Mad Cow Disease: Improvements in the Animal Feed Ban and Other	 
Regulatory Areas Would Strengthen U.S. Prevention Efforts	 
(25-JAN-02, GAO-02-183).					 
                                                                 
Bovine spongiform encephalopathy (BSE), also known as mad cow	 
disease, has been found in cattle in 23 countries. Countries with
BSE have suffered large economic losses because of declines in	 
both beef exports and domestic beef sales. The U.S. Department of
Agriculture (USDA) and the Food and Drug Administration (FDA)	 
have primary responsibility for preventing the introduction of	 
BSE-contaminated cattle, beef, and cattle-derived products into  
the United States. GAO found that FDA has not acted promptly to  
force firms to keep prohibited proteins out of cattle feed and to
label animal feed that cannot be fed to cattle. FDA's data on	 
inspections are severely flawed, and FDA is unaware of the full  
extent of industry compliance. If BSE was discovered in U.S.	 
cattle, many consumers might refuse to buy domestic beef; beef	 
exports could decline dramatically as could sales in related	 
industries, such as hamburger chains and frozen dinner		 
manufacturers. Furthermore, some people might develop mad cow	 
disease if infected cattle were to enter the food supply. The	 
United States acted as many as five years earlier than did other 
countries to impose controls over imports of animals and animal  
feed ingredients from countries that had experienced mad cow	 
disease. Similarly, U.S. surveillance efforts to test cattle	 
brains for mad cow disease met internationally recommended	 
testing targets earlier than did other countries. However, the	 
United States' feed ban is more permissive than that of other	 
countries, allowing cattle feed to contain proteins from horses  
and pigs. FDA is reviewing whether these ingredients should	 
continue to be allowed in cattle feed. Finally, as in most	 
countries that are BSE-free, cattle brains and other central	 
nervous system tissue can be sold as human food.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-183 					        
    ACCNO:   A02630						        
  TITLE:     Mad Cow Disease: Improvements in the Animal Feed Ban and 
Other Regulatory Areas Would Strengthen U.S. Prevention Efforts  
     DATE:   01/25/2002 
  SUBJECT:   Animal diseases					 
	     Cattle						 
	     Consumer protection				 
	     Contaminated foods 				 
	     Feed additives					 
	     Food industry					 
	     Food inspection					 
	     Health hazards					 
	     International economic relations			 
	     International trade regulation			 
	     Bovine Spongiform Encephalopathy			 
	     Variant Creutzfeldt-Jacob Disease			 

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GAO-02-183
     
United States General Accounting Office

GAO

Report to Congressional Requesters

January 2002

MAD COW DISEASE

Improvements in the Animal Feed Ban and Other Regulatory Areas Would
Strengthen U.S. Prevention Efforts

GAO-02-183

Contents

Letter

Results in Brief
Background
Weaknesses Exist in Federal BSE Prevention and Detection Efforts
The Economic Impacts of a U.S. Outbreak Could Be Severe, and

the Health Risks Are Uncertain

The United States Set Controls on Importing Animals and Met BSE Testing
Goals Earlier Than Many Countries, but Its Feed Ban Is More Permissive

Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation

1

                                                                     3 4 10

29

33 36 37 38

Appendix I Scope and Methodology

Appendix II Comments from the Department of Health and Human Services

Appendix III Comments from the Department of Agriculture

Appendix IV Comments from the Customs Service

Appendix V GAO Contacts and Staff Acknowledgments

Tables

Table 1: Cattle Brain Samples USDA Collected and Tested for BSE

in Its Surveillance Program, Fiscal Years 1994-2001 21 Table 2: FDA Feed Ban
Inspection and Compliance Information 23 Table 3: BSE Level of Risk Assessed
for 49 Countries by European

Commission Experts 34

Figures

Figure 1: Countries with Confirmed Cases of BSE, as of December 13, 2001

Figure 2: Examples of Products Derived from Cattle

Figure 3: Agencies' Implementation of Restrictions to Prevent the
Importation of Animals and Products at Risk for BSE

Figure 4: Countries Restricted from Exporting Animals and Products at Risk
for BSE to the United States

Figure 5: Imports of Inedible Meat By-Products, Which Include Meat and Bone
Meal and Other Animal-Derived Meals, Flours, and Residues, from Countries
with BSE, 1980-2000

