[Senate Report 117-175]
[From the U.S. Government Publishing Office]


                                                     Calendar No. 525
117th Congress       }                           {           Report
                                 SENATE
 2d Session          }                           {           117-175
_______________________________________________________________________


                   U.S. CUSTOMS AND BORDER PROTECTION
                     OFFICER RETIREMENT TECHNICAL 
                            CORRECTIONS ACT

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 3868

             TO CORRECT THE INEQUITABLE DENIAL OF ENHANCED
        RETIREMENT AND ANNUITY BENEFITS TO CERTAIN U.S. CUSTOMS
                     AND BORDER PROTECTION OFFICERS

		[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                October 18, 2022.--Ordered to be printed
 Filed, under authority of the order of the Senate of October 14, 2022
 
 
 			        __________
 			        
 			        
 		     U.S. GOVERNMENT PUBLISHING OFFICE    

39-010			     WASHINGTON : 2022 		       
 			        
 
 
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware           ROB PORTMAN, Ohio
MAGGIE HASSAN, New Hampshire         RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona              RAND PAUL, Kentucky
JACKY ROSEN, Nevada                  JAMES LANKFORD, Oklahoma
ALEX PADILLA, California             MITT ROMNEY, Utah
JON OSSOFF, Georgia                  RICK SCOTT, Florida
                                     JOSH HAWLEY, Missouri

                   David M. Weinberg, Staff Director
                    Zachary I. Schram, Chief Counsel
            Lena C. Chang, Director of Governmental Affairs
              Devin M. Parsons, Professional Staff Member
                Pamela Thiessen, Minority Staff Director
            Sam J. Mulopulos, Minority Deputy Staff Director
       Jeremy H. Hayes, Minority Senior Professional Staff Member
                     Laura W. Kilbride, Chief Clerk


                                                     Calendar No. 525
117th Congress       }                           {           Report
                                 SENATE
 2d Session          }                           {           117-175

======================================================================



 
    U.S. CUSTOMS AND BORDER PROTECTION OFFICER RETIREMENT TECHNICAL 
                            CORRECTIONS ACT

                                _______
                                

                October 18, 2022.--Ordered to be printed

 Filed, under authority of the order of the Senate of October 14, 2022

                                _______
                                

 Mr. Peters, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 3868]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 3868), to correct 
the inequitable denial of enhanced retirement and annuity 
benefits to certain U.S. Customs and Border Protection 
Officers, having considered the same, reports favorably thereon 
with an amendment, in the nature of a substitute, and 
recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................4
 IV. Section-by-Section Analysis of the Bill, as Reported.............4
  V. Evaluation of Regulatory Impact..................................5
 VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported...........10

                         I. PURPOSE AND SUMMARY

    S. 3868, the U.S. Customs and Border Protection (CBP) 
Officer Retirement Technical Corrections Act, would address a 
CBP error involving at least 1,352 officers told by the agency 
that they were eligible for an enhanced retirement benefit 
without mandatory retirement requirements, also known as a 
proportional annuity. Officers impacted by this error were 
hired before the enhanced benefit took effect on July 6, 2008 
but not yet on payroll until after that date. Over a decade 
later, CBP realized its error and rescinded these officers' 
eligibility for a proportional annuity in 2021. The bill 
directs CBP to reinstate the proportional annuity for such 
officers and includes a retroactive annuity adjustment for 
eligible individuals who retire before the date of enactment of 
this bill. In addition, the bill grants the Department of 
Homeland Security (DHS) the authority to waive maximum entry 
age requirements for impacted officers as needed.

