Authorization of Customs snd Trade Functions

4/26/2006

Senate Committee on Finance

Chairman Grassley, Ranking Member Baucus, distinguished members of the Committee; I would like to thank the Committee 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 15,000 Customs and Border Protection Officers (CBPOs) and trade enforcement specialists who are stationed at 317 land, sea and air ports of entry (POEs) across the United States. CBPOs make up our nation’s first line of defense in the wars on terrorism and drugs.

In addition, Customs and Border Protection (CBP) entry specialists, import specialist and trade compliance personnel enforce over 400 U.S. trade and tariff laws and regulations in order to ensure a fair and competitive trade environment pursuant to existing international agreements and treaties, as well as stemming the flow of illegal contraband such as child pornography, illegal arms, weapons of mass destruction and laundered money. CBP is also a revenue collection agency. In 2005, CBP commercial operations personnel collected an estimated $31.4 billion in revenue on over 29 million trade entries.

Commercial Operations Staffing Shortages:

When CBP was created, it was given a dual mission of not only safeguarding our nation’s borders and ports from terrorist attacks, but also the mission of regulating and facilitating international trade; collecting import duties; and enforcing U.S. trade laws.

NTEU is deeply concerned with the lack of resources, both in dollars and manpower, devoted to the facilitation and operations aspects of CBP’s trade functions. Because of continuing staffing shortages in commercial operations personnel, experienced commercial operations professionals at all levels, who long have made the system work, are leaving or have left or are so discouraged that they are resigned to frustration. In addition, 25% of import specialists will retire or are eligible to retire within the next few years.

When Congress created the Department of Homeland Security, the House Ways and Means and Senate Finance Committees included Section 412(b) in the Homeland Security Act of 2002 (P.L. 107-296). This section mandates that “the Secretary [of Homeland Security] may not consolidate, discontinue, or diminish those functions...performed by the United States Customs Service…on or after the effective date of this Act, reduce the staffing level, or reduce the resources attributable to such functions, and the Secretary shall ensure that an appropriate management structure is implemented to carry out such functions.”

When questioned on DHS compliance with Sec. 412 (b), then-CBP Commissioner Bonner stated in a June 16, 2005 letter to Ways and Means ranking member Representative Charles Rangel that “While overall spending has increased, budget constraints and competing priorities have caused overall personnel levels to decline.”

The bottom line is that DHS is non-compliant with Section 412(b) of the HSA. As stated in the June 16, 2005 letter, “CBP employed 1,080 non-supervisory import specialists in FY 2001 and 948 as of March 2005.” CBP’s most recent data shows 892 full-time, plus 21 part-time Import Specialists—913 total employed by CBP.

On March 30, 2006, legislation was introduced in the House and Senate, S. 2481 and H.R. 5069, that would require the Department of Homeland Security to comply with Section 412(b) of the Homeland Security Act (P.L. 107-296).

Customs revenues are the second largest source of federal revenues collected by the U.S. Government next to tax revenues. The Committee depends on this revenue source to fund federal priority programs. The Committee should be concerned as to how much DHS non–compliance with Section 412(b) of the HSA cost in terms of revenue loss to the U.S. Treasury?

The Committee should inquire of CBP their plans to become compliant with Section 412(b) and timeline to become compliant.

CBP’s Lack of Optimal Staffing Model:

According to the GAO, “as of June 2003, CBP has not increased staffing levels [at the POEs]” (see GAO-05-663 page 19) and “CBP does not systematically assess the number of staff required to accomplish its mission at ports and airports nationwide…”

GAO observes that “not identifying optimal staffing levels prevent CBP from performing workforce gap analyses, which could be used to justify budget and staffing requests.” This is information Congress needs in order to perform its oversight and appropriations function. CBP states that “absent additional resources, the only way to address these gaps would be to relocate officers…this is not a viable solution because of the costs associated with relocating CBP officers. CBP officials stated that they have not assessed overall staffing needs across ports or airports and do not plan to do so with the proposed model because they do not expect to receive any additional resources given the current budget climate.” (pages 28-29)

It is instructive here to note that the former U.S. Customs Service’s last internal review of staffing for Fiscal Years 2000-2002 dated February 25, 2000, known as the Resource Allocation Model (RAM), shows that the Customs Service needed over 14,776 new hires just to fulfill its basic mission--and that was before September 11. Since then the Department of Homeland Security was created and the U.S. Customs Service was merged with the Immigration and Nationalization Service and parts of the Agriculture Plant Health Inspection Service to create Customs and Border Protection (CBP). CBP was given an expanded mission of providing for both the first line of defense against domestic terrorism and to make sure trade laws are enforced and trade revenue collected.

