Bill Would Hike MPF So CBP Can Pay for Its Own Office Space at Seaports

CBP has been threatening ports that it will reduce its presence or even pull out of ports if those ports don't upgrade work space, members of Congress say, and a recently introduced bipartisan bill aims to put a stop to it.

The CBP Space Act, introduced by Reps. Laurel Lee, R-Fla., and Marie Gluesenkamp Perez, D-Wash., instructs the treasury secretary and CBP commissioner to work together to set an appropriate level for merchandise processing fees (MPF), high enough that CBP "is able to adequately fund equipment upgrades and facilities construction, improvement, and maintenance at United States sea ports of entry."

The MPF ranges between $31.67 and $614.35 per formal entry, and is set at 0.3464% of the value of the merchandise, before duties. Informal entries pay $2.22, $6.66 or $9.99 in fees. However, goods that claim USMCA, Central America Free Trade Agreement or U.S.-Korea Free Trade Agreement benefits, and some other imports covered by FTAs or trade preferences, do not pay the MPF.

The demands are not new, according to the American Association of Port Authorities. In testimony almost two years ago at the House Homeland Security Subcommittee on Border Security, Facilitation and Operations, then-AAPA CEO Christopher Connor said CBP has funding shortages for its facilities at ports of entry.

"To close that gap in recent years, CBP has turned to ports to pay for major upgrades and new facilities. This represents an attempt to shift the burden of financing their inspection mission from the Federal Government onto ports. This is both unsustainable and outside the authority of CBP. These demands are often coupled with threats to slow down cargo processing or disallow the opening of new terminals," Connor said.

The association’s initial research into the legal basis for these demands "shows no statutory authority that allows CBP to require non-Federal entities to contribute to their inspection mission," he said. Noting legislative changes, including amendments to the Immigration and Naturalization Act, have restricted CBP's ability "to push off the burden of maintaining its minimum operational requirements," he said, other "authorities cited by CBP merely entitle them to the use of a room -- literally a floor -- to conduct inspections. Over the ensuing years, this has been expanded to include office space, IT, recreation areas and gyms, parking, gun lockers, kitchens, and more. These demands are excessive and well beyond the original intention of the free space agreements."

Connor said "the financial burden of these requirements would also wreak havoc on port budgets."

Derek Miller, AAPA government relations manager, told International Trade Today that at some ports, CBP had previously worked from trailers, and told the port: "Either you need to construct us a new facility or lease us this floor offsite. That includes not just the lease but the utilities."

CBP asked the ports to pay for the computers, office furniture and televisions to furnish the space, Miller said.

While some ports complied, others have stalled, he said, and the COVID-19 pandemic gave ports the ability to tell CBP it needed to wait a few years to negotiate again.

Miller said no port has explicitly said no, and, to his knowledge, CBP has not reduced services anywhere when the space hasn't yet been provided.

In the news release announcing the bill, Lee said she was concerned to hear about CBP's demands for financial support from ports. "What is more concerning is that CBP has threatened to reduce CBP officers at some ports and threatened to cease operations at others should their demands not be met. The lack of resources is both a major threat to our national security and would only further strain our congested supply chains," she said. The bill ensures a portion of the MPF "will be used to fund CBP’s salaries, expenses, and capital costs associated with inspection operations. The security of our ports should not be hamstrung by CBP's failure to properly allocate funds,” Lee said.

The current AAPA CEO Cary Davis thanked the lawmakers "for recognizing that the government is obligated to pay for customs inspections so ports can focus on other upgrades to keep cargo moving.”

Miller said Congress has been underresourcing CBP, and the agency seems unwilling to ask for all it needs to facilitate trade. He said he hopes the bill can be attached either to a reauthorization of the DHS Countering Weapons of Mass Destruction Office, or to DHS appropriations next year.

If neither of those efforts is successful, Miller said, it could be part of the customs modernization package.

AAPA doesn't have a specific estimate for how much the MPF would need to increase to give CBP the funds to pay for its own facilities and overtime at seaports, but Miller said compared with the overall funds the MPF brings in, "any necessary increase would be de minimis."