[Federal Register Volume 64, Number 98 (Friday, May 21, 1999)]
[Proposed Rules]
[Pages 27711-27717]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12885]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 64, No. 98 / Friday, May 21, 1999 / Proposed 
Rules  

[[Page 27711]]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Part 94

[Docket No. 98-034-1]
RIN 0579-AA96


Importation of Poultry Meat and Other Poultry Products From 
Sinaloa and Sonora, Mexico

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the regulations concerning the 
importation of animal products to relieve certain restrictions on the 
importation of poultry meat and other poultry products from the Mexican 
States of Sinaloa and Sonora. Currently, because of the existence of 
exotic Newcastle disease in Mexico, poultry meat and other poultry 
products from Sinaloa and Sonora must be cooked, sealed, and packaged, 
to certain specifications, to be eligible for importation into the 
United States. This proposal would establish new, less restrictive 
conditions for the importation of poultry meat and other poultry 
products from Sinaloa and Sonora into the United States. This action is 
based on a risk assessment indicating that such importations would 
present a negligible risk of introducing exotic Newcastle disease into 
the United States.

DATES: Consideration will be given only to comments received on or 
before July 20, 1999.

ADDRESSES: Please send an original and three copies of your comments to 
Docket No. 98-034-1, Regulatory Analysis and Development, PPD, APHIS, 
suite 3CO3, 4700 River Road, Unit 118, Riverdale, MD 20737-1238. Please 
state that your comments refer to Docket No. 98-034-1. Comments 
received may be inspected 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 comments are requested to call ahead on (202) 690-2817 to 
facilitate entry into the comment reading room.

FOR FURTHER INFORMATION CONTACT: Dr. Michael David, Senior Staff 
Veterinarian, National Center for Import and Export, VS, APHIS, 4700 
River Road, Unit 39, Riverdale, MD 20737, (301) 734-5034.

SUPPLEMENTARY INFORMATION:

Background

    The Animal and Plant Health Inspection Service (APHIS) of the U.S. 
Department of Agriculture (USDA) regulates the importation of animals 
and animal products into the United States to guard against the 
introduction of animal diseases not currently present or prevalent in 
this country. The regulations pertaining to the importation of animals 
and animal products are set forth in the Code of Federal Regulations 
(CFR), title 9, chapter I, subchapter D (9 CFR parts 91 through 99).
    Until recently, the regulations in parts 91 through 99 governed the 
importation of animals and animal products according to the recognized 
animal disease status of the exporting country. In general, if a 
disease occurred anywhere within a country's borders, the entire 
country was considered to be affected with the disease, and 
importations of animals or animal products from anywhere in the country 
were regulated accordingly. However, international trade agreements 
entered into by the United States--specifically, the North American 
Free Trade Agreement and the General Agreement on Tariffs and Trade--
require APHIS to recognize regions, rather than only countries, as well 
as levels of risk, for the purpose of regulating the importation of 
animals and animal products into the United States. Consequently, on 
October 28, 1997, we published in the Federal Register a final rule (62 
FR 56000-56026, Docket No. 94-106-9, effective November 28, 1997) that 
established procedures for recognizing regions and levels of risk for 
the purpose of regulating the importation of animals and animal 
products. In that rule, we also established procedures by which a 
region may request permission to export animals and animal products to 
the United States under specified conditions, based on the region's 
disease status.
    On the same date, we also published a policy statement (62 FR 
56027-56033, Docket No. 94-106-8) that explained that we will evaluate 
such requests on a case-by-case basis by analyzing the level of disease 
risk involved. Levels of risk exist upon a continuum. However, we 
established five benchmark categories--negligible, slight, low, 
moderate, and high--to give foreign regions a general idea of where 
they fit upon the risk continuum. According to our policy, once we have 
established the level of disease risk associated with the unrestricted 
importation of a particular type of animal or animal product, we will 
determine the import conditions needed to reduce that risk to a 
negligible level. Because of the number of potential variables and the 
vast number of possible combinations of those variables in assessing 
the risk of the unrestricted importation of animals and animal products 
from a region, the precise combination of measures necessary to reduce 
the risk of disease introduction to a negligible level will likely vary 
from region to region depending on the commodities to be imported and 
the diseases of concern.
    The factors that we will consider in determining the level of risk 
associated with unrestricted importation of a particular type of animal 
or animal product from a region are:
    1. The authority, organization, and infrastructure of the 
veterinary services organization in the region.
    2. The type and extent of disease surveillance in the region--e.g., 
is it passive and/or active; what is the quantity and quality of 
sampling and testing?
    3. Diagnostic laboratory capabilities.
    4. Disease status--is the disease agent known to exist in the 
region? If ``yes,'' at what prevalence? If ``no,'' when was the most 
recent diagnosis?
    5. The extent of an active disease control program, if any, if the 
agent is known to exist in the region.
    6. The vaccination status of the region. When was the last 
vaccination? What is the extent of vaccination if it is currently used, 
and what vaccine is being used?
    7. Disease status of adjacent regions.

