[Federal Register Volume 72, Number 5 (Tuesday, January 9, 2007)]
[Proposed Rules]
[Pages 1102-1129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-17]



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Part III





Department of Agriculture





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Animal and Plant Health Inspection Service



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9 CFR Parts 93, 94, 95, and 96



 Bovine Spongiform Encephalopathy; Minimal-Risk Regions; Importation of 
Live Bovines and Products Derived From Bovines; Proposed Rule

  Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / 
Proposed Rules  

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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Parts 93, 94, 95, and 96

[Docket No. APHIS-2006-0041]
RIN 0579-AC01


Bovine Spongiform Encephalopathy; Minimal-Risk Regions; 
Importation of Live Bovines and Products Derived From Bovines

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the regulations regarding the 
importation of animals and animal products to establish conditions for 
the importation of the following commodities from regions that present 
a minimal risk of introducing bovine spongiform encephalopathy (BSE) 
into the United States: Live bovines for any use born on or after a 
date determined by APHIS to be the date of effective enforcement of a 
ruminant-to-ruminant feed ban in the region of export; blood and blood 
products derived from bovines; and casings and part of the small 
intestine derived from bovines. We are proposing these amendments after 
conducting a risk assessment and comprehensive evaluation of the issues 
that concluded that such bovines and bovine products can be safely 
imported under the conditions described in this proposed rule.

DATES: We will consider all comments that we receive on or before March 
12, 2007.

ADDRESSES: You may submit comments by either of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov, select ``Animal and Plant Health Inspection 
Service'' from the agency drop-down menu, then click ``Submit.'' In the 
Docket ID column, select APHIS-2006-0041 to submit or view public 
comments and to view supporting and related materials available 
electronically. Information on using Regulations.gov, including 
instructions for accessing documents, submitting comments, and viewing 
the docket after the close of the comment period, is available through 
the site's ``User Tips'' link.
     Postal Mail/Commercial Delivery: Please send four copies 
of your comment (an original and three copies) to Docket No. APHIS 
2006-0041, Regulatory Analysis and Development, PPD, APHIS, Station 3A-
03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state 
that your comment refers to Docket No. APHIS 2006-0041.
    Reading Room: You may read any comments that we receive on this 
docket in our reading room. The reading room is located in room 1141 of 
the USDA South Building, 14th Street and Independence Avenue, SW., 
Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., 
Monday through Friday, except holidays. To be sure someone is there to 
help you, please call (202) 690-2817 before coming.
    Other Information: Additional information about APHIS and its 
programs is available on the Internet at http://www.aphis.usda.gov.

FOR FURTHER INFORMATION CONTACT: For information regarding ruminant 
products, contact Dr. Karen James-Preston, Director, Technical Trade 
Services, Animal Products, National Center for Import and Export, VS, 
APHIS, 4700 River Road Unit 38, Riverdale, MD 20737-1231; (301) 734-
4356.
    For information concerning live ruminants, contact Dr. Lee Ann 
Thomas, Director, Technical Trade Services, Animals, Organisms and 
Vectors, and Select Agents, National Center for Import and Export, VS, 
APHIS, 4700 River Road Unit 38, Riverdale, MD 20737-1231; (301) 734-
4356.
    For other information concerning this proposed rule, contact Dr. 
Lisa Ferguson, Senior Staff Veterinarian, National Center for Animal 
Health Programs, VS, APHIS, 4700 River Road Unit 43, Riverdale, MD 
20737-1231; (301) 734-6954.

SUPPLEMENTARY INFORMATION:

I. Background

    The Animal and Plant Health Inspection Service (APHIS) of the U.S. 
Department of Agriculture (USDA or Department) regulates the 
importation of animals and animal products into the United States to 
guard against the introduction of animal diseases. The regulations in 9 
CFR parts 93, 94, 95, and 96 (referred to below as the regulations) 
govern the importation of certain animals, birds, poultry, meat, other 
animal products and byproducts, hay, and straw into the United States 
in order to prevent the introduction of various animal diseases, 
including bovine spongiform encephalopathy (BSE), a chronic 
degenerative disease affecting the central nervous system of cattle.
    With some exceptions, APHIS' regulations prohibit or restrict the 
importation of live ruminants and certain ruminant products and 
byproducts from the following three categories of regions with regard 
to BSE: (1) Those regions in which BSE is known to exist (listed in 
Sec.  94.18(a)(1) of the regulations); (2) those regions that present 
an undue risk of introducing BSE into the United States because their 
import requirements are less restrictive than those that would be 
acceptable for import into the United States and/or because the regions 
have inadequate surveillance (listed in Sec.  94.18(a)(2) of the 
regulations); and (3) those regions that present a minimal risk of 
introducing BSE into the United States via live ruminants and ruminant 
products and byproducts (listed in Sec.  94.18(a)(3) of the 
regulations).

Chronology of APHIS Federal Register Publications Regarding BSE 
Minimal-Risk Regions

    We added the Sec.  94.18(a)(3) category (BSE minimal-risk regions) 
to the regulations in a final rule published in the Federal Register on 
January 4, 2005 (70 FR 459-553, Docket No. 03-080-3). In the final 
rule, we specified which commodities may be imported from BSE minimal-
risk regions and under what conditions, and recognized Canada as a BSE 
minimal-risk region. (At this time, Canada is the only recognized BSE 
minimal-risk region.)
    The January 2005 final rule was based on a proposed rule we 
published in the Federal Register on November 4, 2003 (68 FR 62386-
62405, Docket No. 03-080-1). On December 25, 2003, less than 2 weeks 
before the close of the comment period for our proposed rule, a case of 
BSE in a dairy cow of Canadian origin in Washington State was verified 
by an international reference laboratory.
    In response to comments from the public requesting an extension of 
the comment period and in order to give the public an additional 
opportunity to comment on the proposed rule in light of this 
development, on March 8, 2004, we published a notice in the Federal 
Register (69 FR 10633-10636, Docket No. 03-080-2) reopening and 
extending the comment period.
    On January 5, 2005, along with the final rule, we published in the 
Federal Register a notice (70 FR 554, Docket No. 03-080-4) announcing 
the availability of, and requesting comments on, a final environmental 
assessment (EA) regarding the potential impact on the quality of the 
human environment due to the importation of ruminants and ruminant 
products and byproducts from Canada under the conditions specified in 
the final rule. On January 21, 2005, we published in the Federal 
Register a

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notice (70 FR 3183-3184, Docket No. 03-080-5) announcing the 
availability of a corrected version of the EA for public review and 
comment. On April 8, 2005, we published in the Federal Register a 
finding (70 FR 18252-18262, Docket No. 03-080-7) that the provisions of 
the final rule would not have a significant impact on the quality of 
the human environment.
    On March 11, 2005, we published a document in the Federal Register 
that gave notice that the Secretary of Agriculture was delaying until 
further notice the implementation of certain provisions of the final 
rule with regard to certain commodities (70 FR 12112-12113, Docket No. 
03-080-6).
    On November 28, 2005, we published in the Federal Register an 
interim rule (70 FR 71213-71218, Docket No. 03-080-8) that amended 
certain provisions established by the January 2005 final rule. The 
interim rule broadened the list of who is authorized to break seals on 
conveyances and allows transloading under supervision of products 
transiting the United States.
    On March 14, 2006, we published in the Federal Register a technical 
amendment (71 FR 12994-12998, Docket No. 03-080-9) that clarified our 
intent with regard to certain provisions in the January 2005 final rule 
and corrected several inconsistencies within the rule.
    On August 9, 2006, we published in the Federal Register a proposed 
rule (71 FR 45439-45444, Docket No. APHIS-2006-0026) that proposed to 
amend the provisions established by the January 2005 final rule by 
removing several restrictions regarding the identification of animals 
and the processing of ruminant materials from BSE minimal-risk regions, 
and by relieving BSE-based restrictions on hide-derived gelatin from 
BSE minimal-risk regions. We solicited comments concerning our proposal 
for 60 days ending October 10, 2006. On November 9, 2006, we published 
a notice in the Federal Register (71 FR 65758-65759, Docket No. APHIS-
2006-0026) reopening and extended the comment period until November 24, 
2006. We received a total of 10 comments by that date. We are 
considering the issues raised by the commenters and will address them 
in a separate rulemaking document.

Scope of the January 2005 Final Rule

    The regulations established by the January 2005 final rule and 
subsequent amendments allow the importation from BSE minimal-risk 
regions of live bovines that are under 30 months of age when imported 
and when slaughtered and that have been subject to a ruminant feed ban 
equivalent to that in place in the United States. The risk analysis we 
conducted for that rule found that, because of the nature, incubation 
period, and progression of BSE infectivity, young cattle exposed to low 
levels of BSE will accumulate very little BSE infectivity within the 
first few years of life, and that cattle under 30 months of age from a 
BSE minimal-risk region are highly unlikely to have accumulated 
significant amounts of BSE infectivity even if infected. We concluded, 
therefore, that the risk to U.S. livestock presented by the importation 
of such bovines was low.
    We did not attempt, for that rulemaking, to assess the BSE risk 
associated with the importation of live bovines 30 months of age or 
older from a BSE minimal-risk region. Our March 8, 2004, notice that 
reopened and extended the comment period on the November 2003 proposed 
rule stated that APHIS was evaluating the appropriate approach with 
regard to the importation of live animals 30 months of age or older 
from BSE minimal-risk regions, and would address that issue in a 
supplemental rulemaking proposal in the Federal Register. The 
provisions in this proposed rule regarding live bovines are the result 
of that evaluation.
    The regulations established by the January 2005 final rule also 
allow the importation of the following commodities derived from bovines 
of any age: (1) Meat, meat food products, and meat byproducts; (2) 
whole or half carcasses; (3) offal; (4) tallow composed of less than 
0.15 percent insoluble impurities that are not otherwise eligible for 
importation under Sec.  95.4(a)(1)(i) of the regulations; and (5) 
gelatin derived from bones of bovines that is not otherwise eligible 
for importation under Sec.  94.18(c) of the regulations.
    The January 2005 final rule and subsequent amendments did not 
change the regulations concerning the importation of blood and blood 
products from regions listed in Sec.  94.18(a); the requirements for 
the importation of blood and blood products from BSE minimal-risk 
regions remain the same as the requirements for importation of blood 
and blood products from other regions listed in Sec.  94.18(a)--only 
serum and serum albumin are eligible for importation. The January 2005 
final rule also did not change the regulations concerning the 
importation of bovine casings (defined as intestines, stomachs, 
esophagi, and urinary bladders) from regions listed in Sec.  94.18(a); 
the requirements for the importation of bovine casings from BSE 
minimal-risk regions remain the same as the requirements for 
importation of bovine casings from other regions listed in Sec.  in 
94.18(a)--only bovine stomachs are eligible for importation.
    The January 2005 final rule and subsequent amendments allowed trade 
to resume in many, but not all, of the commodities that had been 
prohibited importation from Canada following detection of a BSE-
infected cow in Canada in May 2003. We have continued to consider the 
BSE risk associated with older bovines and other bovine products from 
BSE minimal-risk regions--and Canada in particular--including bovine 
blood and blood products, bovine small intestine other than the distal 
ileum, and bovine casings, which are the subject of this proposed rule.
    Under the Animal Health Protection Act (7 U.S.C. 8301 et seq.), the 
Secretary of Agriculture may prohibit the importation of any animal or 
article if the Secretary determines that the prohibition is necessary 
to prevent the introduction into or dissemination within the United 
States of any pest or disease of livestock. The Secretary has 
determined that it is not necessary to continue to prohibit the 
importation from BSE minimal-risk regions (currently only Canada) of 
live bovines born after the date a feed ban was effectively enforced in 
the region of export, bovine blood or blood products, bovine small 
intestine other than the distal ileum, or bovine casings, provided that 
the conditions described in this proposal are met.\1\ This 
determination is based on a number of factors, which are discussed in 
this document and, in greater detail, in the risk assessment prepared 
for this rulemaking. The risk assessment, and the peer review plan and 
charge for this assessment may be viewed on the Regulations.gov Web 
site or in our reading room. Instructions for accessing Regulations.gov 
and information on the location and hours of the reading room are 
provided under the heading ADDRESSES at the beginning of this proposed 
rule.) In addition, copies may be obtained by calling or writing to the

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individuals listed under FOR FURTHER INFORMATION CONTACT.
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    \1\ The current regulations regarding BSE minimal-risk regions 
apply to bison as well as cattle. In current Sec. Sec.  93.400, 
94.0, and 95.1 of the regulations, bovine is defined as Bos taurus, 
Bos indicus, and Bison bison. Although the research and other data 
cited in this proposed rule refer to bovines other than bison (i.e., 
to ``cattle''), there is no evidence to indicate that the BSE 
susceptibility of bison differs from that of cattle. We therefore 
assume that our conclusions based on cattle-specific evidence 
discussed in this proposed rule are also applicable to bison. Given 
that no cases of BSE have been detected in bison, this is likely a 
cautious assumption. The provisions of this proposed rule would 
apply to bovines as defined in the current regulations, which 
include bison.
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II. BSE and the Government's Role in Protecting Human and Animal Health

A. Nature of BSE

    BSE is a progressive and fatal neurological disorder of cattle that 
results from an unconventional transmissible agent. BSE belongs to the 
family of diseases known as transmissible spongiform encephalopathies 
(TSEs). All TSEs affect the central nervous system of infected animals. 
However, the distribution of infectivity in the body of the animal and 
mode of transmission differ according to the species and TSE agent. In 
addition to BSE, TSEs include, among other diseases, scrapie in sheep 
and goats, chronic wasting disease in deer and elk, and Creutzfeldt-
Jakob disease in humans.
    The agent that causes BSE has yet to be fully characterized. The 
theory that is most accepted in the international scientific community 
is that the agent is an abnormal form of a normal protein known as 
cellular prion protein. The BSE agent does not evoke a traditional 
immune response or inflammatory reaction in host animals. BSE is 
confirmed by post-mortem microscopic examination of an animal's brain 
tissue or by detection of the abnormal form of the prion protein in an 
animal's brain tissues. The pathogenic form of the protein is both less 
soluble and more resistant to degradation than the normal form. The BSE 
agent is resistant to heat and to normal sterilization processes.
    BSE is not a contagious disease, and therefore is not spread 
through casual contact between animals. (The possibility of maternal 
transmission (i.e., from a bovine dam directly to her offspring) was 
suggested by a 1997 study (Ref 1) conducted in the United Kingdom. 
However, subsequent studies have shown that it is unlikely that 
maternal transmission of BSE occurs at any epidemiologically 
significant level, if it occurs at all (Ref 2)). Scientists believe 
that the primary route of transmission requires that cattle ingest feed 
that has been contaminated with a sufficient amount of tissue from an 
infected animal. This route of transmission can be prevented by 
excluding potentially contaminated materials from ruminant feed.

B. U.S. Government's Role in Protecting Human and Animal Health

    Because variant Creutzfeldt-Jakob Disease (vCJD), a chronic and 
fatal neurodegenerative disease of humans, has been linked via 
scientific and epidemiological studies to exposure to the BSE agent, 
most likely through consumption of cattle products contaminated with 
the BSE agent, APHIS collaborates with other Federal agencies to 
implement a coordinated U.S. response to BSE.
    Protecting human and animal health from the risks of BSE is carried 
out on the Federal level primarily by APHIS regarding animal health and 
the Department's Food Safety and Inspection Service (FSIS) regarding 
the food safety of meat and poultry, in coordination with the following 
Centers of the Food and Drug Administration (FDA), U.S. Department of 
Health and Human Services: The Center for Veterinary Medicine regarding 
animal feed and animal drugs; the Center for Food Safety and Applied 
Nutrition regarding foods other than meat, poultry, and egg products; 
the Center for Biologics Evaluation and Research regarding blood and 
blood products and other products; the Center for Drug Evaluation and 
Research regarding drugs containing bovine material; and the Center for 
Devices and Radiological Health regarding devices containing bovine 
material.
    APHIS recognizes that, although Federal agencies may differ 
somewhat in their specific mandates, it is necessary to conduct a 
coordinated Federal effort to safeguard human and animal health. We 
consider it important to base APHIS' regulatory actions on the best 
scientific evidence. Additionally, as the agencies make BSE-related 
documents available for public comment, or otherwise solicit public 
response, the agencies share and discuss information received.
    Of recent note is information solicited and received by FSIS 
between July and October 2006 regarding the 2005 updated Harvard Risk 
Assessment of BSE associated with public health exposure. FSIS 
discussed with APHIS and FDA public comments it received in response to 
a notice of availability (71 FR 39282-39283, Docket No. FSIS-2006-0011, 
published in the Federal Register July 12, 2006) and a public technical 
meeting regarding the risk assessment and the potential of BSE exposure 
and animal health. APHIS has taken relevant comments received into 
consideration with regard to its risk assessment for this proposed 
rule.

III. Commodities Covered by This Proposed Rule

    This rule would amend the APHIS regulations as they apply to the 
importation of the following commodities from BSE minimal-risk regions:
     Live bovines;
     Blood and blood products derived from bovines;
     Small intestine, other than the distal ileum, derived from 
bovines; and
     Casings derived from bovines.
    This part of the Supplementary Information section of this proposed 
rule discusses the risks associated with each commodity, mitigations 
that address the risk, and how we propose to amend the regulations to 
allow the importation of these commodities.

