Money for ACE Development Likely to Come From Alternative Funding Streams

Congress seems unlikely to provide dedicated funding for new ACE development in upcoming appropriations legislation, according to industry officials. Still, CBP may be able to funnel operations and maintenance resources to ACE development, said one industry observer. While the end to funding for new programming isn't unexpected (see 1609140034), the shift is closer to becoming a reality as the Senate and House aim to pass final Department of Homeland Security appropriations legislation by late April, industry and congressional officials said recently.

It’s unclear whether ACE will be in the mix of any half-year fiscal 2017 DHS funding legislation, but “it certainly would be useful,” said Jon Kent, a lobbyist for the National Customs Brokers & Forwarders Association of America. CBP’s operations and maintenance account is a pocket of money that could help fund ACE, but CBP has told the private sector that even that source is running short on funds, Kent said. “It’s all kind of vague right now” how exactly ACE will be funded for the remainder of fiscal 2017 and going forward. The NCBFAA wrote to DHS and the Treasury Department earlier to request that additional funding be made available for ACE programming (see 1701230026).

Although CBP is in talks with the House Ways and Means, Senate Finance, and House and Senate Appropriations committees, about how to fund ACE beyond the April 28 deadline for the current continuing resolution, Congress might provide only maintenance funding for ACE, industry officials said. “Up until now, it has been a separate bucket of money, which was for programming ACE, and now they’re going to have to switch over to the maintenance budget, which will be similar to what it has been in the past,” Sandler Travis consultant Tom Gould said. “The fact that they’re not going to have to spend money on maintaining the [Automated Commercial System (ACS)] means that they’re going to free up some of the maintenance money for maintaining or maybe making some improvements to" ACE.

CBP requested $83.9 million in its original fiscal 2017 budget request, released in February 2016, to maintain ACE (see 1602090051). Congress never appropriated DHS funds for fiscal 2017, as it passed a continuing resolution in December (see 1612090019). Senate and House lawmakers are currently in conference working to finish and pass by April 28 all necessary spending legislation for the second half of the fiscal year, a Senate Appropriations Committee spokesman said in an email.

“When you go to the Congress, Congress says, ‘Oh, we’ve given them the money that they’ve asked for,’” one industry official said. “So it’s sort of circular as to figuring out where the shortage is coming from, and who’s causing it.” For a time, CBP was urging the trade community to make the case for ACE funding, but the trade has since pushed back in saying it is the agency’s responsibility to maintain and roll out the system, the industry official said. Although keeping ACS running is expensive, it’s not “a disaster,” the official said. Industry recently compiled a priority functions list for the ongoing ACE rollout, which was recently made available to CBP. “We’re asking CBP to finish them,” the industry official said. “And we’ve got to see if they can get some money for that.”

Among the recommendations are for ACE to accommodate the release of unmanifested cargo, temporary importation bond electronic messaging, the ability to release de minimis shipments through the Automated Broker Interface (ABI), and house bill release. CBP should also add an automated invoice interface and increase the ACE file size limits from the current 999 lines or one megabyte of data to the previously advertised 9,999 line limit and higher megabyte contingency, the list said.

The “million-dollar question” is whether CBP will have the funds to adequately maintain ACE, Gould said. But he added that it is his understanding that CBP has the money “to maintain the status quo,” and to implement reconciliation, drawback, liquidation, statements and “a couple of other little pieces of functionality.” However, CBP likely doesn’t have funding to automate the de minimis clearance process yet, Gould said. “With e-commerce becoming such a big part of our lives today … that, along with the fact that the Section 321 de minimis level increased from $200 to $800 … have made the desire for that automated Section 321 clearance a much higher priority for all parties involved -- for customs, for the e-commerce companies, for the brokers and the carriers, for any importers in search of general consumers,” Gould said. “So that, to me, is a big one that needs to be addressed.”

A Ways and Means spokeswoman confirmed that her committee is talking with CBP about future ACE appropriations, but didn’t comment further. The Trump administration will release its budget blueprint in "mid-March," an Office of Management and Budget spokesman said in an email. The blueprint will show CBP funding allocations requested from Congress. "It would be premature for us to comment – or anyone to report – on the specifics of this internal discussion before its publication," the spokesman said. "The president and his cabinet are working collaboratively as we speak to create a budget that keeps the president’s promises.” Senate Finance and CBP didn’t comment.

The Border Interagency Executive Council process for securing partner government agency (PGA) funding for the International Trade Data System (ITDS) aspects of ACE has been opaque, the industry official said. While it appears that PGAs will be left to self-fund their own lanes of ITDS, they might lean on CBP for some funding since that agency will be responsible for some ITDS programming, Gould said. “As an example, the PGAs are going to need reports, and customs is the one that’s really creating the reports,” he said. A CBP official last month said that programming for ACE and ITDS has been somewhat in limbo since funding dried up on Dec. 31 (see 1702150028).