[[Page 27712]]

    8. The degree to which the region is separated from regions of 
higher risk through physical or other barriers.
    9. The extent to which movement of animals and animal products is 
controlled from regions of higher risk, and the level of biosecurity 
regarding such movements.
    10. Livestock demographics and marketing practices in the region.
    11. Policies and infrastructure for animal disease control in the 
region--i.e., emergency response capacity.
    The regulations in part 94 pertain to, among other things, the 
importation of meat and other animal products into the United States. 
Currently, Sec. 94.6 governs the importation of carcasses, or parts or 
products of carcasses, of poultry, game birds, or other birds, from 
regions where exotic Newcastle disease (END) is considered to exist. 
Specifically, the regulations allow carcasses, or parts or products of 
carcasses of poultry, to be imported from regions where END is 
considered to exist for consumption if: (1) The poultry is packed in 
hermetically sealed containers and cooked by a commercial method after 
such packing to produce articles that are shelf stable without 
refrigeration, (2) the poultry is thoroughly cooked and appears to have 
a thoroughly cooked appearance throughout upon APHIS inspection at the 
port of arrival, or, (3) the poultry is imported under permit after 
APHIS determines the importation as such will not constitute a risk of 
introducing or disseminating END into the United States.
    We are proposing to establish a new Sec. 94.22, as discussed later 
in this document, to allow the importation of poultry meat and other 
poultry products from the States of Sinaloa and Sonora, Mexico, under 
conditions less restrictive than provided in Sec. 94.6.

Our Proposal

    In June 1994, the Government of Mexico officially requested that 
the United States recognize the Mexican States of Sinaloa and Sonora as 
free of END. In February 1997, a team of APHIS veterinarians conducted 
a site visit to verify that Sinaloa and Sonora were free of END and had 
the veterinary infrastructure, disease control programs, diagnostic 
capabilities, and surveillance programs necessary to prevent a 
recurrence of the disease. The site visit confirmed the information 
presented in the request by the Mexican Government. Copies of the APHIS 
site visit report may be obtained by contacting the person listed under 
FOR FURTHER INFORMATION CONTACT. The APHIS team also determined that 
the poultry industries of Sinaloa and Sonora and Mexican agricultural 
officials were exclusively interested in the exportation of poultry 
meat and other poultry products and not live poultry to the United 
States.
    Based on the information presented to APHIS by the Government of 
Mexico and our site visit to Sinaloa and Sonora, we have established 
the following facts, which correspond with the factors listed 
previously for determining the risk associated with unrestricted 
importation of a particular commodity from a region:
    1. In Mexico, animal health functions are carried out by officials 
at the Federal level, who set policy, and by officials at the State 
level, who carry out program operations. The success of all disease 
eradication or control programs in Mexico largely depends on the 
relationship between these two levels of government and between 
governmental officials and the livestock industry. In Sinaloa and 
Sonora, a collaborative relationship exists between the poultry 
producer associations and State and Federal animal health officials. 
The success of the END eradication program in Sinaloa and Sonora has 
been largely due to the dedication and commitment of the industry and 
its willingness to work with animal health officials. In addition, 
State and Federal laws, regulations, policies, and infrastructure in 
Sinaloa, Sonora, and Mexico appear to be adequate to restrict movements 
of poultry and poultry products into Sinaloa and Sonora from any 
regions of Mexico where END may exist.
    2. Prior to Mexico's declaration of Sinaloa and Sonora as free of 
END in May 1993, Sinaloa and Sonora State officials conducted 
serological surveys of all their commercial and backyard poultry flocks 
to verify the State's END-free status. These surveys were repeated 
again in 1997 and 1998. Sinaloa and Sonora have maintained active 
surveillance on commercial poultry populations since 1993, with 100 
percent of commercial populations under active surveillance in 1997. 
All samples taken from commercial poultry populations since 1993 have 
tested negative for END. Small, private ``backyard'' poultry 
populations have been systematically sampled for END since 1997. All 
``backyard'' flock samples taken since that time have also tested 
negative for END.
    3. Samples from commercial farms in Sinaloa and Sonora and backyard 
flocks in Sinaloa are monitored for diseases at a Federally approved 
laboratory in Ciudad Obregon, Sonora. Samples from backyard flocks in 
Sinaloa are monitored at the central diagnostic laboratory outside 
Mexico City. Both laboratories have the capability to detect Newcastle 
disease either seriologically or by virus isolation.
    4. The last case of END in Sinaloa or Sonora was reported in 1989, 
and Mexico declared both States free of the disease in 1993. The States 
of Chihuahua, Durango, and Baja California, which border Sinaloa and 
Sonora, have been recognized by Mexico as free of END. The State of 
Nayarit, which borders Sinaloa to the south, is the only State that 
borders Sinaloa that has not been recognized by Mexico as free of END. 
However, the last outbreak of END in Nayarit was reported in 1989.
    5. Before 1992, Mexico's END eradication program was primarily 
focused on movement control. Surveillance and testing were passive, 
with samples submitted from reported suspect cases. The program was 
strengthened in 1992, when poultry producers enrolled their flocks in a 
national END certification program. During the last 3 years, the 
eradication program has been further strengthened by the participation 
of additional States, and by the initiation of active surveillance in 
the declared free States. States that move into the ``eradication'' 
phase of the campaign (no cases of END for at least 12 months) must 
establish an emergency response team.
    6. Sinaloa and Sonora use the same vaccination method practiced in 
the United States: only lentogenic (low path) strains of Newcastle 
disease are used.
    7. Sonora is bounded on the west by the Gulf of California, on the 
east by the Sierra Madre mountain ranges and the State of Chihuahua, on 
the north by the United States and the Mexican State of Baja 
California, and on the south by the State of Sinaloa. Baja California, 
Chihuahua, and Sinaloa have each been declared free of END by the 
Government of Mexico and have active disease surveillance and animal 
control programs as described above.
    Sinaloa is bounded on the west by the Gulf of California, on the 
east by the States of Chihuahua and Durango and the Sierra Madre 
mountain ranges, on the north by the State of Sonora, and on the south 
by the State of Nayarit. Both Durango and Chihuahua have been 
recognized by the Government of Mexico as free of END. Nayarit has not 
been officially recognized as free from END, but has not had an 
outbreak of END since 1989.
    8. The only adjacent area of higher risk for Sinaloa is the State 
of Nayarit. Man-made controls are in place along the Sinaloa-Nayarit 
border, and were judged to be adequate by the site-visit

