AGRICULTURAL 

QUARANTINE 

INSPECTION FEES

Major Changes 

Needed to Align Fee 

Revenues with 

Program Costs

Report to Congressional Requesters

March 2013

GAO-13-268

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-268, a report to 

congressional requesters

March 2013

AGRICULTURAL QUARANTINE INSPECTION 

FEES

Major Changes Needed to Align Fee Revenues with 

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.

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.

View GAO-13-268. For more information, 

contact Susan Irving, Director for Federal 

Budget Analysis, 202-512-6806, 

irvings@gao.gov
Page i GAO-13-268 Agricultural Quarantine Inspection Fees

Letter 1 

Background 4

APHIS Currently Does Not Fully Recover Program Costs 9

The Distribution of Fee Collections among CBP, APHIS, and the 

AQI Reserve Is Misaligned with AQI Costs 23

APHIS and CBP Do Not Ensure that All AQI Fees Due are 

Collected 29

Conclusions 31

Matters for Congressional Consideration 33

Recommendations for Executive Action 33

Agency Comments and Our Evaluation 35

Appendix I Objectives, Scope, and Methodology 37

Appendix II Fees Charged for Arrival Inspections 40

Appendix III Comments from the U.S. Department of Agriculture 41

Appendix IV Comments from the Department of Homeland Security 47

Appendix V GAO Contacts and Staff Acknowledgments 51

Tables

Table 1: Total Identified Costs and Revenues of AQI Program,

Fiscal Year 2011 10

Table 2: GAO Illustrative Examples of Fee Rates That Would More 

Closely Align Truck Fees with Full Costs 16

Table 3: APHIS and CBP AQI Costs and Distribution of Fee 

Revenues, Fiscal Year 2011 23

Table 4: Estimated Allocation of AQI Fee Revenues 24

Table 5: Distributions and Obligations of Actual AQI Fee Revenues, 

Fiscal Years 2010 through 2012 27

Contents 
Page ii GAO-13-268 Agricultural Quarantine Inspection Fees

Figures

Figure 1: Current AQI User Fee Rates for People and Vehicles 

Arriving in the United States 6

Figure 2: Total AQI User Fee Collections 7

Figure 3: Distribution of AQI Program Funding Among CBP, 

APHIS, and the AQI Reserve, Fiscal Year 2011 26

Figure 4: Fiscal Year End Total Reserve Balance 29

Abbreviations

APHIS Animal and Plant Health Inspection Service

APIS Advanced Passenger Information System

AQI Agricultural Quarantine Inspection

CBP U.S. Customs and Border Protection

CFO Chief Financial Officer

CMIS Cost Management Information System

DHS Department of Homeland Security

FACT Food, Agriculture, Conservation, and Trade Act of 1990

Treasury Department of the Treasury

USDA U.S. Department of Agriculture

WADS Work Accomplishment Data System

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Page 1 GAO-13-268 Agricultural Quarantine Inspection Fees

United States Government Accountability Office

Washington, DC 20548

March 1, 2013

The Honorable Susan M. Collins

United States Senate

The Honorable Dianne Feinstein 

United States Senate 

The Honorable Kirsten E. Gillibrand 

United States Senate

The movement of people and goods across U.S. borders is vital to the 

U.S. economy but also poses risks because imported products 

sometimes contain exotic pests and diseases that have resulted in billions 

of dollars in damages and lost agricultural revenues. Further, the terrorist 

attacks of September 11, 2001, heightened concerns about agriculture’s 

vulnerability to terrorism, including the deliberate introduction of livestock, 

poultry, and crop diseases.1 The Agricultural Quarantine Inspection (AQI) 

program helps to guard against these threats by inspecting international 

passengers and cargo, seizing prohibited material, and intercepting 

foreign agricultural pests at U.S. ports of entry. The AQI program is coadministered by the Department of Agriculture’s (USDA) Animal and Plant 

Health Inspection Service (APHIS), which has authority to set AQI user 

fees, and the Department of Homeland Security’s (DHS) U.S. Customs 

and Border Protection (CBP). The AQI program is funded in part with 

revenues from fees assessed on those subject to inspection and in part 

with monies from CBP’s annual Salaries and Expenses appropriation. In 

2006 we recommended that DHS and USDA work together to revise the 

user fees to ensure that they cover the AQI program’s costs.

2 In 2007 and 

2008, we reported on various other challenges related to these fees, 

including that AQI user fees were misaligned with program costs.3

 

1

GAO, Homeland Security: Actions Needed to Improve Response to Potential Terrorist Attacks and 

Natural Disasters Affecting Food and Agriculture, 

In 

2010, APHIS hired a contractor to conduct a comprehensive fee review to 

determine the full cost of AQI services, identify potential changes to the 

GAO-11-652 (Washington, D.C.: Aug. 19, 2011).

2

GAO, Homeland Security: Management and Coordination Problems Increase the Vulnerability of 

U.S. Agriculture to Foreign Pests and Disease, GAO-06-644 (Washington, D.C.: May 19, 2006).

3

GAO, Federal User Fees: Key Aspects of International Air Passenger Inspection Fees Should Be 

Addressed Regardless of Whether Fees Are Consolidated, GAO-07-1131 (Washington, D.C.: Sept. 

24, 2007) and Federal User Fees: Substantive Reviews Needed to Align Port-Related Fees with the 

Programs They Support, GAO-08-321 (Washington, D.C.: Feb. 22, 2008).

 
 

Page 2 GAO-13-268 Agricultural Quarantine Inspection Fees

fee structure, and recommend new fees. Efforts to better align fees with 

costs are important, especially in an environment of tightening 

discretionary budgets, because user fees can reduce reliance on 

taxpayer funding of federal programs that provide a service to an 

identifiable beneficiary.

In this context, you asked us to examine the AQI user fees. This report 

assesses the following objectives: (1) the AQI fees currently charged and 

how, if at all, the proposed revisions would improve efficiency, equity, and 

revenue adequacy, and reduce administrative burden; (2) how, if at all, 

changes to the allocation of fee revenues between USDA and DHS could 

improve efficiency, equity, and revenue adequacy, and reduce 

administrative burden; and (3) the extent to which APHIS and CBP fee 

collection processes provide reasonable assurance that all AQI fees due 

are collected.4

To address these objectives we analyzed the AQI fees using principles of 

effective user fee design—efficiency, equity, revenue adequacy, and 

administrative burden—on which we previously reported.

 

5

• Efficiency: “Efficiency” refers to requiring identifiable beneficiaries to pay 

for the costs of services, allowing user fees to simultaneously constrain 

demand and reveal the value that beneficiaries place on the service. If 

those benefiting from a service do not bear the full social cost of the 

service, they may seek to have the government provide more of the 

service than is economically efficient. User fees may also foster 

production efficiency by increasing awareness of the costs of publicly 

provided services and therefore increasing incentives to reduce costs 

where possible. 

Specifically, 

• Equity: “Equity” refers to everyone paying their fair share, but the 

definition of fair share can have multiple facets. Under the beneficiarypays principle, the beneficiaries of a service pay for the cost of providing 

the service. Under the ability-to-pay principle, beneficiaries who are more 

capable of bearing the burden of fees should pay more for the service 

than those with less ability to pay. 

 

4

Also at your request, in September 2012, we reported more broadly on AQI program challenges. See 

GAO, Homeland Security: Agriculture Inspection Program Has Made Some Improvements, but 

Management Challenges Persist, GAO-12-885 (Washington, D.C.: Sept. 27, 2012).

5

See GAO, Federal User Fees: A Design Guide, GAO-08-386SP (Washington, D.C.: May 29, 2008).
 

Page 3 GAO-13-268 Agricultural Quarantine Inspection Fees

• Revenue adequacy: “Revenue adequacy” refers to the extent to which 

the fee collections cover the intended share of costs. It encompasses 

variations in collections over time relative to the cost of the program. 

Revenue adequacy also incorporates the concept of revenue stability, 

which generally refers to the degree to which short-term fluctuations in 

economic activity and other factors affect the level of fee collections. 

• Administrative burden: “Administrative burden” refers to the cost of 

administering the fee, including the cost of collection and enforcement as 

well as the compliance burden (the administrative costs imposed on the 

payers of the fee). 

As we reported, these principals interact and are often in conflict with 

each other so that there are tradeoffs to consider among the principles 

when designing a fee. For example, a fee closely aligned with the cost of 

the services provided to a particular user may promote efficiency and the 

beneficiary-pays aspect of equity, but could impose a higher 

administrative burden and conflict with the ability-to-pay aspect of equity. 

In addition, the Office of Management and Budget (OMB) provides 

guidance to executive branch agencies through Circular No. A-25. This 

circular establishes federal guidelines regarding user fees including the 

scope and types of activities subject to user fees and the basis upon 

which the fees are set. It also provides guidance for executive branch 

agency implementation of fees and the disposition of collections. Further, 

the Chief Financial Officers (CFO) Act of 19906 requires an agency’s CFO 

to review, on a biennial basis, the fees, royalties, rents, and other charges 

for services and things of value and make recommendations on revising 

those charges to reflect costs incurred. The Statement of Federal 

Financial Accounting Standards Number 4, Managerial Cost Accounting 

Concepts and Standards for the Federal Government7

We reviewed APHIS’s cost study and proposed revisions, relevant 

statutes and regulations, and AQI cost and fee revenue data. We 

analyzed APHIS and CBP AQI cost data and interviewed APHIS and 

establishes 

standards for federal agencies to use in reporting the costs of their 

products, services, and activities.

 

6

Pub. L. No. 101-576, 104 Stat. 2838 (Nov. 15, 1990), relevant sections codified at, 31 U.S.C. § 902.

7

Federal Accounting Standards Advisory Board, Statement of Federal Financial Accounting 

Standards No. 4: Managerial Cost Accounting Standards and Concepts (July 31, 1995).
 

Page 4 GAO-13-268 Agricultural Quarantine Inspection Fees

CBP officials. We assessed the reliability of the data and determined that 

they were sufficiently reliable for our purposes. In addition, we selected a 

nonprobability sample of ports of entry to visit: Miami, Florida; Port Huron, 

Michigan; San Diego, California, and its surrounding areas; and Seattle 

and Blaine, Washington. In selecting these ports we considered factors 

including the presence or absence of agriculture inspections for which 

AQI user fees were and were not charged; passenger and cargo 

volumes; the diverse set of inspection challenges faced by ports in varied 

parts of the country; different types of ports (e.g., land border, seaports, 

etc.) and our resource constraints. While information from these visits 

cannot be generalized to other ports of entry, themes we identified from 

the visits allowed us to understand commonalities and differences in 

inspection practices and fee collection processes at various ports and 

provide illustrative examples. We also visited APHIS’s Plant Protection 

and Quarantine offices in Miami, San Diego, and Seattle to understand 

the AQI-related work conducted by APHIS in the field. More details on our 

scope and methodology appear in appendix I.