              II. BACKGROUND AND NEED FOR THE LEGISLATION

    In December 2007, Congress passed legislation that included 
provisions to establish an enhanced retirement benefit for CBP 
officers, which the President signed into law.\1\ This 
legislation structured the new retirement benefit for CBP 
officers similar to retirement provisions for other special 
retirement groups, such as law enforcement officers, nuclear 
material couriers, and firefighters.\2\ For such positions with 
heightened physical and mental demands, the 1.7% enhanced 
annuity is coupled with a mandatory retirement age and maximum 
age of entry, designed to provide retirees with a sufficient 
income after they complete 20 years of service before age 
57.\3\ Both the employee and the agency pay higher 
contributions toward the officer's retirement, aligned with the 
higher annuity level.\4\
---------------------------------------------------------------------------
    \1\Consolidated Appropriations Act, 2008, Pub. L. 110-161, Division 
E, Sec. 535.
    \2\Letter from Acting Director Kathleen McGettigan, Office of 
Personnel Management, to Anthony M. Reardon, National President of the 
National Treasury Employees Union (Apr. 1, 2021).
    \3\Congressional Research Service, Retirement Benefits for Federal 
Law Enforcement Personnel (R42631) (Sep. 5, 2017).
    \4\Letter from Acting Director Kathleen McGettigan, supra note 2.
---------------------------------------------------------------------------
    The enhanced annuity benefit that the legislation 
established for CBP officers took effect prospectively, 
starting on the first day of the pay period six months after 
the legislation's enactment, meaning July 6, 2008.\5\ The 
legislation included transition rules allowing for a hybrid 
retirement benefit, referred to as a ``proportional annuity,'' 
for individuals already serving as CBP officers at the time the 
new benefit took effect.\6\ Specifically, the legislative text 
states that individuals ``serving as a customs and border 
protection officer on the effective date [. . .] pursuant to an 
appointment made before that date'' are eligible for the 
enhanced annuity calculation going forward without being 
subject to the mandatory separation provisions or the 20-years-
of-service requirement.\7\
---------------------------------------------------------------------------
    \5\Consolidated Appropriations Act, 2008, Pub. L. 110-161, Division 
E, Sec. 535(e)(1).
    \6\Consolidated Appropriations Act, 2008, Pub. L. 110-161, Division 
E, Sec. 535(e)(2).
    \7\Id.
---------------------------------------------------------------------------
    The CBP Office of Human Resources Management (HRM) 
coordinated with the CBP Office of Chief Counsel, DHS, and 
Office of Personnel Management (OPM) to implement the enhanced 
retirement for CBP officers over a six month period in 2008. 
The HRM Office of Compensation and Organizational Effectiveness 
Division; Benefits, Medical and Worklife Division; and the 
Hiring Center worked together on guidance for implementing the 
enhanced benefit.\8\ The guidance stated that employees who 
received a tentative job offer before July 6, 2008 but entered 
on duty after this date are eligible for the proportional 
annuity, even if they leave the position before 20 years.\9\ 
This classification resulted in the CBP Hiring Center using the 
``O52'' remark code in the personnel records for this group of 
officers, which states that the officer is ``[e]xempt from 
mandatory retirement and eligible for prorated Annuity upon 
retirement.''\10\
---------------------------------------------------------------------------
    \8\U.S. Customs and Border Protection, Office of Human Resources 
Management, Production to Senate Homeland Security and Governmental 
Affairs Committee (copy on file with Committee); and Email from Allie 
Cleaves, Office of Congressional Affairs, U.S. Customs and Border 
Protection, to Senate Homeland Security and Governmental Affairs Staff 
(Jan. 19, 2022).
    \9\U.S. Customs and Border Protection, Office of Human Resources 
Management, Talent Management Directorate, CBP Hiring Center: CBP 
Officer Enhanced Retirement Coverage-Eligible for a Prorated Annuity 
(Jul. 2020).
    \10\Id.
---------------------------------------------------------------------------
    In July 2011, OPM, in consultation with DHS, published 
final regulations for the enhanced CBP officer retirement 
benefit.\11\ The regulations further clarify that the 
proportional annuity computation applies only to ``an employee 
serving in a primary or secondary customs and border protection 