[[Page 27713]]

team to prevent the reintroduction of END into Sinaloa or Sonora.
    9. Sinaloa and Sonora strictly control the inter- and intrastate 
movement of livestock, poultry, and livestock and poultry products into 
and through each State. Trade and travel through the maritime ports and 
international airports are strictly monitored, as is vehicular movement 
within each State. Commercial vehicles with agricultural cargo must 
present proper sanitary documentation for the cargo or entry is denied. 
In addition, all vehicles entering Sinaloa and Sonora from Nayarit are 
inspected. Poultry products produced in States of lower health status 
than that of Sinaloa and Sonora may be imported only if the products 
meet time and temperature processing requirements and originate from a 
slaughter plant approved and inspected by a full-time salaried 
veterinarian of the Government of Mexico.
    10. Commercial poultry production in Sinaloa is concentrated among 
a handful of producers on about 65 premises, who collectively own about 
3 million laying hens and 28 million broiler chickens. One company 
alone owns 90 percent of the State's broiler chickens, and this 
company, along with two others, owns 50 percent of Sinaloa's laying 
hens. Broiler chickens in Sinaloa are vaccinated against Newcastle 
disease when they are 12 days old and are housed in highly integrated 
operations similar to those found in the United States. Such fully 
integrated operations in Sinaloa implement excellent biosecurity 
measures at all levels of production.
    Commercially produced broilers in Sinaloa are processed in the only 
Federally approved inspection plant in the State, which processes an 
average of 120,000 birds per day. The integrated company that owns and 
operates the plant does not process birds from any other source.
    Sinaloa produces sufficient broilers and table eggs to meet its 
consumption demands. Surplus meat and eggs (about 70 percent of egg 
production and 30 percent of meat production) are exported to other 
Mexican States.
    Commercial poultry production in Sonora consists of one company, 
which maintains only six production farms. Broiler chickens are 
processed at an integrated company-owned plant, which processes 10,000 
birds per day, and the meat is sold locally or is shipped to cities in 
northern Baja California.
    Sonora also produces about 15 percent of the national production of 
table eggs.
    The number of backyard flocks in Sinaloa and Sonora constitutes a 
small population, and biosecurity measures at these operations are 
virtually nonexistent. However, no auctions for trading backyard 
poultry exist in Sinaloa or Sonora, as backyard poultry is maintained 
for personal consumption. (Therefore, as described later in this 
document, we are proposing to allow the importation of poultry meat and 
other poultry products that are derived only from poultry that were 
raised in Sinaloa or Sonora and slaughtered in Sinaloa or Sonora at a 
federally inspected slaughter plant. The slaughter plant would have to 
be operated under the direct supervision of a full-time salaried 
veterinarian of the Government of Mexico and approved by USDA's Food 
Safety and Inspection Service (FSIS).)
    11. State and Federal laws, regulations, policies, and 
infrastructure in Sinaloa and Sonora and the rest of Mexico appear to 
be adequate to maintain surveillance and control of END and to 
eradicate END rapidly in the event of an outbreak in the States of 
Sinaloa or Sonora.
    These findings are described in further detail in a qualitative 
risk assessment that we prepared in accordance with the regionalization 
final rule and policy statement discussed previously. Our qualitative 
risk assessment concerning the importation of poultry meat and other 
poultry products from Federally inspected slaughtering establishments 
in Sinaloa and Sonora may be obtained by contacting the person listed 
under FOR FURTHER INFORMATION CONTACT. The risk assessment indicated 
that the importation of poultry meat and other poultry products from 
federally inspected slaughtering establishments in Sinaloa and Sonora, 
Mexico, would present a negligible risk of introducing END into the 
United States.
    Based on the finding of negligible risk, we are proposing to 
relieve restrictions on the importation of poultry meat and other 
poultry products from Sinaloa and Sonora, Mexico. However, we are 
proposing to allow the poultry meat and other poultry products to be 
imported only under certain conditions, to help prevent the possibility 
that poultry meat and other poultry products from poultry raised in 
regions of Mexico other than Sinaloa or Sonora could be exported to the 
United States via Sinaloa or Sonora. We want to prevent the following 
possibilities: That poultry from regions of Mexico other than Sinaloa 
or Sonora could be moved to Sinaloa or Sonora for slaughter, 
processing, and export to the United States; that poultry meat or other 
poultry products from other regions could be moved to Sinaloa or Sonora 
for export to the United States; or that, once leaving Sinaloa or 
Sonora, poultry meat or other poultry products from Sinaloa or Sonora 
could be commingled with poultry meat or other poultry products from 
other regions of Mexico in transit to the United States. We believe 
that the proposed import conditions would provide protection against 
the occurrence of any of these scenarios. Following the list of import 
conditions is our basis for them.