We conducted this performance audit from April 2012 to March 2013 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The AQI program provides for inspections of imported agricultural goods, 

products, passenger baggage, and vehicles, including commercial 

aircraft, ships, trucks, and railcars, to prevent the introduction of harmful 

agricultural pests and diseases. CBP has responsibility for inspection 

activities at ports of entry,8

• reviewing passenger declarations and cargo manifests and targeting 

high-risk passengers and cargo shipments for agricultural inspection; 

including 

• inspecting international passengers, luggage, cargo, mail, and means of 

conveyance; and 

 

8

The Homeland Security Act of 2002 transferred certain AQI activities from APHIS to the then newlycreated CBP. Whenever USDA prescribes regulations, policies, or procedures for administering the 

activities transferred to CBP, USDA is to coordinate with DHS (6 U.S.C. § 231(d)(2)).

Background 
 

Page 5 GAO-13-268 Agricultural Quarantine Inspection Fees

• holding suspect cargo and articles for evaluation of plant and animal 

health risk in accordance with USDA regulations, policies, and guidelines. 

Inspection procedures vary somewhat depending on what pathway is 

being inspected (e.g., passengers, cargo, vessels, etc.) but, generally, 

CBP officers conduct a combined primary inspection for agriculture, 

customs, and immigration issues,9

APHIS has responsibility for other AQI program activities, including 

and, as needed, make referrals to 

CBP agriculture specialists who conduct more detailed secondary 

inspections.

• setting AQI user fee rates and administering the collected fees; 

• setting inspection protocols; 

• providing training; 

• providing pest identification services at plant inspection stations and 

other facilities; and

• applying remedial measures other than destruction and re-exportation, 

such as fumigation, to commodities, conveyances, and passengers. 

APHIS lacks the authority to recover the full costs of the AQI program 

through fees. Section 2509(a) of the Food, Agriculture, Conservation, and 

Trade (FACT) Act of 199010

 

9

See Appendix II for a summary of the three fees charged for these inspection activities.

authorizes APHIS to set and collect user fees 

sufficient to cover the cost of providing and administering AQI services in 

connection with the arrival of commercial vessels, trucks, railcars, and 

aircraft, and international passengers. APHIS does not have the authority 

to charge AQI fees to pedestrians or military personnel and their vehicles, 

nor to recover the costs of these inspections through the fees assessed 

on others (see fig. 1). AQI fee collections are divided between CBP and 

APHIS. Gaps between AQI fee collections and program costs are

generally covered by CBP using its Salaries and Expenses appropriation, 

which is authorized for necessary expenses related to agricultural 

inspections, among other activities. 

1021 U.S.C. 136a.
 

Page 6 GAO-13-268 Agricultural Quarantine Inspection Fees

Figure 1: Current AQI User Fee Rates for People and Vehicles Arriving in the United States

Note: These fee rates took effect on October 1, 2009, and remain in effect until new rates are 

established through rulemaking. The amount of fees paid annually by commercial vessels (i.e., cargo 

vessels and cruise ships) is capped at a dollar amount equivalent to 15 payments per year.

In fiscal year 2012, AQI fee revenues totaled approximately $548 million 

(see fig. 2). As authorized by the FACT Act, these funds remain available 

without fiscal year limitation and may be used for any AQI-related 

purpose without further appropriation. When funds are available until 

expended, agencies may carry forward unexpended collections to 

subsequent years and match fee collections to average program costs 

over more than 1 year. Such carryovers are one way agencies can 

establish reserve accounts, that is, revenue to sustain operations in the 
 

Page 7 GAO-13-268 Agricultural Quarantine Inspection Fees

event of a sharp downturn in collections. APHIS uses some of the AQI fee 

collections in this way. We have previously reported that a reserve can be 

important when fees are expected to cover program costs and program 

costs do not necessarily decline with a drop in fee revenue.11

Figure 2: Total AQI User Fee Collections

Note: These data include interest collected on late AQI fee payments and on-the-spot penalties. 

According to APHIS officials, APHIS was was not able to isolate these collections from fee 

collections, except in fiscal year 2011 when they totaled $570,912. For consistency, this figure

includes these interest and penalty collections in every fiscal year.

APHIS maintains two types of reserves. APHIS refers to the first reserve 

as the “shared reserve” because it is meant to cover both APHIS and 

CBP needs in the event that fee collections decline unexpectedly. The 

second reserve is an “APHIS-only” reserve, and is funded from APHIS’s 

portion of total AQI collections. The APHIS-only reserve is intended to 

provide APHIS with budgetary flexibility. Between the two reserves, 

APHIS aims to maintain a total reserve balance equal to 3 to 5 months of 

AQI program costs.

 

11GAO-08-386SP. 
 

Page 8 GAO-13-268 Agricultural Quarantine Inspection Fees

As previously mentioned, in 2010, APHIS engaged a contractor to 

conduct a thorough review of AQI program costs and options for 

redesigning AQI fees. In addition, APHIS contracted for an economic 

analysis to ensure that the proposed fees would not have unintended 

consequences. In reviewing the AQI fees, the contractor identified the 

direct and indirect costs of the AQI program for both APHIS and CBP by 

pathway, to the extent the agencies captured these costs for fiscal year 

2010. The contractor also conducted activity-based costing to serve as 

the basis for future fee setting.12

The contractor assumed the accuracy of the data provided from both 

APHIS and CBP. Our recent work

These practices are consistent with 

federal cost accounting standards.

13 reported that data quality is an 

ongoing issue with AQI data systems, including the Work 

Accomplishment Data System (WADS), one of the data sources used by 

the contractor.14 However, Office of Management and Budget Circular A25 states that when reviewing user fees, full cost should be determined or 

estimated using the best available records of the agency, and new cost 

accounting systems do not need to be established solely for the purpose 

of rate-setting. The contractor also solicited input from stakeholders as 

part of the fee review process, a practice consistent with our User Fee 

Design Guide.

15

APHIS is using the AQI cost model developed by the contractor as well 

as the findings from the fee review to update the AQI fee schedule. 

According to APHIS officials, as of February 2013, APHIS and CBP are

considering staff recommendations for a new fee structure, including new

fee rates. Pending approval from both USDA and DHS, APHIS expects to 

publish a notice in the Federal Register with a proposed new fee 

 

 

12Activity-based costing (ABC) uses cost drivers to assign costs through activities to outputs. The 

ABC cost assignment is a two-stage procedure. The first stage assigns the costs of resources to 

activities and the second stage assigns activity costs to outputs.

13GAO-12-885. 

14A majority of the CBP data was derived from the agency’s APHIS Discoverer data-warehouse and 

additional information came from the agency’s Operations Management Report data warehouse. 

These data-warehouses aggregate data from a number of databases including the WADS module of 

the Agriculture Quarantine Activity Systems (AQAS). According to APHIS officials, although a data 

quality assessment was not in the scope of the AQI fee review contract, the contractor inquired about 

potential data quality issues.

15GAO-08-386SP. 
 

Page 9 GAO-13-268 Agricultural Quarantine Inspection Fees

schedule in the fall of 2013. As such, it is important to note that the 

current staff recommendations for AQI fees are subject to change and 

that the fee structure and rates APHIS establishes will be informed by 

many factors, including public comments through the rulemaking process. 

In fiscal year 2011—the most recent year for which data were available—

AQI fee collections covered 62 percent of total identified AQI program 

costs, leaving a gap of more than $325 million between total AQI costs 

and total AQI collections. This gap was covered with funds from CBP’s 

Salaries and Expenses appropriation and by funds from other agencies to 

cover imputed costs. Although the AQI program is often referred to as a 

fully fee-funded program, it is not. Fees assessed on individual pathways 

are to be set commensurate with the costs of services with respect to a 

particular pathway. For passenger fees, the costs of services include the 

costs of related inspections of the vehicle. Once revenue is earned from 

one pathway, however, it may be spent on any AQI-related program cost. 

For example, revenue earned from commercial airline passenger 

inspections may be spent on private air passenger inspection activities. 

However, as shown in table 1, APHIS has chosen not to charge some 

classes of passengers, and the collections of the AQI program as a whole 

do not equal total identified program costs. 

APHIS Currently Does

Not Fully Recover 

Program Costs 

In Fiscal Year 2011 There 

Was a Nearly 40 Percent 

Gap Between Total 

Identified AQI Costs and 

Collections 
 

Page 10 GAO-13-268 Agricultural Quarantine Inspection Fees

Table 1: Total Identified Costs and Revenues of AQI Program, Fiscal Year 2011

Pathways Identified cost Fee revenuea Percentage fee 

funded

Fees currently charged Commercial aircraftb $175,091,488 $49,571,978 28%

Commercial trucks 74,359,800 15,189,400 20

Commercial vesselsc 101,907,247 26,812,768 26

Freight rail 5,198,244 8,905,153 171

Commercial aircraft passengersd 277,838,102 433,679,205 156

Statutory authority to charge, but 

fees not charged 

Private vehicle passengers 129,356,001 0 0 

Bus passengers 23,068,027 0 0 

Cruise vessel passengers 17,860,031 0 0 

Private vessel passengers 4,935,014 0 0 

Private aircraft passengers 11,360,258 0 0 

Rail passengers 1,628,624 0 0 

No statutory authority to charge Pedestrian 34,628,757 0 0 

Military 3,960,739 0 0 

Total $861,192,332 $534,158,504 62%

Source: GAO analysis of APHIS financial data.

a

The overall gap between AQI costs and revenues is currently covered by annual appropriations to 

CBP and to other agencies that pay imputed costs of the AQI program.

b

The costs listed here include only the costs attributable to cargo aircraft. Costs attributed to 

commercial passenger aircraft are included with the costs listed under air passengers, consistent with 

fee authority. However, the revenues listed here include fees assessed on cargo aircraft and 

passenger aircraft in fiscal year 2011. The costs of both courier and individual mail inspections are 

included in the cost of cargo aircraft.

c

The costs listed for commercial vessels exclude AQI costs attributable to cruise vessel passengers 

(listed separately), but the fee revenue listed includes fees assessed on cruise vessels.

d

For passenger fees, the costs of services include the costs of related inspections of the vehicle.

