Millions of individuals arrive in the United States every year and undergo an inspection to ensure they are entering the country lawfully and not transporting any illegal goods or harmful pests and prohibited agricultural products. Prior to the creation of DHS in 2003, passengers were required to undergo separate customs, immigration, and agriculture quarantine inspections (AQI), which were performed by the United States Customs Service, the United States Immigration and Naturalization Service (INS), and APHIS. Under the Homeland Security Act of 2002, however, these passenger inspection functions were transferred to DHS. As part of this realignment, CBP was charged with leading the customs, immigration, and agriculture quarantine inspection functions, and all immigration and agriculture quarantine inspectors were transferred to CBP. The newly created CBP officers were cross-trained on customs, immigration, and agricultural quarantine inspections in what is now referred to as “SABPOE.” As a result, all international passengers are now subject to a single primary inspection—looking for customs, immigration, and agriculture quarantine violations—conducted by a CBP officer. If, as a result of the primary inspection, a passenger requires further scrutiny, that passenger is referred to another CBP officer who conducts a more in-depth secondary inspection. Secondary inspection can involve additional interviews, document reviews, database queries, communication with other law enforcement agencies, observational techniques, and heightened physical inspections. Although CBP absorbed and leads the inspection program for customs, immigration, and agriculture quarantine, other immigration and agriculture responsibilities were not merged into CBP. (See text box for more information on CBP, ICE, and APHIS and their missions.) CBP, ICE, and APHIS The Homeland Security Act established DHS by merging 22 disparate agencies and organizations with multiple missions, values, and cultures. As part of this transition, both CBP and ICE were newly created from parts of legacy agencies. CBP was assigned the border inspection functions of the former Immigration and Naturalization Service (INS) and former U.S. Customs Service and the Department of Agriculture’s APHIS program. The new agency’s mission is the following: interdicting illegal drugs and other contraband; apprehending individuals who are attempting to enter the United States illegally; inspecting inbound and outbound people, vehicles, and cargo; enforcing all laws of the United States at the border; protecting U.S. agricultural and economic interests from harmful pests and diseases; regulating and facilitating international trade; collecting import duties; and enforcing U.S. trade laws. ICE was created by combining the law enforcement arms of the former INS and the former U.S. Customs Service. Its mission is the following: to enforce immigration and customs laws, and to protect the United States against terrorist attacks by targeting illegal immigrants— including the people, money, and materials that support terrorism and other criminal activities. The APHIS Program remains part of the Department of Agriculture, though the agriculture quarantine inspection functions have now been transferred to CBP. The program’s mission is to protect and promote U.S. agricultural health, and administer certain domestic and wild animal management programs. Although the inspections were unified in 2002, the Homeland Security Act did not consolidate the corresponding air passenger inspection fees. Thus the previous separate processes for setting, collecting, and distributing the fees remain in place. So, whereas most passengers likely notice only that they pay “fees” when they purchase a ticket, they actually pay—among other charges—three separate inspection user fees: one for the legacy customs inspection, one for the legacy immigration inspection, and one for the legacy agriculture quarantine inspection. What Is a User Fee? A user fee is a fee assessed to consumers of goods or services provided by the federal government. User fees generally apply to federal programs or activities that provide special benefits to identifiable recipients above and beyond what is normally available to the public. User fees are normally related to the cost of the goods or services provided. An example of a user fee is a fee for entering a national park. In the narrow budgetary sense, a toll for the use of a highway is considered a user fee because it is related to the specific use of a particular section of highway. Alternatively, highway excise taxes on gasoline are considered a form of user charge in the economic sense, but since the tax must be paid regardless of how the gasoline is used and since it is not directly linked with the provision of the specific service, it is considered a tax. The customs air passenger inspection is designed to prevent passengers from bringing illegal goods—such as narcotics—into the United States. Passengers pay a customs air passenger inspection fee, currently set in statute at $5.50 per passenger, when they purchase their tickets. The fees are remitted to the government quarterly, after which they reimburse CBP appropriations for a specific set of reimbursable expenses. The air passenger inspection fee is only one of several types of customs inspection fees also known as COBRA fees—named for its authorizing legislation, the Consolidated Omnibus Reconciliation Act of 1985. For example, commercial vessel passengers also pay a customs inspection fee. The immigration