[Federal Register Volume 62, Number 123 (Thursday, June 26, 1997)]
[Rules and Regulations]
[Pages 34385-34394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16748]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Part 94

[Docket No. 94-106-5]
RIN 0579-AA71


Importation of Beef From Argentina

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

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SUMMARY: We are amending the regulations concerning the importation of 
animal products to allow, under certain conditions, the importation of 
fresh, chilled or frozen beef from Argentina. This change is warranted 
because it removes unnecessary restrictions on the importation of meat 
from Argentina into the United States.

EFFECTIVE DATE: August 25, 1997.

FOR FURTHER INFORMATION CONTACT: Dr. Gary Colgrove, Chief Staff 
Veterinarian, National Center for Import and Export, VS, APHIS, 4700 
River Road Unit 38, Riverdale, MD 20737-1231, (301) 734-8590.

SUPPLEMENTARY INFORMATION:

Background

    The Animal and Plant Health Inspection Service (APHIS), United 
States Department of Agriculture (USDA), has promulgated regulations 
regarding the importation of animals and animal products in order to 
guard against the introduction into the United States of animal 
diseases not currently present or prevalent in this country. These 
regulations are set forth in the Code of Federal Regulations (CFR), 
title 9, chapter 1, subchapter D.
    On April 18, 1996, we published in the Federal Register a proposed 
rule (61 FR 16978-17105, Docket No. 94-106-1) to revise the regulations 
in six different parts of 9 CFR to establish importation criteria for 
certain animals and animal products based on the level of disease risk 
in specified geographical regions. In proposing the amendments to the 
regulations, we stated that we considered the proposed regulatory 
changes to be consistent with and to meet the requirements of 
international trade agreements that had recently been entered into by 
the United States.
    We solicited comments concerning our proposal for 90 days ending 
July 17, 1996. During the comment period, several commenters requested 
that we extend the period during which we would accept comments. In 
response to these requests, on July 11, 1996, we published in the 
Federal Register a notice that we would consider comments on the 
proposed rule for an additional 60 days ending September 16, 1996 (61 
FR 36520, Docket No. 94-106-4). During the comment period, we conducted 
four public hearings at which we accepted oral and written comments 
from the public. These public hearings (announced in the Federal 
Register on May 6 and May 29, 1996, 61 FR 20190-20191 and 26849-26850, 
Docket Nos. 94-106-2 and 94-106-3, respectively) were held in 
Riverdale, MD; Atlanta, GA; Kansas City, MO; and Denver, CO.
    We received 113 comments on the proposed rule on or before 
September 16, 1996. These comments came from representatives of State 
and foreign governments, international economic and political 
organizations, veterinary associations, State departments of 
agriculture, livestock industry associations and other agricultural 
organizations, importing and exporting associations, members of 
academia and the research community, brokerage firms, exhibitors, 
animal welfare organizations, and other members of the public.
    Based on our review of the comments received, it is clear that 
drafting a final rule in response to recommendations submitted by 
commenters will require close analysis of numerous and complex issues. 
However, it is also clear to us that there are a limited number of 
provisions within the proposal that we can make final at this time. 
Where these provisions involve trade, we believe that delaying their 
implementation is unwarranted and not in the best interests of trade 
relations with other countries. On June 26, 1997, we published a final 
rule in the Federal Register to allow the importation of

[[Page 34386]]

fresh, chilled or frozen pork from the State of Sonora, Mexico (62 FR 
(INSERT FR CITE), Docket No. 94-106-6), based on the provisions for 
such importation set forth in our proposed rule. Similarly, in this 
final rule, we are establishing provisions, described below, to allow 
the importation, under certain conditions, of fresh, chilled or frozen 
beef from Argentina. Among these provisions are those that would allow 
the importation of fresh, chilled or frozen beef from Argentina under 
specified conditions. Therefore, in this final rule, we are 
establishing provisions to allow such importation, as described below. 
Although the regulations in current 9 CFR 94.1 prohibit the importation 
of fresh, chilled or frozen beef from countries affected with either 
foot-and-mouth disease (FMD) or rinderpest, the rule changes described 
below deal only with the status of Argentina with regard to foot-and-
mouth disease (FMD). This is because rinderpest has never been known to 
exist in Argentina, and the regulations in part 94 restricting 
importations from Argentina have been based on its FMD status.
    As part of the proposed rule, we proposed to designate Argentina as 
a region in which there has been no case of foot-and-mouth disease 
(FMD) for at least 1 year, but from which certain animals and animal 
products would pose some disease risk if imported into the United 
States without mitigating measures. We cited the fact that vaccination 
for FMD is still being conducted in Argentina as one reason for certain 
animals and animal products presenting a risk if imported into the 
United States without mitigating measures being applied. Vaccination of 
animals for FMD makes it difficult to distinguish between responses 
because of the actual disease and responses from the vaccinations. 
Further, if the disease is present in a region, vaccinating an infected 
animal can suppress the symptoms of the disease and thus prevent those 
symptoms from manifesting themselves at a clinical level, so that it 
appears as if the disease is eradicated. This is referred to as masking 
the disease. Additionally, we noted that Argentina supplements its 
national meat supply by importing fresh, chilled and frozen meat of 
ruminants and swine from countries of greater risk for FMD.

Mitigating Measures

    In our proposal, we set forth a number of mitigating measures that 
we believed to be adequate to reduce to a negligible level the risk of 
disease introduction from importations of fresh, chilled and frozen 
meat of ruminants from Argentina. These measures included certification 
of the following: (1) That the meat has not been in contact with meat 
from regions of greater disease risk; (2) that the meat originated from 
premises where FMD and rinderpest have not been present during the 
lifetime of any ruminants or swine slaughtered for export; (3) that the 
meat originated from premises on which ruminants or swine have not been 
vaccinated with modified or attenuated live viruses for FMD during the 
lifetime of any of the ruminants or swine slaughtered for export; (4) 
that the meat is from ruminants or swine that have not been vaccinated 
for other specified diseases; (5) that the meat comes from carcasses 
that have been allowed to maturate at 40 to 50  deg.F (4 to 10  deg.C) 
for a minimum of 36 hours after slaughter and have reached a maximum pH 
of 6.0 in the loin muscle at the end of the maturation period; and (6) 
that all bone, blood clots, and lymphoid tissue have been removed from 
the meat.