Several other factors also compound the gap between AQI program costs 

and total AQI fee collections, as discussed below. Specifically, CBP’s AQI 

costs are understated, AQI fee rates do not reflect imputed costs, and 

CBP and APHIS do not fully recover the costs of AQI-related 

reimbursable overtime services.

CBP does not capture all time spent on agriculture activities in its Cost 

Management Information System (CMIS)—the system in which CBP 

tracks its activities and determines personnel costs. Both to accurately set 

AQI fee rates to recover program costs and to allocate fee revenues 

between APHIS and CBP proportionate with each agency’s program 

costs, CBP must accurately track its expenses related to the AQI 

program. In 2005, CBP agreed to report its AQI-related expenses to 

CBP’s AQI Costs Are Currently 

Understated By An Unknown 

Amount 
 

Page 11 GAO-13-268 Agricultural Quarantine Inspection Fees

APHIS quarterly. CBP officers’ and agriculture specialists’ time is 

generally charged to a mix of CMIS codes to represent the variety of 

activities they perform. Although this mix of codes will understandably 

vary, CBP guidance specifies that time spent by officers conducting 

primary inspections—which, as previously discussed, include aspects of 

agriculture, customs, and immigration inspections—is to be attributed to a 

mix of CMIS codes representing each of these three functions. We found, 

however, that at 31 ports and other locations,16

CBP headquarters oversees ports’ use of CMIS to track AQI expenses by 

providing guidance and training, and by annually reviewing CMIS data 

from about 50 of the highest-volume ports. In addition, CBP field offices 

review CMIS codes for ports in their jurisdiction on a quarterly basis. CBP 

headquarters also produces CMIS guidance, which includes a CMIS code 

dictionary and a notice that the time officers spend on primary inspection 

should be charged to customs, immigration, and agriculture codes. 

Instructions for reviewing the use of CMIS codes are also provided to 

ports. Although the instructions provide brief examples, they do not 

specify how ports should determine the appropriate mix of codes to use 

or the frequency with which ports should conduct work studies. At some 

locations we visited, CBP officials said that headquarters does not 

provide sufficient CMIS guidance to enable accurate and consistent 

reporting of staff activities. CBP headquarters officials told us that they 

provide semiannual training which is intended to ensure correct CMIS use 

at ports. However, attendance at these training sessions is not required 

and officials said there is high turnover among CMIS practitioners at the 

ports and field offices.

CBP did not charge any

primary inspection time to agriculture-related CMIS codes for all or a 

portion of fiscal year 2012, which means that AQI costs at these ports are 

being understated. Further, CBP officers at ports we visited described 

different procedures for using CMIS codes and wide variation in the 

extent to which they verify that CMIS codes accurately capture work 

activities. Because CBP’s AQI costs are underreported by some unknown 

amount in CMIS, APHIS does not have complete information about CBP’s 

AQI-related costs and therefore is unable to consider total program costs 

when setting AQI fee rates.

 

16Other locations include CBP operations outside of the United States.
 

Page 12 GAO-13-268 Agricultural Quarantine Inspection Fees

The current AQI fee rates do not cover imputed AQI program costs.17

APHIS estimated that these costs were about $38 million in fiscal year 

2011, the most recent year for which data were available. In 2008 we 

recommended that the Secretary of Agriculture include these costs when 

setting AQI fees consistent with federal accounting standards, OMB 

Circular No. A-25 guidance, and USDA policy.18 APHIS agreed with the 

recommendation and, as we will discuss more fully later on in this report, 

has included some, but not all, of these costs in its recent analysis of AQI 

costs. Because APHIS is authorized to set AQI fees to recover the full 

cost for each pathway,19

The AQI program does not fully recover costs for reimbursable overtime 

agriculture inspection services in part because (1) the reimbursement 

rates paid by users are set by APHIS regulations and do not cover the 

agencies’ overtime costs, (2) CBP does not consistently charge for these 

services, and (3) when CBP does charge it does not timely collect 

payments for these services. CBP is authorized to charge for overtime for 

agriculture inspection and related services in some situations, known as 

reimbursable overtime. When a CBP officer or agriculture specialist 

performs an inspection service on a Sunday or holiday or while the 

employee performing the inspection is on overtime, CBP is to bill the user 

for the service. This can happen, for example, when an importer requests 

an inspection of agricultural produce outside of normal duty hours.

it is important that the agency accurately 

captures full program costs. 

Reimbursable overtime collection rates are not aligned with the agencies’ 

current staff costs, which means any reimbursable overtime collections do 

not fully cover costs to perform these services. APHIS has the authority to 

set reimbursable charges to recover the full costs of overtime services, 

but the reimbursement rates have not been adjusted since 2005. Under 

the APHIS regulations, CBP may charge $51 per hour for agriculture-

 

17Imputed costs are costs of goods or services incurred on behalf of an agency that are paid by 

another federal entity, such as certain retirement benefits paid to retirees by the U.S. Office of 

Personnel Management.

18In GAO-08-321 we recommended that USDA include all indirect and imputed costs when setting 

AQI fee rates and either transfer the appropriate portions of those collections to the general fund of 

the Treasury or seek congressional approval to spend those monies on related AQI program costs. 

This recommendation is consistent with the Statement of Federal Financial Accounting Standards 

Number 4, Managerial Cost Accounting Concepts and Standards for the Federal Government.

1921 U.S.C. 136a.

AQI Fee Rates Are Currently 

Not Set to Recover AQI 

Imputed Costs

Current AQI-related 

Reimbursable Overtime Costs 

and Fee Rates Are Misaligned 
 

Page 13 GAO-13-268 Agricultural Quarantine Inspection Fees

related overtime Monday through Saturday and holidays, and $67 per 

hour on Sunday. When we asked CBP officials for their average annual 

costs for overtime agriculture inspections they told us that they have not 

calculated these costs. However, CBP was able to create such an 

analysis for us using August 2012 as an example. CBP estimated that its 

average salary cost for overtime agricultural inspections in August 2012 

was approximately $85 per hour, and it billed approximately $55 per hour 

for those services. They further estimated that for that month, 

reimbursable agriculture overtime services cost the agency approximately 

$58,000, while the agency only billed approximately $37,000 for those 

services—or about 64 percent of the cost.20

CBP headquarters encourages ports to charge for reimbursable overtime 

services and provides guidance clarifying how they should do so. This 

practice is consistent with effective fee design principles; as we have 

previously reported, if a service primarily benefits identifiable users, users 

should pay for that service.

APHIS’s rates for 

reimbursable agriculture overtime services are similarly misaligned with 

its costs. APHIS and CBP officials worked together to develop a draft 

proposed rule to update the overtime rates, but according to APHIS 

officials it has been on hold since summer 2011. 

21 However, CBP personnel at some ports told 

us they do not charge for reimbursable agriculture services provided 

because their port does not get to keep the reimbursable overtime 

funds.22

CBP does not ensure that reimbursable overtime is collected when 

charged. APHIS regulations require that agriculture-related reimbursable 

overtime be paid for in advance and that overtime services be denied to 

In addition, officials at three ports said it is administratively 

burdensome to process the reimbursable overtime forms.

 

20According to CBP officials, CBP officers and agriculture specialists are paid overtime pursuant to 

the Customs Officer Pay Reform Act (19 U.S.C. § 267) and, in some instances, the amount paid by 

CBP under this Act for overtime work exceeds the amount that CBP is authorized to bill for the 

reimbursable overtime services. 

21In addition, taxpayer funding can be less economically efficient than user fee funding. See 

GAO-08-386SP. 

22CBP personnel at two ports of entry we visited said that although there is a demand for these 

services, they sometimes do not offer these services at all. They said that this is because the cost of 

providing these services comes out of a portion of the port’s general overtime budget but that 

payments collected are not returned to the port; rather, reimbursable overtime collections are credited 

to CBP’s Salaries and Expenses account. They said that they generally prioritize use of their overtime 

budgets to backfill for personnel on leave and support mission-critical activities.
 

Page 14 GAO-13-268 Agricultural Quarantine Inspection Fees

anyone whose account is more than 90 days delinquent.23 Nonetheless, 

according to CBP data, as of August 31, 2012, the agency had more than 

$200,000 in past-due overtime agriculture inspection bills, of which more 

than $160,000 is more than a year past-due. Some bills are as old as 

2004, and one company has more than $9,000 in past-due bills that were 

issued from 2004 through 2012. Although CBP can and does assess 

interest for past-due reimbursable overtime bills, it does not consistently 

deny overtime services to entities with accounts more than 90 days 

delinquent. 

APHIS is considering new or updated fees for AQI services. However, the

fees might not recover the costs of all commercial trucks. APHIS lost $85 

million in revenue in fiscal year 2010 due to capping the annual amount of 

AQI fees paid by commercial rail, vessels, and trucks, but as of February 

2013, the staff recommendations APHIS is considering would remedy 

only the revenue loss for commercial rail and vessels. According to 

APHIS data, in fiscal year 2010, the caps on rail and vessel fees resulted 

in a combined revenue loss of about $46 million, while the caps on truck 

entries resulted in a $39 million loss for that year. These revenue losses 

are currently covered by CBP through its annual appropriation or by AQI 

user fees collected from other pathways. As we have previously reported, 

charging users the full cost of the inspection they are receiving can 

promote economic efficiency and equity by assigning costs to those who 

both use and benefit from the services being provided.24

Commercial trucks seeking entry into the United States can either pay the 

$5.25 AQI fee each time they cross the border, or they can pay a onetime flat AQI fee of $105 each calendar year. To pay the annual AQI fee, 

 

237 C.F.R. § 354.1.

24GAO-08-386SP. 