A. Live Bovines

BSE Transmission
    As noted above under ``Nature of BSE,'' oral ingestion of feed 
contaminated with the BSE agent is the only documented route of field 
transmission of BSE (Ref 2 and 3). Several steps must take place for 
BSE to be transmitted to cattle in the United States from a bovine 
imported live from another country. A BSE-infected bovine must be 
imported into the United States; the infected bovine must die or be 
slaughtered; tissues from that animal that contain the infectious agent 
must be sent to a rendering facility; the infectivity present in these 
tissues must survive inactivation in the rendering process; the 
resulting meat-and-bone meal containing the abnormal prion protein must 
be incorporated into feed; and this feed must be fed to cattle at a 
level adequate to infect the cattle. (The amount of infectious material 
required in feed for cattle to become infected is dependent on the age 
of the cattle; younger cattle are more susceptible to BSE and require 
less BSE-contaminated feed to become infected (Ref 4).)
Proposed Regulatory Change; OIE Guideline
    The first step that must occur for BSE to be transmitted to cattle 
in the United States from a BSE-infected bovine imported live into this 
country from a BSE minimal-risk region is that such a bovine must enter 
the United States. Under our current regulations, the risk of such a 
bovine entering the United States is already very low because of the 
APHIS regulatory standards for importation from BSE minimal-risk 
regions.
    In this document, we are proposing to allow the importation of live 
bovines from BSE minimal-risk regions if the animals were born on or 
after a date determined by APHIS to be the date on and after which a 
ruminant-to-ruminant feed ban in the region of export has been 
effectively enforced. Experience around the world in countries with BSE 
has demonstrated that feed bans are

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effective control measures, and that the incidence of BSE worldwide 
continues to decline because of these measures (Ref 5 and 6).
    Because of the demonstrated efficacy of an effectively enforced 
feed ban in reducing the possibility of exposure of cattle to the BSE 
agent, the World Organization for Animal Health (OIE) provides 
guidelines for trade in live cattle from regions that have reported BSE 
if such regions have an effective feed ban in place, provided the 
cattle were born after the date when the feed ban was effectively 
enforced (OIE Terrestrial Animal Health Code, Chapter 2.3.13). The 
condition in this proposed rule for the importation of live bovines 
from BSE minimal-risk regions is consistent with the OIE guideline.
Importance of a Feed Ban in Reducing the Likelihood of BSE Transmission
    By eliminating transmission, an effective feed ban reduces the 
possibility of the existence of infected animals in a given cattle 
population, which in turn reduces even further the chances of healthy 
animals being exposed to the BSE agent via subsequent recycling of 
infectivity.
    Experience in the United Kingdom demonstrates that implementation 
of a ruminant-to-ruminant feed ban causes BSE prevalence to decrease. 
Animal feed restrictions were implemented in the United Kingdom in 
1988, when the use of ruminant meat-and-bone meal (MBM) in ruminant 
animal feed was banned. In September 1990, the use of specified bovine 
offals was banned for use in any animal feed. This ban prohibited the 
use in any animal feed of bovine tissues with the highest potential 
concentration of infectivity. In 1994, the use of mammalian protein--
not just ruminant protein--was banned from ruminant feed. In 1996, 
feeding of any farmed livestock, including fish and horses, with 
mammalian MBM was completely banned. As a result of reducing the 
recycling of infectivity, the annual incidence of BSE fell by 99.4 
percent, from 36,680 in 1992 to 203 in 2005 (Ref 7).
    Although the data presented in the following figure and table 
represent the specific situation in Great Britain during the years 
identified in the graph, there is every reason to expect downward 
pressure on the prevalence of BSE in any country that implements a feed 
ban.
[GRAPHIC] [TIFF OMITTED] TP09JA07.002

Figure 1. Confirmed cases in cattle in Great Britain born after feed 
ban implementation. Note: The first feed ban was implemented in the 
summer of 1988 (before fall calving) (Ref 8).
    The raw data that provided the basis for Figure 1 are reproduced in 
Table 1:

Table 1.--Confirmed Cases in Great Britain by Year of Birth, Where Known
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                            Year                                Cases
------------------------------------------------------------------------
1974.......................................................            1
1975.......................................................            0
1976.......................................................            2
1977.......................................................           10
1978.......................................................            6
1979.......................................................           41
1980.......................................................          102
1981.......................................................          262
1982.......................................................        1,394
1983.......................................................        4,463
1984.......................................................        8,069
1985.......................................................       11,071
1986.......................................................       19,752
1987.......................................................       36,935
1988.......................................................       22,266
1989.......................................................       12,748
1990.......................................................        5,748
1991.......................................................        4,779
1992.......................................................        3,531
1993.......................................................        2,997
1994.......................................................        2,182
1995.......................................................        1,100
1996.......................................................           67
1997.......................................................           45
1998.......................................................           37
1999.......................................................           24
2000.......................................................            6
2001.......................................................            5
2002.......................................................            1
Unknown birth year.........................................       43,342
                                                            ------------
    Total..................................................      180,986
------------------------------------------------------------------------

(Ref 8)
Determining a Date of Effective Enforcement of a Feed Ban
    Under the current regulations, one of the conditions that must be 
met for a region to be recognized by APHIS as a BSE minimal-risk region 
is that the region must have in place a ruminant-to-ruminant feed ban 
that is effectively enforced. APHIS bases its determination

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of whether a region has in place an effectively enforced ruminant-to-
ruminant feed ban on an evaluation of the laws and regulations in place 
in the region, the adequacy of the infrastructure to implement the 
regulations, and the evidence of effective implementation and 
monitoring (i.e., compliance inspections, training and records).
    We are proposing in this rule to require that bovines from a BSE 
minimal-risk region intended for importation into the United States 
have been born on or after the date determined by APHIS to be the date 
of effective enforcement of a ruminant-to-ruminant feed ban in the 
region of export. In determining the date of effective enforcement of a 
feed ban, we believe it is first necessary to consider the amount of 
time, if any, between the regulatory establishment of the feed ban in 
the region of export and the practical implementation of the ban. The 
period of practical implementation can be determined by evaluating 
implementation guidance and policies, such as allowing grace periods 
for certain aspects of the industry. In addition, the time necessary 
for initial education of industry and training of inspectors must be 
considered.
    After the practical implementation period is determined, we believe 
it is then necessary to consider whether, in the region being 
evaluated, an additional period of time was needed to allow most feed 
products to cycle through the system, given the management practices in 
the country.
Feed Ban in Canada
    In conjunction with the rulemaking that resulted in the January 
2005 final rule, APHIS conducted a risk analysis in 2003 and 2004 to 
evaluate the BSE risk from ruminants and ruminant products imported 
from regions presenting a minimal BSE risk, and to evaluate whether 
Canada could be classified as a minimal risk region (Ref 9 and 10). As 
part of the risk analysis, USDA evaluated a series of measures 
introduced in Canada to prevent the feeding of ruminant proteins to 
ruminant animals. USDA considered the compliance activities reported by 
the Canadian Food Inspection Agency (CFIA) as well as epidemiological 
information in concluding that compliance with the feed ban was good, 
and that the feed ban was effectively enforced. In response to the 
detection of two additional BSE cases in Canada, in January 2005, USDA 
reassessed the oversight of Canada's feed ban. Based on review of 
inspection records and on-site observations, USDA confirmed that Canada 
has a robust inspection program, that overall compliance with the feed 
ban is good, and that the feed ban is reducing the risk of transmission 
of BSE in the Canadian cattle population (Ref 11). In addition to the 
USDA audit of the Canadian feed ban, CFIA conducted its own review in 
2005, and concluded that the ban is providing an effective mitigation 
that is contributing to reducing the BSE risk in the country to an 
extremely low level (Ref 12).
Components of the Canadian Feed Ban
    Canada's feed ban came into force on August 4, 1997, when CFIA 
issued regulations prohibiting the use of mammalian protein in ruminant 
feeds as follows: ``Any feed that is, or that contains any prohibited 
material originating from a mammal (with exceptions) shall not be fed 
to a ruminant'' (Ref 12). The ban provided exceptions for milk, blood, 
gelatin, and protein derived solely from porcine or equine sources. 
Canadian feed regulations also prohibit the use of plate waste and 
poultry litter in ruminant feed.
    The feed ban includes requirements for labeling and recordkeeping. 
Feed manufacturers, renderers, retailers, and livestock producers must 
document their production procedures and feeding practices to verify 
their compliance with the feed ban. Feed manufacturers must keep 
records regarding the composition, identity, and distribution of all 
feeds for the species named in the regulations. Renderers, feed 
manufacturers and farmers must take steps to prevent the material 
prohibited under the feed ban from being incorporated into or 
contaminating ruminant feed. To prevent the misfeeding of prohibited 
material to ruminants, users of livestock feed must keep labels or 
invoices from all purchased feeds containing prohibited material; these 
records must be kept for 2 years.
Measures Required at Rendering Facilities
    The rendering industry is important in reducing the risk of 
transmitting BSE infectivity, not only because of its role in 
inactivation of the BSE agent, but also because it serves as a control 
point for the redirection of ruminant protein away from cattle feeds. 
Since 1998, all Canadian rendering facilities have been subject to 
annual inspections and permitting (Ref 11). Three types of permits are 
issued, allowing companies to produce either non-prohibited material 
only, prohibited material only, or both non-prohibited and prohibited 
material (Ref 11). Permitting requires implementation of manufacturing 
controls (such as Good Manufacturing Practices and a risk-based Hazard 
Analysis and Critical Control Point (HACCP) plan, recordkeeping (for 
both production and distribution) and labeling requirements (i.e., ``Do 
not feed to cattle, sheep, deer or other ruminants'' on labels and 
invoices for all prohibited material) directed at preventing cross-
contamination or misfeeding.
Measures to Prevent Contamination of Feed
    As mentioned earlier, renderers, feed manufacturers, and farmers 
must take steps to prevent material prohibited under the feed ban from 
being incorporated into or contaminating ruminant feed. Such 
incorporation or contamination can be prevented by having dedicated 
processing lines or facilities that use only prohibited or non-
prohibited material. If a facility handles both prohibited and non-
prohibited material, procedures must be established and maintained to 
conduct flushing and/or clean-out between batches of product to prevent 
cross-contamination.
    The feed industry in Canada has also taken a number of aggressive 
steps to comply with measures in the feed ban designed to reduce the 
risk of contamination of feed for cattle with prohibited material. 
Recently both the United States and Canada reviewed the changes made to 
industry procedures and governmental inspectional oversight. (Ref 11 
and 12). These reviews demonstrated, for example, that the Canadian 
rendering industry has moved toward establishment of dedicated 
facilities or dedicated processing lines within rendering facilities 
(Ref 11 and 12). Of the 29 rendering facilities in Canada, 6 handle 
both prohibited and non-prohibited material, compared to 13 that 
initially handled both types of material. Of the six, four use 
dedicated processing lines (Ref 12). According to CFIA's reports, the 
feed manufacturing industry has also moved toward dedicated facilities. 
According to the most recent review (March 2005), 94 (17%) of the 550 
commercial feed mills in Canada handled prohibited material and also 
manufactured feeds for ruminants, compared to 120 (22%) in 2002-2003 
(Ref 12). These actions, in addition to the labeling and recordkeeping 
requirements for all products containing prohibited material, decrease 
the likelihood of contamination of ruminant feeds with prohibited 
material.

[[Page 1107]]

Inspections and Compliance
    Following establishment of the feed ban in 1997, CFIA broadened its 
communications with the affected industries and implemented an 
inspection program. This program was introduced in phases. From 1997-
2000, inspection activities focused on integrating the feed ban's 
requirements into standard industry practices. For example, starting in 
1998, rendering facilities were required to pass an annual inspection 
in order to renew their permits to operate. In 2000 and 2001, CFIA 
modified its compliance programs by increasing the frequency of 
inspections of commercial feed mills from once every 3 years to every 
year and by continuing the annual inspection and permitting of all 
rendering facilities. Since 2002, CFIA has been conducting annual 
inspections of all rendering and commercial feed mill facilities and 
some ruminant feeders and retail feed distributors.
Recent Regulatory Amendments in Canada
    In June 2006, CFIA issued amendments to the feed ban regulations in 
Canada to enhance the feed ban in that country. Those amendments 
require, among other things, the removal of potentially BSE-infective 
tissues (specified risk materials, or SRMs) from all animal feeds, pet 
food, and fertilizer. The amendments will not be effective until July 
12, 2007, and, therefore, they are not included in this discussion.
Date of Effective Enforcement of Ruminant-to-Ruminant Feed Ban in 
Canada
    For the purposes of this proposed rule, we have determined a date 
we consider to be the date of effective enforcement of ruminant-to-
ruminant feed ban in Canada, the only country currently recognized by 
APHIS as a BSE minimal-risk region. Although the regulations 
establishing the feed ban in Canada came into force upon their 
publication in August 1997, full implementation and effective 
enforcement was a gradual process. In determining a date when the feed 
ban could be considered to be effectively enforced, we carefully 
considered information drawn from the epidemiological investigations to 
date and the reports noted above under the heading ``Feed Ban in 
Canada.''
    From the outset, CFIA recognized that a phase-in period would be 
required before prohibited materials that were already in feed channels 
would be exhausted and labeling and recordkeeping requirements would be 
met. CFIA estimated that it would take approximately 30 days for feed 
mills and retailers to use up and distribute existing supplies of 
``old'' product; 60 days to add a caution statement to the necessary 
documents; and 60 days for farms to use up their stores of ``old'' 
product (Ref 13). All retailers were given until September 3, 1997, to 
use or distribute feed already produced. Feed manufacturers received a 
grace period until October 3, 1997, to comply with labeling 
requirements. Livestock producers were given a grace period until 
October 3, 1997, to use the feed manufactured and purchased prior to 
the feed ban. However, feed tracing associated with one of the Canadian 
BSE cases suggested that feed produced prior to implementation of the 
feed ban may have been available at feed stores beyond the grace 
period. Therefore, a period of 6 months has been estimated for 
practical implementation of the feed ban, making February 1998 a more 
reasonable baseline from which to assess effective implementation (Ref 
13).
    However, based on our evaluation of the situation in Canada, we 
believe that the feed ban there achieved full efficacy only at some 
time after the practical implementation period. We believe that 
additional time was necessary to allow for most old feed to cycle 
through and out of the system. To evaluate the duration of this time 
frame in Canada, we considered on-farm feeding practices in that 
country. Most cattle producers in Canada do not hold extensive long-
term inventories of purchased feeds on their farms due to limited 
storage space and expense. These practices make it unlikely that feeds 
containing prohibited material were available for more than a few 
months after practical implementation of the feed ban. The possible 
exception is mineral mixes produced before the feed ban that may have 
contained ruminant MBM. Mineral mixes are typically fed daily but in 
very small quantities (grams rather than pounds per day) (Ref 14 and 
15) and may be stored on the farms for longer periods of time. We 
believe, however, that they are not likely to have been purchased for 
use for periods longer than a year.
    Both beef and dairy cattle production can be considered to have an 
annual, or 12-month, calving cycle, in that a cow on a beef or dairy 
farm will generally give birth once a year. Calving occurs among cows 
year-round on Canada's dairy farms to ensure a constant supply of fluid 
milk. Most dairy farms in Canada produce their own forage and grains 
(Ref 16). Forages produced seasonally are stored on the farm to provide 
the basis for the diet fed to dairy cattle of all ages and production 
stages. Protein supplements and specialty feeds, such as mixed calf 
feeds, are typically purchased commercially in quantities to be fed out 
over a few months, because these supplemental feeds are expensive to 
purchase, costly to store, and may deteriorate with time. Typically, 
purchased feeds are available throughout the year with only moderate 
price variations, so there is little incentive for producers to 
maintain large on-farm inventories (Ref 17). The Canadian beef 
production cycle is very seasonal in that cows are bred so that calving 
occurs at the same time of year, generally in the spring (Ref 16). 
Producers are not likely to carry extensive feed inventories from 
season to season (Ref 16 and 18). Therefore, in both Canadian dairy and 
beef production, a 12-month period would generally be sufficient to 
allow purchased feed products that may contain MBM to be completely 
used.
    We arrived at our determination that the Canadian feed ban was 
fully implemented and effectively enforced as of March 1, 1999, by 
adding this additional 12-month period to the 6-month ``practical 
implementation period'' following the August 1997 establishment of the 
feed ban in Canada. We believe that prohibiting the importation of 
bovines from Canada that were born before March 1, 1999, would provide 
an appropriate additional mitigation to what is an already extremely 
low risk of the introduction of BSE from Canada.
Assessment of Risk From Cattle of Canadian Origin
    As noted above, Canada is currently the only country recognized by 
APHIS as a BSE minimal-risk region. In conjunction with this 
rulemaking, we have conducted an assessment that both quantitatively 
and qualitatively addresses the potential BSE risk of importing live 
bovines from Canada.
    Arriving at an estimation of risk begins with laying out the risk 
pathway (a series of occurrences or steps necessary for disease to 
enter and become established). Next, the likelihood of each of the 
multiple steps must be estimated. In our risk assessment, although we 
analyze the likelihood of each individual step in the process 
occurring, we interpret its significance in the context of the entire 
process.
BSE Prevalence in Canada
    One of the conditions for being recognized by APHIS as a BSE 
minimal-risk region is that the region have in

[[Page 1108]]

place and maintain risk mitigation measures adequate to prevent 
widespread exposure and/or establishment of the disease. In classifying 
Canada as a BSE minimal-risk region in our January 2005 final rule, we 
determined that such mitigation measures are in place and are 
maintained in Canada. For the risk assessment for this proposed rule, 
we have made a quantitative estimate of the prevalence of BSE among 
Canadian cattle, using data available to us through August 15, 2006, 
and have used this estimate as part of our quantification of the risk 
of transmission of BSE to U.S. livestock as a result of this rule. Our 
estimate indicates a very low level of BSE prevalence in Canada.
    From the time of detection of the first native case of BSE in 
Canada in 2003, nine cases of Canadian-born BSE-infected cattle have 
been identified, as follows:
     In May 2003, BSE was confirmed in a cow in the Province of 
Alberta. The cow was determined to have been born in March 1997.
     In December 2003, BSE was confirmed in a cow of Canadian 
origin in Washington State. The cow was determined to have been born in 
April 1997.
     In January 2005, BSE was confirmed in two cows in the 
Province of Alberta. One of the cows was determined to have been born 
in October 1996. The other cow was determined to have been born in 
March 1998.
     In January 2006, BSE was confirmed in a cow in the 
Province of Alberta. The cow was determined to have been born in April 
2000.
     In April 2006, BSE was confirmed in a cow in the Province 
of British Columbia. The cow was determined to have been born in April 
2000.
     In June 2006, BSE (of a different phenotype than that in 
the other diagnoses) was confirmed in a cow in the Province of 
Manitoba. The cow was determined to have been born in approximately 
1991.
     In July 2006, BSE was confirmed in a cow in the Province 
of Alberta. The cow was determined to have been born in April 2002.
     In August 2006, BSE was confirmed in a cow in the Province 
of Alberta, which, according to preliminary information available to 
APHIS, was born in 1996.
    Of the nine Canadian-born cows diagnosed with BSE, three were born 
after March 1, 1999, the date we are proposing as the date of effective 
enforcement of a ruminant-to-ruminant feed ban in Canada. This is not 
unexpected, nor do we consider such diagnoses in any way to undercut 
our conclusion that March 1, 1999, can be considered the date of 
effective enforcement of the feed ban in Canada. Experience worldwide 
has demonstrated that, even in countries with an effective feed ban in 
place, BSE has occurred in cattle born after a feed ban was 
implemented. No regulatory effort can ensure 100 percent compliance. 
Isolated incidents, such as feed made from non-prohibited material 
being contaminated with prohibited material during processing, can 
occur due to human error. However, such isolated incidents are not 
epidemiologically significant and do not contribute to further spread 
of BSE, especially when considered in light of the entire risk pathway 
and its attendant risk mitigations.
    Based on our determination that Canada has had in place since March 
1, 1999, an effectively enforced feed ban that continues at a robust 
level, and the demonstrated effectiveness of a feed ban in reducing the 
likelihood of BSE transmission, our expectation is that the prevalence 
of BSE in Canada will continue to decline from its present minimal 
level. As we discuss in our risk assessment for this rulemaking, such a 
decline would decrease any possibility of BSE being introduced into the 
United States by Canadian cattle, and therefore decrease the negligible 
risk of the spread of BSE to U.S. cattle.
    However, in our risk assessment, we also evaluated scenarios that 
are less likely than the one we expect, including no decrease in BSE 
prevalence in Canada over the next 20 years. Even using this extremely 
unlikely scenario, which would mean the continued detection of 
additional BSE--infected Canadian cattle born after March 1, 1999, our 
conclusion is that the BSE risk to U.S. livestock due to implementation 
of this proposed rule would be negligible.
    We used a mathematical model to approximate the proportion of BSE--
infected, but not necessarily clinically diseased, cattle in Canada. 
Our mathematical model is discussed in detail in the risk assessment we 
conducted in conjunction with this proposed rule. Using this 
mathematical model, we estimated that the prevalence of BSE in Canada, 
based on data available as of August 15, 2006, is 6.8 animals per every 
10 million adult cattle. (The current adult cattle population in Canada 
is approximately 5.9 million animals.) In comparison, the same model 
was recently used to estimate the prevalence of BSE in the United 
States. The findings of that analysis supported a conclusion that BSE 
prevalence in the United States is below 1 case per million adult 
cattle, with a most likely estimate for the United States of 1 infected 
animal per 10 million adult cattle (Ref 19).\2\
---------------------------------------------------------------------------

    \2\ The current adult cattle population in the United States is 
approximately 42 million animals.
---------------------------------------------------------------------------