Proposed Conditions

    1. The poultry meat or other poultry products must be derived from 
poultry that were born and raised in Sinaloa or Sonora and slaughtered 
in Sinaloa or Sonora at a federally inspected slaughter plant under the 
direct supervision of a full-time salaried veterinarian of the 
Government of Mexico, and the slaughter plant must be approved to 
export poultry meat and other poultry products to the United States in 
accordance with 9 CFR 381.196.
    2. If processed in any manner, the poultry meat or other poultry 
products must be processed at a Federally inspected processing plant in 
Sinaloa or Sonora under the direct supervision of a full-time salaried 
veterinarian of the Government of Mexico.
    3. The poultry meat or other poultry products may not have been in 
contact with poultry from any State in Mexico other than Sinaloa and 
Sonora or from any other region not listed in Sec. 94.6 as a region 
where END is not known to exist.
    4. The foreign meat inspection certificate for the poultry meat or 
other poultry products (required by FSIS under 9 CFR 381.197) must be 
signed by a full-time salaried veterinarian of the Government of 
Mexico. The certificate must include statements that certify the above 
conditions have been met. The certificate must also show the seal 
number on the shipping container if a seal is required (see below).
    5. In addition, if the poultry meat or other poultry products are 
going to transit any State in Mexico other than Sinaloa or Sonora or 
any other region not listed in Sec. 94.6 as a region where END is not 
known to exist en route to the United States, a full-time salaried 
veterinarian of the Government of Mexico must apply serially numbered 
seals to the containers carrying the poultry meat or other poultry 
products at the Federally inspected slaughter or processing plant in 
Sinaloa or Sonora, and the seal numbers must be recorded on the foreign 
meat inspection certificate.

[[Page 27714]]

    6. Prior to its arrival in the United States, the shipment of 
poultry meat or other poultry products may not have been in any State 
in Mexico other than Sinaloa or Sonora or in any other region not 
listed in Sec. 94.6 unless the poultry meat or poultry products have 
remained under seal until arrival at the U.S. port and either (1) the 
numbers on the seals match the numbers on the foreign meat inspection 
certificate or (2) if the numbers on the seals do not match the numbers 
on the foreign meat inspection certificate, an APHIS representative at 
the port of arrival is satisfied that the poultry meat or poultry 
products were not contaminated during movement to the United States.