The Fees Currently under 

Consideration Would Not 

Fully Recover Costs for All 

Pathways nor Directly 

Charge the Users of 

Certain Services

APHIS Might Remove Caps on 

Commercial Rail and Vessels 

but Not Trucks, Leaving a 

Revenue Gap 
 

Page 15 GAO-13-268 Agricultural Quarantine Inspection Fees

trucks must use an electronic transponder which must be purchased in 

advance. Although the $105 annual AQI truck transponder fee is 

equivalent to paying for 20 arrivals each year, according to APHIS data, 

in 2010, trucks with a transponder cross the border 106 times a year on 

average.25

APHIS is considering raising the per-entry truck fees to more closely align 

fees with costs. To encourage use of truck transponders, APHIS is 

considering setting the fee rate for transponders at a rate equivalent to 

the price of 40 arrivals but still well below the average number of arrivals 

for trucks with transponders. In this way, APHIS hopes to provide a 

financial incentive to use transponders to both minimize CBP’s

administrative burden (by reducing the number of fee collection 

transactions at the border) and to reduce wait times at border crossings. 

According to a CBP estimate, trucks with transponders save at least 10 

minutes when crossing the border because they do not have to pay the 

fee at the time of crossing, benefiting trucking firms and shippers. This 

time savings is, in and of itself, another incentive for truck transponder 

use. Shorter wait times at the border also support the CBP mission to 

foster international trade. 

In Otay Mesa, California, for example, we observed trucks 

which CBP officers told us typically make up to three to four border 

crossings a day, dropping off their cargo nearby and returning for another 

shipment. 

The contractor assisting APHIS with its fee review did not propose a way 

for APHIS to better align truck fees with the full cost of truck inspections 

while still incentivizing the use of transponders, but noted that for the long 

term, APHIS should look into other possible alternatives, including 

examining the feasibility of implementing toll-based transponders, which 

would allow trucks to pay for each crossing while still retaining a low 

administrative burden for CBP and time savings of the current 

transponder system. Table 2 demonstrates, for illustrative purposes only, 

various combinations of per-entry and annual transponder fee rates to 

more closely align commercial truck fees with costs under the current 

system. For example, one example adds a portion of the cost of 

inspecting trucks with transponders to the per-arrival fee for trucks, which 

would provide an incentive for the use of transponders (see table 2). In 

another example, trucks could purchase different “packages” of arrivals at 

 

25The contractor could not determine the distribution around that average.
 

Page 16 GAO-13-268 Agricultural Quarantine Inspection Fees

a discounted rate (50 arrivals, 100 arrivals, 200 arrivals, etc.). In 

commenting on a draft of this report, APHIS officials said that because 

the distribution around the mean number of arrivals is unknown, it would 

be difficult to determine the effects of a change in truck transponder 

pricing.

Table 2: GAO Illustrative Examples of Fee Rates That Would More Closely Align 

Truck Fees with Full Costs

Example 1: Transponders pay the full cost of their average crossings

Per-arrival fee Estimated AQI fee rate for 

transponders if fee was set 

to collect full cost of 

inspections

$7.00 $707.50

Example 2: Per-entry fees are increased to cover the costs of incentivizing 

transponders

Estimated AQI fee rate if the revenue loss from the 

transponder cap was added to the non-transponder AQI 

fee

Transponder fee

$48.00 $280.00

Example 3: Tiered levels of service

Per-arrival fee Transponder fees by 

“package”

$7.00 50 arrivals: $250

100 arrivals: $500

200 arrivals: $1000

Source: GAO analysis of APHIS data from fiscal year 2011 AQI Cost Model. 

As previously discussed, although APHIS has authority to charge AQI 

fees to all international passengers, it currently only charges fees to 

international commercial air passengers.26

 

2621 U.S.C. 136a(a)(1)(A).

As of February 2013, APHIS is 

not considering fees for international passengers aboard private aircraft, 

private vessels, buses, and railcars, citing administrative burdens and 

anticipated challenges relating to collecting these fees. Because APHIS 

does not currently charge fees to inspect these passengers, these costs 

are covered by CBP’s annual appropriations or AQI fees paid by other 

users. This reduces economic efficiency and equity of the fees because 

APHIS Might Not Include Fees 

for Additional Passengers Due 

to Anticipated Collection 

Challenges 
 

Page 17 GAO-13-268 Agricultural Quarantine Inspection Fees

the costs of the inspections are not assigned to those who both use and 

benefit from them. 

APHIS’s authority permits it to charge all passengers for the cost of 

inspecting both passengers and the vehicle in which they arrive, but does 

not always permit APHIS to do the reverse; that is, to include in the 

vehicle AQI fees the cost of inspecting the passengers arriving in the 

vehicle. Charging the cost of inspecting bus, private aircraft, private 

vessel, and rail passengers and the vehicles in which they arrive to the 

passengers themselves would be administratively burdensome because 

there is no existing mechanism for collecting fees from these classes of 

passengers. However, in several instances, CBP can and does charge 

customs fees—fees collected to help offset the costs of customs 

inspections—to private vehicles rather than the passengers. If APHIS had 

statutory authority to charge all vehicles in which passengers travel, 

rather than only the passengers themselves, then APHIS could leverage 

existing customs fee collection mechanisms to minimize administrative 

burden in collecting AQI fees.27 We previously recommended that USDA 

and DHS develop a legislative proposal, in consultation with Congress, to 

harmonize customs, immigration, and AQI fees.

28 To date, a proposal to 

harmonize these three fees has not been introduced.

29

Bus passengers. The cost of bus passenger inspections totaled about 

$23 million, or about $4 per passenger, in fiscal year 2011. CBP officials 

told us that it would be difficult to collect the fee from individual 

passengers. In June 2012, our limited observations of the inspection 

process for bus passengers at San Ysidro, California, revealed logistical 

challenges consistent with these concerns. In this port, bus passengers 

get off the bus and are processed along with pedestrians crossing the 

border, which would make it difficult to properly separate out and charge 

a fee only to bus passengers. 

 

To avoid these kinds of logistical challenges, bus passenger fees could 

be collected using the air passenger fee model in which the fee is 

collected by the airline and then remitted to APHIS periodically. However, 

 

27GAO-08-386SP. 

28GAO-08-321. 

29In fiscal year 2011, CBP submitted a legislative proposal to consolidate customs and immigration 

inspection user fees.
 

Page 18 GAO-13-268 Agricultural Quarantine Inspection Fees

APHIS’s fee review noted that barriers to entry for the bus passenger 

industry are lower than air and cruise vessel industries—which could 

mean a large and changing list of bus companies from which APHIS 

would need to collect fees. Because of this, an APHIS official stated, this 

type of remittance model could be burdensome to maintain and audit. The 

official also told us that APHIS has discussed both a possible transponder 

approach to collect fees for buses, and an approach in which buses with 

over 15 seats and buses with fewer than 15 seats pay different fee rates. 

In commenting on a draft of this report, APHIS officials said that due to 

logistical challenges, they would have to seek new legislative authority to 

allow for the collection of fees for the bus rather than charging a fee for 

the individual passenger.

Private aircraft and private sea vessels. The total cost of inspecting 

private aircraft passengers30 in fiscal year 2011 was about $11 million, 

which equates to approximately $34 per passenger or $93 per aircraft for 

each arrival. The cost of inspecting private vessel sea passengers31 for 

fiscal year 2011 was about $4.9 million, which equates to approximately 

$20 per passenger or $61 per vessel for each arrival. As stated above, 

AQI’s statute authorizes it to charge passengers, but not the private 

aircraft or vessels in which those passengers arrive. However, CBP 

charges a customs fee of $27.50 per year for each private plane and 

vessel at least 30 feet long.32

APHIS considered the effect of charging new fees for private aircraft and 

vessels, but as of February 2013, the fees APHIS is considering might not 

recover the costs of AQI services for these users. APHIS’s fee review 

noted that it would be relatively easy to administer an annual fee on 

private aircraft or vessels using CBP’s current process, but concluded 

that the potential revenue would be very small. However, the potential 

Absent a change in APHIS’s statutory 

authority allowing it to charge private aircraft and vessels for AQI 

services, APHIS and CBP cannot leverage the CBP infrastructure already 

used to collect customs inspections fees for private aircraft and vessels. 

 

30The cost of inspecting private airplane passengers includes the cost of inspecting the private 

airplane in which the passengers arrive.

31The cost of inspecting private sea vessel passengers includes the cost of inspecting the private 

vessel in which the passengers arrive.

3219 C.F.R. § 24.22(e).
 

Page 19 GAO-13-268 Agricultural Quarantine Inspection Fees

revenue from such a fee would be greater than the AQI fees currently 

assessed on freight rail. 

It is also worth noting that even if an AQI vessel fee was piggybacked 

onto the customs vessel fee, vessels presenting similar agriculture risks 

may not all be subject to an AQI fee. As mentioned above, CBP’s 

customs fee applies to private vessels that are at least 30 feet long. 

However, one CBP official told us that many private vessels arriving at his 

port are only about 20 feet long and thus are not required to pay the 

customs fee, but that these vessels still present agriculture risks similar to 

larger vessels because 20-foot vessels are large enough to store food. 

According to APHIS officials, APHIS has not assessed the agricultural 

risks posed by smaller vessels and said that the risks would likely vary at 

each port.

Rail passengers. Rail passenger inspections cost the AQI program 

about $1.6 million in fiscal year 2011, or almost $6 per passenger. As 

stated previously, AQI’s statute authorizes it to charge rail passengers

seeking to enter the country for the costs of inspecting the passengers as 

well as the railcar in which they are riding. CBP charges a customs 

inspection fee for each passenger railcar, but APHIS does not charge an 

AQI fee. Absent a change, APHIS and CBP cannot leverage the 

infrastructure used for a per-car fee for customs inspections currently 

charged for the arrival of each railroad car carrying passengers. 