Public Comments

    Of the comments we received on our proposed rule, a small number 
addressed our proposed classification of Argentina and mitigating 
measures for animals and animal products from Argentina. The commenters 
on these issues included members of the domestic livestock industry, a 
State department of agriculture, representatives of foreign governments 
and meat producers, and other members of the public. We discuss below 
each of the issues raised by the commenters with regard to the 
importation of beef from Argentina, since this final rule addresses 
only the importation of beef from Argentina. We will discuss all other 
comments on the proposed rule, as appropriate, in future rulemaking 
documents.
    Some commenters expressed general concern that the regulations as 
proposed would increase the risk of FMD being introduced into the 
United States, without providing specific information supporting those 
concerns. Other commenters expressed general support for our proposed 
classification of Argentina with regard to FMD. Some commenters stated 
that meat may not present as much risk as live animals, because any FMD 
virus in meat may be inactivated by pH change. These commenters 
suggested no changes and we are making no changes based on their 
comments.
    One of the mitigating measures in our proposal for the importation 
of fresh, chilled or frozen meat of bovines from Argentina was that the 
meat must originate from premises where FMD has not been present during 
the lifetime of any bovines slaughtered for export of meat. One 
commenter stated the regulations should instead require that the 
premises have been free of FMD during the lifetime of any ruminant or 
swine currently living on the premises. We are making no changes based 
on this comment. Under the scenario suggested by the commenter, 
premises infected with FMD during the lifetime of any ruminants or 
swine currently living on the premises could not export beef to the 
United States until all animals on the premises at the time of the 
infection were sold or slaughtered. We consider such a restriction 
unnecessarily stringent. The proposed regulations required that meat 
originate from premises where FMD and rinderpest have not been present 
during the lifetime of any bovines slaughtered for export of meat. 
Moreover, under the regulations we proposed, fresh, chilled or frozen 
beef could not be imported from Argentina if the meat originated from 
premises where ruminants or swine have been vaccinated with modified or 
attenuated live viruses for FMD at any time during the lifetime of the 
bovines slaughtered for export of meat. In effect, this prohibition of 
vaccination makes the animals intended for export sentinel animals for 
FMD. Absence of disease in these animals is an excellent indicator that 
the premises is free of FMD.
    A commenter addressed the criteria we used in proposing to consider 
Argentina as a country of low risk for FMD. Instead of 1 year with no 
reported cases of the disease, as was proposed, the commenter 
recommended that the criterion be 5 years with no reported cases of the 
disease. The condition we proposed of at least 1 year with no reported 
cases of FMD is consistent with the standards set forth in our existing 
regulations. Research and our experience enforcing the regulations has 
shown that from the time of the last reported case of FMD in a country, 
some period of time should pass before importation restrictions are 
relieved, due to the possibility that some animals not showing clinical 
evidence of the disease might be carrier animals. Internationally, a 
number of countries recognize 12 months as a sufficient ``waiting 
period.'' We believe that after a waiting period of 12 months, it is 
safe to conclude that no carrier animals exist in that country.
    The difference between Argentina and countries we have recognized 
in the past as free of FMD is that Argentina continues to vaccinate for 
FMD in some situations and areas where that country

[[Page 34387]]

perceives an increased risk of disease introduction. Although the 
practice of vaccination does not mean that FMD exists in a country, it 
does introduce risk factors such as the possibility of introducing 
disease from improperly inactivated vaccine or the masking of chronic 
cases of FMD. To mitigate these additional risk factors, we proposed to 
require the measures described above in this SUPPLEMENTARY INFORMATION 
under the heading ``Mitigating Measures,'' including the requirement 
that the meat to be exported originated from premises on which 
ruminants or swine have not been vaccinated with modified or attenuated 
live viruses for FMD during the lifetime of any of the bovines 
slaughtered for export. We believe from our experience that the 
mitigation measures we proposed will reduce any disease risk to a 
negligible level.
    Some commenters objected to the proposed classification of 
Argentina. Of those commenters expressing concern, some cited the 
reliance in Argentina on vaccination for FMD. As discussed above, we 
agree that the practice of vaccination can reduce the certainty that a 
country or other region is free of a specific disease, and so we are 
imposing restrictions, also described above, on the importation of beef 
from Argentina to mitigate to a negligible level any risk that might 
exist. Moreover, due to the continued practice of vaccination in 
Argentina, we have determined that an additional mitigating measure 
should be required to ensure that animals slaughtered for beef for 
importation do not come into contact with animals that might not meet 
the other required mitigating measures. Therefore, we are requiring in 
Sec. 94.21, as set forth in this rule, the requirement that fresh, 
chilled or frozen beef to be imported from Argentina come from bovines 
that were moved directly from the premises of origin to the 
slaughterhouse without any contact with other animals.
    One commenter stated that under the recommendations of a 1994 
assessment for disease risk for Argentina, that country should be 
considered a country in which FMD exists, or, at the minimum, as a 
country with an unknown status. The commenter expressed concern that 
cases of FMD were reported in Argentina until 1994. The commenter also 
pointed out that Argentina has 380 km of unprotected border with 
Bolivia and 500 km of unprotected border with Chile. We are making no 
changes based on this comment. Although the report recognized the 
existence of FMD in Argentina until 1994, there have been no reported 
cases of the disease in Argentina since that year. With regard to 
borders, Chile is listed in the regulations (9 CFR 94.1) as a country 
free of FMD and rinderpest. The border area with Bolivia referenced by 
the commenter is in a desert area, with little vegetation and very few, 
if any, cattle. Consequently, there is very little risk of any animal 
crossings of concern from that area. Additionally, the national police 
in Argentina have authority to enforce sanitary regulations along the 
border and elsewhere in the country, and are active in carrying out 
such enforcement.
    Some commenters stated that the proposed classification of 
Argentina contained no quantitative risk assessment for that 
classification. One commenter recommended that Argentina be considered 
to have an unknown risk status for FMD until a quantitative risk 
assessment has been done to determine the final risk and the 
appropriate biosecurity measures for that country and the public has 
had an opportunity to comment on it. The commenter stated that a 
careful review of the situation in Argentina might lead to a decision 
to divide that country, for risk classification purposes, into regions 
separated by the Parana River and the Barrancas-Colorado Rivers. We are 
making no changes based on this comment. We conducted an extensive 
review of the data made available to us by Argentina, developed a 
quantitative risk assessment following a site visit to that country, 
and did not find any disease risk basis to differentiate between 
various regions in Argentina. The factors used in developing the risk 
assessment are discussed below.
    Some commenters stated that the proposed rule contained no 
discussion of how the proposed disease classification of Argentina was 
arrived at, and no final risk analysis calculation. Some commenters 
requested that the risk assessment results and methods be publicized. 
In our proposed rule, we included a discussion of the basis for the 
proposed disease classification of Argentina. This discussion was set 
forth on page 16988 of the proposed rule and included the following 
points. The last outbreak of FMD in Argentina occurred in 1994. 
Vaccinations for FMD in Argentina continue, and Argentina supplements 
its national meat supply by importing fresh, chilled and frozen meat of 
ruminants and swine from countries in which FMD is known to exist. 
Additionally, APHIS reviewed information submitted by the government of 
Argentina, and sent a team of APHIS officials to Argentina in 1994 to 
conduct an on-site evaluation of that country's animal health program.
    In assessing the risk of the introduction of FMD virus into the 
United States through the importation of up to 20,000 metric tons of 
fresh, chilled or frozen beef from Argentina, we created a scenario 
tree for the risk assessment. As part of the scenario tree, we 
identified factors and potential situations that could contribute to an 
increased risk of the introduction of FMD. We then estimated, based on 
the information available to us and on our 1994 site visit to 
Argentina, the likelihood of each of the factors or situations 
occurring.
    The factors or situations we identified included the following: (1) 
The prevalence of residual infection in Argentina; (2) the risk of 
disease re-introduction from neighboring areas; (3) the likelihood of 
not detecting disease outbreaks; (4) the likelihood of infected animals 
not being detected before leaving the farm; (5) the likelihood of 
infected animals not being detected in transit; (6) the likelihood of 
FMD not being detected at antemortem inspection; (7) the likelihood of 
FMD not being detected at postmortem inspection; (8) the likelihood of 
FMD-infected material not being removed during slaughter; (9) the 
likelihood of the FMD virus surviving the process of meat maturation; 
(10) the likelihood of FMD virus not being eliminated during deboning 
of meat; and (11) the likelihood of the virus not being eliminated 
through pH meter checks.
    After estimating the likelihood of each of the above situations 
occurring, we concluded in our risk assessment that if 20,000 metric 
tons of beef were exported indefinitely at the level of risk calculated 
in 1994, this would result in the movement of FMD-infected meat to the 
receiving country once every 444,537 years. We stated that these values 
were time-sensitive, and that the longer Argentina went without 
additional cases of FMD, the less the risk of exporting FMD would 
become. From the time the risk assessment was developed until the 
present, no cases of FMD have been found to exist in Argentina. Based 
on the information available to us, and on the risk assessment we used, 
we consider the FMD risk from the importation of fresh, chilled or 
frozen beef from Argentina to be low. Details concerning the on-site 
evaluation, including the APHIS 1994 risk assessment for Argentina and 
an updated risk assessment recently prepared by APHIS, are available by 
contacting the person listed under FOR FURTHER INFORMATION CONTACT.
    One commenter stated that, although vaccination has historically 
been viewed as an indicator of a disease