    Our estimate of BSE prevalence in Canada incorporates the United 
Kingdom data on the effectiveness of a feed ban. However, it should be 
noted that the actual prevalence of BSE in Canada is most probably 
lower than our estimate. This is because, where we needed to 
incorporate simplifying assumptions in our calculations, due to data 
uncertainty or the constraints of the mathematical model itself, we 
chose assumptions that, if anything, erred on the side of assuming 
greater prevalence.
    An example of this is the data we used related to the diagnosis of 
BSE in a cow of Canadian origin in Washington State in December 2003. 
Although we incorporated that case into the number of Canadian-born 
cattle that have been diagnosed with BSE--which increased the estimate 
of overall BSE prevalence in Canada--we did not numerically increase 
the total Canadian cattle population by including in that country's 
number of cattle those animals of Canadian origin that had been 
imported into the United States and that tested negative for BSE. If 
those animals had been included in the figure used for the total 
Canadian cattle population, the estimated BSE prevalence would have 
been reduced. Additionally, we did not include in our calculations cows 
that were tested in Canada with negative results as part of 
investigations conducted after the diagnosis of BSE in cows of Canadian 
origin.
Projected Future Prevalence Rates in Canada
    Our qualitative conclusion is that, due to the feed ban in Canada, 
BSE prevalence rates will progressively decline in that country over 
the next 20 years. However, because we could not provide an accurate 
prediction for the rate at which we would expect prevalence to 
decrease, we did not attempt to numerically represent the actual 
expected annual release over the 20 years of our analysis. For example, 
it would be guesswork to attempt to estimate exactly what the 
prevalence of BSE in Canada will be in the year 2012 and to use that 
figure in our mathematical model, even though, qualitatively, we 
consider it very likely that the prevalence will be less than it was in 
August 2006. Therefore, when creating a scenario for our quantitative

[[Page 1109]]

calculations, we assume that the prevalence of BSE in Canada will 
remain the same for each of the next 20 years as it was in August 2006.
BSE Risk From Live Bovines From Minimal-Risk Regions
    BSE prevalence, however, is just one factor that must be considered 
when determining the risk of BSE transmission. Requiring, as this rule 
would do, that live bovines imported into the United States from a BSE 
minimal-risk region be born after the date of effective enforcement of 
a feed ban, would mitigate the risk of exposure of U.S. livestock to 
the BSE agent. As discussed above, such a requirement would be 
consistent with the OIE recommendation to allow trade in live cattle 
from regions that have reported BSE if such regions have an effective 
feed ban in place.
    Moreover and importantly, however, if an infected bovine from a BSE 
minimal-risk region were to be imported into the United States, for 
that bovine to transmit infection to a U.S. cow, each in a series of 
additional mitigations against such transmission would have to fail or 
be breached. The effect of such mitigations, discussed in greater 
detail in our risk assessment, was also discussed in the APHIS risk 
assessment that was conducted for our January 2005 final rule 
establishing the category of BSE minimal-risk regions (Ref 9). In the 
risk assessment for this rulemaking, we assess with regard to imports 
of live bovines from Canada (currently the only region recognized by 
APHIS as a BSE minimal-risk region), using updated data and 
assumptions, the likelihood of that series of mitigations failing if 
this proposed rule were implemented.
    The mitigations that would have to be breached include:
     Slaughter controls and dead animal disposal;
     Rendering inactivation;
     Feed manufacturing and use controls;
     Biologic limitations to susceptibility.
    As discussed in our risk assessments, these mitigations work in a 
series and are multiplicative in their risk-reduction effects; i.e., 
however small the chances that BSE infected material would make it past 
the first mitigation, the likelihood of the material eventually 
infecting a U.S. animal would shrink to a significantly smaller level 
with each subsequent mitigation. The risk assessment for this proposed 
rule simulated the impact of these mitigations on the likelihood of 
exposure, establishment, and spread of BSE infectivity in the United 
States if this proposed rule were to be implemented, and quantified 
those impacts where possible.
    Both qualitative and quantitative methods were used in the exposure 
assessment to evaluate the likelihood of exposing susceptible animals, 
given the release of infectivity via imported bovines. The most likely 
scenario of the release assessment included the assumption that the 
prevalence of BSE in the standing adult cattle population in Canada 
will continuously decrease. As explained earlier, this expected 
decrease could not be incorporated into the quantitative methods and, 
therefore, the possible exposures were assessed qualitatively. This 
qualitative exposure assessment of the most likely scenario of the 
release assessment--decreasing Canadian prevalence--indicates that the 
likelihood of BSE exposure and establishment in the U.S. cattle 
population as a consequence of infectivity in the United States 
introduced via imports from Canada is negligible.
    Even though we concluded that it is most likely that Canadian 
prevalence will decrease, we also considered the less likely scenarios 
and quantitatively analyzed the impact of an assumed constant 
prevalence in Canada to simulate potential BSE exposure in U.S. cattle. 
The quantitative model used in the exposure assessment and its results 
include the much less likely scenario that Canadian BSE prevalence 
remains constant through 2026. Because we believe this situation is 
much less likely to occur, we have concluded that prevalence and 
release and, therefore, the number of infected animals occurring in the 
United States would be lower than the values derived from the 
quantitative exposure model.
    Using a base-case assumption that the August 2006 BSE prevalence 
rate in Canada remains the same over the next 20 years, our 
quantitative model predicts the importation of a total of approximately 
19 infected bovines over that period under the provisions of this 
proposed rule. (As discussed above, however, as a result of 
implementation of an effective feed ban, we expect the already low 
prevalence in Canada to decline over time.) The model further predicts 
that, if 19 infected bovines were imported over a 20-year period, 
approximately 2 U.S. animals would consequently be infected during that 
period due to such importations. (For purposes of comparison, the 
standing U.S. cattle population in 2006 is approximately 97 million 
animals, which would be multiplied over a 20-year period.)
    Of the total number of infected animals predicted over the next 20 
years (i.e., the total of infected imported animals and infected U.S. 
cattle), only a small fraction (numerically, fewer than 1 (0.67)) would 
live long enough to develop clinical signs and be likely to contain 
significant levels of infectivity, due to the lengthy incubation period 
for BSE and the fact that most U.S. cattle are slaughtered before 
reaching the age when infectivity is manifested in clinical signs. Even 
assuming the unlikely event of no decline in the Canadian BSE 
prevalence rate over the next 20 years, the predicted results from our 
risk assessment indicate that, given the nature of BSE and the 
mitigations in place that prevent its transmission in the United 
States, it is highly unlikely that BSE would become established in the 
United States due to implementation of this proposed rule. And, as 
noted, we believe the quantitative component of our risk assessment 
overestimates the likely number of infected animals that would be 
present in the United States over the next 20 years as a result of 
importing cattle from Canada under the provisions of this proposed 
rule.
Sensitivity Analysis to Account for Uncertain Parameters
    In reaching the conclusions discussed above, we used what we 
consider base-case conditions. In order to account for uncertainty, 
however, and to allow for possible divergence from those expected base 
case conditions, we have also done ``sensitivity analyses.'' 
Sensitivity analysis evaluates the degree to which changes in the data 
used in a model affect the model's results. Even assuming a combination 
of pessimistic values (i.e., those generating greater risk than base-
case conditions) for every model parameter used, we concluded that 
factors mitigating BSE risk in the United States (e.g., at slaughter, 
during rendering, regarding feed manufacturing and use, and biological 
factors (the effect of an animal's age on its BSE susceptibility)) 
would prevent BSE amplification in the United States, and that any 
imported infectivity would disappear from the U.S. cattle population. A 
detailed discussion of the sensitivity analyses is contained in our 
risk assessment.
Proposed Regulatory Changes Regarding Live Bovines
    Based on the information available to us, we believe that allowing 
the importation from a BSE minimal-risk region of live bovines born on 
or after the date of effective enforcement of a ruminant-to-ruminant 
feed ban in the region of export would continue to

[[Page 1110]]

protect against the introduction and spread of BSE in the United 
States, while removing unnecessary restrictions on the importation of 
such animals, and are proposing to amend Sec.  93.436(a) of the 
regulations to allow such importations. The regulations would specify 
March 1, 1999, as the date of the effective enforcement a ruminant-to-
ruminant feed ban in Canada, currently the only country recognized by 
APHIS as a BSE minimal-risk region.
    We would remove the requirement in Sec.  93.436(a)(1) of the 
current regulations that live bovines imported from BSE minimal-risk 
regions be less than 30 months of age when imported into the United 
States and when slaughtered. We would additionally remove the 
requirement in Sec.  93.436(a)(1) and (b)(1) that such bovines not be 
pregnant when imported into the United States and the provisions in 
Sec.  93.436 that limit importation to those bovines imported either 
for immediate slaughter or for movement to a feedlot and then to 
slaughter.
Identification and Movement of Live Bovines From BSE Minimal-Risk 
Regions
    Section 93.436 also includes movement restrictions to help ensure 
that all bovines imported from BSE minimal-risk regions are slaughtered 
in the United States before they are 30 months of age. If we remove the 
requirement that the bovines be less than 30 months of age when 
slaughtered, certain of the movement restrictions in Sec.  93.436 would 
no longer be necessary. We are proposing to remove those restrictions 
that would be unnecessary, as discussed below.
Permanent Identification of Bovines Moving to Other Than Immediate 
Slaughter
    Current Sec.  93.436(b)(3) requires that bovines imported from a 
BSE minimal-risk region for other than immediate slaughter (i.e., for 
movement to a feedlot in the United States and then to slaughter) be 
permanently and humanely identified before arrival at the port of entry 
with a distinct and legible mark identifying the exporting country. The 
permanent identification required by the current regulations can be 
either a freeze brand, a hot iron brand, or some other method of 
identification applied to each animal's right hip. In this proposal, we 
retain the requirement that bovines imported from a BSE minimal-risk 
region for other than immediate slaughter be permanently marked to 
identify the exporting country. In the event a bovine from a BSE 
minimal-risk region were to be diagnosed in the United States with BSE, 
such marking would expedite initial identification of the animal's 
country of export. Traceback to the animal's premises of origin would 
then be facilitated by the animal's unique individual identification, 
which is currently required under Sec.  93.436(b)(4) and which would 
continue to be required under the provisions of this proposed rule. 
However, we are proposing to specify an alternative to the requirement 
that the animal be marked on the right hip by freeze brand, hot iron, 
or some other method. (The current regulations allow in a general way 
for alternative means of identification with the Administrator's 
approval, but don't include any specifications for such alternative 
means of identification.)
    We are proposing to specify in Sec.  93.436(b)(2) that, in addition 
to the options for permanent identification already included there, the 
permanent identification of bovines imported from BSE minimal-risk 
regions can be in the form of a tattoo on the inside of one ear of each 
animal that identifies the exporting country. Bovines imported from 
Canada that are identified by tattoo would have to be identified with 
the letters ``CAN''.
    We proposed in our November 2003 proposed rule to limit the 
country-of-export permanent identification to a tattoo. However, 
comments from the public on that proposed rule expressed concern that 
tattoos might become illegible over time, could not be effectively 
monitored without restraining the animal, might become obscured by dirt 
and hair, and are not readily visible--particularly on animals with 
dark-skinned ears. In our January 2005 final rule, we agreed that 
tattoos might not provide readily visible identification of the country 
of origin of bovines, and set forth instead the requirement described 
above.
    We continue to believe that tattoos might not be the most readily 
visible means of identification of live animals in groups of animals. 
However, as noted above, the purpose of requiring permanent 
identification of the animal's country of export in this proposed rule 
is to expedite initial identification of an animal's country of export 
in the event the animal is diagnosed with BSE. Such a diagnosis cannot 
be confirmed on a live animal. Once the animal has been euthanized or 
has otherwise died, an ear tattoo would be an effective means of 
identification.
Sealing of Means of Conveyance and Movement as a Group; Bovines 
Imported for Movement to a Feedlot
    We are proposing to remove the requirement in Sec.  93.436(b)(6) 
that live bovines imported from a BSE minimal-risk region for feeding 
and then slaughter be imported in a means of conveyance sealed in the 
region of origin with seals of the national government of the region 
origin, and be moved directly from the port of entry as a group to a 
feedlot identified on the APHIS movement documentation currently 
required for such animals. Under this proposed rule, the importation of 
bovines from a BSE minimal-risk region would not be dependent on 
whether the animals are less than 30 months of age when imported and 
when slaughtered, but, rather, would be governed by whether the animals 
were born on or after the date of effective enforcement of a ruminant-
to-ruminant feed ban in the exporting region. Once imported, the 
bovines would be handled in the same way as U.S. bovines. Therefore, we 
do not believe it would be necessary to retain the provisions in the 
regulations that were designed to help ensure that bovines from a BSE 
minimal-risk region are moved directly to a feedlot and are handled as 
an easily identifiable group.
Sealing of Means of Conveyance and Movement as a Group; Bovines 
Imported for Immediate Slaughter
    We are also proposing to remove the requirement in Sec.  
93.436(a)(6) that the bovines imported from BSE minimal-risk regions 
for immediate slaughter be slaughtered as a group. However, we would 
continue to require that bovines from Canada imported for immediate 
slaughter be moved directly as a group from the port of entry in a 
sealed means of conveyance. We would require that the means of 
conveyance be sealed at the port of entry with seals of the U.S. 
Government, rather than requiring the sealing to occur in the region of 
export with seals of the national government of the region of export, 
as required in the current regulations. We explain our rationale for 
these proposed provisions in the following paragraphs.
    With regard to BSE, the purpose of requiring in the current 
regulations that bovines from BSE minimal-risk regions that are 
imported for immediate slaughter be moved to the slaughtering 
establishment in a sealed means of conveyance is to guard against 
diversion of any of the animals between the port of entry and the 
slaughtering establishment, in order to ensure that the animals are 
slaughtered as a group

[[Page 1111]]

before 30 months of age. Because this proposed rule would not require 
that the animals be slaughtered before 30 months of age, there would be 
no BSE-related reason to require sealing of the means of conveyance.
    However, we believe it is necessary to continue to require sealing 
of means of conveyance transporting bovines from Canada to immediate 
slaughter as a mitigative measure against diseases other than BSE. 
Cattle imported from Canada for immediate slaughter are not subject to 
tuberculosis and brucellosis testing requirements that would otherwise 
be applied to animals imported into the United States. Therefore, we 
would continue to require that such cattle be moved directly to 
slaughter in a sealed means of conveyance. (APHIS had been requiring 
such sealing at the port of entry even before our November 2003 
proposal regarding BSE. However, the requirement for sealing was being 
done as APHIS policy, and was not specified in the regulations.)
Where Sealing Must Take Place
    We are proposing to remove the requirement that the sealing of the 
means of conveyance be done in the region of export. That requirement 
was included in the January 2005 final rule in response to comments 
from members of the public who expressed concern that requiring sealing 
at the port of entry could be harmful to the welfare and quality of the 
animals, due to delays at the port of entry. Under the provisions of 
this proposed rule, however, we do not expect undue delays of shipments 
at the port of entry. When a means of conveyance carrying bovines for 
immediate slaughter arrives at the U.S. port of entry, APHIS inspectors 
would confirm that the animals are as described on the certificate that 
must accompany the animals being imported, but generally would not 
require that the animals be offloaded from the means of conveyance. 
Therefore, requiring that the sealing of the means of conveyance take 
place at the port of entry would not cause measurable delay of the 
shipment. Further, sealing at the port of entry rather than in the 
region of export will reduce the time the animals will need to be 
contained in a sealed means of conveyance and reduce the likelihood 
that a seal will need to be broken between the time it is applied and 
the arrival of the animals at a slaughtering establishment.
APHIS Form VS 17-130
    Currently, Sec.  93.436(b)(8) requires that bovines imported from 
BSE minimal-risk regions for movement to feeding and then slaughter be 
accompanied from the port of entry to the feedlot by APHIS Form VS 17-
130 or other movement documentation deemed acceptable by the 
Administrator, which must identify the physical location of the 
feedlot, the individual responsible for the movement of the animals, 
and the individual identification of the animal. Because, under this 
proposed rule, bovines imported from a BSE minimal-risk region that are 
not moved for immediate slaughter would not be limited to moving to a 
feedlot and then slaughter, it would no longer be necessary to require 
that the bovines be accompanied by a VS Form 17-130 that identifies the 
feedlot of destination. The other necessary information on the VS Form 
17-130-e.g., the individual responsible for the movement of the animals 
and the individual identification of the animal-is already required on 
the health certificate that must accompany the animals under Sec.  
93.405. Therefore, we are proposing to remove the requirement that live 
bovines imported from BSE minimal-risk regions for other than immediate 
slaughter be accompanied by VS Form 17-130.
Transport From Feedlots to Slaughter
    We are proposing to remove the requirement in Sec.  93.436(b)(9) 
that the bovines imported from BSE minimal-risk regions for other than 
immediate slaughter remain at a feedlot until transported from the 
feedlot to a recognized slaughtering establishment for slaughter, and 
we are proposing to remove the requirement in Sec.  93.436(b)(10) that 
the bovines be moved directly from the feedlot to a recognized 
slaughtering establishment in conveyances sealed at the feedlot with 
seals of the U.S. Government. We are also proposing to remove the 
requirement in Sec.  93.436(b)(11) that the bovines be accompanied from 
the feedlot to a recognized slaughtering establishment by APHIS Form VS 
1-27 or other movement documentation deemed acceptable by the 
Administrator, identifying the physical location of the recognized 
slaughtering establishment, the individual responsible for the movement 
of the animals, and the individual identification of the animal. This 
requirement would not be necessary because, under this proposed rule, 
cattle imported for other than immediate slaughter would not be limited 
to those less than 30 months of age that are moved directly to a 
feedlot and then to slaughter.
Immediate Slaughter
    Section 93.420 contains provisions regarding the importation of 
ruminants from Canada for immediate slaughter, and applies to all 
ruminants from Canada imported for immediate slaughter, including 
sheep, goats, bovines, and other types of ruminants. However, as 
applied to sheep, goats, and bovines, many of the requirements in Sec.  
93.420 are duplicative of provisions set forth in Sec.  93.419 for 
sheep and goats and in Sec.  93.436 for bovines. Because the majority 
of provisions in the current regulations regarding the importation of 
bovines and sheep and goats from Canada for immediate slaughter are 
contained in Sec.  93.436 and Sec.  93.419, respectively, we are 
proposing to rewrite Sec.  93.420 so that it applies only to ruminants 
imported from Canada for immediate slaughter other than bovines, sheep, 
and goats. Any provisions of current Sec.  93.420 that are still 
applicable to bovines, sheep, and goats under this proposed rule and 
that do not already appear in Sec.  93.436 or Sec.  93.419 would be 
moved to those sections. 9 CFR 93.405.
    In accordance with Sec.  93.405 of the regulations, bovines, sheep, 
and goats imported from BSE minimal-risk regions must be accompanied by 
a health certificate. Among the information that must be recorded on 
the health certificate is the specific physical location of the feedlot 
or recognized slaughtering establishment where the ruminants are to be 
moved after importation. Because, under this proposed rule, bovines 
imported from BSE minimal-risk regions would not be limited to moving 
to a feedlot or slaughtering establishment, we are proposing to change 
that provision in Sec.  93.405(a)(4) to refer to ``destination,'' 
rather than to ``feedlot or recognized slaughtering establishment.''