In 2005 APHIS set AQI commercial vessel fees—which are levied on 

cruise and cargo vessels alike—to cover the costs of inspecting vessel 

passengers. According to its authorizing statute, APHIS may set fees to 

cover the costs of AQI services for arriving international passengers, and 

commercial aircraft, trucks, vessels, and railcars. The amount of the fee 

must be commensurate with the costs of AQI services for each pathway

(i.e., class of passengers or entities paying the fees), preventing crosssubsidization of costs between users in setting the fee rates. The way the 

fees are currently set, the vessel fee includes the cost of inspecting 

vessel passengers, such as passengers arriving on cruise ships. APHIS 

is considering replacing the cruise vessel fee with a sea passenger fee 

that would recover the costs of inspecting both sea passengers and the 

cruise vessels. The cost of inspecting cruise passengers for fiscal year 

2011 was about $17.9 million. Charging an inspection fee to sea 

passengers would not require a new collections infrastructure because 

commercial vessel passengers currently pay user fees for customs 

inspections, which are remitted to CBP by the party—such as the cruise 

line—issuing the ticket or travel document. As we mentioned previously, 

APHIS Might Revise the Vessel 

Inspection Fees to Recover the 

Costs of Sea Vessel Passenger 

Inspections
 

Page 20 GAO-13-268 Agricultural Quarantine Inspection Fees

in 2008 we recommended that DHS develop a legislative proposal, in 

consultation with Congress, to harmonize the customs, immigration, and 

AQI fees.33 To date, a proposal to harmonize these three fees has not 

been introduced.34 In addition, we previously reported that existing 

collection mechanisms can be leveraged to minimize administrative 

burden in collecting fees.35

APHIS is considering a new fee for treatments and monitoring but might

not change current AQI policy for two other specialized AQI services—

permits for importing commodities and monitoring of garbage compliance 

agreements—that benefit only a limited set of users yet the costs are 

borne by other AQI fee payers. By continuing to include the costs of these 

specialized services in the regular AQI fees for each pathway, the users 

that benefit most from these services do not know how much they are 

paying for these services—which may encourage overuse of these 

services—while other fee payers are paying for services they do not use. 

As we have previously reported, a more tailored, user-specific approach 

to fee-setting better promotes equity and economic efficiency by 

assigning costs to those who use or benefit from the services.36

Treatments and treatment monitoring. APHIS is considering a new fee 

for conducting and monitoring treatments, for example, fumigation. 

APHIS’s treatment and monitoring costs combined were about $14 million 

in fiscal year 2011.

37

 

33

 Treatments may be required when a pest is 

identified on or in a shipment, or, treatment may be required as a 

condition of entry for certain commodities. Treatments are obtained in one 

of two ways. First, and most commonly, treatments are provided by a 

private third-party company who charges the importer accordingly. APHIS 

GAO-08-321. 

34In fiscal year 2011, CBP submitted a legislative proposal to consolidate customs and immigration 

inspection user fees.

35GAO-08-386SP. 

36We have previously reported on the tension between the desire for an administratively simpler fee 

design that sets rates based on the average cost of services provided to all users and the desire for a 

more tailored, user-specific approach to fee-setting that better promotes equity and economic 

efficiency by assigning costs to those who use or benefit from the services. See GAO-08-386SP.

37APHIS does not track costs separately for conducting and monitoring of treatments, so it cannot 

identify the specific costs related to each activity. The contractor’s report recommended that they do 

so.

APHIS Might Create User 

Specific Fees For Some, But 

Not All, Specialized AQI 

Services 
 

Page 21 GAO-13-268 Agricultural Quarantine Inspection Fees

monitors these treatments, generally at no additional costs to the 

importer, to ensure compliance with APHIS policies and procedures. 

Second, and less commonly, in certain instances APHIS provides both 

treatment and monitoring services for certain commodities, generally at 

no additional cost to the importer. Because the cost of treatment and 

monitoring provided by APHIS is bundled into the AQI fees for air cargo, 

maritime cargo, commercial trucks and rail cargo, these services—

including those for repeat offenders who require treatments regularly—

are subsidized by other shippers. Further, importers may not be aware of 

the costs being incurred for APHIS’s treatment and monitoring services. 

Directly charging importers for these services may encourage importers 

to work with growers whose products do not regularly require treatment 

because importers would directly incur the costs of the treatments. In

keeping with basic economic principles, this may also improve the 

economic efficiency of the fees. 

Import commodity permits. Permits are required to import and transport 

certain agricultural commodities. Although APHIS has authority to charge 

for permits, under the current system these services are paid for indirectly 

through the AQI fees. In fiscal year 2011, APHIS issued 12,152 permits 

for the import of commodities such as wood products, plants, and soil. 

Multiple commodities can be listed on a single permit, which is valid for 

that importer for a year. APHIS spent about $13 million in fiscal year 2011 

on permit-related activities; as mentioned previously, the cost of these 

permits is included in the regular inspection fees for air cargo, maritime

cargo, trucks, and rail cargo. As such, importers may not be aware of the 

cost incurred for their permit application and adjudication, which may lead 

to inefficient use of APHIS resources if importers “overpurchase” permit 

applications. According to APHIS officials, importers sometimes obtain 

permits that they do not use. The contractor’s report proposed a charge of 

$1,075 for each commodity permit and $1,775 for each pest permit. 

However, APHIS officials were concerned that charging for permits may 

create an unintended barrier to trade and retaliatory actions by other 

countries with which we trade. 

Monitoring of compliance agreements for regulated garbage. Costs 

related to monitoring compliance with regulated garbage agreements 

were projected to be about $36 million in fiscal year 2013. CBP monitors 

compliance agreements for disposal of regulated international garbage 

but does not currently charge additional fees for these services. APHIS 

guidance requires that agriculture specialists monitor all facilities with 

compliance agreements quarterly—generally airports and seaports that 

serve international travel. In addition, officials stated that certain ships, 
 

Page 22 GAO-13-268 Agricultural Quarantine Inspection Fees

such as cruise ships, have compliance agreements and the disposal of 

their garbage is regularly overseen by CBP agriculture specialists. APHIS 

might continue to include these costs in inspection fees for air, maritime, 

truck, and rail cargo rather than capture them under a separate fee for 

monitoring compliance agreements. 

The fees APHIS is considering would recover imputed costs paid by the 

Office of Personnel Management and the Department of Labor on behalf 

of APHIS and CBP and attributable to the AQI program.38 By 

incorporating some imputed costs in its analysis of AQI program costs, 

APHIS makes progress in implementing our 2008 recommendation. 

However, APHIS’s analysis does not include costs of processing AQI 

collections borne by the Department of the Treasury (Treasury) for costs 

related to collecting, depositing, and accounting for certain AQI fee

collections. We previously reported that agencies authorized to charge 

full-cost recovery fees could include the Treasury’s cost of collections in 

their fee rates and deposit these funds into the Treasury.39 APHIS officials

told us that Treasury has not yet provided APHIS with a statement of 

these costs.40

 

38APHIS estimated these imputed costs would total $28.6 million in fiscal year 2013. If the AQI fees 

were set to cover imputed costs, APHIS would transfer the APHIS portion of those fee revenues to 

the miscellaneous receipts account of the Treasury.

However, federal accounting standards specify that when 

such costs are unknown, a reasonable estimate may be used. 

39See GAO, Budget Issues: Electronic Processing of Non-IRS Collections Has Increased but Better 

Understanding of Cost Structure is Needed, GAO-10-11 (Washington, D.C.: Nov. 20, 2009). These 

receipts would be credited to the general fund of the Treasury as miscellaneous receipts consistent 

with guidance in OMB Circular A-25. 

40Treasury plans to provide a statement of the costs of processing collections to each agency in fiscal 

year 2013.

The Fees Currently under 

Consideration Might

Include Some, But Not All, 

Imputed Costs
 

Page 23 GAO-13-268 Agricultural Quarantine Inspection Fees

CBP’s share of AQI fee revenue is significantly lower than its share of 

program costs.41

Table 3: APHIS and CBP AQI Costs and Distribution of Fee Revenues, Fiscal Year 

2011

For example, in fiscal year 2011 (the most recent year 

for which APHIS could provide this data), CBP incurred 81 percent of total 

AQI program costs, but received only 60 percent of fee revenues; APHIS 

incurred 19 percent of program costs but retained 36 percent of the 

revenues, as shown in table 3. Further, although AQI costs exceeded AQI 

fee revenues by more than $288 million in fiscal year 2011—a gap that 

was bridged in part using amounts from CBP’s annual Salaries and 

Expenses appropriation—APHIS used more than $25 million of the AQI 

fee collections to increase the AQI reserve balance that year. 

CBP APHIS AQI reserve Total

AQI costs (dollars in millions)a $667.1 $156.2 - $823.3

AQI costs (percentage of total AQI costs) 81% 19% - 100%

Distribution of fee revenues (dollars in 

millions) $319.1 $190.3b $25.3c $534.7

Distribution of fee revenues (percentage of 

total) 60% 36% 5% 100%

Source: GAO analysis of AQI cost model data and APHIS financial data.

Notes: Totals may not add due to rounding.

a

AQI costs listed here exclude imputed costs paid by another agency. In fiscal year 2011, total AQI 

costs including imputed costs were $861.6 million ($696.2 million for CBP and $165.4 for APHIS). 

b

In fiscal year 2011, APHIS obligated $190.3 million of fiscal year 2011 fee revenues and an 

additional $0.4 million from the APHIS reserve, for total APHIS AQI obligations of $190.7 million.

 

41As discussed earlier in this report, total costs of the AQI program and, in particular, CBP’s costs are 

understated by an unknown amount.

The Distribution of 

Fee Collections 

among CBP, APHIS, 

and the AQI Reserve 

Is Misaligned with 

AQI Costs 

APHIS’s and CBP’s Shares 

of Fee Revenues Are 

Misaligned 
 

Page 24 GAO-13-268 Agricultural Quarantine Inspection Fees

c

Near the beginning of the fiscal year, APHIS and CBP agreed to the percentage split of fee revenues 

based on their estimate that AQI fee collections would total $507.4 million in fiscal year 2011. Actual 

collections were $534.7 million. Of the additional $27.3 million of fee collections, $1 million each was 

distributed to APHIS and CBP and $25.3 million was added to the shared AQI reserve. APHIS also 

added an additional $4.2 million to its reserve balance in 2011 from prior year recoveries and made 

another adjustment that increased the APHIS reserve by an additional $1.0 million.

In 2005, CBP and APHIS agreed that user fee collections should be 

allocated based on each agency’s expected annual costs. Each fiscal 

year, APHIS and CBP agree to an estimate of total AQI revenues for that 

year and how those funds will be allocated between the agencies. For 

2006, the agencies agreed on a 61/39 percent split for CBP and APHIS, 

respectively. Table 4 shows the planned division of revenues between 

CBP and APHIS for 2010 to 2013. The 63/37 percent split has changed 

little since the 2006 distribution.42

Table 4: Estimated Allocation of AQI Fee Revenues

 

Dollars in millions

Fiscal 

year

Fee 

revenues 

allocated to 

CBP 

Percent of 

estimated 

fee revenues 

allocated to 

CBP

Fee 

revenues 

allocated to 

APHIS 

Percent of 

estimated fee 

revenues 

allocated to 

APHIS

Total 

estimate of 

AQI fee 

revenues 

2010 $312.2 63% $185.8 37% $498.0

2011 318.1 63 189.3 37 507.4

2012 344.8 63 205.2 37 550.0

2013 349.6 63 208.1 37 557.7

Source: GAO analysis of APHIS and CBP agreements.