Basis for Proposed Conditions

    We are proposing to require that the poultry meat and other poultry 
products come only from poultry slaughtered at Federally inspected 
slaughter plants in Sinaloa and Sonora that are approved to export 
poultry meat and other poultry products to the United States in 
accordance with 9 CFR 381.196. Such plants only accept poultry for 
slaughter if it is raised under adequate biosecurity for commercial 
sale. This proposed requirement would serve as an additional safeguard 
against the possibility that poultry meat or other poultry products 
from poultry raised in backyard farms could be exported to the United 
States.
    We are proposing that processed poultry meat or other poultry 
products from Sinaloa and Sonora come only from Federally inspected 
processing plants in Sinaloa and Sonora because those plants must meet 
FSIS requirements in order to be approved to export poultry meat or 
other poultry products to the United States in accordance with 9 CFR 
381.195 through 381.209. Further, those plants are under the direct 
supervision of full-time salaried veterinarians of the Government of 
Mexico.
    The proposed requirement that the poultry meat and other poultry 
products may not have been in contact with poultry from any State in 
Mexico other than Sinaloa or Sonora, or from regions other than those 
listed in 94.6, is intended to ensure that the poultry meat and other 
poultry products were not exposed to END.
    We are proposing to allow the poultry meat and other poultry 
products to transit other regions not listed in Sec. 94.6 en route to 
the United States if the poultry meat and other poultry products are 
shipped in containers sealed with serially numbered seals at the 
Federally inspected slaughtering plant or processing plant in Sinaloa 
or Sonora and the containers arrive in the United States with the seals 
intact. The seal numbers would have to be listed on the foreign meat 
inspection certificate that accompanies the shipment. This precaution 
would ensure that the poultry meat and other poultry products have 
remained in closed containers during transit to the United States and 
have not become contaminated.
    This proposed rule would also allow the importation of the poultry 
meat and other poultry products in containers bearing seals with 
different numbers than those listed on the foreign meat inspection 
certificate if our port inspectors can determine that an official of 
the Government of Mexico opened the original seals and then applied new 
seals. We realize the need to allow some flexibility in shipping and 
recognize that valid reasons may exist for the opening of containers 
and for the changing of numbers in transit. For example, many flights 
from Sinaloa and Sonora to the United States stop in Mexico City, and 
the containers may have to be opened for inspection by Mexican customs 
officials.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been reviewed under Executive Order 12866. 
The rule has been determined to be significant for the purposes of 
Executive Order 12866 and, therefore, has been reviewed by the Office 
of Management and Budget.
    In accordance with 5 U.S.C. 603, we have performed an Initial 
Regulatory Flexibility Analysis, which is summarized below, regarding 
the impact of this proposed rule on small entities. This analysis also 
serves as our cost-benefit analysis under Executive Order 12866. Based 
on the information we have, there is no basis to conclude that this 
rule will result in any significant economic impact on a substantial 
number of small entities. However, we do not currently have all of the 
data necessary for a comprehensive analysis of the effects of this 
proposed rule on small entities. Therefore, we are inviting comments on 
potential effects. In particular, we are interested in determining the 
number and kind of small entities, especially in the southwestern 
border states, that may incur benefits or costs from the implementation 
of this proposed rule.
    In accordance with 21 U.S.C. 111, the Secretary of Agriculture is 
authorized to promulgate regulations to prevent the introduction or 
dissemination of the contagion of any contagious, infectious, or 
communicable disease of animals from a foreign country into the United 
States.
    This proposed rule would amend the regulations to relieve certain 
restrictions on the importation of poultry meat and other poultry 
products from the States of Sinaloa and Sonora, Mexico, by establishing 
new conditions for the importation of poultry meat and other poultry 
products from Sinaloa and Sonora into the United States.
    Currently, no poultry slaughter facilities in the States of Sinaloa 
or Sonora are approved to export poultry meat or other poultry products 
to the United States by the Food Safety and Inspection Service (FSIS) 
of the U.S. Department of Agriculture. Poultry processing facilities in 
Sinaloa and Sonora will need FSIS approval prior to exporting poultry 
to the United States. Further, based on the following analysis, we 
anticipate that if and when Mexican facilities receive FSIS approval to 
export poultry meat or other poultry products to the United States, the 
economic effect of those imports on U.S. producers and processors will 
be minimal.
    As part of our analysis, we compared the expected benefits of 
poultry imports from Sinaloa and Sonora to the expected costs resulting 
from a possible disease outbreak. A qualitative risk assessment 
prepared by APHIS indicates that the expected costs of disease 
introduction are likely to be zero, as the proposed imports pose a low 
probability of causing an outbreak of END in the United States. The 
hazard of concern regarding these potential imports is exotic Newcastle 
disease (END).
    The benefits of allowing poultry imports from Sinaloa and Sonora 
under less restrictive conditions are calculated as the net change in 
consumer and producer surplus that results from the estimated volume of 
trade. Assuming that, among other things, poultry meat and other 
poultry products from Sinaloa and Sonora would be a perfect substitute 
for domestic poultry meat and other poultry products, it is estimated 
that the net benefits of the proposed imports would be positive. 
Allowing importations of poultry meat and other poultry products from 
Sinaloa and Sonora would cause U.S. farm gate prices to decrease 
marginally, benefiting U.S. consumers.
    Our economic analysis examines the potential economic effects of 
such imports under low- (100 metric tons per year), medium- (1,000 
metric tons per year), and high- (5,000 metric tons per year) volume 
scenarios. We chose these levels because 5,000 metric tons is the 
highest volume of poultry meat Mexico has ever exported to the world. 
Further,

[[Page 27715]]

recently, there have been years when Mexico has exported no poultry 
meat. Therefore, we used the above import level scenarios based on 
Mexico's poultry export history,
    For the low-volume scenario, consumer surplus is estimated to 
increase by $67,172 (1996 dollars) and producer surplus would decrease 
by $67,166, resulting in a net annual benefit of $6. The price of 
poultry would fall by $0.006 per metric ton. The medium-volume scenario 
shows an increase in consumer surplus of $671,734, a decrease in 
producer surplus of $671,645, and a net benefit of $89. The price of 
poultry would decrease by $0.063 per metric ton. Under the high-volume 
scenario, consumer surplus would rise by $3,358,942, and producer 
surplus would fall by $3,357,902, for a net benefit of $1,040. Poultry 
prices would decrease by $0.30 per metric ton. It is apparent that 
expected impacts are very small for each of the scenarios.