air passenger inspection is designed to prevent passengers from entering the United States without legal entry and immigration documents. Passengers pay an inspection fee (set in statute at $7 per passenger) when they purchase their tickets. The fees are remitted to the government quarterly, except for the last quarter of the year, when the immigration fees collected to-date are remitted 10 days before the end of the fiscal year, with the remaining fees collected in the fourth quarter remitted along with the first quarter payment of the next fiscal year. The fees are then divided between CBP and ICE according to the costs of the immigration inspection activities for which each agency is responsible. The immigration air passenger fee is one of two immigration inspection fees, the other being the international passenger commercial vessel fee. The agriculture air passenger inspection is in place to seize prohibited materials and intercept foreign agricultural pests. Passengers pay an inspection fee, set by the agency in regulation at $5.00 per passenger, when they purchase their tickets. The fees are remitted to the government quarterly and are made available to APHIS. The fees are then divided between APHIS and CBP based on the proportion of costs associated with each agency’s agriculture quarantine inspection activities. The air passenger inspection fee is only one of several types of APHIS inspection fees, known as AQI fees. For example, commercial aircraft and vessels also pay AQI fees. By statute, the authority to collect the three passenger inspection user fees varies from a legislative grant of broad agency discretion to set and collect a full-cost recovery fee, to more restrictive authority to collect a sum- certain amount available for a limited number of purposes. For example, the agriculture inspection statute grants the Secretary of Agriculture broad discretion to prescribe and collect fees sufficient to cover the cost of providing agricultural quarantine and inspection services. APHIS adjusts fees under this authority through the federal regulatory process by public notice and comment on proposed rates and implementing regulations in the federal register. In contrast, the customs passenger inspection fee statute is the most restrictive of these three fee statutes. It limits both the fee that may be charged and the set of activities for which collections may reimburse appropriations. Somewhere between these two margins is the immigration fee statute. It is available to refund any appropriation for expenses incurred in providing immigration inspection and preinspection services, but it limits the fee that may be charged. While both the immigration and customs statutes contain language that fees equal or be reasonably related to the cost of services, the two statutes actually prescribe an exact amount in law to be charged for their respective inspection services. That is, the immigration and customs user fees actually limit cost recovery to a sum certain. During our audit work, CBP informed us that they are developing a broad legislative proposal that would, among other things, partially consolidate the three passenger inspection user fees and make other changes to address certain administrative challenges. As of August 2007, the legislative proposal had been reviewed by CBP chief counsel but officials were still working on estimates of the cost of ICE’s inspection activities. We have not received, reviewed, or evaluated this proposal, although we have been briefed on elements of it. Because CBP has widely circulated elements of the proposal among key stakeholders, we refer to relevant elements of this proposal throughout this report. Any proposal to consolidate these fees, however, will be considered in an environment of considerable flux and controversy. For example, there are proposals before lawmakers to transfer the agriculture quarantine inspection function back out of DHS and under the Department of Agriculture’s authority. The complex process for setting, collecting, and distributing the passenger inspection fees is different for each fee, creating administrative, operational, and oversight challenges for agencies and stakeholders, and oversight challenges for Congress. The fees are still governed by separate, dissimilar authorizing legislation and are administered by multiple executive branch agencies and overseen by multiple congressional committees. Agencies involved face difficulties reimbursing the collections among their various appropriations because there is disagreement on how to divide the receipts among them and because the process of transferring the funds from one agency to another complicates agency budget execution. Finally, airports and airlines play an important role in both facilitating inspections and in fee collection and remittance, but they have limited substantive interaction with the three agencies. This contributes to misunderstandings, skepticism, and confusion about how the fees work and what activities they may fund. Although the passenger inspections themselves have largely been consolidated, administrative authority remains divided. The Treasury Department, from which the legacy U.S. Customs Service was transferred, retained administrative authority over the customs fee, although most of these duties have been delegated to DHS. The Department of Agriculture’s APHIS retained administrative authority over the agriculture inspection fee, although a majority of the fee collections is transferred to CBP to cover the cost of agriculture quarantine inspections.