Although the 2005 agreement states that AQI funds will be distributed 

between CBP and APHIS in proportion to each agency’s AQI-related 

costs, this does not happen in practice. Rather, the 63/37 percent split 

means that APHIS retains AQI fee revenues sufficient to cover all of its 

estimated AQI costs—including costs attributable to AQI services for 

which no fees are authorized or charged—and transfers the remainder of 

the estimated fee revenues to CBP.43

 

42The funding split was changed from the 61/39 percent split to a 63/37 percent split in fiscal year 

2007 to adjust for the lifting of AQI fee exemptions for flights and air passengers arriving from 

Canada.

In other words, APHIS covers all its 

43APHIS estimates that in fiscal year 2012, it had more than $39 million in AQI costs attributable to 

inspection services for which no fees are charged. Under the fees APHIS is considering, this amount 

would drop to approximately $21 million in 2013 if a new fee structure was in place.
 

Page 25 GAO-13-268 Agricultural Quarantine Inspection Fees

AQI costs with AQI fee revenues, while CBP does not. To bridge the 

resulting gap, CBP uses its annual appropriation. 

Because the 63/37 percent split is based on estimated revenues, APHIS 

and CBP developed an adjustment process for when actual AQI fee 

collections differ from the amount that was expected. When total actual 

fee collections for the year exceed (or fall short of) the estimate, the 

difference is added to (or taken from) the shared reserve. As previously 

mentioned, the shared reserve is money that is carried over each year 

and is meant to cover both APHIS and CBP needs in the event that fee 

collections decline unexpectedly. If, however, APHIS’s costs are greater 

or less than the estimated 37 percent, the difference is added to or taken 

from a second reserve; as mentioned previously, this is known as the 

APHIS-only reserve. For example, according to APHIS officials, a USDA 

hiring freeze has resulted in lower-than-expected APHIS AQI spending in 

recent years. Specifically, because APHIS costs were lower than the 

estimated 37 percent in fiscal year 2012, APHIS took a portion of the 37 

percent allocated to it and put some of those funds into this second 

reserve. Figure 3 shows the total actual distribution of AQI program 

funding among CBP, APHIS, and both reserve funds in fiscal year 2011.
 

Page 26 GAO-13-268 Agricultural Quarantine Inspection Fees

Figure 3: Distribution of AQI Program Funding Among CBP, APHIS, and the AQI Reserve, Fiscal Year 2011

Note: Dollars in millions.

APHIS and CBP also adjust the 63/37 percent split as they see how 

actual revenues compare with estimates. For example, in fiscal year 

2011, fee revenues were higher than estimated and APHIS and CBP 

each received distributions of $1 million more than the initial estimate. 

Table 5 shows the distributions and obligations of actual AQI fee 

revenues for recent years. 
 

Page 27 GAO-13-268 Agricultural Quarantine Inspection Fees

Table 5: Distributions and Obligations of Actual AQI Fee Revenues, Fiscal Years 2010 through 2012

Dollars in millions

Fiscal year

Fee 

revenues 

transferred 

to CBP

Percentage of 

fee revenues 

transferred to

CBP

Fee 

revenues 

obligated by 

APHIS

Percentage of 

fee revenues 

obligated by 

APHIS

Fee revenues 

added to the 

reserve 

Percentage of 

fee revenues 

added to the 

reserve 

Total AQI fee 

revenues 

collected

2010 $312.2 62% $185.8 a 37% $9.4b 2% $507.4

2011 319.1 60 190.3c 36 25.3d 5 534.7

2012 348.8e 64 188.2e 34 11.3 2 548.3

Source: GAO analysis of APHIS financial data.

Notes: Totals may not add due to rounding.

a

In addition, APHIS spent $3.6 million from its reserve balance for total 2010 APHIS AQI obligations 

of $189.4 million.

b

APHIS added an additional $7.4 million to its reserve balance in 2010 from prior year recoveries from 

APHIS accounts and funds released by the FACT Act.

c

In addition, APHIS spent $0.4 million from its reserve balance for total 2011 APHIS AQI obligations 

of $190.7 million.

d

APHIS added an additional $4.2 million to its reserve balance in 2011 from prior year recoveries and 

made another adjustment that increased the reserve by an additional $1 million.

e

APHIS transferred $4 million from its initial allocation to CBP.

We have previously reported that maintaining a reserve balance is 

important for fee programs to ensure that program operations can be 

sustained in case fee revenues decline but workload does not. According 

to APHIS officials, APHIS’s target balance for the total reserve is 3 to 5 

months worth of AQI costs. Officials told us that this level would ensure 

the stability of the program in case of potential fluctuations in fee 

volumes, bad debts, unanticipated crises, or the need for one time capital 

expenditures. The upper end of the target—5 months—is the amount 

APHIS officials estimate would be needed to completely shut down the 

inspection program if it were to cease. However, a maximum target 

balance aligned with more realistic program risks would also allow for 

lower reserve levels. The rationale for maintaining a reserve balance as a 

buffer against a complete program shutdown is not as compelling when a 

fee-funded program also has access to annual appropriations from the 

general fund, as Congress has an opportunity to weigh its funding 

priorities on an annual basis.

Moreover, our analysis of APHIS’s cost and collection projections shows 

a higher total reserve balance than the 3- to 5-month target. The total 

The Fees APHIS is 

Currently Considering 

Would Overfund the Total 

AQI Reserve, Increasing 

Reliance on CBP’s 

Appropriated Funds to 

Cover Program Costs
 

Page 28 GAO-13-268 Agricultural Quarantine Inspection Fees

reserve balance was approximately $107 million at the end of fiscal year 

2012, which represents about 2.4 months of the AQI program costs paid 

with AQI fee revenues that year.44 Our analysis of APHIS data shows that

the balance in the total AQI reserve would grow by an estimated $55 

million, $75 million, and $96 million in fiscal years 2013, 2014, and 2015, 

respectively. This would bring the reserve balance to approximately $333 

million—or more than triple the fiscal 2012 balance. To further put this 

amount in perspective, $333 million would have paid more than 7 months 

of AQI costs paid with fee revenues in fiscal year 2012.45

APHIS’s projected level for the shared reserve fund exceeds the historical 

use of the fund (see figure 4). In past crises, APHIS and CBP used much 

less than APHIS’s total reserve balance target of 3 to 5 months worth of 

AQI costs. During the financial crisis in fiscal year 2009, AQI collections 

dropped by more than $46 million compared to the prior year and the 

reserve fund dropped by about $50 million, reducing the reserve from 2.3 

months of fiscal year 2008 costs paid with fee revenues to 1.1 months of 

fiscal year 2009 costs paid with fee revenues, as shown in figure 4. In 

addition, after the events of September 11, 2001, the reserve fund 

dropped from approximately $68 million on October 1, 2001, to just less 

than $45 million on September 30, 2002, reducing the reserve to about 

2.5 months of fiscal year 2002 costs paid with fee revenues. 

An 

unnecessarily high total reserve balance means that monies that could be 

used to pay for AQI program costs would instead be carried over for 

possible future needs. This strategy would increase reliance on CBP’s 

annual appropriation to pay for current AQI-related costs. 

 

44This excludes AQI costs covered by the appropriation to CBP’s Salary and Expenses Account.

45In February 2013 APHIS provided us with various sets of updated projections of amounts it would 

add to the reserve but not in time for us to assess the reliability of the data and incorporate it into this 

report.
 

Page 29 GAO-13-268 Agricultural Quarantine Inspection Fees

Figure 4: Fiscal Year End Total Reserve Balance 

Note: Data on months of APHIS and CBP AQI costs exclude AQI costs funded with CBP’s 

appropriation. The reserve balance includes both the shared reserve and the APHIS reserve. In fiscal 

year 2012, the APHIS reserve balance was $50.7 million and the shared reserve balance was $56.1 

million.

APHIS’s collection practices for the AQI fees assessed on railcars are not 

consistent with APHIS regulations. According to the APHIS fee 

regulations,46

 

467 C.F.R. § 354.3.

railcars seeking to enter the United States may pay AQI 

fees in one of two ways. First, they can pay a $7.75 fee for each arrival of 

a loaded commercial railcar. Second, they can prepay a flat fee of $155 

annually for a specific railcar. The $155 annual fee is equal to the cost of 

20 individual arrivals. According to APHIS officials, no railcar companies 

APHIS and CBP Do 

Not Ensure that All 

AQI Fees Due are 

Collected 

APHIS Does Not Collect 

AQI Railcar Fees 

Consistent with Its 

Regulations 
 

Page 30 GAO-13-268 Agricultural Quarantine Inspection Fees

choose the $155 flat fee; rather, all choose to pay the $7.75 per arrival 

fee. However, rather than collecting this fee for each arrival of a loaded 

railcar (as required by APHIS regulations), APHIS only collects fees for 

the first 20 arrivals a railcar makes each year.

47 Because of this, in fiscal 

year 2010, APHIS lost $13.2 million in railcar fee revenue because about 

1.7 million railcar arrivals did not pay a fee even though a fee was due. 

CBP does not verify that it collects applicable user fees for every 

commercial truck, private aircraft, and private vessel for which the fees 

are due, resulting in an unknown amount of lost revenue. We have 

previously reported that internal controls should generally be designed to 

assure that ongoing monitoring occurs in the course of operations.48

Similarly, CBP does not consistently verify that all arriving private aircraft 

and private vessels have a customs user fee decal, as required. As we 

stated previously in this report, per CBP regulations, private aircraft and 

private vessels more than 30 feet long arriving in the United States must 

pay an annual $27.50 customs user fee. As proof of payment, these 

Per 

APHIS and CBP regulations, commercial trucks entering the United 

States must pay AQI and customs user fees by purchasing an annual 

transponder or paying the fees upon each arrival. Trucks without 

transponders pay fees upon arrival by cash, check, or credit card. CBP 

personnel at ports we visited compared the amount of cash deposited for 

AQI and customs user fees to the number of cash register transactions to 

ensure against theft, but did not verify that all trucks that were supposed 

to pay the fees actually paid the fees. In other words, CBP cannot be sure 

that it collected these fees from all trucks required to pay them. The 

Automated Commercial Environment system alerts CBP when an arriving 

truck does not have a transponder and therefore owes the fee at the time 

of crossing, but CBP does not require officers to record in the system that 

the truck has paid the fee, or review this information to verify whether all 

trucks paid the fees.