The United States' Poultry Market

    Since the mid-1960s, there have been dramatic changes in the market 
structure, production technology and retail marketing of broiler 
products. Production efficiency has been increased by continuing 
improvements in genetics, nutrition, housing, equipment, disease 
control, and management. Improved production efficiency is demonstrated 
in the reduction of feed and time required for producing a broiler 
chicken. Growing a 4.5 lb. broiler in 1940 required 14 weeks and 4 lb. 
of feed per pound of live bird. Today, the same size bird can be 
produced in 6.5 weeks with less than 2 lb. of feed per pound of bird.
    Managerial decisionmaking has shifted from single proprietorship 
farming operations to vertically integrated poultry producing-
processing-marketing firms, in which production and marketing decisions 
are centralized in a single entity that is either owned directly or 
controlled through contracts.
    Improvement in poultry house technology enables producers to raise 
chickens in large confinement units throughout the year, resulting in 
increased production efficiency and consequent reductions in production 
cost. By 1995, almost all (99 percent) broilers were produced by 
vertically integrated companies. In 1978, in the United States, the 
four largest broiler companies controlled 21.4 percent of national 
production, and the eight largest broiler companies controlled 36.1 
percent. By 1992 the four largest companies produced approximately 41 
percent of national production, while the eight largest companies 
produced about 56 percent.
    The potential economic effects of the proposed importation of 
poultry meat and other poultry products from the Mexican States of 
Sinaloa and Sonora on national, regional, and local poultry producers 
are dependent on a number of factors, such as where the products would 
be consumed in the United States. While it is currently unknown exactly 
how poultry meat and other poultry products from Sinaloa and Sonora 
would enter U.S. marketing and distribution channels and where they 
would ultimately be consumed, it is likely that they would be shipped 
by truck through Nogales, AZ. Other U.S. States in the region that 
could receive poultry from Sinaloa and Sonora are California, New 
Mexico, and Texas. It is unclear whether poultry from Sinaloa and 
Sonora would be consumed only in these four States. If poultry from 
Sinaloa and Sonora were purchased by a local retail chain or 
wholesaler, it would likely be consumed regionally. If it were 
purchased by a national wholesaler, it could be consumed anywhere in 
the United States. The effect on small producers would be more 
pronounced if Sinaloa and Sonora imports affected only California, 
Arizona, New Mexico, and Texas producers. For the purpose of this 
analysis, we examined both the possibility that poultry meat and other 
poultry products from Sinaloa and Sonora would be consumed locally in 
these four southwestern States, and also the possibility that they 
would enter national distribution channels.
    The Small Business Administration (SBA) defines small poultry farms 
(Standard Industrial Code 0251) as those earning less than $500,000 in 
annual sales, except for sales of chicken eggs. Industry experts 
suggest that only those poultry operations producing in excess of 
270,000 broiler chickens would earn $500,000 or more in sales annually.
    According to the SBA definition, at least 99 percent of poultry 
farms in Arizona, New Mexico, and Texas and 97 percent of poultry farms 
in California are small entities. There were 1,425 small poultry farms 
in the four states in 1992, and only 7 farms with estimated annual 
revenues greater than $500,000. For the United States as a whole, in 
1992, there were an estimated 11,626 small poultry farms, and 14 large 
poultry farms. Although some structural changes may have occurred among 
broiler producers since the 1992 Census of Agriculture, it can be 
assumed that poultry farms remain predominantly small entities.
    According to the 1992 Census of Agriculture, in 1992, California's 
average sales by small broiler farms ($97,540) were higher than the 
national average ($85,883), while sales in Texas were lower ($73,429). 
There are no comparable data for Arizona's and New Mexico's broiler 
farmers.
    Whether we consider the United States as a whole or only selected 
southwestern States, the overwhelming majority of poultry farms are 
small entities. It is reasonable to conclude that, if U.S. poultry 
producers are affected by this proposed rule, a substantial number 
would be small entities.