Figure 6: Imports of Beef and Edible Cattle Organs from Countries with BSE,
1980-2000

Figure 7: Imports of Prepared Beef Products from Countries with BSE,
1980-2000

Figure 8: Economic Sectors That Would Be Affected if BSE Were Found in the
United States

                                    6 8

12

13

16 17 18 30

Abbreviations

BSE bovine spongiform encephalopathy
FDA Food and Drug Administration
FMD foot and mouth disease
GAO General Accounting Office
HHS Department of Health and Human Services
OIE Office International Des Epizooties
TSE transmissible spongiform encephalopathy
USDA United States Department of Agriculture
vCJD variant Creutzfeldt-Jacob disease

United States General Accounting Office Washington, DC 20548

January 25, 2002

The Honorable Tom Harkin
Chairman
The Honorable Richard G. Lugar
Ranking Minority Member
Committee on Agriculture, Nutrition, and Forestry
United States Senate

The Honorable Richard J. Durbin
United States Senate

Bovine spongiform encephalopathy (BSE), commonly known as mad cow
disease, is an always fatal, neuro-degenerative disease that has been found
in cattle in 23 countries around the world. Cattle contract the disease
through animal feed that contains protein derived from the remains of
diseased animals. Scientists generally believe an equally fatal disease in
humans-known as variant Creutzfeldt-Jacob Disease (vCJD)-is linked
to eating beef from cattle infected with BSE. Just over 100 people have
died from vCJD, which many scientists believe is difficult to contract. Both
diseases have long incubation periods during which they are
undetectable-2 to 8 years in cattle and possibly up to 30 years in humans.
Countries with BSE have experienced large economic losses in both their
beef exports and domestic beef sales. In Europe, more than 5 million head
of cattle have been destroyed to thwart the spread of BSE since 1986,
when it was first identified in the United Kingdom.

The U.S. Department of Agriculture (USDA) and the Food and Drug
Administration (FDA) have primary responsibility for preventing the
introduction of BSE-contaminated cattle, beef, and cattle-derived products
(such as some dietary supplements) into the United States and the spread
of the disease if it were to appear. In 1989, USDA began to identify
countries from which cattle and cattle-derived products cannot be
imported because of BSE concerns; since 1992, FDA has identified the
foods, medical products, and other FDA-regulated products derived from
cattle for which imports from those countries pose a potential risk. USDA
and FDA screen imported shipments of such products. In 1997, to prevent
the spread of BSE should it appear in a U.S. herd, FDA implemented a ban
on animal feed. It prohibited the use of proteins from most mammals in

feed for cattle and other ruminants.1 The prohibited proteins may still be
used in other animal feed, including pet food and feed for swine and horses.
In addition, USDA inspects domestically prepared meat, and FDA oversees the
manufacture of medical and other products to help ensure they do not contain
potentially infective brain and spinal cord (central nervous system) tissue.
To detect BSE in the estimated 97 million dairy and beef cattle in the
United States, USDA implemented a surveillance program to conduct post
mortem tests for BSE on the brains of certain adult cattle.

No cases of BSE-infected animals have been detected in the United States,
but the continuing discovery of new cases in other countries, as well as a
limited understanding of the disease and its prevention, have heightened
concerns about the adequacy of federal efforts to keep BSE out of the United
States. In light of these concerns, you asked us to (1) assess the
effectiveness of federal actions to prevent BSE and ensure compliance with
the animal feed ban; (2) assess the potential economic impacts and health
risks if BSE were to be found in U.S. cattle; and (3) compare U.S. actions
with actions taken in other countries to prevent the emergence or spread of
BSE. As you also requested, we considered, to the extent feasible, a study
by the Harvard Center for Risk Analysis and sponsored by USDA to examine the
potential for BSE in the United States.2 That study, issued in November
2001, concluded that BSE is extremely unlikely to become established in the
United States and that, if introduced here, it would be eliminated within 20
years.3 The authors acknowledged that those conclusions, which were based on
a probabilistic simulation model developed for the study, could be
influenced by a number of model assumptions that could not be verified with
confidence-including assumptions about U.S. measures to prevent the
introduction and spread of BSE. The study also states that the most
influential sources of

1Ruminants are animals with four-chambered stomachs including, but not
limited to, cattle, buffalo, sheep, goats, deer, elk, and antelope.