[[Page 34388]]

presence, and it is true that many vaccines can hide the incidence of a 
disease or produce false positives, the assessment of vaccination use 
should be reconsidered. The commenter stated that vaccination should be 
an acceptable risk reduction or ``biosecurity'' measure in some 
instances, without resulting in an automatic classification to a higher 
risk status. The commenter inquired whether the role of vaccination has 
been fully evaluated, or whether such an evaluation will take place on 
a case-by-case basis. We are making no changes based on this comment. 
We agree that vaccination is a useful tool in areas that present a 
higher risk because of factors such as proximity to areas where FMD 
exists, or past disease experience. We also agree that vaccine use is 
not necessarily an indicator of the existence of a disease agent. 
However, we do not believe it can be definitely assumed that vaccine 
use is not masking a disease agent at a low level. We intend to 
continue to evaluate the issue of vaccine use and the risk it presents 
with various diseases and vaccines. We will, if appropriate, propose 
changes in the future with regard to the regulatory assessment of the 
use of vaccination, when we believe we can be sure of a region's 
disease status, notwithstanding the use of vaccination within that 
region.
    Some commenters stated that, in general, a country or region should 
not be designated as an area of low risk if that country or region 
imports products from a country or region of a higher risk, or if it 
borders a country or region of higher risk. In particular, the 
commenters cited the fact that Argentina imports fresh, chilled and 
frozen meat of ruminants and swine from countries where FMD is known to 
exist, and shares land borders with countries of an unknown risk. The 
commenters stated that Argentina should be considered to present the 
same level of risk as the highest risk country or region from which it 
imports. We are making no changes based on these comments. In 
determining the risk of importations from Argentina, we considered the 
factors cited by the commenters. Although Argentina does share borders 
with countries of higher risk, access across those borders is 
restricted through either natural barriers or border patrols. 
Additionally, among the restrictions we proposed to impose on the 
importation of fresh, chilled or frozen meat from Argentina are the 
requirements that the meat has not been in contact with meat from 
regions of greater disease risk, and that the meat comes from deboned 
carcasses that have been allowed to maturate to a pH level sufficient 
to inactivate the FMD virus.
    Some commenters requested we eliminate the proposed requirement for 
deboning fresh meat before importation from Argentina, and also for 
other countries that may be similarly classified for FMD. We are making 
no changes based on these comments. We consider deboning, and the other 
measures described in the following paragraph, necessary to minimize 
the disease risk from such importations. Furthermore, much of the meat 
shipped internationally is already deboned and cryogenically packed. We 
do not believe, therefore, that requiring meat to be deboned before 
shipment to the United States from such regions will present a 
significant hardship.
    In Sec. 94.1 of our proposal, we proposed that fresh, chilled or 
frozen meat from ruminants or swine raised and slaughtered in regions 
classified as proposed for Argentina for FMD could not be imported into 
the United States if the meat has not reached a maximum of 6.0 pH in 
the loin muscle. Additionally, all bone, blood clots, and lymphoid 
tissue would need to have been removed from the meat. Several 
commenters stated that these requirements should not apply to regions 
classified as proposed for Argentina, because such regions would 
already need to be free of the disease agent for at least 1 year. We 
are making no changes based on these comments. Argentina is a country 
where vaccination for FMD is still carried out. This may mask low-level 
infections in the animals. The mitigation measures proposed will 
significantly reduce any potential FMD risk from the importation of 
beef from Argentina.
    In the Supplementary Information section of our proposed rule, we 
stated that acidic or alkaline conditions readily kill the FMD virus. 
One commenter took issue with this statement, stating that research has 
shown that although a pH below 6.0 or above 11.5 will inactivate the 
FMD virus, the virus resident in the micro-environment of animal 
tissue--such as lymphatic tissue, bone marrow, or coagulated blood--is 
resistant to inactivation over a practical pH range. Although we agree 
with the commenter, the regulations as proposed already address the 
concerns raised. We assume that by ``micro-environment,'' the commenter 
is referring to those areas of meat in the carcass that are in the 
immediate area of the bones, lymphatic tissue, or coagulated blood. In 
the proposed regulations, one of the conditions for importing fresh, 
chilled or frozen meat from Argentina was that all bone, blood clots, 
and lymphoid tissue be removed from the meat.
    We are, however, making a change to one of the proposed provisions 
discussed by the commenter--the pH level considered necessary to 
inactivate the FMD virus. We proposed to require that fresh, chilled or 
frozen meat to be imported from Argentina ``have reached a maximum pH 
of 6.0.'' Upon review of the comment we received and of generally 
accepted literature on the subject, we agree with the commenter that 
the pH level reached should be less than 6.0. The literature showed 
that, while a pH level of 6.0 was sufficient to inactivate the bulk of 
an FMD virus population, small fractions of that population were able 
to withstand the 6.0 level (Cottral, et al.). A majority of available 
literature on this topic indicates that a pH level of 5.8 or less will 
relieve this concern. Therefore, we are making this change in 
Sec. 94.21 as set forth in this rule.

Equivalency of Mitigation Measures

    One commenter stated the proposed requirements for the importation 
of animal products under part 94 do not allow for the exporting 
countries to apply different, but equivalent, risk mitigation measures. 
The commenter stated such an omission is contrary to the equivalence 
principle under WTO-SPS. We are making no changes based on this comment 
at this time. In our proposal, we proposed quantitative risk assessment 
options that would allow different risk mitigation measures. We are 
currently reviewing the comments we received on these options and will 
address them in future rulemaking. Additionally, should alternative 
risk mitigation measures be submitted to APHIS, we will review and 
consider them carefully and, when appropriate, we will incorporate them 
into our regulatory system.