Economic Impact on Small Entities

    There is no general rule that sets threshold or trigger levels for 
``significant economic impact;'' however, it has been suggested that an 
economic effect that equals a small business' profit margin--5 to 10 
percent of annual sales--could be considered significant.1
---------------------------------------------------------------------------

    \1\ Verkuil, Duke Law Journal, 1982.
---------------------------------------------------------------------------

    We used estimated changes in producer surplus together with the 
1992 Census of Agriculture data on poultry inventories and poultry 
sales to develop very rough estimates of the economic impact of the 
proposed rule on small poultry farmers across the United States and in 
selected southwestern States. To do this, we assumed that losses in 
producer surplus are shared equally among all poultry farms in the 
geographic area under consideration (either the entire United States or 
selected southwestern States). We then compared per farm changes in 
producer surplus with small farms' annual sales to determine whether 
the economic effects approached the 5-10 percent threshold.
    If poultry meat and other poultry products from Sinaloa and Sonora 
entered national distribution channels and, therefore, economic effects 
were shared by all U.S. producers, there would not be a significant 
economic impact on small entities no matter which level (low, medium, 
or high volume) of imports is assumed. Producer surplus losses per U.S. 
poultry farm would range from $2 to $103 per year, and these amounts 
are substantially less than 1 percent of the typical small poultry 
farmer's annual sales in every scenario.
    If, under the high-volume scenario, the maximum 5,000 metric tons 
were imported annually from Sinaloa and Sonora and consumed locally in 
Arizona, California, New Mexico, and Texas, there likely would not be a

[[Page 27716]]

significant economic impact on small entities no matter which level 
(low, medium, or high volume) of imports is assumed. Producer surplus 
losses per poultry farm in the selected southwestern States would range 
from $10 to $488 per year, and these amounts are less than 1 percent of 
the typical small California or Texas poultry farmer's annual sales in 
every scenario. Since we have no data available on sales in Arizona and 
New Mexico, we cannot determine the effect of this proposal on 
producers in those States.
    A substantial number (99 percent) of U.S. broiler farms meet the 
SBA size criteria for designation as small entities. However, the 
proposed rule is not likely to have a significant economic impact on 
them. Even under the high-volume import assumption, there would not be 
a significant economic impact on small U.S. poultry farms, no matter 
where the Mexican poultry is imported and consumed. Under the most 
extreme assumptions (imports of 5,000 metric tons and limited 
geographic area affected), small poultry producers in California and 
Texas would experience losses in producer surplus equaling less than 1 
percent of annual sales, which does not meet the suggested criteria for 
significant economic impact. Further, we expect that this action will 
have a similar effect on small poultry producers in Arizona and New 
Mexico, though we do not have the data to confirm this.
    If this rule is adopted, it is very unlikely that a volume of 5,000 
metric tons of poultry meat or other poultry products will be exported 
from Sinaloa and Sonora to the United States since Mexico is not a 
major exporter of poultry meat or other poultry products. Mexico had 
yearly world exports of 5,000 metric tons of poultry meat and poultry 
products in 1990, 1991, and 1992. However, in 1993, 1994, 1995, Mexico 
exported no poultry meat and other poultry products, and since 1996 has 
exported less than 1000 metric tons of poultry meat and other poultry 
products annually.
    Further, even under the high-volume scenario (5,000 metric tons), 
Mexico's exports to the United States represent less than .05 percent 
of total U.S. poultry production (over 14 million metric tons in 1997).

Alternatives Considered

    In developing this proposed rule, we considered: (1) Making no 
changes to the existing regulations governing the importation of 
poultry meat and other poultry products from Sinaloa or Sonora, Mexico; 
(2) proposing to allow the importation of poultry meat and other 
poultry products from Sinaloa and Sonora under conditions different 
from those proposed; or (3) proposing to allow the importation of 
poultry and poultry products from Sinaloa and Sonora under the 
conditions proposed in this document.
    We rejected the first alternative because poultry meat and other 
poultry products from Sinaloa and Sonora appear to present little risk 
of introducing END into the United States, and 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 poultry meat 
and other poultry products from Sinaloa and Sonora under conditions 
other than those proposed. We believe that using conditions less 
stringent than those proposed for the importation of poultry meat and 
other poultry products from Sinaloa and Sonora would increase the risk 
of the introduction of END into the United States to more than a 
negligible level and that using more stringent conditions would be 
unnecessarily restrictive. We believe the proposed conditions to be 
both effective and necessary in reducing to a negligible level the risk 
of the introduction of END through the importation of poultry meat and 
other poultry products imported into the United States from Sinaloa and 
Sonora, Mexico. Further, we invite public comment on the risk-
mitigating controls and requirements we have proposed in this document.
    The proposed changes to the regulations would result in new 
information collection or recordkeeping requirements, as described 
below under the heading ``Paperwork Reduction Act.''

