[Senate Report 118-101]
[From the U.S. Government Publishing Office]


                                                   Calendar No. 217

118th Congress}                                           { Report
                                 SENATE
 1st Session  }                                           { 118-101

======================================================================
 
                 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. 311

             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 3, 2023.--Ordered to be printed
                
                               __________            
                            
                
		 U.S. GOVERNMENT PUBLISHING OFFICE
		         WASHINGTON : 2023
                
======================================================================                
                
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

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

                   David M. Weinberg, Staff Director
            Lena C. Chang, Director of Governmental Affairs
              Devin M. Parsons, Professional Staff Member
           William E. Henderson III, Minority Staff Director
              Christina N. Salazar, Minority Chief Counsel
                  Andrew J. Hopkins, Minority Counsel
                     Laura W. Kilbride, Chief Clerk
                     
                     

                                                  Calendar No. 217

118th Congress}                                           { Report
                                 SENATE
 1st Session  }                                           { 118-101

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

                                _______
                                

                October 3, 2023.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 311]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 311) 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........................6
VII. Changes in Existing Law Made by the Bill, as Reported............9

                         I. PURPOSE AND SUMMARY

    S. 311, the U.S. Customs and Border Protection Officer 
Retirement Technical Corrections Act, would address a U.S. 
Customs and Border Protection (CBP) error involving around 
1,200 officers. In 2008, CBP told these officers they were 
eligible for an enhanced retirement benefit without certain 
mandatory retirement requirements, also known as a proportional 
annuity. Officers affected by this error received a job offer 
before the enhanced benefit took effect on July 6, 2008, but 
entered on duty after July 6, 2008. Several years later, the 
Office of Personnel Management (OPM) issued guidance with a 
different interpretation of the law's requirements. Over a 
decade later, CBP finally realized its retirement policy toward 
this group of officers did not align with the law. CBP 
rescinded these officers' eligibility for a proportional 
annuity in 2021. The bill directs CBP to reinstate the 
proportional annuity for the affected officers and includes a 
retroactive annuity adjustment for eligible individuals who 
retire before the date of enactment of this bill. The bill also 
includes a GAO study of CBP's retirement benefit practices to 
ensure a similar issue does not occur again.\1\
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    \1\On March 30, 2022, the Committee approved S. 3868, the U.S. 
Customs and Border Protection Officer Retirement Technical Corrections 
Act, with an amendment in the nature of a substitute. That bill, as 
reported, is substantially similar to S. 311. Accordingly, this 
committee report is, in many respects, similar to the committee report 
for S. 3868. See S. Rept. 117-175.
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              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.\2\ This 
legislation structured a 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.\3\ For such positions with 
heightened physical and mental demands, a 1.7% enhanced annuity 
rate is coupled with a mandatory retirement age and maximum age 
of entry, requiring individuals to complete 20 years of service 
before age 57.\4\ Both the employee and the agency pay higher 
contributions toward the officer's retirement, aligned with the 
higher annuity level.\5\
---------------------------------------------------------------------------
    \2\Consolidated Appropriations Act, 2008, Pub. L. 110-161, Division 
E, Sec. 535.
    \3\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).
    \4\Congressional Research Service, Retirement Benefits for Federal 
Law Enforcement Personnel (R42631) (Sep. 5, 2017).
    \5\Letter from Acting Director Kathleen McGettigan, supra note 3.
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    The enhanced annuity benefit established for CBP officers 
took effect prospectively, starting on the first day of the pay 
period six months after the enactment of the 2007 legislation, 
meaning July 6, 2008.\6\ 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. 
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\
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    \6\Consolidated Appropriations Act, 2008, Pub. L. 110-161, Division 
E, Sec. 535(e)(1).
    \7\Consolidated Appropriations Act, 2008, Pub. L. 110-161, Division 
E, Sec. 535(e)(2).
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    In 2008, the CBP Office of Human Resources Management (HRM) 
coordinated with the CBP Office of Chief Counsel, Department of 
Homeland Security (DHS), and OPM to implement the enhanced 
retirement for CBP officers over a six-month period. The HRM 
Office of Compensation and Organizational Effectiveness 
Division; Benefits, Medical and Worklife Division; and 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. 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.''\9\
---------------------------------------------------------------------------
    \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); 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).
---------------------------------------------------------------------------
    In July 2011, OPM, in consultation with DHS, published 
final regulations for the enhanced CBP officer retirement 
benefit.\10\ 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.''\11\ 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.\12\
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    \10\Office of Personnel Management, Customs and Border Protection 
Officer Retirement, 76 Fed. Reg. 41993 (Jul. 18, 2011) (final rule).
    \11\17 CFR Sec. 842.1009.
    \12\Office of Personnel Management, supra note 10; Consolidated 
Appropriations Act, 2008, supra note 7.
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    In 2020, a CBP employee requested information from the 
agency about the prorated annuity described in the individual's 
O52 code. 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 brought the O52 
code to the agency's attention for similarly situated officers, 
after over a decade of having implemented the benefit. CBP 
realized that the policy for this group of officers failed to 
comply with federal statute or the related OPM regulations that 
had since been finalized. OPM confirmed the error on the part 
of CBP in January 2021. 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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.\14\ Nearly 1,200 officers have been impacted by 
this CBP error. Of this total, CBP identified 764 employees who 
entered on duty as officers before age 37, the maximum entry 
age since the start of the enhanced benefit. 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 just over 400 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.\15\
---------------------------------------------------------------------------
    \14\Id.
    \15\Production from U.S. Customs and Border Protection to the 
Senate Homeland Security and Governmental Affairs Committee (May 10, 
2023) (copy on file with Committee); U.S. Customs and Border 
Protection, Briefing with Senate Homeland Security and Governmental 
Affairs Committee (May 11, 2023).
---------------------------------------------------------------------------
    Unless there is a legislative fix, officers who are not 
able to reach 20 years of service will only receive a 1% 
annuity rate for their retirement calculation rather than the 
1.7% annuity rate, and they will not be reimbursed for the 
higher contributions they have made toward their retirement 
over the years.\16\
---------------------------------------------------------------------------
    \16\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).
---------------------------------------------------------------------------
    The U.S. Customs and Border Protection Officer Retirement 
Technical Corrections Act would ensure impacted officers can 
receive the retirement benefits they were promised when 
starting their service. This bill directs 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 order to help prevent a future problem similar to this error 
that had a negative impact on officers and their families, the 
bill also requires that the Comptroller General review CBP's 
internal controls and training to ensure CBP is complying with 
laws and regulations.