Comments on Initial Regulatory Flexibility Analysis

    Several commenters addressed the Initial Regulatory Flexibility 
Analysis we published in our proposed rule. The commenters objected to 
the statement in our analysis that selected cuts of meat from grass-fed 
cattle from Argentina could possibly be classified as grain-fed beef. 
The commenters stated that, under standard industry practice, such a 
classification would not be made by the exporting country. We agree 
that our statement as written could be misleading. Our intent in the 
proposal was not to imply that grass-fed beef could potentially be 
identified as grain-fed beef by the exporting country. Rather, we were 
referring to the system

[[Page 34389]]

of quality grading carried out by the Department's Agricultural 
Marketing Service. At the retail level, the USDA grades most familiar 
to the consumer are ``prime,'' ``choice,'' and ``select.'' These grades 
are followed in descending order by a number of other grades. Beef from 
grass-fed cattle is much less likely to achieve the higher grade 
classifications familiar to consumers than is beef from grain-fed 
cattle, because beef from grass-fed cattle does not generally have the 
characteristic marbling of grain-fed beef required for the higher 
quality grades. However, in theory, certain cuts of meat from certain 
grass-fed cattle might qualify for some of the higher grades. In order 
to clarify our meaning, we have worded our Final Regulatory Flexibility 
Analysis in this document to read that ``selected cuts from grass-fed 
cattle could possibly be graded as the same quality as grain-fed beef 
available to consumers at the retail level.''

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been reviewed under Executive Order 12866. The rule 
has been determined to be economically significant for purposes of 
Executive Order 12866 and, therefore, has been reviewed by the Office 
of Management and Budget.
    Under the ``Regulatory Flexibility Act'' (5 U.S.C. Sec. 603), we 
are required to include in this Final Regulatory Flexibility Analysis a 
description of significant alternatives to this rule. In developing 
this final rule, APHIS considered either (1) taking no action on the 
proposed requirements for the importation of fresh, chilled or frozen 
beef from Argentina, (2) allowing the importation of fresh, chilled or 
frozen beef from Argentina under conditions that are either more or 
less stringent than those adopted in this rule, or (3) adopting the 
proposed conditions which reduce the risk of introduction of FMD into 
the United States to a neglible level.
    We rejected the first alternative, which essentially would have 
been to retain the restrictions on the importation of fresh, chilled 
and frozen beef from Argentina that are set forth in the existing 
regulations. Because fresh, chilled, or frozen beef can be imported 
under certain conditions from Argentina with negligible FMD risk, 
taking no action would not be scientifically defensible and would be 
contrary to trade agreements entered into by the United States. We also 
rejected the second alternative, which would allow the importation of 
fresh, chilled or frozen beef from Argentina under conditions other 
than those proposed. In developing the proposed criteria for the 
importation of such beef, we determined that criteria and mitigating 
measures less stringent than those proposed would increase the risk of 
the introduction of FMD into the United States to more than a 
negligible level, and that more stringent conditions would be 
unnecessarily restrictive. We consider the proposed conditions to be 
both effective and necessary in reducing to a negligible level the risk 
of the introduction of FMD because of beef imports from Argentina.
    Under 5 U.S.C. 603, we are also required to include in this 
analysis an assessment of comments received on our Initial Regulatory 
Flexibility Analysis. When we proposed the conditions for the 
importation of meat from Argentina, we did so based on the information 
available to us from Argentina, USDA sources, an APHIS site visit to 
that country, and scientific literature. We requested comments on the 
proposed conditions for such importation of meat, along with the rest 
of the proposed rule. We received and considered comments on the 
proposed conditions, and our responses are discussed in the 
SUPPLEMENTARY INFORMATION section, above. After reviewing the comments 
received and preparing a risk assessment which is available upon 
request, we continue to consider the proposed conditions for the 
importation of beef from Argentina to be effective in reducing the risk 
of the introduction of FMD to a negligible level, and have determined 
that it is neither warranted nor necessary to revise those conditions 
in this final rule. As discussed above, we are making a wording change 
in this Final Regulatory Flexibility Analysis to clarify our 
description of certain cuts of beef from grain-fed cattle.
    Over 95 percent of the beef and dairy industries are composed of 
producers and firms that can be categorized as small according to the 
Small Business Administration's (SBA) size classification. Economic 
impacts resulting from this rule would therefore largely affect small 
entities. The analysis of economic impacts discussed below would thus 
fulfill the requirement of a cost-benefit analysis under E.O. 12866, as 
well as the analysis of impacts of small entities as required by the 
Regulatory Flexibility Act. A discussion of the size distribution of 
these industries is also provided to support the above rationale to 
merge these required analyses based on their size classification.

Analysis of Anticipated Economic Impacts

    Under this rule, fresh, chilled and frozen beef may be imported 
from Argentina. Currently, meat processed by curing, cooking, and 
canning is allowed to be imported from Argentina. Practically speaking, 
fresh beef cannot be transported from Argentina to the United States 
without being chilled or frozen. This rule change is expected to 
increase the amount of beef imports from Argentina, because the United 
States has prohibited the importation of fresh beef from Argentina 
since enactment of the 1930 Tariff Act.

Background of the Argentine Beef Industry

    Argentine cattle inventories (about 54.7 million head at the end of 
1994) are about 50 percent of U.S. cattle inventories (estimated at 
103.3 million head on January 1, 1995). Argentina was the world's 
leading beef exporter for many years, up until the early 1970's. 
Argentina's decline has been attributed to national policies that 
discouraged production and trade and also to unfavorable 
weather.1 Nevertheless, historical data indicate that the 
costs of producing Argentine beef is one of the lowest in the world. In 
many years, Argentine beef cow and steer prices are less than one half 
U.S. cow prices.2 Both the history and cost structure 
suggest that Argentina has the natural resources to increase beef 
production and trade. Long-standing working commercial arrangements 
exist between Argentine and U.S. firms. Although trade has been 
restricted to cooked product, the U.S. ranks as the second most 
important beef market for Argentina. In 1992 and 1993, Argentine beef 
export markets totaled 297 KT (thousand metric ton) and 279 KT. 
Destinations for this product (and their volumes for 1992 and 1993, in 
parentheses) were: the European Economic Community (137 KT and 125 KT); 
the U.S. (101 KT and 86 KT); Chile (16 KT and 22 KT); and all others 
(0.038 KT and 0.037 KT).
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    \1\ Source: McCoy et al., Livestock and Meat Marketing, 3rd 
Edition, Van Nostrand Reinhold, 1988, pg. 546.
    \2\ Source: USDA, Ag. Statistics 1972, Table 455 and USDA, ERS, 
The World Beef Market-Government Intervention and Multilateral 
Policy Reform, pg. 37.
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    Although the Argentine cattle inventory is about 53 percent of the 
U.S. cattle inventory, its beef production is roughly 25 percent of 
U.S. production due to differences between the Argentine and U.S. beef 
production systems. U.S. beef cattle is fed predominately grain-based 
rations, while Argentine cattle is fed largely on

[[Page 34390]]

grass. The U.S. system results in cattle reaching slaughter weights 
more quickly and heavier at slaughter than cattle fed on grass.
    Cattle fed grain produces beef that is often times referred to as 
``fed beef''. Argentine beef produced from cattle raised on grass and 
U.S. beef produced from culled, older animals produce beef commonly 
referred to as ``nonfed beef''. Both the Argentine and domestically 
produced nonfed beef are suitable for lower quality uses in the U.S. 
beef market. Such uses include hamburger meat patties, sausages, and 
other prepared meals and foods. Selected cuts of Argentine beef could 
possibly meet the quality requirements comparable to U.S. grain-fed 
beef products.