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. If this proposed rule is adopted: (1) All State 
and local laws and regulations that are inconsistent with this rule 
will be preempted; (2) no retroactive effect will be given to this 
rule; and (3) administrative proceedings will not be required 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 proposed rule. The assessment provides a 
basis for the conclusion that the importation of poultry meat and other 
poultry products from Sinaloa and Sonora, Mexico, under the conditions 
specified in this proposed rule would not present a significant risk of 
introducing or disseminating END into the United States and would 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, as amended (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 section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the information collection or 
recordkeeping requirements included in this proposed rule have been 
submitted for approval to the Office of Management and Budget (OMB). 
Please send written comments to the Office of Information and 
Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, 
DC 20503. Please state that your comments refer to Docket No. 98-034-1. 
Please send a copy of your comments to: (1) Docket No. 98-034-1, 
Regulatory Analysis and Development, PPD, APHIS, suite 3C03, 4700 River 
Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer, 
OCIO, USDA, room 404-W, 14th Street and Independence Avenue SW., 
Washington, DC 20250. A comment to OMB is best assured of having its 
full effect if OMB receives it within 30 days of publication of this 
proposed rule.
    This proposed rule would amend the regulations to relieve certain 
restrictions on the importation of poultry meat and other poultry 
products from Sinaloa and

[[Page 27717]]

Sonora, Mexico, by establishing new conditions for the importation of 
fresh and processed poultry and poultry products from Sinaloa and 
Sonora into the United States.
    Implementing this proposed rule would necessitate the use of two 
paperwork collection activities: the completion of a foreign meat 
inspection certificate and the placing of seals on shipping containers.
    We are asking OMB to approve our use of these information 
collections in connection with our program to import poultry meat and 
other poultry products from the Mexican States of Sinaloa and Sonora.
    We are soliciting comments from the public (as well as affected 
agencies) concerning our proposed information collection and 
recordkeeping requirements. We need this outside input to help us:
    (1) Evaluate whether the proposed information collection is 
necessary for the proper performance of our agency's functions, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of our estimate of the burden of the 
proposed information collection, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the proposed information collection on 
those who are to respond, (such as through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses).
    Estimate of burden: Public reporting burden for this proposed 
collection of information is estimated to average 0.133 hours per 
response.
    Respondents: Full-time, salaried veterinarians of the Government of 
Mexico.
    Estimated annual number of respondents: 4.
    Estimated annual number of responses per respondent: 15.
    Estimated annual number of responses: 60.
    Estimated total annual burden on respondents: 8 hours.
    Copies of this information collection can be obtained from 
Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence 
Avenue SW., Washington, DC 20250.

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, we propose to amend 9 CFR part 94 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 would continue 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. A new Sec. 94.22 would be added to read as follows:


Sec. 94.22  Importation of poultry meat and other poultry products from 
Sinaloa and Sonora, Mexico.

    Notwithstanding any other provisions of this part, poultry meat and 
other poultry products from the States of Sinaloa and Sonora, Mexico, 
may be imported into the United States under the following conditions:
    (a) The poultry meat or other poultry products are derived from 
poultry born and raised in Sinaloa or Sonora and slaughtered in Sinaloa 
or Sonora at a federally inspected slaughter plant under the direct 
supervision of a full-time salaried veterinarian of the Government of 
Mexico, and the slaughter plant must be approved to export poultry meat 
and other poultry products to the United States in accordance with 9 
CFR 381.196.
    (b) If processed, the poultry meat or other poultry products were 
processed in either Sinaloa or Sonora, Mexico, in a Federally inspected 
processing plant that is under the direct supervision of a full-time 
salaried veterinarian of the Government of Mexico.
    (c) The poultry meat or other poultry products have not been in 
contact with poultry from any State in Mexico other than Sinaloa or 
Sonora or with poultry from any other region not listed in Sec. 94.6 as 
a region where exotic Newcastle disease is not known to exist.
    (d) The foreign meat inspection certificate accompanying the 
poultry meat or other poultry products (required by Sec. 381.197 of 
this title) includes statements certifying that the requirements in 
paragraphs (a), (b), and (c) of this section have been met and, if 
applicable, listing the numbers of the seals required by paragraph 
(e)(1) of this section.
    (e) The shipment of poultry meat or other poultry products has not 
been in any State in Mexico other than Sinaloa or Sonora or in any 
other region not listed in Sec. 94.6 as a region where exotic Newcastle 
disease is not known to exist, unless:
    (1) The poultry meat or other poultry products arrive at the U.S. 
port of entry in shipping containers bearing intact, serially numbered 
seals that were applied at the Federally inspected slaughter plant by a 
full-time salaried veterinarian of the Government of Mexico, and the 
seal numbers correspond with the seal numbers listed on the foreign 
meat inspection certificate; or
    (2) The poultry meat or other poultry products arrive at the U.S. 
port of entry in shipping containers bearing seals that have different 
numbers than the seal numbers on the foreign meat inspection 
certificate, but, upon inspection of the hold, compartment, or 
container and all accompanying documentation, an APHIS representative 
is satisfied that the poultry containers were opened and resealed en 
route by an appropriate official of the Government of Mexico and the 
poultry meat or other poultry products were not contaminated or exposed 
to contamination during movement from Sinaloa or Sonora to the United 
States.

    Done in Washington, DC, this 17th of May 1999.
Craig A. Reed,
Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 99-12885 Filed 5-20-99; 8:45 am]
BILLING CODE 3410-34-P