officer position on July 6, 2008.''\12\ Both the regulations 
and the underlying statute specify that individuals who enter 
on duty as a CBP officer after July 6, 2008 are not eligible 
for the proportional annuity.
---------------------------------------------------------------------------
    \11\Office of Personnel Management, Customs and Border Protection 
Officer Retirement, 76 FR 41993 (Jul. 18, 2011) (Rule).
    \12\17 CFR Sec. 842.1009.
---------------------------------------------------------------------------
    In 2020, a CBP employee requested information from the 
agency about the prorated annuity described in the individual's 
O52 code.\13\ This employee had entered on duty after July 6, 
2008, even though CBP had offered the position to the 
individual prior to that date. The CBP officer's inquiry in 
2020 brought the O52 code to the agency's attention after over 
a decade of having implemented the benefit, along with the 
realization that CBP Human Resources Management failed to 
comply with federal statute or the related OPM regulations that 
had since been finalized.\14\ OPM confirmed the error on the 
part of CBP upon CBP's request in January 2021.\15\ In 
response, CBP rescinded the O52 remark code in February 2021 
from the personnel record of any officer who had not 
technically entered on duty prior to or on July 6, 2008, even 
if the officer had been offered a position before that date.
---------------------------------------------------------------------------
    \13\U.S. Customs and Border Protection, Office of Human Resources 
Management, Production to Senate Homeland Security and Governmental 
Affairs Committee (copy on file with Committee).
    \14\Id.
    \15\Id.
---------------------------------------------------------------------------
    CBP's error resulted in a number of officers becoming 
ineligible for the proportional annuity they had been promised 
and contributed toward since the beginning of their careers as 
CBP officers.\16\ At least 1,352 officers have been impacted by 
this CBP error.\17\ Of this total, CBP identified 1,077 
employees who entered on duty as officers before age 37, the 
maximum entry age since the start of the enhanced benefit.\18\ 
Although these employees will reach the 20-year mark at or 
below the mandatory retirement age of 57, they had still been 
told at the time of their hiring that they did not necessarily 
have to follow this timeline in order to access their benefits. 
Additionally, there are at least 275 officers who are at an 
even higher risk of losing their enhanced benefits because they 
entered on duty as a CBP officer after age 37 and may not be 
able to work a total of 20 years.
---------------------------------------------------------------------------
    \16\Id.
    \17\Id.
    \18\Id.
---------------------------------------------------------------------------
    Unless there is a legislative fix, officers who are not 
able to reach 20 years of service will only receive a 1% 
annuity calculation rather than 1.7% annuity calculation, and 
they would not be reimbursed for the higher contributions they 
have made toward their retirement over the years.\19\ That is 
why the CBP Officer Retirement Technical Corrections Act is 
necessary for this group of over 1,300 officers and their 
families.
---------------------------------------------------------------------------
    \19\ Id.; and National Treasury Employees Union, CBP Proportional 
Retirement Update (Aug. 24, 2021) (www.nteu.org//media//Files/nteu/
docs/public/cbp/leo/enhanced-retirement-eligibility-faqs) (accessed May 
17, 2022).
---------------------------------------------------------------------------
    This bill would ensure impacted officers can receive the 
retirement benefits they were promised when starting their 
service. It does so by directing CBP to identify eligible 
individuals and notify them of the correction. Those identified 
would then be eligible for a correction that would align their 
retirement benefits with the proportional annuity. The 
legislation also includes a retroactive annuity adjustment for 
eligible individuals who retire before the date of enactment of 
this bill and grants DHS the authority to waive maximum entry 
age requirements for eligible officers as needed. In hopes of 
preventing a future error like that one that had a negative 
impact on over 1,300 officers and their families, the bill 
further includes a provision to have the Comptroller General 
review CBP's internal controls and training to ensure CBP is 
complying with laws and regulations.