Assumptions of Analysis

    This analysis assumes that Argentine uncooked beef exports to the 
U.S. do not exceed their 20 KT tariff-free quota limit. These 
assumptions are based on the difficulties that will likely be 
encountered by Argentine beef producers and processors in increasing 
production and aligning production with consumer demands in export 
markets. The economic impact on U.S. beef producers will depend on 
demand-side factors, such as consumer acceptance of Argentine product, 
but probably most heavily on two supply-side factors: Whether the 
uncooked beef imports consist mainly of beef that can be substituted 
for U.S. nonfed beef and the total quantity of uncooked beef shipments 
to the U.S. The higher returns from uncooked product (as compared with 
current shipments of cooked product) will likely cause an immediate 
shift to chilled or frozen uncooked beef product shipments. However, 
current production and export commitments are expected to constrain 
increases in beef exports for some time. Given adequate adjustment time 
to increase production and shift markets, it is possible that Argentina 
could increase its beef exports and its potential to produce a beef 
product that could grade up to the quality requirements comparable with 
US fed beef. However, at this time, USDA and many trade analysts 
conclude that Argentina exports to the U.S. will most likely consist of 
nonfed beef within tariff-free specified levels.

Method of Analysis

    This analysis is based on results generated by the USDA's Economic 
Research Service's United States Mathematical Programming (USMP) model. 
USMP is a static, programming model of U.S. agriculture with 
considerable regional and cross-commodity detail. U.S. beef production, 
use and trade are broken into two main classes: grain fed beef and 
nonfed beef. For this analysis, USMP was used specifically to determine 
the effect of an additional 20 KT carcass weight equivalent (CWE) of 
nonfed beef. All estimates reflect a 3-to 5-year adjustment period. 
These results represent historical relationships in production, 
consumption, and trade, and are based on existing industry structure 
and pricing arrangements in agricultural markets, and 1995 base-year 
prices and quantities.
    The increase in imports represents less than one-fifth of one-
percent of total U.S. beef availability (11,573 KT CWE) in 1995, and 
less than a 2-percent increase in imported beef. This beef availability 
came from domestic production (10,390 KT); beginning stocks at 172 KT; 
and imports of 1,011 KT. Utilization of these supplies in 1995 were 
distributed as follows: 10,776 KT in domestic food uses; 625 KT 
exported; and, 172 KT in ending stocks. The market clearing price was 
$4,402.17 per MT CWE at wholesale level. The implied price elasticity 
of demand for nonfed beef in the USMP model is almost negative one; 
that is, given a 3-to 5-year adjustment period, a one percent decline 
in price elicits about an equal percentage increase in quantities 
demanded. The lack of supply response registered in the model implies 
that the supply of U.S. nonfed beef is perfectly price inelastic. This 
outcome is consistent with the observed behavior of U.S. dairy and beef 
cow-calf operations. The decision to market these animals is largely 
determined by factors other than the price of nonfed beef.
Impact on U.S. Consumers
    An increase of 20 KT of Argentine nonfed beef product in U.S. 
uncooked beef market is estimated to increase consumer welfare gains by 
$89.15 million annually. This increase in welfare results from beef 
supplies that would be added to other nonfed beef supplies used mainly 
in ``non table cut'' beef applications, such as in hamburger meat 
patties, sausages, and other prepared meals and foods. Increased market 
quantities reduced average wholesale U.S. beef prices by $8.27 per MT 
CWE (from $4,402.17 to $4,393.9 per MT CWE), less than a fifth of one 
percent drop in price.
    Although most of the welfare gains are expected to accrue directly 
to consumers, some of the consumer welfare gains from increased beef 
imports may be initially retained by beef importers. Given time, 
competition among importers in sales to the domestic market will force 
prices lower and thus transfer welfare gains to consumers.
Impact on U.S. Livestock Sector
    Primary producers of livestock and beef products are negatively 
affected by beef imports increases solely through lower prices. The 
price effect generated in the model is not sufficient to force 
producers to lower their production. In the aggregate, producer welfare 
losses of $40.15 million were estimated to result from the additional 
nonfed beef supplies on the U.S. beef market (Table 1). These losses 
result from a drop of around $3.85 per MT CWE across total U.S. beef 
production. For purposes of this analysis, these losses were 
distributed across firms in the following three sub-sectors: beef cow-
calf operators and milk producers; feedlot operators; and, cattle 
slaughterers and processors.
Beef Cow-Calf Operators and Milk Producers
    Increased imports of nonfed beef would compete with U.S. domestic 
sources of this type of beef such as cull beef and dairy cow slaughter. 
Thus, the resulting impact of increased nonfed beef imports is lower 
prices for both cull beef and dairy cows. Because the sale of cull cows 
is a by-product of these farming operations, production does not 
decrease.3 Thus, even though increased beef imports lower 
cull dairy prices by almost 0.3 percent (from $541.71 per head to 
$540.17, or $1.54 per head), lower prices do not cause producers to 
cutback production. The lower returns reduce producer welfare of milk 
producers by about $18.65 million. Similarly, the lower returns on cull 
beef cows reduce producer welfare of beef cow-calf operators by $12.7 
million. In total, these cow-calf beef operators and dairy farmers 
experience producer welfare declines of $31.35 million.
---------------------------------------------------------------------------

    \3\ The majority of producers receipts of these two commodities 
are realized through the sale of primary outputs (feeder calves in 
the case of beef cow-calf operators and milk in the case of dairy 
producers). The minor role of cull cow sales to total income is 
particularly evident on dairy operations which typically generate up 
to 90 percent of their returns from milk sales.
---------------------------------------------------------------------------

Feedlot Operators
    It is shown above that increased imports of nonfed beef displaces 
low-quality beef, mainly affecting dairy and beef cow-calf operations. 
The beef sector is further affected due to fewer feeder calves received 
at feedlots as a result of increased culling of beef cows. A reduction 
in supply of feeder calves caused prices for both yearling beef

[[Page 34391]]

calves and fed cattle to rise. The feedlot gains from output price 
increases on fed cattle at slaughter nearly offset the increased costs 
to purchase yearling beef calves. The net losses in feedlots of $0.24 
per head multiplied over the estimated number of cattle fed (22,500,000 
head) produced an aggregate feedlot operators' producer welfare loss of 
$5.4 million.4
---------------------------------------------------------------------------

