U.S. Customs and Border Protection Issues

4/27/2012

Senate Appropriations Committee - Subcommittee on Homeland Security

Chairman Landrieu, Ranking Member Coats, 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 24,000 Customs and Border Protection (CBP) Officers and trade enforcement specialists who are stationed at 331 land, sea and air ports of entry (POEs) across the United States. CBP employees’ mission is to protect the nation’s borders at the ports of entry from all threats while facilitating legitimate travel and trade. CBP 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, processing approximately $2 trillion of imports--28 million trade entries a year--at the POEs and collecting more than $32 billion in revenue for the U.S. government in fiscal year 2010.

CBP STAFFING AT THE PORTS OF ENTRY

There is perhaps no greater roadblock to legitimate trade and travel efficiency than the lack of sufficient staff at the ports. Understaffed ports lead to long delays in our commercial lanes as cargo waits to enter U.S. commerce.

Those delays result in real losses to the U.S. economy. According to a draft report prepared by the Department of Commerce, border delays in 2008 cost the U.S. economy nearly 26,000 jobs and $6 billion in output, $1.4 billion in wages, and $600 million in tax revenues annually. According to the same report, by 2017, average wait times could increase to nearly 100 minutes, costing the U.S. more than 54,000 jobs and $12 billion in output, $3 billion in wages and $1.2 billion in tax revenues. The cumulative loss in output due to border delays over the next ten years is estimated to be $86 billion.

More than 50 million Americans work for companies that engage in international trade, according to the U.S. Department of the Treasury. If Congress is serious about job creation, then Congress should support enhancing U.S. trade and travel by mitigating wait times at the ports and enhancing trade enforcement by increasing CBP security and commercial operations staffing at the air, sea, and land ports of entry.

In October 2009, the Southwest Border Task Force, created by Homeland Security Secretary Janet Napolitano, presented the results of its staffing and resources review in a draft report. This draft report recommended that the “federal government should hire more Customs [and Border Protection] officers.” The report echoes the finding of the Border-Facilitation Working Group. (The U.S.–Mexico Border Facilitation Working Group was created during the bilateral meeting between President George W. Bush and President Felipe Calderon held in Merida in March 2007.) “In order to more optimally operate the various ports of entry, CBP needs to increase the number of CBP Officers. According to its own estimate, the lack of human resources only for the San Ysidro POE is in the “hundreds” and the CBP Officer need at all ports of entry located along the border with Mexico is in the “thousands.” (“CBP: Challenges and Opportunities” a memo prepared by Armand Peschard-Sverdrup for Mexico’s Ministry of the Economy: U.S.-Mexico Border Facilitation Working Group, January 2008, pages 1 and 2.)

Despite these independent studies that state that CBP is understaffed at ports of entry by thousands of officers, the FY 2013 budget provides only enough personnel funding to maintain the current number of CBP Officer, CBP Agriculture Specialist and CBP trade operations positions.

NTEU urges the Committee to increase funding to hire additional CBP Officers and Agriculture Specialists to sufficiently staff existing booths and traffic lanes at the air, sea and land ports of entry.

Also of concern to NTEU in the FY 2013 budget request is the decrease of $21 million in funding for inspectional overtime at the air, land and sea ports of entry. CBP states that “this reduction will not impact operational staffing.”

Overtime is essential when staffing levels are insufficient to ensure that inspectional duties can be fulfilled, that officers have sufficient back-up and that wait times are mitigated. In CBP’s own words, “Overtime allows OFO to schedule its personnel to cover key shifts with a smaller total personnel number.” This is one reason that Congress authorized a dedicated funding source to pay for overtime-- customs user fees, pursuant to Title 19, section 58c (f) of the U.S. Code. CBP collects user fees 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. These fees are deposited into the Customs User Fee Account. User Fees are designated by statute to pay for services provided to the user, such as inspectional overtime for passenger and commercial vehicle inspection during overtime shift hours. In addition, APHIS user fees and immigration user fees also fund “fee-related” inspection costs.

User fees have not been increased in years and some of these user fees cover only a portion of recoverable fee-related costs. For example, CBP collects the extraordinarily low fee of $437 at arrival of a commercial vessel to a port to recover personnel and other costs to process and inspect the vessel’s crew and cargo. This fee, however, is capped at $5955 per calendar year; no matter how many times the commercial vessel enters a port that year. This fee was last raised from $397 to $437 in 2007, but the cap has remained at $5955 since 1986. In 2010, CBP collected a total of $19.9 million in Commercial Vessel user fees, but the actual cost of Commercial Vessel inspections in FY 2010 was $33.6 million.

