Agricultural Quarantine Inspection Fees:
Major Changes Needed to Align Fee Revenues with Program Costs
GAO-13-268, Mar 1, 2013
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What GAO Found
GAO's analysis of the Agricultural Quarantine Inspection (AQI) fee and cost data revealed a more than $325 million gap between fee revenues and total program costs in fiscal year 2011, or 38 percent of AQI program costs. The program, which is co-administered by the Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) and Department of Homeland Security (DHS) Customs and Border Patrol (CBP), has a gap for several reasons: 1) APHIS's authority does not permit it to charge all persons seeking entry to the United States (e.g., pedestrians) and does not permit it to charge the costs of those inspections to others; 2) APHIS has chosen not to charge some classes of passengers, citing administrative fee collection difficulties; 3) CBP does not charge a portion of all primary inspections to agriculture functions, as required by CBP guidance; 4) APHIS does not consider all imputed costs (that is, costs incurred by other agencies on behalf of the AQI program) when setting fees; and 5) the allowable rates for overtime services are misaligned with the personnel costs of performing those services. APHIS is considering fees that would better align many, but not all, AQI fees with related inspection activity costs. APHIS and CBP can take additional steps to better align fees with costs; however, additional authority will be needed to fully recover all program costs.
Contrary to APHIS-CBP agreements and APHIS policy, the distribution of fee collections between CBP and APHIS is significantly misaligned with AQI costs. In 2005, CBP and APHIS agreed to divide AQI collections in proportion to each agency's share of AQI costs. However, in fiscal year 2011, for example, CBP incurred over 80 percent of total program costs but received only 60 percent of collections, while APHIS incurred 19 percent of program costs but retained 36 percent of collections. CBP bridges the gap between its AQI costs and its share of the fee revenues with its annual appropriation. In keeping with its authorities and with good practices for fee-funded programs, APHIS carries over a portion of AQI collections from year to year to maintain a shared APHIS-CBP reserve to provide a cushion against unexpected declines in fee collections. APHIS's stated goal is to maintain a 3- to 5-month reserve but the preliminary fee proposal would fund the reserve at a level higher than the 5 month maximum. Further, the 5-month maximum target balance is the amount officials say they would need to completely shut down the program, and therefore does not reflect realistic program risks. Further, this is more than the amount required to cover shortfalls during both the 2009 financial crisis and the events of September 11, 2001, and would increase reliance on appropriated funds to cover current program costs.
APHIS's and CBP's collection processes do not provide reasonable assurance that all AQI fees due are collected. Specifically, APHIS does not collect AQI fees for railcars consistent with its regulations, resulting in a revenue loss of $13.2 million in 2010. Further, CBP does not verify that it collects fees due for every commercial truck, private aircraft, and private vessel, resulting in an unknown amount of revenue loss annually. CBP has tools available to help remedy these issues but does not require their use. Until APHIS and CBP improve oversight of these collection processes, they will continue to forgo revenue due the government, which will increase reliance on appropriated funds to cover program costs.
Why GAO Did This Study
The AQI program guards against agriculture threats by inspecting international passengers and cargo at U.S. ports of entry, seizing prohibited material, and intercepting foreign agricultural pests. The program, which cost $861 million in 2011, is funded from annual appropriations and user fees. GAO has reported several times on the need to revise the fees to cover program costs as authorized. In 2010, APHIS initiated a review of AQI costs and fee design options. APHIS and CBP are considering options for a new fee structure. Pending departmental approval, APHIS expects to issue a proposed rule in fall 2013. GAO was asked to examine issues related to the AQI fees. This report examines 1) the fees currently charged and proposed revisions; 2) how fee revenues are allocated between the agencies; and 3) the extent to which fee collection processes provide reasonable assurance that all AQI fees due are collected. To do this, GAO reviewed AQI fee and cost data, and relevant laws, regulations, and policies; observed inspections at ports of entry; and interviewed APHIS and CBP officials.
What GAO Recommends
GAO is making a number of recommendations aimed at more fully aligning fees with program costs, aligning the division of fees between APHIS and CBP with their respective costs, and ensuring that fees are collected when due. Further, GAO suggests Congress amend the AQI fee authority to allow the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program. USDA and DHS generally agreed with the recommendations.
For more information, contact Susan Irving, Director for Federal Budget Analysis, 202-512-6806, irvings@gao.gov.