B. Bovine Blood and Blood Products

    Blood and blood products can be divided into two main groups:
    1. In addition to whole blood, those products derived from blood 
that are composed of cells, such as red cell concentrate and platelets; 
and
    2. Plasma (that portion of blood that is cell-free) and products 
derived from plasma, such as serum (plasma with fibrinogen and clotting 
factors removed), clotting factors, immunoglobins and albumin (Ref 20).
    Fetal bovine serum (FBS) is the most commonly imported blood-
derived commodity. FBS is serum derived from blood of bovine fetuses. 
As serum, it is the cell-free portion of blood with fibrinogen and 
clotting factors removed. It is used in tissue culture media,

[[Page 1112]]

including those used to produce pharmaceuticals and biological 
products, such as vaccines, and cannot be derived synthetically.
BSE Risk Associated With Bovine Blood and Blood Products From BSE 
Minimal-Risk Regions
    Our January 2005 final rule did not include provisions for the 
importation of bovine blood and blood products from BSE minimal-risk 
regions. We considered it advisable at the time to continue to prohibit 
the importation of blood and blood products from such regions (with the 
exception of those commodities that were already allowed to be imported 
for restricted use from BSE-affected regions under Sec.  95.4(b) and 
(d)).
    In consultation with FDA, we have continued to assess the risk of 
BSE from blood and blood products from BSE minimal-risk regions. Based 
on the conclusions of our assessment, we are proposing to amend the 
regulations in Sec.  95.4 to allow the importation of blood and blood 
products from such regions under specified conditions, which we discuss 
below.
    Consistent with the approach of the risk assessment conducted for 
this proposed rule with regard to live animals and bovine small 
intestine, the risk estimation for blood and blood products relies on a 
comprehensive understanding of the multiple steps in the risk pathway. 
Thus, to understand the likelihood of BSE spreading and becoming 
established in the United States as a result of importing blood and 
blood products from a BSE minimal-risk region (currently only Canada), 
we examine the entire risk pathway. We evaluate the evidence from 
research to date--including research that has not detected infectivity 
in bovine blood and research in other species where infectivity has 
been detected--in the context of this larger risk pathway. Analysis of 
this risk pathway, discussed below, is the basis for our proposal to 
allow, under specified conditions, the importation of blood and blood 
products derived from bovines from BSE minimal-risk regions.
    One of the conditions for being recognized by APHIS as a BSE 
minimal-risk region is that the region have in place and enforce risk 
mitigation measures adequate to prevent widespread exposure and/or 
establishment of the disease, so that, even if one of the very few 
infected bovines in a BSE minimal-risk region were a source of imported 
blood or blood products, additional factors would act to further 
diminish the likelihood of the BSE agent's entering the United States 
in bovine blood or blood products.
    Perhaps the most important factor is that, in research using 
infected bovines, infectivity has not been detected in cattle blood or 
any tested derivatives (Ref 21). This finding is applicable to clotted 
blood and fetal calf blood, and to products derived from whole blood, 
such as serum or buffy coat (the white cell fraction of centrifuged 
whole blood). As noted below, research in other species with BSE or 
other TSE agents has demonstrated infectivity in blood, and we use 
these studies to further inform our risk assessment. In addition, 
because blood components--such as FBS and bovine serum albumin (BSA)--
are used in the manufacture of vaccines, it is worthwhile to address 
injection vs. oral consumption as a route of exposure.
    Injection presents a different risk pathway than does oral 
consumption of BSE-contaminated bovine materials. The route of exposure 
can affect the risk of disease transmission. The relative efficiencies 
of different transmission routes of BSE have been reported to be, in 
decreasing order, intracerebral (injecting directly into the brain), 
intravenous (injecting directly into a vein), intraperitoneal (injected 
directly into the abdominal cavity), subcutaneous/intramuscular 
(injecting below the skin and/or into a muscle), and oral. It is 
estimated that the subcutaneous/intramuscular route of transmission 
requires 10 times the dose of a TSE agent to cause infection as does 
the intracerebral route and that oral/intragastric transmission 
requires 10 times the dose needed for subcutaneous/intramuscular 
transmission. In other words, injection of a BSE agent into an animal 
is a more efficient way of transmitting the disease agent to that 
animal than getting it into the animal through its food.
    The difficulty in examining the possibility of BSE transmission 
through injection is that BSE infectivity has not been detected in 
unprocessed bovine blood. We generally avoid extrapolating from studies 
of TSEs other than BSE in species other than bovines; however, in order 
to consider the only available evidence, we elected to use such studies 
as potential indicators of the behavior of BSE in cattle blood if, 
contrary to current evidence, it were to be present at previously 
undetectable levels. These studies are discussed in detail in our risk 
assessment.
    It is important to restate that no studies have demonstrated BSE 
infectivity in bovine blood and that we considered studies that 
involved TSEs other than BSE and species other than bovines. If, 
contrary to current research, BSE infectivity were to be distributed in 
bovine blood, research indicates that the BSE infectivity would likely 
be highest in the cellular components of the blood. These cellular 
fractions of the whole blood, both red and white cells, are excluded 
from the blood when harvesting FBS and BSA for use in the preparation 
of vaccines and drugs.
    Another component of the pathway of interest consists of the ways 
in which bovine blood that is collected might in some way become 
contaminated with SRMs at the time of collection, particularly in a 
slaughter environment. To guard against such possible contamination, it 
would be necessary to collect the blood in a closed system (a system in 
which the blood is conveyed directly from the animal in a closed 
conduit to a closed receptacle) or in an otherwise hygienic manner. 
Additionally, to prevent blood collected from a fetal calf from 
becoming contaminated with SRMs, the uterus from a slaughtered dam 
should be removed intact and taken to a separate area away from the 
slaughtering area of the facility. Further, pithing or use of air 
injection stunning devices at slaughter could cause macro-emboli from 
higher risk tissues from the animal's central nervous system to be 
introduced into the animal's circulatory system. Prohibiting the use of 
these processes is necessary to prevent contamination of the blood.
Proposed Regulatory Changes Regarding Blood and Blood Products
    Currently, the regulations in Sec.  95.4 specify that only the 
following blood products for the following uses are eligible for 
importation from any region listed in Sec.  94.18(a) (including (a)(1) 
through (a)(3)), based on the fact that the manner in which they are 
used makes it highly unlikely they will come in contact with ruminants 
in the United States:
     Under Sec.  95.4(b), serum derived from ruminants that 
have been in any region listed in Sec.  94.18(a) may be imported into 
the United States for scientific, educational, or research purposes if 
the APHIS Administrator determines that the importation can be made 
under conditions that will prevent the introduction of BSE into United 
States. Such serum is allowed importation into the United States only 
if it is accompanied by an import permit issued by APHIS in accordance 
with 9 CFR 104.4 (a U.S. Veterinary Biological Product Permit), and 
must be moved and handled as specified on the permit.
     Under Sec.  95.4(d), serum albumin (a blood plasma 
protein) derived from

[[Page 1113]]

ruminants that have been in any region listed in Sec.  94.18(a) may be 
imported into the United States for use as an ingredient in cosmetics 
(provided FDA import requirements are also met), if the person 
importing the article obtains a United States Veterinary Permit for 
Importation and Transportation of Controlled Materials and Organisms 
and Vectors, which states the intended use of the article and the name 
and address of the consignee in the United States.
    All other serum and serum albumin from regions listed in Sec.  
94.18(a) is prohibited importation into the United States.
    The regulations in Sec.  95.4 regarding BSE do not specifically 
reference blood and blood products other than those described above--
either to prohibit or to allow their importation--largely because 
commercial interest in importing blood products from regions listed in 
Sec.  94.18(a) has focused on serum and serum albumin. By policy, 
however, APHIS has prohibited the importation of any blood and blood 
products from Sec.  94.18(a) regions, other than those described above.
    Based on our evaluation of the BSE risk associated with bovine 
blood and blood products from BSE minimal-risk regions, we believe that 
bovine blood and blood products may be imported from BSE minimal-risk 
regions if properly protected against contamination. We are, therefore, 
proposing the following changes to the regulations at Sec.  95.4(e).
    In general, blood collected from bovines can be obtained in one of 
three ways: It can be collected from an animal that has been 
slaughtered, it can be collected from a live donor animal (similar to 
human blood collection), and it can be collected from the fetal calf of 
a bovine dam that has been slaughtered.
    For all of the above three manners of collection, we would require 
that the blood be collected in a closed system or in an otherwise 
hygienic manner that prevents contamination of the blood with SRMs. 
This requirement is necessary to ensure that the blood is not 
contaminated after collection.
Prohibited Methods of Stunning
    When a bovine is slaughtered as part of the process of blood 
collection, we would require in Sec.  95.4(e)(1)(ii) and (e)(2)(ii) 
that the slaughtered animal was not subjected to a stunning process 
with a device injecting compressed air or gas into the cranial cavity, 
or subjected to a pithing process. Either of those processes create the 
possibility that macro-emboli from higher risk tissues from the 
animal's central nervous system might be introduced into the animal's 
circulatory system.
Fetal Calves
    For blood collected from a fetal calf, we would require in Sec.  
95.4(e)(2)(iii) that the uterus be removed from the slaughtered dam's 
abdominal cavity intact and taken to a separate area sufficiently 
removed from the slaughtering area of the facility to ensure that the 
fetal blood is not contaminated with SRMs when collected.
Animal Health Requirements
    Also, although it is extremely unlikely that any given bovine in a 
BSE minimal-risk region would be infected with BSE, because of the 
often undifferentiated clinical signs of BSE (i.e., clinical signs that 
could be attributed to either BSE or some other disease(s)), we 
consider it prudent to disqualify from importation into the United 
States blood and blood products drawn from live bovines showing signs 
of any type of disease. Therefore, we would require in Sec.  
95.4(e)(1)(ii) and (e)(2)(ii) that bovines slaughtered as part of the 
process of collection (e.g., when blood is collected directly from the 
slaughtered animal or from the fetal calf of a slaughtered dam) have 
passed ante-mortem inspection to ensure that the animals are clinically 
normal and have no obvious signs of disease. If the blood is collected 
from a live bovine donor, the donor animal must be free of clinical 
signs of disease.
    We are proposing to add language to Sec.  95.4 to prohibit the 
importation of the blood and blood products and derivatives of blood 
and blood products, except as specifically provided in Sec.  95.4. This 
would codify current policy.
Required Certification
    We would require in Sec.  95.4 that the shipment of blood or blood 
products to the United States be accompanied by an original certificate 
signed by a full-time salaried veterinary officer of the national 
government of the region of origin, or issued by a veterinarian 
designated by or accredited by the national government of the region of 
origin, attesting that the veterinarian issuing the certificate was 
authorized to do so. The certificate must state that the applicable 
requirements of Sec.  95.4 have been met.

C. Small Intestine of Bovines

    The requirement established in the January 2005 final rule for 
removal of the entire small intestine of bovines from BSE minimal-risk 
regions was consistent with the FSIS regulations at that time, which 
govern the slaughter of animals in the United States for meat and meat 
products for human consumption. The FSIS regulations also apply to 
slaughtering establishments in other countries that wish to export meat 
to the United States. FSIS regulations (9 CFR 327.2) provide that a 
country can be considered eligible to export meat and meat products to 
the United States only if it maintains a meat inspection program 
equivalent to that of the United States. A country must demonstrate 
``equivalence'' by implementing measures that provide the same level of 
protection against food hazards as is achieved domestically. FSIS 
conducts audits of eligible foreign countries' meat inspection systems 
at least annually. At the time of our January 2005 final rule, FSIS 
required that the entire small intestine be removed and be disposed of 
as inedible, in order to ensure removal of the entire distal ileum.
Research Regarding BSE and the Gastrointestinal System of Cattle
    As discussed in our risk assessment for this proposed rule, in 
studies regarding the pathogenesis of BSE in the gastrointestinal 
system of cattle experimentally and naturally exposed to the BSE agent, 
no BSE infectivity was detected at any time in the esophagus, 
reticulum, rumen, abomasum, proximal small intestine, proximal colon, 
distal colon, and rectum (Ref 21). The studies demonstrated that, if 
infectivity in intestinal tissues of bovines (other than distal ileum) 
exists, it is below the level of detection by mouse bioassay (i.e., the 
insertion of tissue with infectivity from a bovine into a mouse). Based 
on these studies, we have concluded that intestine other than the 
distal ileum is highly unlikely to contain epidemiologically 
significant levels of infectivity, if any infectivity is present at 
all.
    These studies have been compelling to the international scientific 
community, and the OIE has based international trade guidelines on the 
likelihood that the distal ileum, but not the remainder of the bovine 
intestine, is a potential source of BSE infectivity. The distal ileum 
is the only portion of the bovine intestine for which OIE recommends 
any trade restrictions because of BSE.
FSIS and FDA Regulations Regarding the Small Intestine
    On September 7, 2005, FSIS published in the Federal Register an 
interim final rule that allowed for use as human food, under certain 
conditions, beef small intestine, excluding the distal ileum, derived 
from cattle slaughtered in official U.S. establishments or in

[[Page 1114]]

certified foreign establishments in countries listed by FSIS in 9 CFR 
327.2(b) as eligible to export meat products to the United States (Ref 
22). FSIS also provided that it will permit casings derived from beef 
small intestine, excluding the distal ileum, to be used as containers 
of meat food products only if the casings are derived from cattle that 
have been inspected and passed in an official U.S. establishment or a 
certified foreign establishment.
    Also on September 7, 2005, FDA published an interim final rule (Ref 
23) and request for comments in which it provided that small intestine 
is not considered a prohibited cattle material if the distal ileum is 
removed by a qualifying procedure. FSIS imposed a similar requirement 
in its interim rule.
    The small intestine of cattle attaches at its most proximal end 
(closest to the mouth) to the most distal (closest to the anus) chamber 
of the ruminant stomach. The most proximal segment of small intestine 
is the duodenum. Distal to the duodenum is the very long jejunum. The 
duodenum and jejunum are used for natural beef casings. Distal to the 
jejunum is the ileum, which is estimated to be 2- to 3-feet long (Ref 
24). The distal-most portion of the ileum, or ``distal ileum,'' is 
estimated to be 12- to 18-inches long. It attaches at the most proximal 
portion of the large intestine, the cecum, at what is termed the 
``ileocecal junction'' or ``ileocecal orifice.'' Just distal to the 
ileocecal junction is the cecocolic junction.
    FSIS and FDA have determined that the distal ileum can be 
effectively removed from the rest of the small intestine (Ref 22 and 
23). They have also determined that the remaining small intestine can 
be used as human food if the distal ileum is removed (Ref 22 and 23). 
To ensure complete removal of the distal ileum, both FSIS and FDA 
require the removal of at least 80 inches of the uncoiled and trimmed 
small intestine as measured from the cecocolic junction, unless the 
processing establishment has demonstrated that an alternative method is 
effective in ensuring complete removal of the distal ileum. Based on 
bovine anatomy as described above, we concur that removal of at least 
80 inches of the uncoiled and trimmed small intestine as measured from 
the cecocolic junction will remove the distal ileum.
Proposed Regulatory Changes Regarding Bovine Small Intestine
    In our January 2005 final rule, we provided in Sec.  94.19 that one 
of the conditions for the importation of meat, meat byproducts, and 
meat food products derived from bovines from BSE minimal-risk regions 
is that the commodity have been derived from bovines from which the 
SRMs were removed at slaughter. This same condition is set forth in 
Sec.  95.4(g) with regard to offal derived from bovines from BSE 
minimal-risk regions.
    The regulations at Sec.  94.19 also require, in addition to the 
removal of SRMs, the removal of the entire small intestine, even though 
only part of the small intestine (the distal ileum) has been determined 
to be an SRM.
    Because it is possible to effectively separate and remove the 
distal ileum from the remainder of a bovine's small intestine, we are 
proposing to remove the requirements in Sec.  94.19(a)(2), (b)(2), and 
(f) that bovine meat, meat byproducts, meat food products, and whole or 
half carcasses intended for importation from BSE minimal-risk regions 
be derived from animals from which the entire small intestine was 
removed at slaughter. We would require instead only that SRMs have been 
removed. (Under FSIS regulations, in effect, the distal ileum SRM 
includes 80 inches of the uncoiled and trimmed small intestine as 
measured from the cecocolic junction, unless the processing 
establishment has demonstrated that an alternative method is effective 
in ensuring complete removal of the distal ileum.) Similarly, we are 
proposing to remove the importation condition in Sec.  95.4(g)(1)(i) 
(which we are proposing in this document to redesignate as Sec.  
95.4(h)(1)(i)) that offal derived from bovines from BSE minimal-risk 
regions be derived from animals from which the small intestine was 
removed, and would provide instead that the offal must have been 
derived from bovines from which SRMs were removed.

D. Bovine Casings

    Currently, Sec.  96.2(b) prohibits the importation of casings, 
except stomachs, from bovines and other ruminants that originated in or 
were processed in any region listed in Sec.  94.18(a), which includes 
BSE minimal-risk regions. In Sec.  96.1, animal casings are defined as 
intestines, stomachs, esophagi, and urinary bladders from cattle, 
sheep, swine, or goats that are used to encase processed meats in foods 
such as sausage.
    As explained above, only the distal ileum of the small intestine of 
bovines presents a BSE risk, and FSIS and FDA have established 
procedures for effective removal of the distal ileum from the remainder 
of the small intestine. There is no scientific evidence of BSE 
infectivity in ruminant esophagi or urinary bladders.
Proposed Regulatory Changes Regarding Bovine Casings
    Therefore, we are proposing to amend Sec.  96.2 of the regulations 
to allow the importation of casings derived from bovines from BSE 
minimal-risk regions if the casings are derived from that part of the 
small intestine that is eligible for use as human food in accordance 
with the requirements established by FSIS at 9 CFR 310.22 and FDA at 21 
CFR 189.5 and 21 CFR 700.27. We are also proposing to allow the 
importation from BSE minimal-risk regions of casings derived from 
bovine esophagi and urinary bladders.
Executive Order 12866 and Regulatory Flexibility Act
    This proposed rule has been reviewed under Executive Order 12866. 
The rule has been determined to be economically significant for the 
purposes of Executive Order 12866 and, therefore, has been reviewed by 
the Office of Management and Budget.
    Under the Animal Health Protection Act of 2002 (7 U.S.C. 8301 et 
seq.), the Secretary of Agriculture is authorized to promulgate 
regulations if he or she determines that the regulations are necessary 
to prevent the introduction into or dissemination within the United 
States of any pest or disease of livestock.
    This proposed rule would amend the regulations by establishing 
conditions for the importation of the following commodities from 
regions that present a minimal risk of introducing BSE into the United 
States: Live bovines for any use born on or after a date determined by 
APHIS to be the date of effective enforcement of a ruminant-to-ruminant 
feed ban in the region of export (for live bovines from Canada, that 
date is March 1, 1999); blood and blood products derived from bovines; 
and casings and part of the small intestine derived from bovines.
    In accordance with Executive Order 12866 and the Regulatory 
Flexibility Act, we assessed the potential economic costs and benefits 
of this rule and potential effects on small entities. Below is a 
summary of our economic analysis. The full economic analysis may be 
viewed on the Regulations.gov Web site or in our reading room. 
(Instructions for accessing Regulations.gov and information on the 
location and hours of the reading room are provided under the heading 
ADDRESSES at the beginning of this proposed rule.) In addition, copies 
may be obtained by calling or writing to the individuals listed under 
FOR FURTHER INFORMATION CONTACT.
    We do not have enough data for a comprehensive analysis of the 
potential

[[Page 1115]]

economic effects of this proposed rule on small entities. Therefore, in 
accordance with 5 U.S.C. 603, we have performed an initial regulatory 
flexibility analysis for this proposed rule. We are inviting comments 
about this proposed rule as it relates to small entities. In 
particular, we are interested in determining the number and type of 
small entities that would incur benefits or costs from the 
implementation of this proposed rule and the economic effect of those 
benefits or costs.

The Proposed Rule and This Analysis

    The purpose of this proposed rule is to remove certain restrictions 
on the importation of certain bovine commodities from BSE minimal-risk 
regions. APHIS has determined that the restrictions are unwarranted to 
prevent the introduction and dissemination of BSE into the United 
States from such regions.
    The risk assessment for this proposed rule analyzes the likelihood 
that importing those commodities from Canada would introduce and 
disseminate BSE into the U.S. cattle population. The likelihood of 
release (introduction of the disease agent), the likelihood of exposure 
for susceptible animals given release, and the magnitude of 
consequences given release and exposure are evaluated either 
quantitatively or qualitatively. The risk estimation that combines 
these components concludes that the BSE risk posed by the proposed rule 
would be negligible.
    This preliminary regulatory impact analysis addresses expected 
economic effects of allowing resumption of imports from Canada of the 
commodities listed above. Expected benefits and costs are examined in 
accordance with Executive Order 12866. Expected economic impacts for 
small entities are also considered, as required by the Regulatory 
Flexibility Act. Effects for Canadian and other foreign entities are 
not addressed in this analysis. However, the Agency expects 
reestablished access to U.S. markets to benefit Canadian producers and 
suppliers of commodities included in the proposed rule and, for at 
least one commodity, cull cattle/processing beef, to result in partial 
displacement of processing beef imports from other sources.