    \4\ Yearling beef calf prices go up more per head ($0.64 per 
head) than for fed cattle ($0.40 per head). These changes are based 
on: a $76.34 per cwt live weight beef yearling calf price and animal 
weights of 600 pounds and a $71.99 per cwt live weight fed slaughter 
cattle price and animal weights of 1200 pounds.
---------------------------------------------------------------------------

Cattle Slaughterers/Primary Processors
    Slaughterhouses received the same number of marketings as under the 
baseline, but received cull beef and dairy cows at lower prices. These 
benefits were off-set slightly by price increases on purchases of fed 
cattle to be slaughtered. In addition, slaughterers faced lower 
wholesale prices on their nonfed beef output. Combining these three 
effects--the benefit of lower cull beef and dairy cow prices, offset by 
slightly higher fed cattle prices and lower wholesale nonfed beef 
prices--resulted in an average net loss to cattle slaughters and 
primary beef processors of $3.7 million. The slaughterers principally 
affected by this rule would be those that handle cull beef and dairy 
cows and supply manufacturing beef.

                    Table 1.--Producer Welfare Losses                   
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                                                Welfare 
                             Item                                losses 
------------------------------------------------------------------------
Subtotal--Dairy Sector.......................................      18.65
Subtotal--Beef Sector........................................       21.8
                                                              ==========
  --Beef Cow-Calf Operators..................................       12.7
  --Beef Feedlot Operators...................................        5.4
  --Beef Slaughterers........................................        3.7
                                                              ==========
    Total beef and dairy sectors.............................      40.45
------------------------------------------------------------------------

    Producer losses, on a per farm or firm basis, are relatively small. 
It is shown in Table 2 that the losses incurred per farm range from $16 
for cow-calf producers to roughly $2,700 for slaughters. These losses 
are small compared with total gross sales from livestock sales for 
either beef or dairy operations, representing on average less than 0.1 
percent of the value of sales.

                                 Table 2.--Distribution of Economic Impacts on U.S. Agricultural Sector of Beef Imports                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Numbers in  Market share               Economic loss             
                                                                                          size    ------------------------------------------------------
                   Sub-sector                               Size category               category                     Total      Per entity    % of sales
                                                                                     -------------   (Percent)  ----------------------------------------
                                                                                       (Numbers)                   (million)    (loss/firm)   (Percent) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Beef Cow-Calf..................................  Small..............................      801,940          99.8        $11.82        $14.74         0.07
                                                 All................................      803,240         100           12.70         15.84         0.07
Dairy Farms....................................  Small..............................      152,500          68.5         12.72         83.41         0.09
                                                 All................................      159,500         100           18.65        116.93         0.09
Feed Lots......................................  Small..............................       57,141          30            1.65         28.80         0.03
                                                 All................................       57,541         100            5.3          93.43         0.03
Slaughterers...................................  Small..............................        1,330          81            2.98      2,253            0.01
                                                 All................................        1,385         100            3.68      2,657            0.01
--------------------------------------------------------------------------------------------------------------------------------------------------------

Impact on Small Entities

Beef Cow-Calf Operators and Milk Producers
    Beef and dairy farms with annual sales of less than $0.5 million 
are considered small according to Small Business Administration (SBA) 
size criteria. Recent Census data show that about 99.8 percent of 
operations with beef cows have fewer than 1,000 head-herd 
size.5 On average, these 801,940 operations had sales of 
under $0.5 million while maintaining 92.9 of beef cow inventories. 
Farms with less than $0.5 million of cattle and calves sales averaged 
sales of $20,976 in 1992, as opposed to average sales of $1.3 million 
on larger farms. Similarly for dairy operations, most producers fell in 
the ``small'' business category. Recent USDA data show that 95.6 
percent of operations with milk cows have fewer than 200 head in their 
herds. Census data is available on farms with dairy product sales, but 
not by herd size. These data show that 95.2 percent of these farms have 
sales less than $0.5 million. Assuming that both USDA and Census data 
were tracking roughly the same dairy operations, it is estimated that 
68.2 percent of milk cow inventories are on the 152,500 operations with 
sales less than $0.5 million with average dairy product sales of 
$93,800 per farm in 1992. Besides the sale of dairy products, the sale 
of cull dairy cattle and young stock (not selected to be retained for 
milking or breeding purposes) contribute to farm income. USDA budget 
data for 1992 indicated that, on an average U.S. dairy operation, the 
sale of culled cattle contributed $1.27 (around 8 percent) for every 
$15.85 of receipts.6 Census data indicate that cattle sales 
contributes about $8,000 toward gross farm sales on a small dairy farm 
(making total sales average about $102,000): also, about 8 percent of 
total gross farm income. Net farm income drops of about $15 on 
``small'' beef farms and $83 on ``small'' dairy farms were estimated by 
dividing the adjusted aggregate economic impact estimated by the model, 
by the number of small U.S. beef and dairy operations.7
---------------------------------------------------------------------------

    \5\ Source: 1992 U.S. Census, Beef Cow Herd Size by Inventory 
and Sales: 1992, Table 28, pg. 30.
    \6\ USDA, Ken Mattrews, USDA, ERS, ``Economic Indicators of the 
Farm Sector: Costs of Production, 1992--Major Field Crops and 
Livestock and Dairy''.
    \7\ This adjustment was obtained by multiplying the total 
aggregate economic impact by the percentage of cattle inventories 
held on small dairy and beef farms.
---------------------------------------------------------------------------

Feedlot Operators
    The number of ``small'' entities in the feedlot industry was 
estimated using data and information from various sources. U.S. Census 
of Agriculture data show that there were 57,541 beef feedlot operations 
(SIC 0211) with total agricultural sales of over $20.7 billion ($0.8 
million in crop sales and $19.9 billion in livestock 
sales).8 No distributional data on sales are

[[Page 34392]]

available, but using the aggregate totals gives average annual sales 
per feedlot at $345,840. (SBA classification of feedlots put small 
operations as those establishments with sales at $1.5 million or less.) 
Although casual observation would suggest that most cattle placed on 
feed occurs on highly concentrated (both geographically and size-wise) 
feedlots, without any additional information or data, all feedlots in 
the U.S. would fall into SBA's small entity category. However, other 
data sources indicate that the cattle feeding business is dominated by 
a few feedlots with high sales. Crom notes that large feedlots (with 
8,000 head capacity) marketed 63 percent of the fed cattle in 1984 and 
numbered only 379.9 Sales on such operations would average 
over 35,000 head per year and take them out of SBA's ``small entity'' 
category. Updating Crom's estimated by a 1993 CF Resources, Cattle 
Industry Reference Guide (CIRG) which reported a total number of 46,141 
feedlot operations with over 22.388 million fed cattle marketings in 
1992 with the feedlot numbers from Census, and assuming that large 
feedlot marketings' percentage grew to 70 percent and numbers increased 
to 400 by 1990, would imply that less than 7 million head of fed cattle 
are distributed across the 57,141 ``small'' feedlots. Given this recent 
production and marketing data, these ``small'' feedlots appear to 
average sales of about 120 fed cattle per year valued at about 
$103,666. These size and small feedlot extrapolations do not seem to 
violate Crom's earlier findings that ``farm feedlots made up 97 percent 
of all lots but fed only 19 percent of the cattle in 1984''. Almost all 
of the cattle fed by large and small lots alike purchased a high 
percentage of the cattle fed out (on average 60 percent in 1984). Thus, 
most feedlots are large operations (making up roughly 70 percent of all 
operations) and market a high percentage of national total fed cattle 
marketings. Using the above data on feedlot size, the impact on 
``small'' feedlot operators from increased imports of nonfed beef 
translated into less than a $30 per year drop in gross sales on an 
average ``small'' feedlot (about a 0.03 percent drop).
---------------------------------------------------------------------------

