime at JFK is already stretched beyond their limits, the RSA should be restricted to hiring new CBP Officers, and not to simply expanding overtime hours.

Another concern is that CBP continues to be a top-heavy management organization. In terms of real numbers, since its creation, the number of new managers has increased at a much higher rate than the number of new frontline CBP hires. According to CBP’s own numbers, a snapshot of CBP workforce demographics in September 2014 showed that the Supervisor to Frontline employee ratio was 1 to 5.9 for the CBP workforce, 1 to 6.1 for CBP officers and 1 to 6.9 for CBP Agriculture Specialists.

The tremendous increase in CBP managers and supervisors has come at the expense of national security preparedness and frontline positions. Also, these highly paid management positions are straining the CBP budget. With the increased use of RSAs to fund additional CBP Officer new hires, NTEU urges that CBP return to a more balanced supervisor to frontline employee ratio.

RECOMMENDATIONS

Funding for additional CBP staff must be increased to ensure security and mitigate prolonged wait times for both trade and travel at our nation’s ports of entry. The use of RSAs as an alternate source of funding is merely a band aid approach and cannot replace the need for Congress to authorize an increase in CUFs and immigration user fees by indexing these fees to inflation or to provide sufficient appropriations to hire 2,700 new CBP Officers to adequately address CBP staffing needs. Therefore, NTEU urges the Committee to:

• Support legislation to authorize funding through appropriations and a user fee increase indexed to inflation for the needed 2,700 new CBP Officers;

• Engage in robust oversight of RSAs to ensure that this program does not replace primary funding sources or result in inequitable distribution of CBP Officer resources;

• Reject the provision in the Senate-approved highway bill that diverts needed Customs user fee funding from CBP staffing and overtime to unrelated projects.

The more than 25,000 CBP employees represented by NTEU are proud of their part in keeping our country free from terrorism, our neighborhoods safe from drugs and our economy safe from illegal trade, while ensuring that legal trade and travelers move expeditiously through our air, sea and land ports. These men and women are deserving of more resources to perform their jobs better and more efficiently.

Thank you for the opportunity to submit this testimony to the Committee on their behalf.