Analytical Approach

    We expect the proposed rule to have effects for several different 
categories of commodities, and benefits to exceed costs overall. Using 
projected baseline data for the United States and projected imports 
from Canada with and without the rule, we compute impacts for four 
commodity categories: Cull cattle/processing beef would be the 
commodity primarily affected, due to the resumption of cull cattle 
imports from Canada; and feeder cattle, fed cattle, and fed beef would 
be affected secondarily, as Canada's slaughter mix adjusts to 
reestablished exports of culled cows, bulls, and stags to the United 
States.
    The demand for cull cattle is derived from the demand for 
processing beef, and only a small portion of the U.S. supply of 
processing beef would come from imported Canadian cull cattle. 
Therefore, cull cattle and processing beef are combined into a single 
commodity category. Processing beef refers to lean, boneless beef that 
is mixed with trimmings from grain-fed cattle to produce ground beef, 
thereby complementing the domestic production of fed beef. Demand for 
processing beef is high, as reflected in robust ground beef sales. 
Despite higher domestic cull cattle slaughter in past months in 
response to drought conditions, U.S. production of processing beef is 
currently trending low because the industry is in the early stages of 
the expansion phase of the cattle cycle.
    Historically, Canada has been a major trading partner of the United 
States in livestock and meat. In 2002, prior to the discovery of BSE in 
Canada, the United States imported 1.7 million live bovines from 
Canada, valued at more than $1.1 billion and accounting for more than 
67 percent of U.S. total bovine imports. That same year, the United 
States imported from Canada 382,110 MT of bovine meat, also valued at 
$1.1 billion, which comprised about 44 percent of bovine meat imports 
from all sources. U.S.-Canadian cattle and beef trade changed 
dramatically following Canada's May 2003 BSE discovery. Canada's cattle 
population increased rapidly following the loss of export markets for 
its cattle and beef. Its excess cow population and the strong U.S. 
demand for cull cattle/processing beef underlie imports of Canadian 
cull cattle expected to occur with this rule.
    We evaluate welfare impacts of the proposed rule for cull cattle/
processing beef, feeder cattle, fed cattle, and fed beef using a net 
trade, non-spatial partial equilibrium model.\3\ Present and annualized 
values of welfare gains and losses for the 5-year period, 2007-2011, 
are computed using 3 percent and 7 percent discount rates. The present 
and annualized values are expressed in 2006 and 2001 dollars.
---------------------------------------------------------------------------

    \3\ A complete description of the model is provided in: 
Forsythe, K.W. ``An Economic Model for Routine Analysis of the 
Welfare Effects of Regulatory Changes.'' V3.00. U.S. Department of 
Agriculture, Animal and Plant Health Inspection Service, Veterinary 
Services, Centers for Epidemiology and Animal Health, April 20, 2005 
(draft). It can be found at http://www.aphis.usda.gov/peer_review/content/printable_version/bas_model_econOnly_apr20.pdf.
---------------------------------------------------------------------------

    For five other commodity categories--breeding cattle, vealers and 
slaughter calves, bison, bovine casings and small intestine products, 
and bovine blood and blood products--we do not quantitatively model 
expected effects of the proposed rule. For the first three of these 
categories, changes in import quantities projected under the proposed 
rule are very small, suggesting that impacts for U.S. entities would 
not be significant. For bovine casings, small intestine products, and 
blood and blood products, insufficient information about the 
commodities and quantities that would be imported and levels of U.S. 
production and consumption prevents us from modeling expected effects 
of the rule.

Price and Quantity Impacts for the Modeled Commodities

    The proposed rule is expected to result in the resumption of cull 
cattle imports from Canada. In addition, declines in imports of feeder 
cattle, fed cattle, and fed beef are expected to occur as a result of 
the resumption of cull cattle imports affecting the slaughter mix in 
Canada. The baseline, along with the projected changes, are presented 
in Table VIII, below. Relative prices highlight the different 
situations for the Canadian and U.S. cull cattle markets. For example, 
in September, 2006, the price of slaughter cows in Canada was only 70 
percent of the comparable U.S. price.
    Cull cattle/processing beef. With the rule, imports of cull cattle 
from Canada would result in price declines for processing beef. Over 
the period of analysis, the annual decrease in the price of processing 
beef, all things equal, is expected to average about 4.3 percent, 
ranging from declines of $5 per cwt (hundredweight, 100 pounds) in 
2007, to $3 per cwt in 2009. In response to this price effect, 
wholesale demand for processing beef would increase by an average of 
about 114 million pounds per year over the period of analysis, and 
domestic supply would decrease by an annual average of about 131 
million pounds.
    Feeder cattle, fed cattle, and fed beef. Imports of feeder cattle, 
fed cattle, and fed beef are projected to decrease because of the rule. 
Of these commodities affected secondarily, the

[[Page 1116]]

largest impacts would be for feeder cattle. We estimate that the price 
of feeder cattle would increase in 2007 by about 0.3 percent, from $733 
to about $735 per head in 2006 dollars. Over the 5-year period of 
analysis, the annual increase in feeder cattle prices attributable to 
the proposed rule, all things equal, is expected to average about 0.6 
percent, ranging from about $2.20 per head in 2007, to about $4.60 per 
head in 2010. In response to these price increases, there would be an 
average annual decrease in the demand for feeder cattle of about 
152,000 head over the period of analysis, and an average annual 
increase in domestic supply of about 66,000 head.
    For fed cattle, our analysis indicates that the price would 
increase by less than 0.1 percent in 2007. Over the 5-year period, the 
annual increase in fed cattle prices attributable to the proposed rule, 
all things equal, is expected to average less than 0.2 percent, ranging 
in 2006 dollars from 35 cents per head in 2007, to about $1.90 per head 
in 2009. We estimate that these small changes in price would cause the 
demand for fed cattle to decrease by an average of about 33,000 head 
per year and the domestic supply of fed cattle to increase by an 
average of 26,000 head per year.
    Impacts of the proposed rule for fed beef are expected to be very 
small, with the price increasing in 2007 by less than 0.3 percent, or 
about 36 cents per cwt carcass weight equivalent from a base price of 
$142. Over the 5-year period of analysis, the increase in fed beef 
prices, all things equal, is expected to average less than 0.1 percent, 
with no effect projected for the last 3 years.
    Clearly, the largest price effects would result from the resumption 
of cull cattle imports from Canada, an expected outcome matched by 
estimated welfare impacts.

Welfare Effects for the Modeled Commodities

    In this analysis, consumption and production have commodity-
specific definitions that differ from their commonly understood 
meanings. These definitions are central to interpreting the changes in 
welfare, and are shown in Table I. They imply that the proposed rule 
may have mixed effects for at least some entities in the affected 
industries.

    Table I.--Definitions of Consumers and Producers for the Modeled
                          Commodity Categories
------------------------------------------------------------------------
       Commodity category              Consumers           Producers
------------------------------------------------------------------------
Feeder cattle...................  Buyers of cattle    Sellers of U.S.-
                                   for feedlot         raised cattle for
                                   feeding in the      feedlot feeding
                                   United States.      in the United
                                                       States.
Fed cattle......................  Buyers of fed       Sellers of U.S.-
                                   cattle for          sourced fed
                                   slaughter in the    cattle for
                                   United States.      slaughter in the
                                                       United States.
Cull cattle/processing beef.....  U.S. buyers of      Sellers of U.S.-
                                   processing beef     produced
                                   at the wholesale    processing beef
                                   level.              at the wholesale
                                                       level.
Fed beef........................  U.S. buyers of fed  Sellers of U.S.-
                                   beef at the         produced fed beef
                                   wholesale level.    at the wholesale
                                                       level.
------------------------------------------------------------------------

    Cull cattle/processing beef. Projected cull cattle imports from 
Canada are converted to their processing beef equivalent using 
projected carcass weights for cows, bulls, and stags, as shown in the 
note to Table II. Consumers (buyers of processing beef at the wholesale 
level) can be expected to benefit from welfare gains and producers 
(sellers of processing beef at the wholesale level) can be expected to 
bear welfare losses due to the cull cattle imports. The present value 
of the welfare changes in 2006 dollars when using a 3 percent discount 
rate would be $1.24 billion in consumer gains, $657 million in producer 
losses, for a net benefit of about $587 million. Annualized values over 
the 5 years, in 2006 dollars when using a 3 percent discount rate, 
would be consumer gains of $271 million, producer losses of $143 
million, and net benefits of $128 million.

Table II.--Cull Cattle/Processing Beef: Present and Annualized Values of Welfare Changes With the Proposed Rule,
                                                    2007-2011
----------------------------------------------------------------------------------------------------------------
                                                                Discount             Changes in welfare
                                                                  rate    --------------------------------------
                                                               (percent)     Consumer     Producer       Net
----------------------------------------------------------------------------------------------------------------
                                                                                     (Thousand dollars)
                                                                          --------------------------------------
Present value:
    2006 Dollars............................................            3    1,243,147     -656,540      586,607
                                                                        7    1,120,778     -590,070      530,708
    2001 Dollars............................................            3    1,080,856     -570,814      510,043
                                                                        7      974,488     -513,038      461,450
Annualized value:
    2006 Dollars............................................            3      271,447     -143,358      128,089
                                                                        7      273,347     -143,912      129,435
    2001 Dollars............................................            3      236,010     -124,640      111,370
                                                                        7      237,669     -125,125     112,544
----------------------------------------------------------------------------------------------------------------
Note: Consumers are U.S. buyers of processing beef at the wholesale level; producers are sellers of U.S.-
  produced processing beef at the wholesale level. Cull cattle imports from Canada in thousand head are
  converted to processing beef in million pounds carcass weight equivalent by multiplying by the following
  carcass weights (pounds) for cows and bulls/stags, respectively: 2007, 576 and 888; 2008, 579 and 893; 2009,
  583 and 899; 2010, 586 and 904; and 2011, 590 and 909 (Source: Expert opinion, USDA Economic Research Service,
  Market and Trade Economics Division, Animal Products, Grains, and Oil Seeds Branch).


[[Page 1117]]

    Welfare changes for the cull cattle/processing beef category 
dominate the modeled effects. The relatively large impacts are not 
unexpected, given that this is the one modeled commodity category for 
which imports from Canada would be newly reestablished. The numbers of 
cull cattle that would be imported with the rule, projected to average 
545,000 cows and 66,000 bulls and stags per year, 2007-2011, are much 
larger than the projected average annual declines in feeder cattle 
(218,000 head) and fed cattle (59,000 head).
    Feeder cattle, fed cattle, and fed beef. Fewer feeder cattle and 
fed cattle and less fed beef are projected to be imported from Canada 
with the rule than would enter without the rule, and the model 
indicates for these commodities gains in producer welfare (higher 
prices and less competition from Canadian suppliers) and losses in 
consumer welfare (higher prices and fewer feeder, fed cattle, and less 
fed beef available for purchase). Of these three commodities, the 
largest impact would be for feeder cattle, with estimated producer 
welfare gains of $494 million and consumer welfare losses of $518 
million, for a net loss of $24 million (2006 dollars, discounted at 3 
percent).
    Combined welfare effects. Effects of the proposed rule for cull 
cattle/processing beef, feeder cattle, fed cattle, and fed beef are 
summed in Table III.

   Table III.--Present and Annualized Values of Combined Welfare Changes for the Modeled Commodities With the
                                            Proposed Rule, 2007-2011
----------------------------------------------------------------------------------------------------------------
                                                                Discount           Changes in welfare \1\
                                                                  rate    --------------------------------------
                                                               (percent)     Consumer     Producer       Net
----------------------------------------------------------------------------------------------------------------
                                                                                     (Thousand dollars)
                                                                          --------------------------------------
Present value:
    2006 Dollars............................................            3      444,740      111,662      556,401
                                                                        7      407,740       96,136      503,876
    2001 Dollars............................................            3      386,246       97,526      483,775
                                                                        7      302,447      133,266      435,714
Annualized value:
    2006 Dollars............................................            3       97,110       24,384      121,494
                                                                        7       99,452       23,457      122,908
    2001 Dollars............................................            3       84,339       21,296      105,634
                                                                        7       86,339       20,514     106,851
----------------------------------------------------------------------------------------------------------------
\1\ Combined welfare changes for cull cattle/processing beef, feeder cattle, fed cattle, and fed beef.

    The analysis tells us that the present value of the combined 
welfare changes in 2006 dollars when using a 3 percent discount rate, 
for example, would be $445 million in consumer gains, $112 million in 
producer gains, for a total welfare benefit of $556 million. Annualized 
values over the 5 years, in 2006 dollars when using a 3 percent 
discount rate, would be consumer gains of $97 million and producer 
gains of $24 million, yielding benefits of over $121 million.
    Our analysis shows producer welfare changes to be negative in 2007 
and positive in each of the following 4 years, 2008-2011. In 2007, 
producer welfare losses for the cull cattle/processing beef category 
would be larger than the combined producer welfare gains for the other 
three commodities. For the years 2008-2011, the opposite would occur. 
This is largely due to the fact that, given Canada's excess cull cattle 
supply, the largest annual number of cull cattle would be imported in 
2007, with imports diminishing thereafter. Table III shows positive 
changes in producer welfare because the discounted producer welfare 
gains in 2008-2011 would exceed producer welfare losses in 2007.
    By far, the largest effects of the proposed rule would be due to 
resumption of Canadian cull cattle imports. As shown in Table IV, the 
present value of consumer welfare gains for the cull cattle/processing 
beef category outweighs the combined consumer welfare losses for the 
other three categories ($1.24 billion in consumer benefits, compared to 
$798 million in combined consumer losses, in 2006 dollars and 
discounted at 3 percent). Producer welfare losses attributable to 
resumption of cull cattle/processing beef imports are smaller in 
magnitude than the combined producer welfare gains for the other three 
categories ($657 million in producer losses, compared to over $768 
million in combined producer gains).
    We invite public comment on these estimates of welfare changes. In 
particular, we welcome informed opinion regarding the price 
elasticities we use in the analysis for cull cattle/processing beef 
(price elasticity of supply, 0.84; price elasticity of demand, -0.40) 
that result in the welfare gains for buyers of processing beef being so 
much larger than the welfare losses for sellers of processing beef.

   Table IV.--Present Values of Separate and Combined Welfare Changes With the Proposed Rule for Cull Cattle/
Processing Beef, Feeder Cattle, Fed Cattle, and Fed Beef, in 2006 Dollars and Discounted at 3 Percent, 2007-2011
----------------------------------------------------------------------------------------------------------------
                                                 Cull cattle/
                                                  processing     Feeder     Fed cattle    Fed beef     Combined
                                                     beef        cattle
----------------------------------------------------------------------------------------------------------------
                                                                        (Thousand dollars)
                                                ----------------------------------------------------------------
Change in consumer welfare.....................    1,243,147      518,352      176,136     -103,919      444,740
Change in producer welfare.....................     -656,540      494,483      171,791      101,928      111,662
Net change.....................................      586,607      -23,870        4,345       -1,991      556,401
----------------------------------------------------------------------------------------------------------------


[[Page 1118]]

Displacement of Processing Beef Imports From Other Countries
    The net impact of cull cattle imports from Canada would depend upon 
the extent to which they would displace (substitute for) processing 
beef imports from other countries. About 35 percent of cull cattle 
imports from Canada over the period of analysis are projected to 
displace processing imports from other countries and the remainder are 
projected to contribute to an increase in the U.S. supply of processing 
beef (respectively, 5-year averages of 132 million pounds and 245 
million pounds, carcass weight equivalent).\4\ We consider here the 
effects of extreme displacement possibilities, that is, if either none 
or all of the Canadian cull cattle imports were to displace processing 
beef imports from other countries.
---------------------------------------------------------------------------

    \4\ These projections are based on the expert opinion of staff 
of the USDA Economic Research Service, Market and Trade Economics 
Division, Animal Products, Grains, and Oil Seeds Branch.
---------------------------------------------------------------------------

    Projected imports of cull cattle from Canada are shown in Table V, 
together with changes in the U.S. supply of processing beef under the 
three displacement scenarios: None of the Canadian imports displacing 
imports from other countries; projected displacement; or all of the 
Canadian imports displacing imports from other countries. In the third 
scenario, we assume that the cull cattle imports from Canada would have 
no impact on the U.S. supply of processing beef.
    Table VI compares the present and annualized values of welfare 
changes and average annual price changes for the cull cattle/processing 
beef category under the three displacement scenarios, in 2006 dollars. 
Discounting at 3 percent, the present value of net welfare benefits for 
the cull cattle/processing beef category would be about $927 million 
when no displacement is assumed to occur, compared to net benefits of 
about $587 million when projected levels of displacement occur, and 
zero benefits or costs when we assume all imported Canadian processing 
beef would displace imports from other countries. Annualized net values 
for the three scenarios, discounted at 3 percent, range from $203 
million, to $128 million, to no impact. Over the 5-year period, annual 
declines in prices would average about $6 per cwt if no displacement 
were to occur, and about $4 per cwt with projected levels of 
displacement. There would be no price effect if all processing beef 
imports from Canada were to displace imports from other countries.

 Table V.--Projected Imports of Cull Cattle From Canada With the Proposed Rule and Changes in the U.S. Supply of
Processing Beef if (i) None of the Cull Cattle Imported From Canada Displace Processing Beef Imported From Other
  Countries, (ii) Projected Displacement Occurs, or (iii) All of the Cull Cattle Imported From Canada Displace
      Processing Beef Imports From Other Countries, 2007-2011, in Million Pounds Carcass Weight Equivalent
----------------------------------------------------------------------------------------------------------------
                                                              2007       2008       2009       2010       2011
----------------------------------------------------------------------------------------------------------------
Projected cull cattle imports from Canada................        458        403        333        343        346
Projected processing beef imports from Canada............          0          0          0          0          0
Projected displacement of processing beef imports from           170        149        128        106        106
 other countries by processing beef imports from Canada..
Change in U.S. supply if none of the processing beef             458        403        333        343        346
 imports from Canada displace imports from other
 countries...............................................
Change in U.S. supply of processing beef if projected            288        254        205        237        240
 displacement occurs.....................................
Change in U.S. supply if all the processing beef imports           0          0          0          0         0
 from Canada displace imports from other countries.......
----------------------------------------------------------------------------------------------------------------
Note: Cull cattle (slaughter cows, bulls, and stags) are converted from thousand head to million pounds carcass
  weight equivalent by multiplying by the following carcass weights (pounds) for cows and bulls/stags,
  respectively: 2007, 576 and 888; 2008, 579 and 893; 2009, 583 and 899; 2010, 586 and 904; and 2011, 590 and
  909 (Source: Expert opinion, USDA Economic Research Service, Market and Trade Economics Division, Animal
  Products, Grains, and Oil Seeds Branch).