 

47The regulations specify that no credit toward the annual railcar AQI fee is given for user fees paid 

for individual arrivals. In other words, if, for example, a rail company makes and pays for 7 arrivals, 

then decides midway through the year that they wish to instead pay the flat $155 fee, the 7 individual 

arrival fees they already paid do not count toward the flat fee.

48GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 

(Washington, D.C., November 1999).

CBP Does Not Verify 

Payment for Commercial 

Truck, Private Vessel, and 

Private Aircraft Fees 
 

Page 31 GAO-13-268 Agricultural Quarantine Inspection Fees

aircraft and vessels receive a customs user fee decal.

49

For private aircraft, the Advanced Passenger Information System (APIS) 

can show the customs user fee decal number before arrival. However, 

APIS neither requires that the decal number be entered nor flags aircraft 

for which decal numbers are not entered. For private vessels, the 

Pleasure Boat Reporting System and the Small Vessel Arrival System 

both include a field for the customs user fee decal number. However, the 

decal number is not a required field in either system and the systems do 

not link to the Decal and Transponder Online Procurement System to 

provide an automated mechanism to verify the decal number. According 

to CBP officials, CBP officers are to physically verify the decal during their 

inspection of the aircraft or vessel upon arrival. However, CBP does not 

verify that this actually occurs, nor are procedures in place nationwide to 

ensure that CBP officers collect the decal user fee as required if arriving 

vessels and aircraft lack a valid decal. Further, on one of our site visits to 

a small airport, the CBP officers conducting the inspections were 

unfamiliar with the process they should follow if an aircraft arrived without 

a decal; port records showed that the last time a customs user fee decal 

had been sold at that airport was in 2010. Later that day, port officials 

informed us that shortly after our visit an aircraft arrived without a decal 

and the officers collected the decal fee. We also observed inspections of 

private vessels that arrived without customs decals; the CBP officer 

conducting the inspections did not collect the decal user fees, but instead 

informed the vessel owners of the requirement to get a decal.

As APHIS’s fee 

review noted, the customs decal could provide an administratively simple 

mechanism on which to piggyback an AQI fee for private aircraft and 

vessels. However, absent more rigorous oversight of proper payment for 

customs decals this strategy would not be as effective as it otherwise 

could be.

The AQI program is a key component in the nation’s efforts to protect 

against exotic diseases and pests and the billions of dollars in damage 

they can cause. Analyzing and understanding the costs of providing these 

important services—for which CBP and APHIS have joint responsibility—

are important so that the agencies and Congress have the best possible 

information available to them when designing, reviewing, and overseeing 

 

4919 C.F.R. § 24.22(e).

Conclusions 
 

Page 32 GAO-13-268 Agricultural Quarantine Inspection Fees

AQI fees and operations. This is especially true given the increasing need 

for fiscal restraint in an environment of tightening discretionary budgets. 

By conducting a thorough review of AQI program costs and options for 

redesigning AQI fees, APHIS has taken important steps in identifying and 

strengthening the link between AQI program costs and fee collections. 

However, the current AQI fee structure does not (1) recover full costs 

from some users, as authorized; (2) charge fees to some passengers that 

APHIS is authorized to charge but chooses not to for policy reasons; and 

(3) align fees with the program costs to maximize economic efficiency and 

equity. As of February 2013, the fees APHIS is considering would not fully 

remedy these issues (partly because of gaps in AQI’s statutory authority 

and partly because APHIS chooses not to fully exercise the AQI fee 

authorities), thus requiring APHIS and CBP to continue to rely on 

appropriated funds to bridge the historical gap of nearly 40 percent 

between AQI program costs and collections. Similarly, because the 

reimbursable overtime rates for agriculture inspections are not aligned 

with personnel costs to perform the inspections and because not all ports 

consistently charge for those reimbursable services or collect payment in 

a timely way, a portion of those costs are subsidized by CBP’s 

appropriation.

Absent authority to either charge all pathways for AQI services or to 

permit cross-subsidization among pathways when setting fees—that is, 

allowing fees paid by some users to be set to recover the costs of 

services provided to other users—the AQI program cannot recover its full 

costs and must continue to rely on appropriated funds. Furthermore, 

APHIS does not charge fees in all instances in which the authority exists 

to do so because administrative costs for collecting fees from certain 

passengers would be high and the statutory authority limits the recovery 

of such costs through fees assessed on vehicles in which passengers 

travel (a method CBP uses for some other inspection fees). 

Regular, timely, and substantive fee reviews are especially critical for 

programs—like AQI—that are mostly or solely fee funded to ensure that 

fee collections and program costs remain aligned. Although APHIS is to 

be commended for its in-depth review of the AQI user fees and program 

costs, until APHIS includes all imputed costs when setting fee rates and 

CBP ensures that its CMIS cost data accurately reflect program costs at 

all ports, APHIS will not be able to set fees to recover the full costs of AQI 

services. 

Because the fee revenues distributed to each agency are not aligned with 

costs and funding of the AQI reserve is greater than the level needed to 
 

Page 33 GAO-13-268 Agricultural Quarantine Inspection Fees

address realistic program risks, CBP relies more heavily on its 

appropriation to fund AQI costs that could otherwise be funded with AQI 

fee revenues. APHIS and CBP have not followed their 2005 agreement to 

allocate fee collections based on each agency’s costs, essentially 

overfunding APHIS and underfunding CBP. 

Finally, the AQI program is forgoing revenues because CBP and APHIS 

do not ensure that all fees due are collected. APHIS does not collect 

railcar fees for the arrival of all railcars in accordance with regulations, 

and CBP does not use available controls to verify that commercial trucks 

have paid the AQI fee. Similarly, because CBP does not use available 

information to verify that all arriving private aircraft and private vessels 

have valid customs decals, the agency does not have assurance that it is 

collecting all fees that are due. 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.

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. 

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.

To help ensure that USDA considers full AQI program costs when setting 

AQI fee rates, we recommend that

• the Secretary of Agriculture include all imputed costs borne by other 

federal agencies and attributable to the AQI program, and 

• the Secretary of Homeland Security direct CBP to update and widely 

disseminate comprehensive guidance to ports on the correct use and 

review of 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. 

Matters for 

Congressional 

Consideration 

Recommendations for 

Executive Action
 

Page 34 GAO-13-268 Agricultural Quarantine Inspection Fees

CBP should also consider making CMIS training mandatory for CMIS 

practitioners.

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, we recommend that the 

Secretary of Agriculture 

• 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;

• 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; 

• eliminate caps on the commercial vessel and commercial rail AQI fees;

• set truck fee rates to recover the costs of AQI services for trucks while 

maintaining a financial incentive for trucks to use transponders; and

• 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.

To align reimbursable overtime revenues with the costs of those 

agriculture inspections, we recommend that 

• the Secretaries of Agriculture and Homeland Security 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; and

• the Secretary of Homeland Security 

• ensure that ports consistently charge for agriculture overtime 

services that are eligible for reimbursement and

• deny agriculture-related reimbursable overtime inspection services 

to entities with bills more than 90 days past due, consistent with 

APHIS regulations.

To help ensure that AQI fee rates are structured to maximize economic 

efficiency and equity while minimizing administrative burden, we 

recommend that the Secretary of Agriculture 

• charge user fees for AQI permit applications;

• charge user fees for treatment services; and
 

Page 35 GAO-13-268 Agricultural Quarantine Inspection Fees

charge user fees for the costs of monitoring compliance agreements for 

regulated garbage. 

To better align the distribution of AQI fee revenues with AQI costs, we 

recommend that 

• the Secretaries of Agriculture and Homeland Security work together to 

allocate AQI fee revenues consistent with each agency’s AQI costs, and 

• the Secretary of Agriculture establish an AQI reserve target that is more 

closely aligned with program needs and risks, based on past experience.

To ensure that inspection fees are collected when due, we recommend 

that 

• the Secretary of Agriculture revise its processes for collecting AQI railcar 

fees to conform to USDA regulation and

• the Secretary of Homeland Security 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. 

We provided a draft of this report to the Secretaries of Agriculture and 

Homeland Security for their review and comment. We received written 

comments from USDA and DHS, which are reprinted in appendixes III 

and IV, respectively. In addition, both agencies provided technical 

comments, which we incorporated as appropriate.

DHS concurred with our recommendations and described corrective 

actions the agency plans to take to implement them.

USDA agreed with the majority of the recommendations we made to the 

Secretary of Agriculture. However, USDA said that with respect to nine of 

the recommendations, the agency is preparing to initiate notice and 

comment rulemaking regarding the AQI fees. Therefore, USDA stated, it 

would be inappropriate to firmly commit to any particular component or a 

specific amount of fees at this time. USDA commented that, at this time, 

they cannot agree with our recommendation to establish a fee to recover 

the costs of AQI services for buses and bus passengers, but that they 

would work with CBP to assess whether USDA should seek authority to 

establish a bus fee that covers the cost of bus passenger inspections and

whether such a fee would be practical. As we stated in our report, we 

recognize that USDA may not currently have the authority to assess this 

fee on the vehicles rather than the passenger. We continue to believe that 

Agency Comments 

and Our Evaluation
 

Page 36 GAO-13-268 Agricultural Quarantine Inspection Fees

APHIS should recover the costs of AQI services for bus passengers, as 

authorized, or seek legislative authority to establish a bus fee that covers 

the costs of bus passenger inspections. We continue to encourage 

APHIS and CBP to explore options for implementing such a fee in a way 

that would minimize the administrative burden of the fee. 

USDA disagreed with our recommendation to charge user fees for the 

costs of monitoring compliance agreements for regulated garbage, stating 

that compliance agreements save money because the agency does not 

need to provide a service, and that charging a fee to those that provide 

the service would be a disincentive to enter into such an agreement. 

However, APHIS regulations state that any person engaged in the 

business of handling or disposing of garbage must first enter into a 

compliance agreement with APHIS. USDA further asserted that 

recovering the costs of compliance agreements through the current AQI 

fees is fair and simple. However, the costs of compliance agreements 

being paid through AQI fees assessed on cargo pathways (air, vessels, 

trucks, and rail) benefit entities that handle garbage for users that do not 

pay AQI fees, including private aircraft and private vessels. We continue 

to believe that the users of these specialized services should be charged 

directly, consistent with Circular A-25, promoting efficiency and equity by 

ensuring that the beneficiaries of the service pay for the service.