    \8\ Source: U.S. Census, Selected Characteristics of Farms by 
Standard Industrial Classification: 1992, Table 18, pg. 25.
    \9\ Source: USDA, ERS, Agricultural Information Bulletin Number 
545, Economics of the U.S. Meat Industry, Richard J. Crom, November 
1988, pg. 57.
---------------------------------------------------------------------------

Cattle Slaughterers/Primary Processors
    The size distribution of firms in this sub-sector made it difficult 
to allocate the small losses estimated above across large and small 
firms. In the past, the desire to cut transportation costs of cattle 
and product, to gain economics of scale in plant operations, and to 
shift to newer plants (without existing labor contracts) has lead to 
increased industry concentration in this U.S. sub-sector. The exit of 
many older, smaller plants and companies have also contributed to 
increased market concentration. Most firms have multi-million dollar 
operations made up of new, large, state-of-the-art slaughter and 
packing plants located close to areas of high concentration of fed 
cattle (Kansas, Nebraska, Texas, Colorado, and Iowa). Still, there are 
substantial numbers of packers that ``can be characterized as having 
small slaughter capacities and often only one or two slaughter plants. 
They typically possess only about one percent of the industry slaughter 
and often slaughter cows as well as fed cattle.'' 10 The 
main output of packers is boxed beef which make up the bulk of beef 
shipments (up from 43 percent of beef shipments in 1979 and over 80 
percent in 1988.11 12 In 1992, there were 1,385 
meat packing establishments in the U.S. down from 1,434 such 
establishments in 1987.13 The 1987 data indicate that 214 
establishments exclusively processed beef, however no such data is 
available for 1992 at this time. Also, the 1987 data indicated that 
most plants fell in the SBA classifications of ``small'' with 96 
percent of the establishments employing less than 500 employees, 
shipping almost 81 percent of total product.14 15 
At the present time, the 1992 firm distribution data is not available. 
Thus, this analysis assumes that 81 percent of the volume is handled by 
the 1330 ``small'' firms (96 percent times 1,385 firms). This is 
despite the fact that concentration studies have found that slaughter 
activities are highly concentrated among the top 3-4 companies, but 
that substantial competition exists for cattle on the local level due 
to local inter-firm bidding for slaughter animals.16 Four-
firm concentration ratios rose steadily throughout the 1980s and 
reached levels of 70.3 for steers and heifers and 55.8 for all cattle 
in 1990.17 Using the aggregate slaughterers/processor 
producer welfare losses calculated above (and adjusted to reflect the 
volume handled by ``small'' entities), producer welfare losses incurred 
by ``small'' beef slaughterers/processors was estimated at $2,253 per 
year when increased imports consisted of nonfed beef. These losses 
compare with average ``small'' firm value of shipments of over $30 
million in 1992.
---------------------------------------------------------------------------

    \10\ Source: Marion, Bruce W., The Organization and Performance 
of the U.S. Food System, NC 117 Committee, Lexington Books, 1985, 
pg. 128.
    \11\ Agricultural Input and Processing Industries, Iowa State 
University, pg. 6.
    \12\ These boxed beef products are fairly substitutable and 
provide processors with meat cut into primal or subprimal cuts 
sealed in vacuum-pack bags, shipped in 60-pound cardboard boxes. 
Boxed beef has cut transportation costs and labor costs of 
retailers, increased product quality and shelf life and made for 
more product standardization.
    \13\ Source: 1992 Census of Manufacturers, MC92-SUM-1(P), 
Preliminary Report, Summary Series, pg. 9.
    \14\ SBA classification of meat packing plants put small 
operations as those establishments with less than 500 employees.
    \15\ Census of Manufacturing, Industry Series--Meat Products, 
SIC 2011,2013,2015. 1987.
    \16\ (Iowa, pg. 7; Crom, pg. )
    \17\ (Iowa, pg. 5)

Table 3.--Average ``Small'' Entity Welfare Losses in Dollars Per Farm or
                             Firm Per Year.                             
------------------------------------------------------------------------
                                                              Loss per  
                    Farm type affected                       entity per 
                                                                year    
------------------------------------------------------------------------
Beef Cow-Calf Operators...................................      ( 14.72)
Dairy Producers...........................................      ( 83.41)
Feedlot Operators.........................................      ( 30.00)
Slaughterers/Primary Processors...........................   ( 2,253.00)
------------------------------------------------------------------------

Summary

    This rule would allow the importation of fresh, chilled or frozen 
beef from Argentina. If Argentina were able to fill its 20 KT quota to 
the U.S.'s uncooked beef market with nonfed beef product, consumer 
welfare gains of around $90 million annually are possible. These 
consumer gains, as well as the likely producer welfare losses, would 
depend on the type of beef and total quantities received in the U.S. 
from Argentina. The 20 KT of imports will likely consist mainly of 
nonfed beef. Consumers would enjoy both lower prices and greater 
supplies, while producers realize lower returns from lower prices, but 
not lower quantities produced. These gains, even after taking into 
account the likely producer losses discussed below, produce a net 
social welfare gain to the United States of $48.7 million (Table 4).
    Primary producers of livestock and beef products are negatively 
affected by beef import increases solely through lower prices. The 
price effect generated is not sufficient to discourage producers from 
continuing traditional levels of production. In the aggregate, producer 
welfare losses of $40.45 million are distributed between the dairy and 
beef sectors, the latter sector being composed of cow-calf, feedlot and 
slaughter operations.

[[Page 34393]]

    Nonfed beef imports are expected to add to sales of low-quality 
beef made from both beef and dairy cows at lower prices. With nonfed 
beef, the prices for cull beef and dairy cattle are lowered, reducing 
milk producers' welfare by almost $19 million and beef producers' 
welfare by almost $13 million. On a small farm basis, these losses 
translate into reduced net farm incomes of just over $15 on beef farms 
and $83 on dairy farms. These drops are small compared with total gross 
sales from livestock sales for either beef or dairy operations.
    Feedlot operations are expected to be negatively affected, albeit 
marginally, by increased beef imports. The impact on feedlots is low in 
the case of nonfed beef due to the fact that milk producers share part 
of the negative effect on cull cows while no quantity effect in numbers 
marketed occurs. In the aggregate, feedlot net incomes are expected to 
be reduced by $5.4 million.
    Cattle slaughterers and primary meat processors will be faced with 
the same amount of livestock at lower prices--both concerning what 
processors purchase from producers and what they sell. The net effect 
of these price changes are lower net returns to slaughterers of $3.7 
million.
    Over 95 percent of the beef and dairy industries are composed of 
producers and firms that can be categorized as small according to the 
SBA's size classification. This rule would therefore largely affect 
small entities, and the economic impacts analyzed would be directly 
applicable to these entities.