  Table VI.--Present and Annualized Values of Welfare Changes and Average Annual Price Changes for Cull Cattle/
   Processing Beef if (i) None of the Cull Cattle Imported From Canada Displaces Processing Beef Imported From
    Other Countries, (ii) Projected Displacement Occurs, or (iii) All of the Cull Cattle Imported From Canada
                Displace Processing Beef Imports From Other Countries, in 2006 Dollars, 2007-2011
----------------------------------------------------------------------------------------------------------------
                                          Amount of imports from                Changes in welfare
                                            Canada assumed to    -----------------------------------------------
        Discount rate  (percent)          displace imports from
                                           other countries \1\       Consumer        Producer           Net
----------------------------------------------------------------------------------------------------------------
                                                                                (Thousand dollars)
                                                                 -----------------------------------------------
Present value:
    3..................................  None...................       1,928,548      -1,001,140         927,408
    3..................................  Projected..............       1,243,147        -656,540         586,607
    3..................................  All....................               0               0               0
    7..................................  None...................       1,742,482        -901,619         840,864
    7..................................  Projected..............       1,120,778        -590,070         530,708
    7..................................  All....................               0               0               0
Annualized value:
    3..................................  None...................         421,107        -218,603         202.504
    3..................................  Projected..............         271,447        -143,358         128,089

[[Page 1119]]

 
    3..................................  All....................               0               0               0
    7..................................  None...................         424,975        -219,896         205,079
    7..................................  Projected..............         273,347        -143,912         129,435
    7..................................  All....................               0               0               0
Average annual price change and
 percentage price change:
                                                                        (Dollars    (Percentage)
                                                                        per cwt)
                                         None...................           -6.00           -6.57
                                         Projected..............           -4.00           -4.26
                                         All....................              -0              0
----------------------------------------------------------------------------------------------------------------
Note: Prices are in carcass weight equivalent.
\1\ Projected displacement quantities for the 5 years, 2007-2011, in million pounds carcass weight equivalent,
  are 170, 149, 128, 106, and 106. Displaced quantities for the 5 years, if all cull cattle imported from Canada
  were to displace processing beef imports from other countries, would be 458, 403, 333, 343, and 346 (Source:
  Expert opinion, USDA Economic Research Service, Market and Trade Economics Division, Animal Products, Grains,
  and Oil Seeds Branch).

    It is evident that the extent of import displacement would 
influence impacts of the proposed rule for the cull cattle/processing 
beef category. Table VII shows the significance of the displacement 
assumption for the combined welfare effects. The larger the quantity of 
processing beef imports from other countries that would be displaced, 
the smaller the net benefits. The difference between consumer gains and 
producer losses would exceed $897 million (discounted at 3 percent) if 
no displacement of processing beef imports from other countries were to 
occur. The present value of net benefits would be about $556 million 
with projected displacement, and there would be a net welfare loss of 
$30 million if all of the imported Canadian cull cattle were to 
displace imports from other countries. In the third scenario, the 
modeled effects of the rule would be due to changes in the supply of 
Canadian feeder cattle, fed cattle, and fed beef as a result of the 
cull cattle imports affecting the slaughter mix in Canada. In this 
case, consumer welfare losses for these commodities would exceed 
producer welfare gains, resulting in a net decline in welfare.

Table VII.--Present and Annualized Values of Combined Welfare Changes for the Modeled Commodities if (i) None of
   the Processing Beef Imports From Canada Displace Imports From Other Countries, (ii) Projected Displacement
 Occurs, or (iii) All of the Processing Beef Imports From Canada Displace Imports From Other Countries, in 2006
                                               Dollars, 2007-2011
----------------------------------------------------------------------------------------------------------------
                                                Amount of imports from               Changes in welfare
                                              Canada assumed to displace  --------------------------------------
          Discount rate  (percent)           discount imports  from other
                                                       countries             Consumer     Producer       Net
----------------------------------------------------------------------------------------------------------------
                                                                                     (Thousand dollars)
                                                                          --------------------------------------
Present value:
    3......................................  None........................    1,130,141     -232.938      897,202
    3......................................  Projected...................      444,740      111,662      556,401
    3......................................  All.........................     -798,407      768,202      -30,206
    7......................................  None........................    1,029,444     -215,413      814,032
    7......................................  Projected...................      407,740       96,136      503,876
    7......................................  All.........................     -713,038      686,206      -26,832
Annualized value:
    3......................................  None........................      246,770      -50,861      195,909
    3......................................  Projected...................       97,110      -24,384      121,494
    3......................................  All.........................     -174,337      167,742       -6,595
    7......................................  None........................      251,080      -52,527      198,552
    7......................................  Projected...................       99,452       23,457      122,908
    7......................................  All.........................     -173,895      167,369       -6,527
----------------------------------------------------------------------------------------------------------------


[[Page 1120]]

    Multi-sector impacts. For a broader examination of impacts, we map 
interactions among the grain, animal, and animal products industries 
using a second model.\5\ This model takes into account substitution 
among livestock products in response to relative price changes. It 
incorporates foreign trade and yields expected price and revenue 
effects, but does not allow for computation of welfare changes.
---------------------------------------------------------------------------

    \5\ Three examples of studies based on this type of model are: 
Paarlberg, P.L. ``Agricultural Export Subsidies and Intermediate 
Goods Trade,'' American Journal of Agricultural Economics. 77, 1 
(1995): 119-128. Paarlberg, P.L., J.G. Lee, and A.H. Seitzinger. 
``Potential Revenue Impact of an Outbreak of Foot-and-Mouth Disease 
in the United States,'' Journal of the American Veterinary Medical 
Association. 220, 7 (April 1, 2002): 988-992. Sanyal, K.K. and R.W. 
Jones. ``The Theory of Trade in Middle Products,'' American Economic 
Review. 72 (1982): 16-31.
---------------------------------------------------------------------------

    Our results show for the combined livestock, feed, and grain 
sectors, an estimated decline in gross revenues with the proposed rule 
of less than one percent in 2007. For the beef and cattle sectors, the 
gross revenue declines are also less than one percent. The analysis 
indicates declines of less than one percent, as well, in cattle and 
beef prices in 2007.
    As expected, these simulated impacts are small because they 
describe effects for aggregated commodity groupings (all cattle 
production and all beef production are grouped within single 
categories) and because of the linkages specified between the livestock 
production and processing sectors that allow for greater flexibility in 
adjusting to supply shocks. The larger effects reported above for cull 
cattle/processing beef are subsumed within a combined beef sector in 
this multi-sector model. These results support our expectation that 
broader impacts of the proposed rule would be limited.

Effects for Commodities Not Modeled

    Commodity categories not modeled that would be affected by the 
proposed rule are breeding cattle, vealers and slaughter calves, bison, 
bovine casings and small intestine products, and bovine blood and blood 
products.
    Breeding cattle. We do not expect the resumption of dairy and beef 
breeding cattle imports from Canada to significantly affect the U.S. 
market for these animals. The number that would be imported under the 
proposed rule is small in comparison to projected cattle imports from 
Canada overall (4 percent) and even smaller in comparison to the number 
of replacement breeding heifers supplied on average by U.S. producers 
(0.5 percent). Breeding cattle imported from Canada would augment the 
U.S. breeding herd very slightly. Demand for these animals, like the 
demand for breeding cattle generally, would derive from management 
decisions based on herd composition and expected future net returns, 
with price variations influencing secondarily the quantity of breeding 
cattle purchased.
    Vealers and slaughter calves. The proposed rule is expected to have 
a small effect on the number of vealers and slaughter calves imported 
from Canada. A decline in imports is projected in each year of the 
period of analysis, compared to quantities that would be imported 
without the rule, as Canadian slaughter patterns adjust to 
reestablished export opportunities for cull cattle. Over the 5-year 
period, an average of 11,800 fewer vealers and slaughter calves are 
projected to be imported annually with the proposed rule than would be 
imported without the rule.
    For the 10-year period, 1994-2003, slaughter of vealers and calves 
in the United States averaged 1.3 million head per year. We expect 
annual U.S. vealer and calf slaughter during the period of analysis to 
be similar to this earlier average. On this basis, the average annual 
decrease in vealer and slaughter calf imports from Canada under the 
proposed rule would be equal to less than 1 percent of U.S. vealer and 
calf slaughter. Any effect on vealer and slaughter calf prices because 
of the smaller number expected to be imported under the proposed rule 
would not be significant.
    Bison. Like the cattle industry, the commercial bison industry is 
comprised primarily of cow-calf operations that sell weaned calves to 
other operations for finishing and processing. Projected bison imports 
from Canada total 4,000 head in 2007, 3,150 head in 2008, and 2,500 
head each year thereafter. Each year, 250 head of breeding bison are 
projected to be imported. The remainder would be mainly bison for 
immediate slaughter (2,500 head in 2007, 2,400 head in 2008, and 2,000 
head in each of the following years), with a lesser number of feeders 
(1,250 head in 2007, 500 head in 2008, and 250 head in each year 
thereafter).
    The 2,500 bison projected to be imported for immediate slaughter in 
2007 would represent about 7 percent of the U.S. slaughter total in 
2005. We assume that most if not all of these slaughter bison (as well 
as the 1,250 head projected to be imported in 2007 for feeding) would 
be slaughtered at less than 30 months of age, that is, they would be of 
the same age as Canadian bison that are currently allowed to be 
imported. Thus, the only change in bison imports in 2007, as well as in 
subsequent years, under the proposed rule would be imports of 250 head 
of breeding bison.
    Yearly imports from Canada of 250 head of breeding bison would 
augment the U.S. bison breeding herd only slightly. They would annually 
represent only about two-tenths of one percent of the U.S. bison 
breeding herd, assuming the composition of the national bison herd is 
similar to that of the national cattle herd, with breeding stock (cows, 
replacement heifers, and bulls) constituting about 56 percent of the 
animals.
    As the market for bison meat becomes better established, the demand 
for breeding stock will continue to strengthen. The projected imports 
of breeding bison under the proposed rule would help meet this growing 
demand. However, they would constitute a very small addition to the 
U.S. breeding herd. Any effects on bison prices and the welfare of U.S. 
bison producers are expected to be insignificant.
    Bovine casings and small intestine products. The proposed rule may 
affect the supply of bovine casings and small intestine products in the 
United States in three ways: By allowing importation of bovine casings 
from Canada; by allowing importation of Canadian bovine small 
intestines, minus the distal ileum, that are used to make certain 
casings and variety meats; and by reducing restrictions on live bovine 
imports from Canada and thereby changing the U.S. supply of bovine 
products in general, including intestines and other material used to 
produce casings and variety meats.
    We calculate that with the rule the annual supply of bovine casings 
and variety meats produced from small intestines would increase on 
average over the period of analysis by about 1.6 percent. The largest 
increase would occur in 2007, with production of 2.5 million pounds of 
additional small intestine for use as casings and variety meats. These 
supply projections presume a ready market for these products.
    The proposed rule would allow importation from Canada of bovine 
small intestine minus the distal ileum that could then be processed 
into casings and variety meats in the United States. APHIS does not 
have information on the volume of bovine small intestine that may be 
imported from Canada because of the proposed rule. We welcome 
information that would enable us to evaluate effects on the U.S. supply 
of bovine small intestine of allowing their importation from Canada.

[[Page 1121]]

    Current regulations prohibit the importation of bovine and other 
ruminant casings from BSE minimal-risk regions. The proposed rule would 
remove this prohibition, and therefore allow resumption of bovine 
casings imports from Canada. The Agency does not have information on 
levels of production or consumption of bovine casings in the United 
States, and trade data do not distinguish between bovine and ovine 
casings; import and export quantities and prices for bovine casings 
alone are unavailable from the U.S. Department of Commerce. We welcome 
information that the public may provide that would enable us to better 
understand the U.S. bovine casings industry and levels of historic 
trade in bovine casings between the United States, Canada, and the 
world.
    Bovine blood and blood products. The proposed rule would allow 
resumption of imports of bovine blood and blood products from BSE 
minimal-risk regions, that is, of Canadian origin. The primary 
commodities affected would be products used in the manufacture of 
vaccines and drugs, of which fetal bovine serum (FBS) is the most 
important. It is the most widely used serum in the culturing of cells, 
tissues and organs.
    Since the detection of BSE in Canada in 2003, imports of FBS from 
Canada have been restricted to either research samples of Canadian-
origin FBS (limited to 1 liter per shipment), or FBS that is derived 
from animals that originate in the United States, Australia, Mexico, or 
Central America and is processed at a designated Canadian facility 
under USDA permit.
    The proposed rule may affect the supply of FBS in the United States 
in two ways: By allowing Canadian-origin FBS imports for commercial 
purposes, and by reducing restrictions on bovine imports from Canada 
and thereby changing the U.S. supply of pregnant cows presented for 
slaughter. We approximate that the proposed rule would allow for the 
importation of up to 24,000 liters of FBS derived from Canadian cows. 
Had this amount been imported in 2005, it would have represented about 
13 percent of U.S. imports of FBS from all sources. In addition, the 
increase in pregnant cow slaughter projected with the proposed rule may 
provide an additional 23,000 to 32,000 liters. Other than for these 
upper-bound approximations, we are unable to project the extent to 
which the U.S. supply of FBS may be affected by the proposed rule. The 
additional supplies would benefit U.S. establishments that use FBS in 
their manufacturing processes.

Alternative to the Proposed Rule

    An alternative to the proposed rule considered by APHIS would be to 
allow resumption of live bovine imports from BSE minimal-risk regions 
without restriction by date of birth. In other words, Canadian bovines 
could be imported for any destination or purpose without regard to 
their age.
    Cattle imports from Canada. In Table VIII, projected imports under 
the alternative are compared to projected imports if no regulatory 
action were taken (baseline import quantities) and to projected imports 
under the proposed rule. The alternative would allow entry of bovines 
born before the date specified in the proposed rule as when a ruminant-
to-ruminant feed ban in Canada was effectively enforced: March 1, 1999. 
For convenience, we refer to these animals as older cull cattle.
    Under the proposed rule, cattle that are 8 years or older prior to 
March 1, 2007 would be prohibited. Each year thereafter, the prohibited 
older cull cattle would comprise a smaller age group: 9 years or older 
prior to March 1, 2008, 10 years or older prior to March 1, 2009, and 
so on. Within a few years, the proposed rule's requirement that bovines 
be born on or after March 1, 1999, would not limit bovine imports from 
Canada; bovine imports allowed under the proposed rule and the 
alternative would be the same.

  Table VIII.--Projected Imports of Canadian Feeder Cattle, Fed Cattle,
 Cull Cattle/Processing Beef, and Fed Beef: Baseline, Proposed Rule, and
 Alternative of No Restriction by Date of Birth on Live Bovine Imports,
                                2007-2011
------------------------------------------------------------------------
                                   2007    2008    2009    2010    2011
------------------------------------------------------------------------
                        Feeder cattle from Canada
------------------------------------------------------------------------
                            (Thousand head)
    Baseline....................     302     371     425     440     441
    Proposed Rule...............     189     175     167     178     179
    Alternative.................     189     175     167     178     179
------------------------------------------------------------------------
                         Fed cattle from Canada
------------------------------------------------------------------------
                            (Thousand head)
    Baseline....................     742     731     729     755     756
    Proposed Rule...............     728     673     644     685     688
    Alternative.................     728     673     644     685     688
------------------------------------------------------------------------
 Cull cattle from Canada, net of imports assumed to displace processing
                    beef imports from other countries
------------------------------------------------------------------------
               (Million pounds carcass weight equivalent)
    Baseline....................       0       0       0       0       0
    Proposed Rule...............     288     254     205     237     240
    Alternative.................     360     318     205     237     240
------------------------------------------------------------------------
                          Fed beef from Canada
------------------------------------------------------------------------
               (Million pounds carcass weight equivalent)
    Baseline....................     446     425     420     419     419
    Proposed Rule...............     371     390     420     419     419

[[Page 1122]]

 
    Alternative.................     371     390     420     419     419
------------------------------------------------------------------------
Source: Expert opinion, USDA Economic Research Service, Market and Trade
  Economics Division, Animal Products, Grains, and Oil Seeds Branch.
Note: For the cull cattle/processing beef category, cull cattle imports
  are converted from thousand head to million pounds carcass weight
  equivalent for 2007-2011 by multiplying by the following carcass
  weights (pounds) for cows and bulls/stags, respectively: 2007, 576 and
  888; 2008, 579 and 893; 2009, 583 and 899; 2010, 586 and 904; and
  2011, 590 and 909.

    Projected imports of Canadian feeder cattle, fed cattle, and fed 
beef are the same under the proposed rule and under the alternative. In 
both cases, feeder and fed cattle imports would be fewer than would 
enter without the rule, and fed beef imports would be less in the first 
2 years of the period of analysis. The only difference between imports 
under the proposed rule and under the alternative is with respect to 
cull cattle imports projected for 2007 and 2008. Under the alternative, 
imports of cull cattle are projected in these 2 years to be one-fourth 
greater, net of displaced processing beef imports, than they would be 
under the proposed rule. The older cull cattle that would be imported 
under the alternative would total 168,000 cows and 20,000 bulls and 
stags in 2007, and 147,000 cows and 18,000 bulls and stags in 2008. 
These older cull cattle would yield 72 million pounds and 64 million 
pounds of processing beef, carcass weight equivalent, for the 2 years.
    Table IX shows the present and annualized values of welfare changes 
under the alternative for the cull cattle/processing beef category. The 
present value of the welfare changes (2006 dollars, 3 percent discount 
rate) would be $1.4 billion in consumer gains, $731 million in producer 
losses, for a net benefit of about $667 million. Annualized values over 
the 5 years would be consumer gains of $305 million, producer losses of 
$160 million, and net benefits of $146 million.

 Table IX.--Alternative of No Restriction by Date of Birth on Live Bovine Imports: Present and Annualized Values
                          of Welfare Changes for Cull Cattle/Processing Beef, 2007-2011
----------------------------------------------------------------------------------------------------------------
                                                                Discount             Changes in welfare
                                                                  rate    --------------------------------------
                                                               (percent)     Consumer     Producer       Net
----------------------------------------------------------------------------------------------------------------
                                                                                     (Thousand dollars)
                                                                          --------------------------------------
Present Value:
    2006 Dollars............................................            3    1,397,680     -730,800      666,880
                                                                        7    1,267,061     -660,333      606,728
    2001 Dollars............................................            3    1,215,348     -635,446      579,902
                                                                        7    1,101,796     -574,189      527,606
Annualized Value:
    2006 Dollars............................................            3      305,190     -159,573      145,617
                                                                        7      309,025     -161,049      147,976
    2001 Dollars............................................            3      265,377     -138,752      126,624
                                                                        7      268,718     -140,039     128,678
----------------------------------------------------------------------------------------------------------------
Note: Consumers are U.S. buyers of processing beef at the wholesale level; producers are sellers of U.S.-
  produced processing beef at the wholesale level. Cull cattle imports from Canada in thousand head are
  converted to processing beef in million pounds carcass weight equivalent by multiplying by the following
  carcass weights (pounds) for cows and bulls/stags, respectively: 2007, 576 and 888; 2008, 579 and 893; 2009,
  583 and 899; 2010, 586 and 904; and 2011, 590 and 909.

    To exemplify the differences in welfare effects between the 
alternative and the proposed rule for the cull cattle/processing beef 
category, we compare in Table X their present and annualized values in 
2006 dollars when discounted at 3 percent. Compared to effects under 
the proposed rule, consumer welfare gains under the alternative would 
be 12.4 percent larger, producer welfare losses would be 11.3 percent 
larger, and net benefits would be 13.7 percent larger. The annual 
decrease in processing beef prices under the alternative over the 5-
year period, all things equal, is computed to average $4.80 per cwt, 
compared to an average annual decrease of $4.00 under the proposed 
rule.