Another example of an extraordinarily low user fee is the fee paid by railcar owners of $8.25 per car at arrival for processing and inspection, but the fee is capped at $100 per railcar per calendar year. In 2010, CBP collected a total of $8.6 million in rail car user fees, but the actual cost of rail car inspections in FY 2010 was $18.9 million. And Commercial Vehicles pay only $5.50 per vehicle at arrival for processing and inspection, but the fee is capped at $100 per vehicle per calendar year. In 2010, CBP collected a total of $13.7 million in Commercial Vehicle user fees, but the actual cost of Commercial Vehicle inspections in FY 2010 was over $113.7 million.

According to Government Accountability Office (GAO), (GAO-12-464T, page 11), the air passenger immigration inspection user fee should be reviewed and adjusted to fully recover the cost of the air passenger immigration inspection activities conducted by U.S. Customs and Immigration (ICE) and CBP. GAO estimated that fee collections available to ICE and CBP to pay for costs incurred in providing inspection services totaled about $600 million in FY 2010, however, “air passenger immigration fees collections did not fully cover CBP’s costs in FY 2009 and FY 2010.” NTEU urges Congress to allow CBP to better align air passenger inspection fee revenue with the costs of providing immigration inspection services and adjust the fee as needed so that collections are aligned with total inspection costs.

Also, according to the GAO, (GAO-12-464T, page 7), CBP has a $639.4 million unobligated balance in its Customs User Fee Account. These unobligated balances have remained in CBP’s Customs User Fee Account for more than 10 years. NTEU urges the Committee to clarify the purposes for which the nearly $640 million in unobligated balances in the Customs User Fee Account is available. NTEU supports legislative changes necessary to allow CBP to use this Customs User fee unobligated balance to fully fund inspectional overtime in FY 2013 and recover other costs incurred for processing and inspection of international travelers and trade.

TRADE ENFORCEMENT AND COMPLIANCE STAFFING

CBP has a dual mission of safeguarding our nation’s borders and ports as well as regulating and facilitating international trade. CBP personnel are responsible for collecting import duties and fees, and enforcing U.S. trade laws. In FY 2010, CBP collected $32 billion in revenue. Since CBP was established in March 2003, however, there has been no increase in CBP trade enforcement and compliance personnel and again, the FY 2012 budget proposes no increase in FTEs for CBP trade operations personnel.

In effect, there has been a CBP trade staffing freeze at March 2003 levels and, as a result, CBP’s revenue function has suffered. Recently, in response to an Import Specialists staffing shortage, CBP has implemented at certain ports a tariff sharing scheme resulting in certain ports being assigned only parts of the Harmonized Tariff Schedule. This is a short-sighted solution that shortchanges taxpayers, trade compliant importers, and the federal treasury.

Also, the FY 2013 budget requests $10 million for Intellectual Property Rights (IPR) enforcement enhancement. The Administration’s request, however, includes no increase in CBP trade operations staff at the ports to implement this trade enforcement program.

Lastly, the FY 2013 budget request proposes to cut 21 trade operations positions including 14 Rulings and Regulations staffers who are responsible for promulgating regulations and rulings, and providing policy and technical support to CBP, DHS, Treasury, Congress, and the importing community concerning the application of Customs laws and regulations.

NTEU urges the Committee not to cut CBP trade operations staff, but rather to increase funding to hire additional trade enforcement and compliance personnel, including Import Specialists, at the POEs to enhance trade revenue collection.

CBP CAREER LADDER PAY INCREASE

NTEU commends the Department for increasing the journeyman pay for CBP Officers and Agriculture Specialists. Many deserving CBP trade and security positions, however, were left out of this pay increase, which has significantly damaged morale.

NTEU strongly supports extending this same career ladder increase to additional CBP positions, including CBP trade operations specialists and CBP Seized Property Specialists. The journeyman pay level for the CBP Technicians who perform important commercial trade and administration duties should also be increased from GS-7 to GS-9.

RATIO OF CBP SUPERVISORS TO FRONTLINE CBP OFFICERS

CBP is continuing to increase the number of supervisors when a much greater need exists for new frontline hires. In terms of real numbers, since CBP was created, the number of new managers has increased at a much higher rate than the number of new frontline CBP hires. According to GAO, between October 2003 and February 2006, CBP increased the number of managers by 17 percent, but increased the number of frontline CBP Officers by only 2 percent (See GAO-06-751R, page 11).

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.

RECOMMENDATIONS

Sufficient CBP staffing must be provided to ensure security and mitigate prolonged wait times for both trade and travel at our nation’s ports of entry. Therefore, NTEU urges the Committee to include in its FY 2013 DHS appropriations bill:

• funding to significantly increase both port security and trade enforcement staffing at the Ports of Entry; and

• funding to extend enhanced pay and retirement recognition to additional CBP personnel, including Import and other Commercial Operations Specialists, CBP Seized Property Specialists and CBP Technicians.

The more than 24,000 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 though 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.