The RAM also notes that in 1998 the base total of import specialist positions was 1,249 and the import specialist optimal staffing level for 2002 is 1,489 -- an addition of 240 positions. It is NTEU’s understanding that the current number of full-time import specialists is 892. This is 357 less than the 1998 base total, and 597 less than the projected 2002 optimal staffing level. (See page 2 of U.S. Customs Service Optimal Staffing Levels Fiscal Years 200-2002 attached.)

The original deadline for completing CBP’s proposed, but fatally flawed, staffing model was April 2005. NTEU asks the Committee to direct CBP to design and complete a new staffing model that includes overall staffing needs and to assess optimal staff levels at the 317 Ports of Entry to fulfill their dual security-commercial mission, so that Congress will have information from CBP that justifies it’s budget and staffing request allowing Congress to adequately address its authorization, oversight and appropriations responsibilities.

Import Specialist Redesign Model:

It has come to NTEU’s attention that Acting Commissioner Spero is in the process of reviewing the Import Specialist Redesign Model. It is our understanding this Import Specialist Redesign Model proposes to change the day-to-day operations of Import Specialists by migrating the physical verification of cargo from CBPOs to import specialists. Import Specialists have an interest in performing the trade examinations that their investigations generate, they do not have the resources or training to do the physical cargo inspections that are currently tasked to CBPOs.

The Committee should be concerned that CBP is contemplating the transfer of some of the CBPO’s inspection duties to their unarmed commercial trade enforcement and duty collection specialists. Will this further dilute the trade and revenue functions at CBP? Will it dilute the security functions at the POEs?

What is the timeline for CBP’s development of its Import Specialist Redesign Model? How will CBP ensure that this redesign plan is in compliance with Section 412(b) of the HSA that prohibits the Secretary from consolidating, discontinuing or diminishing trade functions or reducing the staffing level, or resources attributable to such functions?

In Section 412(b), Congress has set a floor for import specialists and other commercial operations personnel. Congress must also make sure that these personnel assets are fenced off from being diverted elsewhere within CBP.

One Face at the Border Initiative:

On September 2, 2003, CBP announced the misguided One Face at the Border (OFAB) initiative. The initiative was designed to eliminate the pre-9/11 separation of immigration, customs, and agriculture functions at US land, sea and air ports of entry. In practice the OFAB initiative has resulted in diluting customs, immigration and agriculture inspection specialization and quality of passenger and cargo inspections. Under OFAB, former INS agents that are experts in identifying counterfeit foreign visas are now at seaports reviewing bills of lading from foreign container ships, while expert seaport Customs inspectors are now reviewing passports at airports. The processes, procedures and skills are very different at land, sea and air ports, as are the training and skills sets needed for passenger processing and cargo inspection.

It is apparent that CBP sees its One Face at the Border initiative as a means to “increase management flexibility” without increasing staffing levels. For this reason, Congress, in the Immigration and Border Security bill passed by the House last year, HR 4437, section 105, requires the Secretary of Homeland Security to submit a report to Congress “describing the tangible and quantifiable benefits of the One Face at the Border Initiative…outlining the steps taken by the Department to ensure that expertise is retained with respect to customs, immigration, and agriculture inspection functions…” NTEU urges the Committee to add similar OFAB study language to the Customs Authorization legislation.

In the same vein as the One Face at the Border initiative, it has come to NTEU’s attention that increasingly CBP is “detailing” import specialists and other commercial operations personnel to backfill CBPO vacancies. The stresses of commercial operations staffing shortages are being compounded by CBP assigning new inspection duties to commercial operations personnel. NTEU has heard that OPM may be in the process of rewriting commercial operations position descriptions to reclassify job duties previously assigned to CBPOs to import specialists and/or entry specialists. NTEU urges the Committee to look into any reclassification of these commercial operations jobs that supply a valuable U.S. Government funding source.

Customs-Trade Partnership Against Terrorism (C-TPAT):

C-TPAT is a voluntary program whereby importers, brokers, air, sea, land carriers, and other entities in the international supply chain and intermodal transportation system to enter into partnerships with DHS. C-TPAT allows DHS to validate the entities’ security procedures and supply chains in exchange for speedier entry and clearance into U.S. ports. Currently, CBP employs only 80 Supply Chain Specialist to validate over 10,000 C-TPAT applicants. NTEU strongly endorses CBP hiring additional staff to validate C-TPAT applicants.