[[Page 1123]]



   Table X.--Present and Annualized Values of Welfare Changes for Cull
Cattle/Processing Beef, With the Alternative and With the Proposed Rule,
            3 Percent Discount Rate, 2006 Dollars, 2007-2011
------------------------------------------------------------------------
                                             Changes in welfare
                                  --------------------------------------
                                     Consumer     Producer       Net
------------------------------------------------------------------------
                                             (Thousand dollars)
                                  --------------------------------------
Present Value:
    Alternative..................    1,397,680     -730,800      666,880
    Proposed Rule................    1,243,147     -656,540      586,607
    Difference...................      154,533      -74,260       80,273
Annualized Value:
    Alternative..................      305,190     -159,573      145,617
    Proposed Rule................      271,447     -143,358      128,089
    Difference...................       33,743      -16,215       17,528
Difference as a percentage of            12.4%        11.3%        13.7%
 welfare changes with the
 proposed rule...................
------------------------------------------------------------------------

    When we compare present and annualized values of combined welfare 
changes under the alternative and under the proposed rule, we find that 
the net welfare benefits would be 15 to 16 percent larger under the 
alternative than would be realized under the proposed rule. For 
example, the annualized net benefit (2006 dollars, 3 percent rate of 
discount) would be $140 million under the alternative, compared to $121 
million under the proposed rule. Impacts under the alternative and 
under the proposed rule would also differ for some of the commodities 
not modeled. For example, we would expect the supply of bovine casings 
to be larger with the alternative, due to larger projected slaughter 
numbers.
    BSE risk. As described in the risk assessment for this proposed 
rule, transmission of BSE requires that bovines ingest feed that 
contains the infectious agent. Feed contamination results from the 
incorporation of ingredients that contain certain ruminant protein 
derived from infected animals. Standard rendering processes do not 
completely inactivate the BSE agent. Therefore, rendered protein such 
as meat-and-bone meal derived from infected animals may remain 
contaminated. Prohibitions on the use of ruminant protein in ruminant 
feed are imposed by FDA to mitigate the risk of BSE transmission.
    The OIE establishes standards for the international trade in 
animals and animal products. It recommends that cattle be imported from 
a region that has reported an indigenous case of BSE only if the cattle 
selected for export were born after the date from which a ban on the 
feeding of ruminants with meat-and-bone meal and greaves (the residue 
left after animal fat or tallow has been rendered) derived from 
ruminants had been effectively enforced.
    On August 4, 1997, Canada issued regulations prohibiting the use of 
mammalian protein in ruminant feeds. Implementation of the feed ban was 
a gradual process, with producers, feed mills, retailers, and feed 
manufacturers given grace periods before they were required to be in 
full compliance with the regulations. It is estimated that this 
implementation period may have lasted several months, making February 
1998 a more realistic date on which the ban can be considered to have 
been practically implemented.
    The likelihood that Canadian cattle born after February 1998 would 
be exposed to the BSE agent continues to decrease over time. APHIS 
considers that a period of 1 year following the practical 
implementation of the feed ban allows sufficient time for the measures 
taken by Canada to have their desired effect. Therefore, APHIS 
concludes that cattle born on or after March 1, 1999, are unlikely to 
have been exposed to the BSE agent via feed and can be imported into 
the United States for any purpose with a low risk that they will be 
infected with the BSE agent.
    We do not have a quantitative estimate of the additional risk posed 
by importation of Canadian cattle born before March 1, 1999. The 
importance of a feed ban as a risk mitigation measure is demonstrated 
in science and experience, and is incorporated into the OIE feed ban 
recommendation. We conclude that there may be some degree of increased 
risk of BSE introduction under the alternative, compared to the minimal 
risk posed by the proposed rule, because of the greater likelihood of 
the older cull cattle having been exposed to infectivity. While our 
analysis indicates larger net welfare benefits may be realized under 
the alternative of no restriction by date of birth on live bovine 
imports, the proposed rule is preferable because it would pose a lower 
risk of BSE introduction into the United States and would be consistent 
with demonstrated science, experience, and OIE guidance.

Expected Impacts Assuming Resumption of Processing Beef Imports From 
Canada

    Current regulations require that imported Canadian cattle be 
slaughtered at less than 30 months of age and that imported Canadian 
beef come from cattle slaughtered at less than 30 months of age. Our 
analysis assumes no imports of processing beef from Canada. As a second 
scenario, we consider effects if imports of Canadian beef from cattle 
slaughtered at 30 months or older were to resume at the same time that 
the proposed rule is finalized.
    Importation of ruminant products and byproducts was included in the 
BSE minimal-risk regions final rule, and this proposed rule would not 
change regulations regarding the importation of beef from Canada. 
However, in March 2005, APHIS gave notice in the Federal Register that 
the applicability of certain provisions of the rule pertaining to 
bovine meat, meat byproducts, whole and half carcasses, and certain 
other bovine products was being delayed until further notice. This 
partial delay of applicability of the BSE minimal-risk regions rule 
prohibits the importation of such products if derived from bovines 30 
months of age or older at slaughter.
    As discussed, the United States is a large importer of processing 
beef, with Australia, New Zealand, and Uruguay currently our primary 
suppliers. Over the period of analysis, total processing beef imports 
are projected to provide about 45 percent of U.S. consumption of 
processing beef (decreasing from 49 percent in 2007 to 42 percent in 
2011). We assume annual imports of Canadian processing beef, 2007-2011, 
would average 240 million pounds carcass weight equivalent, of which 
about two-thirds would displace processing beef imports from other 
countries and about

[[Page 1124]]

one-third would represent a net increase in U.S. supply. It is further 
assumed under this scenario that the Canadian cull cattle imported 
would not displace processing beef imports from other countries.\6\ The 
net addition of processing beef from Canada would be equivalent to 2.8 
percent of projected baseline imports (without the rule) over the 
period of analysis, or 1.3 percent of U.S. supply. When the processing 
beef produced from projected cull cattle imports from Canada is 
included, the increase in the U.S. supply of processing beef under this 
scenario would be equivalent to 4.3 percent of projected imports 
without the proposed rule.
    Projected imports of cull cattle and processing beef from Canada 
under this scenario are compared in Table XI to projected imports of 
cull cattle alone used to evaluate the proposed rule. Results of the 
analysis show the price of processing beef decreasing in 2007 by 6.3 
percent under this scenario, from $99 to about $93 per cwt carcass 
weight equivalent in 2006 dollars. Over the period of analysis, the 
annual decrease in processing beef prices because of the proposed rule, 
all things equal, is expected to average about 5 percent, ranging from 
about $6.20 per cwt in 2007 to about $3.80 per cwt in 2009.
---------------------------------------------------------------------------

    \6\ The import quantities and extent of displacement are 
projections made by staff of the USDA Economic Research Service 
(ERS), Market and Trade Economics Division, Animal Products, Grains, 
and Oil Seeds Branch, based on their expert opinion and reference to 
the ``USDA Agricultural Baseline Projections to 2015,'' United 
States Department of Agriculture, Interagency Agricultural 
Projections Committee, Baseline Report OCE-2006-1, February 2006.

 Table XI.--Scenario Comparison of Quantities of (1) Cull Cattle Alone and (ii) Cull Cattle and Processing Beef
 Projected To Be Imported From Canada, Net of Displaced Processing Beef Imports From Other Countries, 2007-2011,
                         in Million Pounds of Processing Beef, Carcass Weight Equivalent
----------------------------------------------------------------------------------------------------------------
                                                                                                Cull cattle and
                                   Year                                      Cull cattle only   processing beef
----------------------------------------------------------------------------------------------------------------
2007......................................................................                288                339
2008......................................................................                254                299
2009......................................................................                205                242
2010......................................................................                237                279
2011......................................................................                240               282
----------------------------------------------------------------------------------------------------------------
Source: Expert opinion, USDA Economic Research Service, Market and Trade Economics Division, Animal Products,
  Grains, and Oil Seeds Branch.
Notes: Cull cattle are converted to processing beef by multiplying by the following carcass weights (pounds) for
  cows and bulls/stags, respectively: 2007, 576 and 888; 2008, 579 and 893; 2009, 583 and 899; 2010, 586 and
  904; and 2011, 590 and 909. All of the quantities that follow are expressed in million pounds of processing
  beef, carcass weight equivalent. For the cull cattle imports only scenario, the quantities are based on
  projected imports of slaughter cows, bulls, and stags, and are equivalent to: 2007, 458; 2008, 403; 2009, 333;
  2010, 343; and 2011, 346. These quantities are reduced by the following projected displaced processing beef
  imports from other countries: 2007, 170; 2008, 149; 2009, 128; 2010, 106; and 2011, 106. For the scenario that
  assumes importation from Canada of both cull cattle and processing beef, quantities of cull cattle imported
  are: 2007, 214; 2008, 199; 2009, 192; 2010, 204; and 2011, 207. Projected processing beef imports are: 2007,
  325; 2008, 275; 2009, 200; 2010, 200; and 2011, 200. Combined cull cattle and processing beef imports are
  2007, 539; 2008, 474; 2009, 392; 2010, 404; and 2011, 407. These quantities are reduced by the following
  projected displaced processing beef imports from other countries: 2007, 200; 2008, 175; 2009, 150; 2010, 125;
  and 2011, 125.

    As shown in Table XII, the present value of the welfare changes in 
2006 dollars when using a 3 percent discount rate would be $1.47 
billion in consumer gains, $770 million in producer losses, for a net 
benefit of about $695 million. Annualized values over the 5 years, in 
2006 dollars when using a 3 percent discount rate, would be consumer 
gains of $320 million, producer losses of $168 million, and net 
benefits of $152 million.

 Table XII.--Cull Cattle/Processing Beef: Present and Annualized Values of Welfare Changes Assuming Cull Cattle
            Imports and Processing Beef Imports From Canada Would Resume at the Same Time, 2007-2011
----------------------------------------------------------------------------------------------------------------
                                                                Discount             Changes in welfare
                                                                  rate    --------------------------------------
                                                               (percent)     Consumer     Producer       Net
----------------------------------------------------------------------------------------------------------------
                                                                                     (Thousand dollars)
                                                                          --------------------------------------
Present Value:
    2006 Dollars............................................            3    1,465,829     -770,389      695,440
                                                                        7    1,321,580     -692,393      629,187
    2001 Dollars............................................            3    1,274,467     -669,797      604,670
                                                                        7    1,149,081     -602,002      547,078
Annualized Value:
    2006 Dollars............................................            3      320,071     -168,218      151,853
                                                                        7      322,321     -168,868      153,453
    2001 Dollars............................................            3      278,286     -146,253      132,033
                                                                        7      280,250     -146,823      133,427
----------------------------------------------------------------------------------------------------------------

    Compared to impacts for the cull cattle/processing beef category 
when only cull cattle would enter, this scenario would result in 
consumer welfare gains larger by 17.9 percent, producer welfare losses 
larger by 17.3 percent, and net benefits larger by 18.6 percent.

[[Page 1125]]

    Combined effects under this scenario for cull cattle/processing 
beef, feeder cattle, fed cattle, and fed beef are shown in Table XIII.

  Table XIII.--Present and Annualized Values of Combined Welfare Changes for the Modeled Commodities, Assuming
      Cull Cattle Imports and Processing Beef Imports From Canada Would Resume at the Same Time, 2007-2011
----------------------------------------------------------------------------------------------------------------
                                                                Discount             Changes in welfare
                                                                  rate    --------------------------------------
                                                               (percent)     Consumer     Producer       Net
----------------------------------------------------------------------------------------------------------------
                                                                                     (Thousand dollars)
                                                                          --------------------------------------
Present Value:
    2006 Dollars............................................            3      669,191        2,387      671,578
                                                                        7      610,108       -2,145      607,963
    2001 Dollars............................................            3      581,395        2,519      583,917
                                                                        7      529,956       -1,342      528,614
Annualized Value:
    2006 Dollars............................................            3      146,122          523      146,643
                                                                        7      148,808         -513      148,294
    2001 Dollars............................................            3      126,951          551      127,501
                                                                        7      129,252         -327      128,923
----------------------------------------------------------------------------------------------------------------

    Removal of the delay of applicability, thereby allowing importation 
of Canadian beef from cattle slaughtered at 30 months or older, is a 
decision that will be taken at the discretion of the Secretary of the 
U.S. Department of Agriculture.

Expected Impacts for Small Entities

    We have prepared an initial regulatory flexibility analysis that 
indicates that industries expected to be affected by the proposed rule 
are composed largely of small entities. Industries that may be 
affected, as categorized by the North American Industry Classification 
System, are Beef Cattle Ranching and Farming (NAICS 112111), Dairy 
Cattle and Milk Production (NAICS 112120), All Other Animal Production 
(NAICS 112990), Cattle Feedlots (NAICS 112112), Animal (except Poultry) 
Slaughtering (NAICS 311611), Meat Processed from Carcasses (NAICS 
311612), Meat and Meat Product Merchant Wholesalers (NAICS 424470), 
Supermarkets and Other Grocery (except Convenience) Stores (NAICS 
445110), Meat Markets (NAICS 445210), In-Vitro Diagnostic Substance 
Manufacturing (NAICS 325413), and Biological Product (except 
Diagnostic) Manufacturing (NAICS 325414).
    Average effects for small entities would be small. As examples, we 
approximate that gross receipts for small-entity beef and dairy 
operations would increase, respectively, by $160 (0.6 percent of annual 
revenue) and $133 (less than 0.1 percent of annual revenue), due to the 
rule's projected impact on feeder cattle prices. We approximate that 
small-entity feedlots may incur a revenue loss of about $5,040 (less 
than 0.3 percent of annual revenue), due to the rule's expected effects 
on feeder cattle and fed cattle prices. Small-entity meat packing and 
processing establishments may benefit marginally with the rule, with 
estimated price increases for fed beef in 2007 and 2008 representing an 
increase in annual revenue of less than 0.2 percent. Effects of the 
proposed rule for packers and processors that utilize processing beef 
would be larger, due to the resumption of cull cattle imports from 
Canada. Annual prices of processing beef are expected to fall by an 
average of $4 per cwt over the period of analysis. The price declines 
would benefit establishments that use processing beef to produce ground 
beef for the wholesale market. Conversely, establishments that sell 
processing beef would be negatively affected by the expected price 
declines.
    Currently, bovines imported from Canada are restricted to animals 
that are slaughtered at less than 30 months of age. Bovines not 
imported for immediate slaughter must be moved from the port of entry 
to a feedlot in a sealed means of conveyance and from the feedlot to a 
recognized slaughtering establishment again in a sealed means of 
conveyance. The animals may not be moved to more than one feedlot. 
Under the proposed rule, these movement restrictions would no longer be 
imposed. Canadian bovines imported other than for immediate slaughter 
could be moved any number of times to any destinations in unsealed 
means of conveyance.
    Under the proposed rule, feeder bovines imported from BSE minimal-
risk regions would not need to be accompanied by APHIS Form VS 17-130, 
which currently is used to identify the feedlot of destination. (The 
individual responsible for the movement of an imported animal and the 
individual identification of the animal would still be required 
information on the accompanying health certificate.) Also under the 
proposed rule, bovines of Canadian origin moved from a U.S. feedlot to 
a slaughtering establishment would not need to be accompanied by APHIS 
Form VS 1-27.
    Removal of these movement and paperwork requirements would benefit 
buyers and sellers of Canadian-origin bovines. Many of the 
beneficiaries are likely to be small entities, given their predominance 
among cattle and dairy operations and feedlot establishments. Affected 
businesses would be able to take advantage of a broader range of 
transactional opportunities than under current regulations. For 
example, the sale of a young steer first for backgrounding, then for 
confined feeding at one or more facilities, and finally for slaughter 
may enable the original and subsequent owners of the animal to better 
maximize returns compared to current marketing possibilities. While we 
are not able to quantify impacts of removing current movement 
restrictions on Canadian cattle imports, we expect their removal would 
benefit the cattle industry across-the-board.
    The Agency has found no significant alternatives to the proposed 
rule that would continue to protect against the introduction and 
dissemination of BSE into the United States while removing unnecessary 
prohibitions on the importation of certain commodities from Canada. 
Without the proposed rule, restrictions on U.S. importation of

[[Page 1126]]

certain Canadian bovine commodities that are without scientific merit 
would continue. With the proposed rule, importation of these Canadian 
commodities would be allowed to resume under certain conditions and the 
risk of introduction of BSE into the United States would remain 
minimal.

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

    To provide the public with documentation of APHIS' review and 
analysis of any potential environmental impacts associated with the 
importation of bovine and bovine products from Canada under this 
proposed rule, we have prepared an environmental assessment. The 
environmental assessment was prepared in accordance with: (1) The 
National Environmental Policy Act of 1969 (NEPA), as amended (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).
    The environmental assessment may be viewed on the Regulations.gov 
Web site or in our reading room. Instructions for accessing 
Regulations.gov and information on the location and hours of the 
reading room are provided under the heading ADDRESSES at the beginning 
of this proposed rule. In addition, copies may be obtained by calling 
or writing to the individuals listed under FOR FURTHER INFORMATION 
CONTACT.

Paperwork Reduction Act

    This proposed rule contains no new information collection or 
recordkeeping requirements under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.).

References

    1. Wilesmith, J.W., G.A.H. Wells, J.B.M. Ryan, D. Gavier-Widen, 
and M.M. Simmons. (1997). A cohort study to examine maternally-
associated risk factors for BSE. Vet Rec 141: 239-43.
    2. Prince, M.J., J.A. Bailey, P.R. Barrowman, K.J. Bishop, G.R. 
Campbell, and J.M. Wood. (2003). Bovine Spongiform Encephalopathy. 
Rev. sce. tech. OIE; 22 (1): 37-60.
    3. Wilesmith, J.W., G.A.H. Wells, M.P. Cranwell, and J.B.M. 
Ryan. (1988). Bovine spongiform encephalopathy epidemiological 
studies. Vet. Rec. 123: 638-644.
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Wilesmith, H. van Roermund, and M. de Jong. (2004). Quantifying BSE 
control by calculating the basic reproduction ratio R0 
for the infection among cattle. J. Math. Biol. 2004. Jan:48(1): 1-
22. Epub June 12, 2003.
    5. European Commission (EC). (2005). Report on the monitoring 
and Testing of Ruminants for the Presence of Transmissible 
Spongiform Encephalopathy (TSE) in the EU in 2004. June 13. (http://europa.eu.int/comm/food/food/biosafety/bse/annual_report_tse2004_en.pdf).
    6. European Commission (EC). (2005a). The TSE Roadmap. July 15. 
COM(2005) 322 FINAL. (http://europa.eu.int/comm/food/food/biosafety/bse/roadmap_en.pdf).
    7. Department of Environment Food and Rural Affairs (DEFRA), 
United Kingdom. (2006b). BSE: Statistics--BSE-GB weekly cumulative 
statistics; As of April 28, 2006. Page last modified May 5, 
available at http://www.defra.gov.uk/animalh/bse/statistics/weeklystats.html#pass.
    8. Department of Environment Food and Rural Affairs (DEFRA), 
United Kingdom. (2006a). BSE: Statistics--Confirmed cases of BSE in 
GB by year of birth where known; As of October 2, 2006. Page last 
modified October 26, 2006, available at http://www.defra.gov.uk/animalh/bse/statistics/bse/yrbirth.html.
    9. Animal and Plant Health Inspection Service (APHIS). (2004). 
Analysis of risk--update for the Final Rule: bovine spongiform 
encephalopathy; minimal risk regions and importation of commodities, 
page 13. December 2004, available at http://www.aphis.usda.gov/lpa/issues/bse/risk_ assessment/03-080-3--risk--
doc.pdf.
    10. Animal and Plant Health Inspection Service (APHIS). (2003). 
Risk Analysis: BSE Risk from Importation of Designated Ruminants and 
Ruminant Products from Canada into the United States, page 18. 
October 2003, available at http://aphis.usda.gov/lpa/issues/bse/bsecan_risk_anal.pdf.
    11. United States Department of Agriculture (USDA). (2005). 
Assessment of the Canadian Feed Ban. February, available at http://www.aphis.usda.gov/lpa/issues/bse/CAN-FeedBanReview.pdf.
    12. Canadian Food Inspection Agency (CFIA). (2005). Canadian 
Food Inspection Agency Feed Ban Review. March 2, available at http://www.inspection.gc.ca/english/anima/feebet/rumin/revexa/revexae.shtml.
    13. United States Department of Agriculture (USDA). (2005a). 
U.S. Department of Agriculture's Summary of the Epidemiological 
Findings of North American Bovine Spongiform Encephalopathy Positive 
Cattle. April 29, available at http://www.aphis.usda.gov/lpa/issues/bse/bse_epi_report_4-29-05.doc.
    14. National Research Council (NRC). (1996). Nutrient 
Requirements of Beef Cattle. 7th edition. National Academy Press. 
Washington, DC.
    15. National Research Council (NRC). (2001). Nutrient 
Requirements of Dairy Cattle. 7th edition. National Academy Press. 
Washington, DC.
    16. Canadian Food Inspection Agency (CFIA). (2002). Risk 
Assessment on Bovine Spongiform Encephalopathy in Cattle in Canada. 
December, available at http://www.inspection.gc.ca/english/sci/ahra/bseris/bserise.shtml.
    17. Leger, David. (2005). Public Health Agency of Canada, 
personal communication, December.
    18. Gow, Sheryl. (2005). Public Health Agency of Canada, 
personal communication, December.
    19. Animal and Plant Health Inspection Service (APHIS). (2006). 
An Estimate of the Prevalence of BSE in the United States. July 
2006, available at http://www.aphis.usda.gov/newsroom/hot_issues/bse/bse_in_usa.shtml.
    20. Farshid, M., R.E. Taffs, D. Scott, D.M. Asher, and K. 
Brorson. (2005). The clearance of viruses and transmissible 
spongiform encephalopathy agents from biologicals. Current Opinion 
in Biotechnology. 16: 561-567.
    21. European Commission Scientific Steering Committee (EC SSC). 
(2002b). Update of the opinion on TSE infectivity distribution in 
ruminant tissues. November, available at http://www.europa.eu.int/comm/food/fs/sc/ssc/out296_en.pdf.
    22. Food Safety and Inspection Service (FSIS) (2005). Federal 
Register Volume 70, No. 173, 53043-53050. Interim final rule, 
``Prohibition of the Use of Specified Risk Materials for Human Food 
and Requirements for the Disposition of Non-Ambulatory Disabled 
Cattle.'' Docket No. 03-025IFA. September 7. Page 53043, available 
at http://frwebgate.access.gpo.gov/cgi-bin/getpage. 
cgi?position=all&page=53043&dbname=2005--register.
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Materials Derived From Cattle in Human Food and Cosmetics.'' Docket 
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Derived From Cattle in Human Food and Cosmetics; and Recordkeeping 
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pp. 42256-42285). October, available at http://www.fda.gov/ohrms/dockets/dailys/04/oct04/100604/04n-0081-c00081-01-vol12.pdf.