                        III. LEGISLATIVE HISTORY

    Senator Gary Peters (D-MI) introduced S. 311, the U.S. 
Customs and Border Protection Officer Retirement Technical 
Corrections Act, on February 9, 2023, with original cosponsor 
Senator Josh Hawley (R-MO). The bill was referred to the 
Committee on Homeland Security and Governmental Affairs.
    The Committee considered S. 311 at a business meeting on 
May 17, 2023. At the business meeting, Chairman Peters offered 
a substitute amendment to slightly adjust the officer 
eligibility language to clarify that the job offers received 
before July 6, 2008 were still ``tentative'' offers. The 
substitute amendment was adopted by unanimous consent with 
Senators Peters, Hassan, Sinema, Rosen, Padilla, Ossoff, 
Blumenthal, Paul, Lankford, Romney, Scott, and Hawley present. 
The bill, as amended, was ordered reported favorably by roll 
call vote of 12 yeas to 0 nays, with Senators Peters, Hassan, 
Sinema, Rosen, Padilla, Ossoff, Blumenthal, Paul, Lankford, 
Romney, Scott, and Hawley voting in the affirmative, and with 
Senators Carper, Johnson, and Marshall voting yea by proxy, for 
the record only.

        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.''

Section 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 a tentative 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, as 
well as the relevant training provided to CBP senior leaders, 
and submit a report to the Senate Homeland Security and 
Governmental Affairs Committee and the House Homeland Security 
Committee. 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



    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 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. 311 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. 311 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. 311
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     By fiscal year, millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2023   2024   2025   2026   2027   2028   2029   2030   2031   2032   2033  2023-2028  2023-2033
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Increases in Direct Spending
 
Estimated Budget Authority...........................      0      1      1      2      2      3      3      3      3      3      3         9         24
Estimated Outlays....................................      0      1      1      2      2      3      3      3      3      3      3         9         24
--------------------------------------------------------------------------------------------------------------------------------------------------------
CBO estimates that administrative costs associated with the identification of people affected by S. 311 and the processing of retirement annuity
  revisions would increase spending subject to appropriation by less than $500,000 over the 2023-2028 period.