NTEU recognizes that the only way to speed up the validation process for the voluntary C-TPAT program is to commit more financial and human resources to the validation process. In several pieces of port security legislation before Congress, however, provisions have been added that would allow expanding the validation effort through the use of third parties. In order to speed up the C-TPAT validation process, whether done by CBP employees or CBP contracting out the validation process to the private sector, it will cost additional money. A key question remains, where does this money come from?

NTEU is concerned that legislative language in proposed port security legislation would allow CBP to spend their limited budget to hire private contractors to perform these third party validations.

As stated before, NTEU believes that C-TPAT validations should be done by CBP employees paid for by a customs fee. We also recognize that CBP’s resources are extremely limited and not likely to be significantly increased. If Congress decides to allow third part validations, the applicants, not CBP, should pay the costs of these third party contracts. CBP should not to be a party to the third party validation contract, nor responsible for the cost of third party validations. The applicant must pay all costs associated with the third party validation.

NTEU also strongly believes that CBP must have final say in reviewing and approving these certified third party validations, before the designation is final. C-TPAT participants should only be allowed to contract with independent third parties to conduct validations and assessments if these validations are submitted to the Secretary for approval. It is CBP that must have the ultimate responsibility to review the validation submitted by the third party entity hired by the C-TPAT applicant, and it is CBP, not the third party entity, that makes the final determination as to eligibility.

Finally, in order to eliminate conflicts of interest and possible collusion, third party validators must be independent of the C-TPAT participants they are validating. C-TPAT applicants, under the third party validation program, should not be policing themselves by paying another company to validate them, with no federal requirements, review and approval.

This third party validation process would be similar to the independent third party accounting audits required under Sarbanes-Oxley and submitted to the SEC for approval.

Study of Dedicated Funding:

In 2006, 11 million containers came into the United States and this year that figure is expected to grow by ten percent. Additional commercial operations staffing and training funds are needed to address this growth in trade. In addition, as evidenced by the C-TPAT program, private sector coordination funding is also needed. Multiple proposals for utilization of some form of additional customs fees are currently being promoted to support a great variety of proposed programs. The new security needs along with important national trade policy goals require additional financial resources.

NTEU encourages the Committee to examine the question of collection and utilization of fees. This study should determine the relationship between current fees and monies allocated for CBP services and assess the need for additional fees.

Increase Trade Personnel Pay Grades:

One final issue tied to CBP funding of commercial operations personnel is the fact the journeyman grade of import specialists has remained at a GS-11. This, despite the fact that most import specialists across the country regularly do higher graded work in the course of their daily duties as their position has evolved from one that was more transaction-based to one that is account-based which requires more specialized knowledge and experience of particular industries such as agriculture, automotive, communications, textile and steel to properly enforce the complex trade rules accompanying each industry.

In addition to not adequately staffing trade function jobs as required by Section 412(b), CBP continues to refuse to properly compensate import specialists for their invaluable work on behalf of the trade community and the American people. NTEU strongly urges the Committee to increase the journeyman grade for CBP import specialists to GS-12. The upgrade has been long overdue and would show CBP trade personnel that Congress recognizes the high level of expertise that all import specialists possess.

Conclusion:

Each year, with trade and travel increasing at astounding rates, CBP personnel have been asked to do more work with fewer personnel, training and resources. The more than 15,000 CBP employees represented by the NTEU are capable and committed to the varied missions of DHS from border control to the facilitation of trade into and out of the United States. They are proud of their part in keeping our country free from terrorism, our neighborhoods safe from drugs and our economy safe from illegal trade. These men and women are deserving of more resources and technology so that they can perform their jobs better and more efficiently.

In reauthorizing CBP, the Committee should endeavor to reestablish a productive balance between trade security and trade facilitation. The American public expects its borders and ports be properly defended. Congress must show the public that it is serious about protecting the homeland by fully funding CBPOs and commercial operations personnel at our 317 POEs. To maintain its commercial-security balance, Congress must ensure CBP comply with Section 412 of the Homeland Security Act.

Finally, to better understand the challenges that CBP employees face everyday, I urge each of you to visit the land, sea and air CBP ports of entry in your home districts. Talk to the CBPOs, canine officers, and trade entry and import specialists there to fully comprehend the jobs they do and what their work lives are like. Thank you for the opportunity to submit this testimony to the Committee on their behalf.