List of Subjects

9 CFR Part 93

    Animal diseases, Imports, Livestock, Poultry and poultry products, 
Quarantine, Reporting and recordkeeping requirements.

[[Page 1127]]

9 CFR Part 94

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

9 CFR Part 95

    Animal feeds, Hay, Imports, Livestock, Reporting and recordkeeping 
requirements, Straw, Transportation.

9 CFR Part 96

    Imports, Livestock, Reporting and recordkeeping requirements.

    Accordingly, we are proposing to amend 9 CFR parts 93, 94, 95, and 
96 as follows:

PART 93--IMPORTATION OF CERTAIN ANIMALS, BIRDS, AND POULTRY, AND 
CERTAIN ANIMAL, BIRD, AND POULTRY PRODUCTS; REQUIREMENTS FOR MEANS 
OF CONVEYANCE AND SHIPPING CONTAINERS

    1. The authority citation for part 93 would continue to read as 
follows:

    Authority: 7 U.S.C. 1622 and 8301-8317; 21 U.S.C. 136 and 136a; 
31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.


Sec.  93.405  [Amended]

    2. In Sec.  93.405, paragraph (a)(4) would be amended by removing 
the words ``feedlot or recognized slaughtering establishment'' and 
adding in their place the words ``destination''.
    3. Section 93.419 would be amended as follows:
    a. Paragraphs (b) and (c) would be revised to read as set forth 
below.
    b. Paragraph (d) would be redesignated as paragraph (e).
    c. A new paragraph (d) would be added to read as set forth below.
    d. In newly designated paragraph (e)(2), the reference to 
``paragraph (d)(7)'' would be removed and a reference to ``paragraph 
(e)(7)'' would be added in its place.


Sec.  93.419  Sheep and goats from Canada.

* * * * *
    (b) If the sheep or goats are unaccompanied by the certificate 
required by paragraph (a) of this section, or if they are found upon 
inspection at the port of entry to be affected with or exposed to a 
communicable disease, they shall be refused entry and shall be handled 
or quarantined, or otherwise disposed of, as the Administrator may 
direct.
    (c) Any sheep or goats imported from Canada must not be pregnant, 
must be less than 12 months of age when imported into the United States 
and when slaughtered, must be from a flock or herd subject to a 
ruminant feed ban equivalent to the requirements established by the 
U.S. Food and Drug Administration at 21 CFR 589.2000, and must be 
individually identified by an official Canadian Food Inspection Agency 
eartag applied before the animal's arrival at the port of entry into 
the United States, that is determined by the Administrator to meet 
standards equivalent to those for official eartags in the United States 
as defined in Sec.  71.1 of this chapter and to be traceable to the 
premises of origin of the animal. No person may alter, deface, remove, 
or otherwise tamper with the individual identification while the animal 
is in the United States or moving into or through the United States, 
except that the identification may be removed at the time of slaughter. 
The animals must be accompanied by the certification issued in 
accordance with Sec.  93.405 that states, in addition to the statements 
required by Sec.  93.405, that the conditions of this paragraph have 
been met. Additionally, for sheep and goats imported for immediate 
slaughter, the certificate must state that the conditions of paragraphs 
(d)(1) through (d)(3) of this section have been met, and, for sheep and 
goats imported for other than immediate slaughter, the certificate must 
state that the conditions of paragraphs (e)(1) and (e)(2) of this 
section have been met.
    (d) Sheep and goats imported for immediate slaughter. Sheep and 
goats imported from Canada for immediate slaughter must be imported 
only through a port of entry listed in Sec.  93.403(b) or as provided 
for in Sec.  93.403(f) in a means of conveyance sealed in Canada with 
seals of the Canadian Government, and must be moved directly as a group 
from the port of entry to a recognized slaughtering establishment for 
slaughter as a group. The sheep and goats shall be inspected at the 
port of entry and otherwise handled in accordance with Sec.  93.408. 
The seals on the means of conveyance must be broken only at the port of 
entry by the APHIS port veterinarian or at the recognized slaughtering 
establishment by an authorized USDA representative. If the seals are 
broken by the APHIS port veterinarian at the port of entry, the means 
of conveyance must be resealed with seals of the U.S. Government before 
being moved to the recognized slaughtering establishment. The shipment 
must be accompanied from the port of entry to the recognized 
slaughtering establishment by APHIS Form VS 17-33, which shall include 
the location of the recognized slaughtering establishment. 
Additionally, the sheep and goats must meet the following conditions:
    (1) The animals have not tested positive for and are not suspect 
for a transmissible spongiform encephalopathy;
    (2) The animals have not resided in a flock or herd that has been 
diagnosed with BSE; and
    (3) The animals' movement is not restricted within Canada as a 
result of exposure to a transmissible spongiform encephalopathy.
* * * * *
    4. Section 93.420 would be revised to read as follows:


Sec.  93.420  Ruminants from Canada for immediate slaughter other than 
bovines, sheep, and goats.

    The requirements for the importation of sheep and goats from Canada 
for immediate slaughter are contained in Sec.  93.419. The requirements 
for the importation of bovines from Canada for immediate slaughter are 
contained in Sec.  93.436. All other ruminants imported from Canada for 
immediate slaughter, in addition to meeting all other applicable 
requirements of this part, must be imported only through a port of 
entry listed in Sec.  93.403(b) or as provided for in Sec.  93.403(f) 
to a recognized slaughtering establishment for slaughter, in 
conveyances that must be sealed with seals of the U.S. Government at 
the port of entry. The seals may be broken only at a recognized 
slaughtering establishment in the United States by an authorized USDA 
representative. The shipment must be accompanied from the port of entry 
to the recognized slaughtering establishment by APHIS Form VS 17-33, 
which must include the location of the recognized slaughtering 
establishment. Such ruminants shall be inspected at the port of entry 
and otherwise handled in accordance with Sec.  93.408.


(Approved by the Office of Management and Budget under control number 
0579-0277)

    5. Section 93.436 would be amended as follows:
    a. Paragraphs (a) and (b) would be revised to read as set forth 
below.
    b. In paragraph (c), the reference to ``Sec. Sec.  93.419(c) and 
93.420'' would be removed and a reference to ``Sec. Sec.  93.405 and 
93.419'' would be added in its place.


Sec.  93.436  Ruminants from regions of minimal risk for BSE.

* * * * *
    (a) Bovines for immediate slaughter. Bovines from a region listed 
in Sec.  94.18(a)(3) of this subchapter may be

[[Page 1128]]

imported for immediate slaughter under the following conditions:
    (1) The bovines must have been born on or after a date determined 
by APHIS to be the date of effective enforcement of a ruminant-to-
ruminant feed ban in the region of export. For bovines imported from 
Canada, that date is March 1, 1999.
    (2) Each bovine must be individually identified by an official 
eartag of the country of origin, applied before the animal's arrival at 
the port of entry into the United States, that is determined by the 
Administrator to meet standards equivalent to those for official 
eartags in this chapter and to be traceable to the premises of origin 
of the animal. No person may alter, deface, remove, or otherwise tamper 
with the official identification while the animal is in the United 
States or moving into or through the United States, except that the 
identification may be removed at the time of slaughter;
    (3) The bovines must be accompanied by a certificate issued in 
accordance with Sec.  93.405 that states, in addition to the statements 
required by Sec.  93.405, that the conditions of paragraphs (a)(1) and 
(a)(2) of this section have been met;
    (4) The bovines must be imported only through a port of entry 
listed in Sec.  93.403(b) or as provided for in Sec.  93.403(f). The 
bovines shall be inspected at the port of entry and otherwise handled 
in accordance with Sec.  93.408;
    (5) The bovines must be moved directly from the port of entry to a 
recognized slaughtering establishment. Bovines imported from Canada 
must be moved to the slaughtering establishment in conveyances that are 
sealed with seals of the U.S. Government at the port of entry. The 
seals may be broken only at the recognized slaughtering establishment 
by an authorized USDA representative; and
    (6) The bovines must be accompanied from the port of entry to the 
recognized slaughtering establishment by APHIS Form VS 17-33.
    (b) Bovines for other than immediate slaughter. Bovines from a 
region listed in Sec.  94.18(a)(3) of this subchapter may be imported 
for other than immediate slaughter under the following conditions:
    (1) The bovines must have been born on or after a date determined 
by APHIS to be the date of effective enforcement of a ruminant-to-
ruminant feed ban in the region of export. For bovines imported from 
Canada, that date is March 1, 1999.
    (2) The bovines must be permanently and humanely identified before 
arrival at the port of entry with a distinct and legible mark 
identifying the exporting country. Acceptable means of permanent 
identification include the following:
    (i) A mark properly applied with a freeze brand, hot iron, or other 
method, and easily visible on the live animal and on the carcass before 
skinning. Such a mark must be not less than 2 inches nor more than 3 
inches high, and must be applied to each animal's right hip, high on 
the tail-head (over the junction of the sacral and first cocygeal 
vertebrae). Bovines exported from Canada so marked must be marked with 
``CAN'';
    (ii) A tattoo with letters identifying the exporting country must 
be applied to the inside of one ear of the animal. For bovines exported 
from Canada, the tattoo must read ``CAN'';
    (iii) Other means of permanent identification upon request if 
deemed adequate by the Administrator to humanely identify the animal in 
a distinct and legible way as having been imported from the BSE 
minimal-risk exporting region.
    (3) Each bovine must be individually identified by an official 
eartag of the country of origin, applied before the animal's arrival at 
the port of entry into the United States, that is determined by the 
Administrator to meet standards equivalent to those for official 
eartags in Sec.  71.1 of this chapter and to be traceable to the 
premises of origin of the animal. No person may alter, deface, remove, 
or otherwise tamper with the official identification while the animal 
is in the United States or moving into or through the United States, 
except that the identification may be removed at the time of slaughter;
    (4) The bovines must be accompanied by a certificate issued in 
accordance with Sec.  93.405 that states, in addition to the statements 
required by Sec.  93.405, that the conditions of paragraphs (a)(1) and 
(a)(2) of this section have been met; and
    (5) The bovines must be imported only through a port of entry 
listed in Sec.  93.403(b) or as provided for in Sec.  93.403(f).
* * * * *

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

    6. The authority citation for part 94 would continue to read as 
follows:

    Authority: 7 U.S.C. 450, 7701-7772, 7781-7786, and 8301-8317; 21 
U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.


Sec.  94.19  [Amended]

    7. In Sec.  94.19, paragraphs (a)(2), (b)(2), and (f) would be 
amended by removing the words ``and small intestine'' each time they 
appear.

PART 95--SANITARY CONTROL OF ANIMAL BYPRODUCTS (EXCEPT CASINGS), 
AND HAY AND STRAW, OFFERED FOR ENTRY INTO THE UNITED STATES

    8. The authority citation for part 95 would continue to read as 
follows:

    Authority: 7 U.S.C. 8301-8317; 21 U.S.C. 136 and 136a; 31 U.S.C. 
9701; 7 CFR 2.22, 2.80, and 371.4.

    9. Section 95.4 would be amended as follows:
    a. The heading and the paragraph (a) introductory text would be 
revised to read as set forth below.
    b. Paragraphs (e) through (h) would be redesignated as paragraphs 
(f) through (i), respectively.
    c. Paragraphs (a)(1)(ii) and (a)(1)(iv) would be revised to read as 
set forth below.
    d. In paragraph (b), the words ``paragraphs (d) and (h)'' would be 
removed and the words ``paragraphs (d), (e), and (i)'' would be added 
in their place.
    e. Paragraph (d) introductory text would be revised to read as set 
forth below.
    f. New paragraph (e) would be added to read as set forth below.
    g. In newly designated paragraph (h)(1)(i), the words ``and small 
intestine'' would be removed.
    h. In newly designated paragraph (i) introductory text, the words 
``paragraphs (h)(1) through (h)(3)'' would be removed and the words 
paragraphs ``paragraphs (i)(1) through (i)(3)'' would be added in their 
place.


Sec.  95.4  Restrictions on the importation of processed animal 
protein, offal, tankage, fat, glands, certain tallow other than tallow 
derivatives, and blood and blood products due to bovine spongiform 
encephalopathy.

    (a) Except as provided in paragraphs (c) through (i) of this 
section, the importation of the following is prohibited:
    (1) * * *
    (ii) Glands, unprocessed fat tissue, and blood and blood products 
derived from ruminants;
* * * * *
    (iv) Derivatives of glands and blood and blood products derived 
from ruminants;
* * * * *

[[Page 1129]]

    (d) Except as provided in paragraph (e) of this section, the 
importation of serum albumin, serocolostrum, amniotic liquids or 
extracts, and placental liquids derived from ruminants that have been 
in any region listed in Sec.  94.18(a) of this chapter, and collagen 
and collagen products that meet any of the conditions listed paragraphs 
(a)(1) through (a)(3) of this section, is prohibited unless the 
following conditions have been met:
* * * * *
    (e) Bovine blood and blood products that are otherwise prohibited 
importation under paragraph (a)(1) or (d) of this section may be 
imported into the United States if they meet the following conditions:
    (1) For blood collected at slaughter and for products derived from 
blood collected at slaughter:
    (i) The blood was collected in a closed system in which the blood 
was conveyed directly from the animal in a closed conduit to a closed 
receptacle, or was collected otherwise in an hygienic manner that 
prevents contamination of the blood with SRMs.
    (ii) The slaughtered animal passed ante-mortem inspection and was 
not subjected to a pithing process or to a stunning process with a 
device injecting compressed air or gas into the cranial cavity;
    (2) For fetal bovine serum:
    (i) The blood from which the fetal bovine serum was derived was 
collected in a closed system in which the blood was conveyed directly 
from the animal in a closed conduit to a closed receptacle, or was 
collected otherwise in an hygienic manner that prevents contamination 
of the blood with SRMs;
    (ii) The dam of the fetal calf passed ante-mortem inspection and 
was not subjected to a pithing process or to a stunning process with a 
device injecting compressed air or gas into the cranial cavity;
    (iii) The uterus was removed from the dam's abdominal cavity intact 
and taken to a separate area sufficiently removed from the slaughtering 
area of the facility to ensure that the fetal blood was not 
contaminated with SRMs when collected.
    (3) For blood collected from live donor bovines and for products 
derived from blood collected from live donor bovines:
    (i) The blood was collected in a closed system in which the blood 
was conveyed directly from the animal in a closed conduit to a closed 
receptacle, or was collected otherwise in a hygienic manner that 
prevents contamination of the blood with SRMs;
    (ii) The donor animal was free of clinical signs of disease.
    (4) Each shipment to the United States is accompanied by an 
original certificate signed by a full-time salaried veterinary officer 
of the national government of the region of origin, or issued by a 
veterinarian designated by or accredited by the national government of 
the region of origin, representing that the veterinarian issuing the 
certificate was authorized to do so. The certificate must state that 
the requirements of paragraph (e)(1), (e)(2), or (e)(3) of this 
section, as applicable, have been met.
* * * * *

PART 96--RESTRICTION OF IMPORTATIONS OF FOREIGN ANIMAL CASINGS 
OFFERED FOR ENTRY INTO THE UNITED STATES

    10. The authority citation for part 96 would continue to read as 
follows:

    Authority: 7 U.S.C. 8301-8317; 21 U.S.C. 136 and 136a; 7 CFR 
2.22, 2.80, and 371.4.

    11. In Sec.  96.1, new definitions of Food and Drug Administration 
and Food Safety and Inspection Service would be added, in alphabetical 
order, to read as follows:


Sec.  96.1  Definitions.

* * * * *
    Food and Drug Administration. The Food and Drug Administration of 
the United States Department of Health and Human Services.
    Food Safety and Inspection Service. The Food Safety and Inspection 
Service of the United States Department of Agriculture.
* * * * *
    12. In Sec.  96.2, paragraph (b) would be revised to read as 
follows:


Sec.  96.2  Prohibition of casings due to African swine fever and 
bovine spongiform encephalopathy.

* * * * *
    (b) Ruminant casings. The importation of casings, except stomachs, 
from ruminants that originated in or were processed in any region 
listed in Sec.  94.18(a) of this subchapter is prohibited, except as 
provided in paragraphs (b)(1) and (b)(2) of this section:
    (1) Casings that are derived from sheep that were slaughtered in a 
region listed in Sec.  94.18(a)(3) of this subchapter at less than 12 
months of age and that were from a flock subject to a ruminant feed ban 
equivalent to the requirements established by the U.S. Food and Drug 
Administration at 21 CFR 589.2000 may be imported.
    (2) Casings that are derived from bovines that were slaughtered in 
a region listed in Sec.  94.18(a)(3) of this subchapter may be 
imported, provided, if the casings are derived from the small 
intestine, the casings are derived from that part of the small 
intestine that is eligible for use as human food in accordance with the 
requirements established by the Food Safety and Inspection Service at 9 
CFR 310.22 and the Food and Drug Administration at 21 CFR 189.5.
    (3) Casings imported in accordance with either paragraph (b)(1) or 
(b)(2) of this section must be accompanied by a certificate that:
    (i) States that the casings meet the conditions of this section;
    (ii) Is written in English;
    (iii) Is signed by an individual eligible to issue the certificate 
required under Sec.  96.3; and
    (iv) Is presented to an authorized inspector at the port of entry.


(Approved by the Office of Management and Budget under control number 
0579-0015)

    13. In Sec.  96.3, paragraph (d) would be revised to read as 
follows:


Sec.  96.3  Certificate for animal casings.

* * * * *
    (d) In addition to meeting the requirements of this section, the 
certificate accompanying sheep casings from a region listed in Sec.  
94.18(a)(3) of this subchapter must state that the casings meet the 
requirements of Sec.  96.2(b)(1) and the certificate accompanying 
bovine casings from a region listed in Sec.  94.18(a)(3) of this 
subchapter must state that the casings meet the requirements of Sec.  
96.2(b)(2).
* * * * *

    Done in Washington, DC, this 3rd day of January 2007.
Bruce Knight,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 07-17 Filed 1-4-07; 3:00 pm]
BILLING CODE 3410-34-P