        Table 4.--Aggregate Consumer and Producer Welfare Changes       
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                                               Welfare  
                           Item                                change   
------------------------------------------------------------------------
Total Consumer Welfare Gain (Loss)........................        89.15 
Total Producer Welfare Gain (Loss)........................       (40.45)
Net Social Welfare Gain (Loss)............................        48.7  
------------------------------------------------------------------------
Small Business Regulatory Enforcement Fairness Act of 1996.             

    This rule has been designated by the Administrator, Office of 
Information and Regulatory Affairs, Office of Management and Budget, as 
a major rule under the Small Business Regulatory Enforcement Fairness 
Act of 1996 (SBREFA) (Pub. L. 104-121, 5 U.S.C. 801-808). Therefore, it 
has been submitted for a 60-day Congressional review in accordance with 
that Act, and will not become effective until that review period ends.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule: (1) Preempts all State and local laws that 
are inconsistent with this rule; (2) has no retroactive effect; and (3) 
does not require administrative proceedings before parties may file 
suit in court challenging this rule.

National Environmental Policy Act

    An environmental assessment and finding of no significant impact 
have been prepared for this rule. The assessment provides a basis for 
the conclusion that the actions required or authorized by this rule 
will not present a significant risk of introducing or disseminating FMD 
and will not have a significant impact on the quality of the human 
environment. Based on the finding of no significant impact, the 
Administrator of the Animal and Plant Health Inspection Service has 
determined that an environmental impact statement need not be prepared.
    The environmental assessment and finding of no significant impact 
were prepared in accordance with: (1) The National Environmental Policy 
Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.), (2) Regulations of the 
Council on Environmental Quality for implementing the procedural 
provisions of NEPA (40 CFR parts 1500-1508), (3) USDA regulations 
implementing NEPA (7 CFR part 1b), and (4) APHIS' NEPA Implementing 
Procedures (7 CFR part 372).
    Copies of the environmental assessment and finding of no 
significant impact are available for public inspection at USDA, room 
1141, South Building, 14th Street and Independence Avenue SW, 
Washington, DC, between 8 a.m. and 4:30 p.m., Monday through Friday, 
except holidays. Persons wishing to inspect copies are requested to 
call ahead on (202) 690-2817 to facilitate entry into the reading room. 
In addition, copies may be obtained by writing to the individual listed 
under FOR FURTHER INFORMATION CONTACT.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), the information collection or recordkeeping requirements 
included in this final rule have been approved by the Office of 
Management and Budget (OMB). The assigned OMB control number is 0579-
0015.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, tribal 
governments, and the private sector. Under section 202 of the UMRA, 
APHIS generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures to State, local, or tribal 
governments, in the aggregate, or to the private sector, of $100 
million or more in any one year. When such a statement is needed for a 
rule, section 205 of the UMRA generally requires APHIS to identify and 
consider a reasonable number of regulatory alternatives and adopt the 
least costly, more cost-effective, or least burdensome alternative that 
achieves the objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) that may result in expenditures to 
State, local, and tribal governments, in the aggregate, or to the 
private sector, of $100 million or more in any one year. Thus, this 
rule is not subject to the requirements of sections 202 and 205 of the 
UMRA.

List of Subjects in 9 CFR Part 94

    Animal diseases, Imports, Livestock, Meat and meat products, Milk, 
Poultry and poultry products, Reporting and recordkeeping requirements.

    Accordingly, 9 CFR part 94 is amended as follows:

PART 94--RINDERPEST, FOOT-AND-MOUTH DISEASE, FOWL PEST (FOWL 
PLAGUE), EXOTIC NEWCASTLE DISEASE, AFRICAN SWINE FEVER, HOG 
CHOLERA, AND BOVINE SPONGIFORM ENCEPHALOPATHY: PROHIBITED AND 
RESTRICTED IMPORTATIONS

    1. The authority citation for part 94 continues to read as follows:

    Authority: 7 U.S.C. 147a, 150ee, 161, 162, and 450; 19 U.S.C. 
1306; 21 U.S.C. 111, 114a, 134a, 134b, 134c, 134f, 136, and 136a; 31 
U.S.C. 9701; 42 U.S.C. 4331, and 4332; 7 CFR 2.22, 2.80, and 
371.2(d).

    2. In Sec. 94.1, paragraph (a)(1) is revised to read as follows:


Sec. 94.1  Countries where rinderpest or foot-and-mouth disease exists; 
importations prohibited.

    (a) * * * 
    (1) Except as provided in Sec. 94.21, rinderpest or foot-and-mouth 
disease exists in all countries of the world, except those listed in 
paragraph (a)(2) of this section;
* * * * *

[[Page 34394]]

    3. A new Sec. 94.21 is added to read as follows:


Sec. 94.21  Restrictions on importation of beef from Argentina.

    Notwithstanding any other provisions of this part, fresh, chilled 
or frozen beef from Argentina may be exported to the United States 
under the following conditions:
    (a) The meat is beef that originated in Argentina;
    (b) The meat came from bovines that were moved directly from the 
premises of origin to the slaughterhouse without any contact with other 
animals;
    (c) The meat has not been in contact with meat from countries other 
than those listed in Sec. 94.1(a)(2);
    (d) The meat came from bovines that originated from premises where 
foot-and-mouth disease and rinderpest have not been present during the 
lifetime of any bovines slaughtered for export of meat;
    (e) Foot-and-mouth disease has not been diagnosed in Argentina 
within the previous 12 months;
    (f) The meat came from bovines that originated from premises on 
which ruminants or swine have not been vaccinated with modified or 
attenuated live viruses for foot-and-mouth disease at any time during 
the lifetime of the bovines slaughtered for export of meat;
    (g) The meat came from bovines that have not been vaccinated for 
rinderpest at any time during the lifetime of any of the bovines 
slaughtered for export of meat;
    (h) The meat came from bovine carcasses that have been allowed to 
maturate at 40 to 50  deg.F (4 to 10  deg.C) for a minimum of 36 hours 
after slaughter and have reached a pH of 5.8 or less in the loin muscle 
at the end of the maturation period. Any carcass in which the pH does 
not reach 5.8 or less may be allowed to maturate an additional 24 hours 
and be retested, and, if the carcass still does not reach a pH of 5.8 
or less after 60 hours, the meat from the carcass may not be exported 
to the United States;
    (i) All bone, blood clots, and lymphoid tissue have been removed 
from the meat; and
    (j) An authorized official of Argentina certifies on the foreign 
meat inspection certificate that the above conditions have been met.

    Done in Washington, DC, this 23rd day of June 1997.
Terry L. Medley,
Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 97-16748 Filed 6-25-97; 8:45 am]
BILLING CODE 3410-34-P