2Independent of the Harvard study, in May 2001 the Animal Disease Risk
Assessment, Prevention, and Control Act of 2001 (P.L. 107-9) required USDA
to report on the risk to the United States from BSE, the effectiveness of
current interagency BSE prevention efforts, and recommendations to reduce
and manage the risks. USDA expects to issue its report later this year.

3Evaluation of the Potential for Bovine Spongiform Encephalopathy in the
United States, Harvard Center for Risk Analysis, Harvard School of Public
Health and the Center for Computational Epidemiology, College of Veterinary
Medicine, Tuskegee University,

Nov. 26, 2001.

Results in Brief

uncertainty regarding the spread of BSE "are related to compliance with the
feed ban." USDA plans to have the study peer-reviewed by a team of outside
experts to validate its scientific integrity. We did not attempt to validate
the model nor the assumptions Harvard made in applying the model to the
United States. Also, we did not conduct an independent risk analysis of the
potential for BSE to occur in the United States.

While BSE has not been found in the United States, federal actions do not
sufficiently ensure that all BSE-infected animals or products are kept out
or that if BSE were found, it would be detected promptly and not spread to
other cattle through animal feed or enter the human food supply. With regard
to imports, the United States had imported about 125 million pounds of beef
(0.35 percent of total imported) and about 1,000 cattle (0.003 percent of
total imported) from countries that later discovered BSE-during the period
when BSE would have been incubating. In addition, weaknesses in USDA's and
FDA's import controls, such as inspection capacity that has not kept pace
with the growth in imports, may allow BSE-infected products to enter the
country. With regard to animal testing to detect BSE, although USDA has
steadily increased the number of animals it tests, it does not include many
animals that die on farms. Experts consider these animals a high-risk
population. Concerning the feed ban, FDA has not acted promptly to compel
firms to keep prohibited proteins out of cattle feed and to label animal
feed that cannot be fed to cattle. We identified some noncompliant firms
that had not been reinspected for 2 or more years and instances when no
enforcement action had occurred even though the firms had been found
noncompliant on multiple inspections. Moreover, FDA's data on inspections
are severely flawed and, as a result, FDA does not know the full extent of
industry compliance. FDA acknowledges that it has not yet identified and
inspected all firms subject to the ban. In terms of the public health risk,
consumers do not always know when foods and other products they use may
contain central nervous system tissue, which, according to scientific
experts, could pose a health risk if taken from diseased animals.

The economic impacts of a BSE outbreak in the United States could be severe,
according to federal economists. However, scientific experts believe the
health risks are uncertain. In terms of the economic impacts, if BSE were
discovered in U.S. cattle, beef exports and domestic beef consumption would
drop. The severity and duration of the economic impact would depend largely
on the number of animals affected, the U.S. response, and the public's
reaction. We could not extrapolate the potential impact on the U.S. economy
by looking at the experiences of countries

with BSE because perceptions about food safety risks vary from country to
country, and the economic impacts of BSE on one country might not be
applicable to another. Nonetheless, if BSE were found here, the economic
impact on the $56 billion beef industry could be devastating. Many consumers
might refuse to buy domestic beef; beef exports could decline dramatically
and sales in related industries-such as hamburger chains and soup and frozen
dinner manufacturers-could be similarly affected. Concerning the health
risks, if BSE-infected cattle were to enter the food supply, some people
might develop vCJD. However, experts disagree about the number of people who
would be affected. While many believe that vCJD is very difficult to
contract, so that relatively few people would develop it, some experts
believe that, because of the long incubation period, no one can predict
whether few or many might contract vCJD.

The United States acted as many as 5 years earlier than other countries to
impose controls over imports of animals and animal feed ingredients from
countries that had experienced BSE. Similarly, U.S. surveillance efforts to
test cattle brains for BSE met internationally recommended testing targets
earlier than other countries. However, the United States has a more
permissive feed ban than other countries-one that allows cattle feed to
contain proteins from horses and pigs. FDA is reviewing whether these
ingredients should continue to be allowed in cattle feed. Finally, as in
most countries that are BSE-free, including the United States, cattle brains
and other central nervous system tissue can be sold as human food.

This report makes recommendations to USDA and FDA to, among other things,
strengthen enforcement of the feed ban, develop a coordinated strategy to
identify resources needed to increase inspections of imported goods, and
alert consumers when products may contain central nervous system tissue. In
commenting on a draft of this report, FDA and Customs concurred with our
recommendations. USDA largely concurred but said that labeling and warning
statements should be reserved for known hazards.