Status Legend:
- Review Pending
- Open
- Closed - implemented
- Closed - not implemented
Matters for Congressional Consideration
Matter: In light of declining discretionary budgets, to reduce or eliminate the reliance of the AQI program on taxpayer funding, Congress should consider allowing USDA to set AQI fees to recover the aggregate estimated costs of AQI services--thereby allowing the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program.
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Matter: Congress should consider amending USDA's authorization to assess AQI fees on bus companies, private vessels, and private aircraft and include in those fees the costs of AQI services for the passengers on those buses, private vessels, and private aircraft.
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendations for Executive Action
Recommendation: To help ensure that USDA considers full AQI program costs when setting AQI fee rates, the Secretary of Agriculture should include all imputed costs borne by other federal agencies and attributable to the AQI program.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that USDA considers full AQI program costs when setting AQI fee rates, the Secretary of Homeland Security should direct CBP to update and widely disseminate comprehensive guidance to ports on the correct use and review of Cost Management Information System (CMIS) codes. Specifically, the guidance should reiterate that a portion of CBP officers' primary inspection time should be charged to agriculture and cover how, and with what frequency, ports should conduct work studies to determine the correct allocation of staff time. CBP should also consider making CMIS training mandatory for CMIS practitioners.
Agency Affected: Department of Homeland Security
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should establish an AQI cruise passenger fee aligned with the costs of inspecting cruise passengers and vessels and collected using the existing processes for collecting cruise passenger customs fees.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should establish a fee for passenger railcars aligned with the costs of inspecting rail passengers and railcars and collected using the existing processes for collecting passenger railcar customs fees.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should eliminate caps on the commercial vessel and commercial rail AQI fees.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should set truck fee rates to recover the costs of AQI services for trucks while maintaining a financial incentive for trucks to use transponders.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should recover the costs of AQI services for buses and bus passengers by either establishing a bus passenger fee that is remitted by the bus companies or seeking legislative authority to establish a bus fee that covers the costs of bus passenger inspections.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To align reimbursable overtime revenues with the costs of those agriculture inspections, the Secretaries of Agriculture and Homeland Security should work together to amend overtime regulations for agriculture services so that reimbursable overtime rates that CBP and APHIS charge are aligned with the costs of those services.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To align reimbursable overtime revenues with the costs of those agriculture inspections, the Secretaries of Agriculture and Homeland Security should work together to amend overtime regulations for agriculture services so that reimbursable overtime rates that CBP and APHIS charge are aligned with the costs of those services.
Agency Affected: Department of Homeland Security
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To align reimbursable overtime revenues with the costs of those agriculture inspections the Secretary of Homeland Security should (1) ensure that ports consistently charge for agriculture overtime services that are eligible for reimbursement and (2) deny agriculture-related reimbursable overtime inspection services to entities with bills more than 90 days past due, consistent with APHIS regulations.
Agency Affected: Department of Homeland Security
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that AQI fee rates are structured to maximize economic efficiency and equity while minimizing administrative burden, the Secretary of Agriculture should charge user fees for AQI permit applications.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that AQI fee rates are structured to maximize economic efficiency and equity while minimizing administrative burden, the Secretary of Agriculture should charge user fees for treatment services.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help ensure that AQI fee rates are structured to maximize economic efficiency and equity while minimizing administrative burden, the Secretary of Agriculture should charge user fees for the costs of monitoring compliance agreements for regulated garbage.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better align the distribution of AQI fee revenues with AQI costs, the Secretaries of Agriculture and Homeland Security should work together to allocate AQI fee revenues consistent with each agency's AQI costs.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better align the distribution of AQI fee revenues with AQI costs, the Secretaries of Agriculture and Homeland Security should work together to allocate AQI fee revenues consistent with each agency's AQI costs.
Agency Affected: Department of Homeland Security
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To better align the distribution of AQI fee revenues with AQI costs, the Secretary of Agriculture should establish an AQI reserve target that is more closely aligned with program needs and risks, based on past experience.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To ensure that inspection fees are collected when due, the Secretary of Agriculture should revise its processes for collecting AQI railcar fees to conform to USDA regulation.
Agency Affected: Department of Agriculture
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To ensure that inspection fees are collected when due, the Secretary of Homeland Security should establish internal controls to alert personnel when fees are not paid, and use available information to verify that arriving trucks, private aircraft, and private vessels pay applicable inspection user fees.
Agency Affected: Department of Homeland Security
Status: Review Pending
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.