                        III. LEGISLATIVE HISTORY

    Chairman Gary Peters (D-MI) introduced S. 3868, the U.S. 
Customs and Border Protection Officer Retirement Technical 
Corrections Act, on March 17, 2022 with Senator Josh Hawley (R-
MO). The bill was referred to the Committee on Homeland 
Security and Governmental Affairs.
    The Committee considered S. 3868 at a business meeting on 
March 30, 2022. Chairman Peters and Ranking Member Rob Portman 
(R-OH) offered a substitute amendment that added a subsection 
directing the Government Accountability Office to review CBP's 
hiring practices, policies, and procedures related to 
eligibility for the enhanced retirement benefit. The substitute 
amendment was adopted by voice vote en bloc. The bill, as 
amended, was ordered reported favorably by voice vote en bloc 
with Senators Peters, Carper, Hassan, Sinema, Rosen, Padilla, 
Ossoff, Paul, Lankford, Romney, Scott, and Hawley present.

        IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title

    This section establishes the short title of the bill as the 
``U.S. Customs and Border Protection Officer Retirement 
Technical Corrections Act.''

Sec. 2. Adjustment related to transition rules

    Subsection (a) defines the term ``eligible individual'' in 
the context of this section. Officers are eligible if they 
received and accepted an offer of employment before July 6, 
2008 and entered into duty on or after July 6, 2008.
    Subsection (b) describes the benefits these eligible 
officers are entitled to receive, to align with the benefits 
promised by the agency between 2008 and 2021. They may receive 
the enhanced annuity starting in 2008 without being subject to 
mandatory retirement requirements.
    Subsection (c) directs DHS, within 120 days, to create a 
list of impacted officers, notify the impacted officers of the 
correction, and provide OPM with the information necessary for 
the annuity correction. OPM is directed to make the annuity 
correction after receiving the information, including 
retroactively for impacted officers who retired before this 
bill's enactment.
    Subsection (d) provides DHS with the authority to waive 
maximum entry age requirements for the group of impacted 
officers. It also directs OPM, in consultation with DHS, to 
issue appropriate guidance to assist in the implementation of 
the annuity correction.
    Subsection (e) directs the Government Accountability Office 
to review the CBP hiring practices, policies, and procedures 
related to eligibility for the enhanced retirement benefit and 
training of the senior leaders of CBP to submit a report to 
Senate Homeland Security and Governmental Affairs Committee and 
the House Committee on Homeland Security. This report will 
assist Congress in understanding the process of how this error 
occurred and how to prevent CBP from issuing guidance in the 
future that does not comply with federal law.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 12, 2022.
Hon. Gary Peters,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3868, the U.S. 
Customs and Border Protection Officer Retirement Technical 
Corrections Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Amber 
Marcellino.
            Sincerely,
                                         Phillip L. Swagel,
                                                          Director.
    Enclosure.

    
    	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The bill would:
           Allow certain Customs and Border Protection 
        Officers to retire with an increased retirement benefit
           Make those officers eligible for an annuity 
        that would treat a portion of their years of service 
        similarly to the treatment of time in service for 
        federal law enforcement officers and firefighters
    Estimated budgetary effects would mainly stem from:
           Larger retirement annuities for certain 
        Customs and Border Protection Officers
           Retroactive revisions and adjustments to the 
        annuities of affected officers who retire before 
        enactment
    Bill summary: S. 3868 would allow certain Customs and 
Border Protection Officers (CBPOs) to retire with a more 
generous civil service retirement benefit.
    Estimated Federal cost: The estimated budgetary effect of 
S. 3868 is shown in Table 1. The costs of the legislation 
mostly fall within budget function 600 (income security).

                                                    TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF S. 3868
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2022    2023    2024    2025    2026    2027    2028    2029    2030    2031    2032   2022-2027  2022-2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Increases in Direct Spending
 
Estimated Budget Authority................       0       *       1       2       2       2       2       2       2       2       2         7         18
Estimated Outlays.........................       0       *       1       2       2       2       2       2       2       2       2         7         18
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = between zero and $500,000.
CBO estimates that administrative costs associated with the identification of people affected by S. 3868 and the processing of retirement annuity
  revisions would increase spending subject to appropriation by less than $500,000 over the 2022-2027 period.

