Gym, Kennel Demands by Customs Adds to Port Operators’ Ire

• Border agency demands seaports fund $52 million in upgrades
• Ports already grappling with staff pulled to border, busy season

It seemed like a game-changer for the Port of Monroe, Michigan, located less than 20 miles from a Ford Motor Co. plant, when it got an order to ship hundreds of Mustangs to Germany.

The work would require up to 200 workers at a facility that handled mostly commodities like coal and limestone. Ford’s order came as the port was working to establish itself as the first federal marine highway on the Great Lakes, a chance for an economic boon for the Rust Belt community in the shadow of Detroit.

Then, U.S. Customs and Border Protection stepped in.

The border agency told Ford and the port operator that it didn’t have the resources to inspect every shipping container, and the port would need to buy new fencing, cranes, facilities and security at its own expense before it would be allowed to carry out the order, which also included imports. The upgrades were required not just for the Ford work, but to accept containers from any other company for international shipping, according to a University of Michigan case study of how the security agency has impacted the port and local economy.

Ford ultimately pulled the project and shipped the Mustangs by rail to Baltimore. Yet the agency hasn’t altered its position, and its demands have cost the region countless revenues and job creation, according to the report.

“The U.S. Customs and Border Protection has nearly put the Port of Monroe out of the international cargo business,” Paul LaMarre, the port’s director, said in an interview.

Monroe is among a growing number of public ports that say Customs and Border Protection is demanding that they front the bills for on-site upgrades and equipment to improve security. The demands add to their financial worries at a time when the Trump administration’s tariff orders and siphoning of hundreds of customs officers to the U.S.-Mexico border is already stressing resources in the midst of the busy summer shipping season.

In recent months the demands have accelerated. At least half a dozen ports of various sizes throughout the country have been told to make at least $52 million in often last-minute upgrades or potentially face inspection service issues, the American Association of Port Authorities said in a May 9 letter to congressional homeland security overseers.

The requests have included gym space and break rooms for border agency staff, additional space in cruise ship embarkment buildings, and kennels for cargo-sniffing canines, the group said.

The “disturbing” trend continues “with no end in sight,” AAPA CEO Kurt Nagle said in the letter.

“They’re saying if you want to play in this space, you’re going to pay,” Gregg Ward, who has consulted for the Monroe port and is president of Detroit-Windsor Truck Ferry Inc. said in an interview.

A spokesperson from the border agency didn’t respond to a request for comment.

Seaport Disrupted

Now some lawmakers are calling for oversight and provisions in spending bills aimed at ensuring ports aren’t blindsided by the agency’s demands.

An amendment to the fiscal 2020 Homeland Security spending bill that would require the border agency to brief Congress on its requirements for staffing and security upgrades at seaports, as well as lay out the process of deciding how initiatives are funded, was adopted last week by the House Appropriations Committee .

“The federal government’s responsibility is port security,” Rep. Dutch Ruppersberger (D-Md.), who offered the provision and whose district includes the Port of Baltimore, said in a hallway interview. “The states don’t have the money to do that, and they are doing a lot of it already.”

The congressman wants the border agency to justify its authority to ask for these requests, and would support a stronger provision in the Senate’s Homeland Security spending bill that would require CBP to lay out its budget for funding needs, spokeswoman Jaime Lennon from Ruppersberger’s office said in an interview.

Both Ruppersberger and Sen. Chris Van Hollen (D-Md.) said they’re worried about how widespread the issue is, beyond impacting their Port of Baltimore. Port of Baltimore operators didn’t respond to a request for comment.

Van Hollen is developing language for the Senate’s Homeland Security appropriations bill that would halt expenditures on current and future facility requests for seaports from the border agency until there has been a review of the management of funding, according to spokeswoman Bridgett Frey.

The Senate’s appropriations bill development has stalled as lawmakers and the White House negotiate top-line budget figures.

Democrats on the Senate Homeland Security and Governmental Affairs Committee led by ranking member Gary Peters (D-Mich.), whose state includes the Port of Monroe, are also digging into the issue, an aide said in a telephone interview.

Port Authorities

The agency has told ports it has statutory and regulatory authority to require a suitable environment for cargo inspections at no cost to the government. For example, a 1928 Justice Department legal opinion on customs inspections states there is no reason the federal government should “pay the costs of acts which it has power to require others to perform at their own expense.”

The reasonableness of the requests may be more of a gray area, in terms of what is actually required for customs officers to do their jobs, according to an aide from the committee’s minority office.

“This doesn’t exist everywhere, this doesn’t exist at all the ports, but it’s being forced on this little community port,” Ward said, referring to the type of equipment demands at Monroe, which he estimated would cost at least $5 million to $6 million.

To be sure, the border agency has made facility requests in the past, and the agency since 2013 has been expanding a public-private partnership program with a variety of ports that donate materials or reimburse the agency, for example, when extra cargo loads require overtime hours for inspection.

“Record increases in passenger and cargo volumes are outpacing CBP’s personnel and infrastructure resources, resulting in increased passenger wait times and cargo backups,” the agency’s website for the partnership program says.

According to the University of Michigan report, the CBP regarded serving Monroe as a “courtesy” that was not required.

The ports association said members met with acting Customs and Border Protection Commissioner John Sanders June 12 to discuss the facilities issue and staffing. The group wants a pause in the funding requests until Congress can conduct oversight of the process, and require the agency to report its funding needs and timelines.

Back in Monroe, LaMarre said that in the years since the Mustang loss they’ve been accepted to the agency’s private partnership program, but are still waiting for a clear list of needs from the agency. Meanwhile, he said, the port has lost millions of dollars in business as shipping clients chose alternative ports or transportation modes that aren’t facing the same demands from the border agency.

At this point, he said he’s willing to pay what it takes to clear cargo.

“We’re just looking for a responsive partner” he said, adding that the meeting with Sanders seemed to tip some action. “We are a public port in a distressed community, and our distressed community is being put off the list of priorities entirely.”

To contact the reporter on this story: Michaela Ross in Washington at mross@bgov.com

To contact the editors responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com; Paul Hendrie at phendrie@bgov.com