Decrease in User Fees Hitting CBP's Budget; About $72 Million in Duties Were Deferred, Official Says

The travel limitations imposed to slow the spread of COVID-19 has resulted in a big hit to CBP's budget due to the decrease in corresponding user fees, said Thomas Overacker, CBP executive director, Cargo and Conveyance Security, while speaking on the virtual National Association of Foreign-Trade Zones conference on May 12. CBP is actively looking for ways to cut spending as a result. Overacker said the northern and southern border restrictions are scheduled to expire on May 20 (see 2004210046) and that there's been no indication that the restrictions will be extended again.

While CBP is typically well-funded, “roughly 40% of our salaries are paid for by user fees,” Overacker said. “So we've seen a precipitous decline in user fee collections this year as a result of the near-stoppage of travel, so it will be some time before travel picks back up and we see those user fees go back up. Nevertheless, we are working diligently within the agency to trim fat, to trim waste, to save money any way we can so that we can continue the mission going forward.”

Over 1,000 importers deferred payment of $72 million of regular customs duties under the now expired duties deferral program offered by the Treasury Department applied to entries in March and April (see 2004300048), Overacker said. Asked to compare that amount to a typical month, Overacker called that number “significant” but didn't go into more detail. He noted the agency typically deals with 800,000 importers in a year. “Not everyone has had a chance to take advantage of it,” and CBP recognizes that the rollout happened “very fast,” he said.

While not as dramatic as with travel, the agency is “seeing huge declines in cross-border trade,” he said. For example, in April, there was a 26% decline in truck traffic on the Southwest border, and a 34% truck traffic decline on the northern border, he said. There's also been around a 25% decline in the number of container vessels coming to the U.S., and about a 27% fall in bulk and break bulk arrivals, Overacker said. By import values, April was down 15% from April last year, he said. The number of entries was down 21% from the same period last year, he said.

CBP “learned a lot of lessons” from the port closure in Alaska after an employee in the same building tested positive for COVID-19 (see 2004030044), Overacker said. CBP recognizes “that it may happen that the trade is impacted in serious ways, or a port is impacted in serious ways where we would have to allow for diversions of cargo” or a “waiver of the 24-hour rule, and flexibility along the supply chain,” he said. That's “something we're prepared for, should it arise.”

CBP has been working closely with the Food and Drug Administration and the Federal Emergency Management Agency to keep the flow of the imported personal protective equipment moving, Overacker said. CBP is helping FEMA understand the requirements for importing PPE and is “facilitating the release of this cargo when it arrives,” he said. CBP has “facilitated the importation of over 185 flights of personal protective equipment into the country with collaboration with FEMA,” he said.

CBP in recent weeks has been engaged in “heavy internal discussions specifically around” the Type 4 bond for FTZ operators, said Jim Swanson of the Office of Cargo Security and Controls in the CBP Office of Field Operations. Swanson has been working within the agency to “standardize and create a formula so everybody can understand what the bond amount is and why it's that amount,” he said. “So, expect to see that fairly soon.”