    Basis of estimate: For this estimate, CBO assumes that S. 
3868 will be enacted before the end of calendar year 2022.
    Background: In 2007, the Consolidated Appropriations Act, 
2008, authorized enhanced retirement coverage for CBPOs that is 
similar to coverage that applies to federal law enforcement 
officers and firefighters. That coverage took effect on July 6, 
2008, but implementation was different for CBPOs who already 
were working on that date and those whose service began after 
that date.
    CBPOs who entered duty after July 6, 2008, and who complete 
20 years of service qualify for a retirement benefit that uses 
a higher multiplier in the annuity calculation: 1.7 percent of 
an employee's highest three consecutive years of qualifying pay 
(or high-3) multiplied by the required 20 years of CBPO 
service. (For any years of federal service beyond 20, 1 percent 
of the employee's high-3 is included in the annuity 
calculation.) In addition, officers cannot begin working after 
age 36 and they generally must retire by age 57. The age limit 
for starting work ensures that CBPOs can work the 20 years they 
need to receive enhanced retirement before they reach the 
mandatory retirement age. (In contrast, the federal retirement 
benefit under non-enhanced retirement generally is calculated 
at 1 percent of an employee's high-3 for all years of 
service.)\1\
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    \1\The calculations described apply to retirements under the 
Federal Employees Retirement System (FERS), the system that generally 
covers federal employees who started service after 1986 and includes 
most of the individuals affected by S. 3868.
---------------------------------------------------------------------------
    CBPOs who already were serving on the effective date are 
eligible for a proportional annuity, which provides a larger 
benefit without the requirement to complete 20 years of covered 
CBPO service--that is, service that occurs on or after July 6, 
2008. Upon retirement, their annuities will be prorated, with 
the enhanced rate of 1.7 percent applying to years of CBPO 
service after July 6, 2008, and the standard rate of 1 percent 
applying to years of service before that date.
    Some CBPOs were offered employment before, but did not 
start until after, July 6, 2008: Customs and Border Protection 
originally informed those officers (a group of about 1,400) 
that they would be eligible for the proportional annuity. 
However, in 2021, the Office of Personnel Management (OPM) 
determined that the proportional annuity provisions would not 
apply because those officers had not entered duty by the 
effective date. As a result, those CBPOs either will retire 
with a smaller than expected annuity (the non-enhanced annuity 
calculation will apply to all their years of service, including 
years of CBPO service after the effective date) or they will 
need to continue working until they completed a full 20 years 
of covered service to be eligible for the enhanced benefit.
    S. 3868 would, for the purposes of retirement, consider all 
members of the affected group as having been in their positions 
on the effective date, thus making them eligible for the 
proportional annuity calculation.
    Direct spending: S. 3868 would increase direct spending 
relative to current law because it would allow the affected 
officers to receive enhanced retirement benefits for some (but 
not all) years of their service. In total, CBO estimates, 
enacting the bill would increase direct spending by $18 million 
over the 2022-2032 period.
    The largest budgetary effect of S. 3868 would stem from 
benefits for CBPOs who were hired--but did not begin service--
before July 6, 2008, at an age older than 36 (the maximum age 
to begin work, under current law). Before enhanced retirement 
coverage for CBPOs was implemented, there was no maximum age, 
so some officers hired before the effective date were older, 
and some had previous years of federal service at other 
agencies. CBO estimates that about 140 of those older CBPOs 
either are already eligible for regular retirement on the basis 
of their age and total years of service or will become so 
before they achieve the 20 years of covered service following 
July 6, 2008, necessary to receive enhanced coverage. Moreover, 
because of the mandatory retirement age of 57, CBO expects that 
most of those older officers would not or could not work enough 
additional years to meet the 20-year requirement for enhanced 
coverage.
    Under current law, those officers will receive a regular 
retirement benefit.\2\ If enacted, S. 3868 would allow them to 
retire with the proportional annuity calculation, instead of 
the regular annuity calculation. CBO estimates that the 
proportional calculation would increase their initial 
retirement benefit by 57 percent, or by about $12,000, on 
average. Federal retirement benefits are adjusted annually for 
inflation and thus generally increase over time. On that basis, 
CBO estimates that the larger benefits for those retirees would 
increase direct spending by $16 million over the 2022-2032 
period.
---------------------------------------------------------------------------
    \2\Most federal employees become eligible for regular retirement at 
one of several combinations of age and years of service: age 62 with 5 
years, 60 with 20 years, or 55 to 57 (depending on the year of birth) 
with 30 years.
---------------------------------------------------------------------------
    S. 3868 also would direct OPM to retroactively revise the 
annuities of any affected officer who retires before enactment 
to use the proportional annuity calculation. As of August 2022, 
about 20 retired CBPOs would qualify for the revised benefit. 
Including the retroactive adjustment, CBO estimates that 
revising pre-enactment retirements would initially increase 
benefits for the group by about $9,000 each, on average. Those 
benefits also would increase annually to account for inflation 
and would thus increase direct spending by $2 million over the 
2022-2032 period, CBO estimates.
    Most of the remaining CBPOs who would be affected by the 
bill (a little more than 1,200) were younger than 37 when they 
were hired and generally would not be eligible to retire before 
they complete the 20 years of covered service required to 
qualify for the enhanced retirement. Thus, CBO expects that 
enacting S. 3868 would not lead to significant costs for that 
group of officers.
    Spending subject to appropriation: S. 3868 would direct the 
Secretary of Homeland Security to identify and notify anyone 
affected by the bill and to provide necessary information to 
OPM to facilitate the processing of any required annuity 
corrections for that group. CBO estimates that the cost would 
be less than $500,000 over the 2022-2027 period; any spending 
would be subject to the availability of appropriated funds.
    Pay-as-you-go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in Table 1.
    Increase in long-term deficits: CBO estimates that enacting 
S. 3868 would not increase on-budget deficits by more than $5 
billion in any of the four consecutive 10-year periods 
beginning in 2033.
    Mandates: None.
    Estimate prepared by: Federal Costs: Amber Marcellino; 
Mandates: Rachel Austin.
    Estimate reviewed by: Christina Hawley Anthony, Chief, 
Projections Unit; H. Samuel Papenfuss, Deputy Director of 
Budget Analysis; Theresa Gullo, Director of Budget Analysis.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    Because S. 3868 would not repeal or amend any provision of 
current law, it would make no changes in existing law within 
the meaning of clauses (a) and (b) of paragraph 12 of rule XXVI 
of the Standing Rules of the Senate.

                                  [all]