We are sending copies of this report to the Secretaries of Agriculture and 

Homeland Security, the appropriate congressional committees, and other 

interested parties. In addition, the report is available at no charge on 

GAO’s website at http://www.gao.gov.

Should you or your staff have any questions about this report, please 

contact me on (202) 512-6806 or irvings@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix V.

Susan J. Irving

Director for Federal Budget Analysis, Strategic Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-13-268 Agricultural Quarantine Inspection Fees

To analyze the Agricultural Quarantine Inspection (AQI) fees, we 

assessed (1) the AQI fees currently charged and how, if at all, the 

proposed revisions would improve efficiency, equity, and revenue 

adequacy, and reduce administrative burden; (2) how, if at all, changes to 

the allocation of fee revenues between the Department of Agriculture 

(USDA) and the Department of Homeland Security (DHS) could improve 

efficiency, equity, and revenue adequacy, and reduce administrative 

burden; and (3) the extent to which Animal and Plant Health Inspection 

Service (APHIS) and U.S. Customs and Border Protection (CBP) fee 

collection processes provide reasonable assurance that all AQI fees due 

are collected. 

To address these objectives we analyzed the AQI fees using principles of 

effective user fee design—specifically, efficiency, equity, revenue 

adequacy, and administrative burden—on which we previously reported.1

These principles draw on various laws and federal guidance.2

 

1

See GAO, Federal User Fees: A Design Guide, 

To assess 

the current AQI fees and proposed revisions, we examined 

documentation provided by APHIS related to the activity-based cost 

model APHIS and the contractor used to analyze AQI costs and the AQI 

fee structure; observed a demonstration of CostPerform, the software 

used for the activity-based costing; and analyzed cost and fee revenue

data and documentation provided by both APHIS and CBP. We also 

interviewed APHIS officials responsible for the review and fee-setting 

process. To assess the reliability of data from the activity-based costing 

model, we reviewed whether costs were ascribed to activities in a logical 

manner and discussed the reliability of the data with knowledgeable 

agency officials. Based on these assessments, we determined that the 

AQI cost data from the activity-based costing model were sufficiently 

GAO-08-386SP (Washington, D.C.: May 

29, 2008).

2

Office of Management and Budget Circular No. A-25 establishes federal guidelines 

regarding user fees including the scope and types of activities subject to user fees, the 

basis upon which the fees are set, and the disposition of collections. The Chief Financial 

Officers (CFO) Act of 1990 requires an agency’s CFO to review, on a biennial basis, the 

fees, royalties, rents, and other charges for services and things of value and make 

recommendations on revising those charges to reflect costs incurred (Pub. L. No. 101-

576, 104 Stat. 2838 (Nov. 15, 1990), relevant sections codified at, 31 U.S.C. § 902). The 

Statement of Federal Financial Accounting Standards No. 4: Managerial Cost Accounting 

Standards and Concepts establishes standards for federal agencies to use in reporting the 

costs of their products, services, and activities (Federal Accounting Standards Advisory 

Board, Statement of Federal Financial Accounting Standards No. 4: Managerial Cost 

Accounting Standards and Concepts (July 31, 1995). 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-13-268 Agricultural Quarantine Inspection Fees

reliable for our purposes. We reviewed the analysis of the economic 

impact of proposed changes to fee rates, which was performed as part of 

the fee review. This analysis evaluated the economic impact of proposed 

fee scenarios on both the U.S. economy and selected industries to 

determine if any fee scenarios considered would create an unreasonable 

burden on these industries or consumers. Specifically, a contractor

analyzed short and long-run economic impacts by evaluating the impact 

on the price of individual goods and services, corresponding changes in 

U.S. consumer purchases, and the resulting impact throughout the U.S. 

economy. All scenarios showed economic impacts that were very small 

relative to the size of the affected sectors and had an overall minimal 

impact on the national economy. Because the contractor found the effects 

to be minimal, it did not apply behavioral responses to changes in fee 

prices to the proposed fees. 

To examine how changes to the allocation of fee revenue could improve

efficiency, equity, and revenue adequacy, and reduce administrative 

burden, we compared the existing and proposed fee structures to 

applicable statutes and regulations and to criteria from GAO’s User Fee 

Design Guide.3

To address all of these objectives, we visited a nonprobability sample of 

seven ports of entry to observe CBP inspection procedures and discuss 

We used APHIS and CBP data to analyze AQI costs and 

fee collections. We also discussed fee design options with APHIS and 

CBP officials. Further, we analyzed the extent to which CBP attributes a 

portion of primary inspection time to agriculture-related cost accounting 

codes by analyzing data from CBP’s cost management information 

system. In addition, to examine how APHIS and CBP fee collection 

processes have ensured that all AQI fees are collected, we interviewed 

APHIS and CBP officials, examined documents related to fee collection 

procedures, and observed fee collection processes at ports of entry. To 

assess the reliability of the CBP and APHIS data, we analyzed the data 

for internal consistency and discussed the data with CBP and APHIS 

officials. We also compared the APHIS data on collections and 

obligations of AQI fee revenue and AQI reserve balances to another 

published source of this information and found them to be consistent. 

Based on these assessments, we determined that the CBP and APHIS 

data were sufficiently reliable for our purposes.

 

3

GAO-08-386SP. 
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-13-268 Agricultural Quarantine Inspection Fees

issues related to AQI user fees. We determined that, for our purposes 

and considering resource constraints, seven is a sufficient number of site 

visit ports. We visited the ports of Blaine, Washington; Miami, Florida; 

Otay Mesa in San Diego, California; Port Huron, Michigan; San Diego, 

California; San Ysidro, California; and Seattle, Washington. We selected 

these ports of entry based on entry pathways, particularly those that 

charge fees, such as commercial rail and commercial vessels; volume of 

entries; diversity of inspection challenges; and geographic proximity to 

each other. We also visited APHIS Plant Protection and Quarantine 

(PPQ) offices in Miami, San Diego, and Seattle to understand the AQIrelated work being conducted by APHIS in the field. We determined that a 

nonprobability sample was sufficient for our purposes because we used 

the site visit information to understand commonalities and differences in 

inspection practices and fee collection processes at various ports and for

illustrative examples of how fee design and implementation affect equity, 

efficiency, revenue adequacy, and administrative burden. Because we 

used a nonprobability sample, the information we obtained from these 

visits cannot be generalized to other CBP ports of entry. On the site visits, 

we interviewed CBP and APHIS officials and observed agriculture 

inspections and AQI fee collection processes. We also interviewed AQI 

program stakeholders, including ship agents and customs brokers. We 

conducted a content analysis on our site visit interviews and observations 

to identify common themes. 

We conducted this performance audit from April 2012 to March 2013 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Fees Charged for Arrival 

Inspections

Page 40 GAO-13-268 Agricultural Quarantine Inspection Fees

Users AQI Fees a Customs Fees b Immigration Fees c

Commercial aircraft $70.75

Commercial trucks $5.25 per arrival or $105 per year $5.50 per arrival or $100 per year

Commercial vessels $496 $437 

Freight railcar $7.75 per arrival or $155 per year $8.25 per arrival or $100 per year

Passenger railcar $8.25 per arrival or $100 per year

Commercial aircraft passengers $5 $5.50 $7 

Private vehicle passengers

Bus passengers

Cruise vessel passengers $5.50 $7

Private vessel passengers

Private aircraft passengers

Rail passengers

Pedestrian

Military

Private Aircraft $27.50

Private Vessel $27.50

Dutiable Mail $5.50

Source: GAO analysis of relevant laws and regulations. 

a

7 C.F.R. § 354.3. The amount of AQI fees paid annually by commercial vessels is capped at a dollar 

amount equivalent to 15 payments per year. Certain vessels, railcars, commercial aircraft, and 

commercial aircraft passengers are exempted from the AQI fees.

b

19 C.F.R. § 24.22. The customs inspection commercial vessel fee is capped at $5,955 for a vessel in 

a calendar year and barges and other bulk carriers from Canada or Mexico pay a reduced fee of $110 

per arrival, but not more than $1,500 in a calendar year. Certain vessels, railcars, air passengers, 

vessel passengers, and private vessels are exempted from the fees.

c

8 U.S.C. § 1356. Air and vessel passengers from certain locations, including Canada and Mexico, 

pay a reduced immigration inspection fee of $3 per arrival.

Appendix II: Fees Charged for Arrival 

Inspections 
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 41 GAO-13-268 Agricultural Quarantine Inspection Fees

Appendix III: Comments from the U.S.

Department of Agriculture
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 42 GAO-13-268 Agricultural Quarantine Inspection Fees
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 43 GAO-13-268 Agricultural Quarantine Inspection Fees
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 44 GAO-13-268 Agricultural Quarantine Inspection Fees
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 45 GAO-13-268 Agricultural Quarantine Inspection Fees
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 46 GAO-13-268 Agricultural Quarantine Inspection Fees
Appendix IV: Comments from the Department 

of Homeland Security

Page 47 GAO-13-268 Agricultural Quarantine Inspection Fees

Appendix IV: Comments from the 

Department of Homeland Security
Appendix IV: Comments from the Department 

of Homeland Security

Page 48 GAO-13-268 Agricultural Quarantine Inspection Fees
Appendix IV: Comments from the Department 

of Homeland Security

Page 49 GAO-13-268 Agricultural Quarantine Inspection Fees
Appendix IV: Comments from the Department 

of Homeland Security

Page 50 GAO-13-268 Agricultural Quarantine Inspection Fees
Appendix V: GAO Contacts and Staff 

Acknowledgments

Page 51 GAO-13-268 Agricultural Quarantine Inspection Fees

Susan J. Irving, (202) 512-6806 or irvings@gao.gov

In addition to the contact named above, Jacqueline M. Nowicki, Assistant 

Director, and Susan Etzel, Senior Analyst in Charge, managed all aspect 

of this assignment. Laurel Plume and Alexandra Edwards made key 

contributions to this report. Michelle Cooper, Kate Lenane, Felicia Lopez, 

Mary Denigan-Macauley, Rebecca Gambler, Sarah McGrath, Donna 

Miller, Cynthia Saunders, Anne Stevens, and Jack Warner also made 

important contributions. 

Appendix V: GAO Contacts and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(450973)
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