    Basis of estimate: For this estimate, CBO assumes that S. 
311 will be enacted before the end of calendar year 2023.
    Background: In 2007, the Consolidated Appropriations Act, 
2008, authorized an enhanced retirement benefit for CBPOs 
similar to the one available to federal law enforcement 
officers and firefighters. That change took effect on July 6, 
2008, but its implementation was different for officers who 
already were working on that date and those whose service began 
after that date.
    CBPOs who enter 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 employment as a CBPO ensures that they can work 
the 20 years needed to receive an enhanced retirement before 
they reach the mandatory retirement age. (In contrast, the 
federal retirement benefit under standard retirement generally 
is calculated at 1 percent of an employee's high-3 for all 
years of service.)
    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 (covered service is that which occurs on or after 
July 6, 2008). Upon retirement, their annuities will be 
prorated, with the enhanced multiplier of 1.7 percent applying 
to years of CBPO service after July 6, 2008, and the standard 
multiplier of 1 percent applying to years of service before 
that date.
    Some CBPOs received a tentative offer of employment before 
July 6, 2008, but did not begin duty until after that date. 
Customs and Border Protection (CBP) originally informed those 
officers (a group of about 1,400, based on data provided by the 
agency) 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 need to 
continue working until they have completed a full 20 years of 
covered service to be eligible for the enhanced benefit or they 
will retire with a smaller than expected annuity (the standard 
annuity calculation will apply to all their years of service).
    S. 311 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. 311 would increase direct spending 
relative to current law because it would allow the affected 
officers to receive enhanced retirement benefits for their 
years of service as CBPOs. In total, CBO estimates, enacting 
the bill would increase direct spending by $24 million over the 
2023-2033 period.
    The largest budgetary effect of S. 311 would stem from 
benefits for CBPOs who were tentatively offered employment 
before July 6, 2008, and began duty after that date 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 of the officers 
tentatively offered employment before the effective date were 
older, and some had previous years of federal service at other 
agencies. CBO estimates that about 225 of those older CBPOs 
either are already eligible for standard 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, that is 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 standard 
retirement benefit. If enacted, S. 311 would allow them to 
retire with the proportional annuity calculation instead. CBO 
estimates that the proportional calculation would increase 
their initial retirement benefit by 55 percent, or by about 
$11,000, 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 $21 million over the 
2023-2033 period.
    S. 311 also would direct OPM to retroactively revise the 
annuities of any affected officer who retires before enactment 
to use the proportional annuity calculation. CBP indicated 
that, as of July 2023, about 30 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 $7,000 each, 
on average. Those benefits also would increase annually to 
account for inflation and would thus increase direct spending 
by $3 million over the 2023-2033 period, CBO estimates.
    Most of the remaining CBPOs who would be affected by the 
bill 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. 311 would not 
lead to significant costs for that group of officers.
    Spending subject to appropriation: S. 311 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 2023-2028 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 net direct spending and deficits: CBO 
estimates that enacting S. 311 would not increase net direct 
spending by more than $2.5 billion in any of the four 
consecutive 10-year periods beginning in 2034.
    CBO estimates that enacting S. 311 would not increase on-
budget deficits by more than $5 billion in any of the four 
consecutive 10-year periods beginning in 2034.
    Mandates: None.
    Estimate prepared by: Federal costs: Amber Marcellino; 
Mandates: Andrew Laughlin.
    Estimate reviewed by: Barry Blom, Chief, Projections Unit; 
Kathleen FitzGerald, Chief, Public and Private Mandates Unit; 
Christina Hawley Anthony, Deputy Director of Budget Analysis.
    Estimate approved by: Phillip L. Swagel, Director, 
Congressional Budget Office.

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

    Because S. 311 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]