Background BSE and vCJD are among a group of diseases known as transmissible
spongiform encephalopathies (TSE). Currently, there are no therapies or
vaccines to treat TSEs, and a definitive diagnosis can only be made from a
post mortem examination of the brain. The infective agent that gives rise to
TSEs is generally thought to be a malformed protein, called a prion,4

4Prions are neither viruses nor bacteria and contain no genetic material.

which causes normal molecules of the same protein in the brain to become
malformed.5 Prions cannot be killed by conventional heat, irradiation, or
chemical disinfection and sterilization procedures. The precise amount of
material needed to cause disease is unknown but is generally thought to be
very small.6 TSE prions accumulate in central nervous system
tissue-specifically the brain, spinal cord, and eye-but are also present in
other body tissues of infected humans and animals. Other TSEs include
Creutzfeldt-Jacob disease (in humans), scrapie (in sheep), transmissible
mink encephalopathy, and chronic wasting disease (in elk and deer).

The original source of BSE is not known with certainty. However, evidence
suggests that the practice of recycling the remains of diseased animals,
specifically scrapie-infected sheep, into feed for livestock, including
cattle, was responsible for the emergence and spread of BSE in the United
Kingdom. In 1988, the United Kingdom banned the practice of feeding
ruminant-derived protein to ruminants. Following this ban, the number of new
cases of BSE-infected cattle declined from a high in 1992 of 32,280 new
cases to a total of 1,312 cases in 2000, and to 526 cases as of September
30, 2001. About 2,500 cases of BSE have appeared elsewhere in 18 other
European countries, as well as Oman, Canada, the Falkland Islands, and
Japan, as a result of the exportation of contaminated feed and cattle (see
fig. 1). The one BSE-infected cow found in Canada had been imported and was
destroyed without entering the animal or human food chains. The BSE-infected
cattle found in Oman (two animals) and the Falkland Islands (one animal) had
also been imported.

5 The prion hypothesis is not universally accepted. Some scientists believe
a virus or other conventional agent, as yet undetected, gives rise to TSEs.

6According to scientific experts at the European Commission, in careful
feeding experiments less than one gram of brain tissue from an infected
animal induced disease in all the recipient cattle. The infective dose
depends heavily on characteristics of the host and the route of exposure.
Consuming infected material is a less efficient means of inducing disease
than injecting the material directly into the brain.

Figure 1: Countries with Confirmed Cases of BSE, as of December 13, 2001

aBSE found only in imported cattle.

Source: Office International Des Epizooties (world organization for animal
health).

In 1996, experts in the United Kingdom reported the first cases of vCJD.
They believed the victims contracted it by eating beef contaminated by
central nervous system tissue from BSE-infected cattle. Although
contamination of meat with central nervous system tissue could occur in many
ways during the slaughtering and processing of cattle, the major suspect in
these cases was meat removed by a system that mechanically recovered (by
squeezing under pressure) the remaining meat left on carcasses after all
accessible meat has been removed by knife. Prior to December 1995, when the
United Kingdom banned the practice, mechanically recovered meat, which was
included in many cooked meat products such as sausages, could legally have
contained spinal cords. While scientists believe that at least several
hundred thousand people may have eaten BSE-infective tissue, many believe
vCJD is difficult to contract.7 As of November 2001, 112 people have had
vCJD, of whom just over 100 had died, nearly all in the United Kingdom.8
Most vCJD victims

7 According to FDA, millions of people in the United Kingdom may have been
exposed to BSE.

8This figure includes 12 probable cases where confirmation will never be
possible, according to officials in the Department of Health in the United
Kingdom.

have been young-the average age at death was 28-and half died within 13
months from the time they first showed symptoms.

As figure 2 shows, cattle provide meat and a wide array of consumer
products. Many of these products may pose at least a theoretical risk for
BSE infection. For example, dietary supplements, vaccines, cosmetics, and
surgical replacement tissue, as well as gelatin, are produced from bovine
carcasses, central nervous system tissue, and blood. The rendering industry
in the United States and elsewhere recycles animals and animal tissues
considered unfit for human consumption into, among other things, animal
feed; diseased animals are routinely part of such recycling. The United
States trades extensively in animals and the full range of animal products.

No test for BSE or TSE infectivity has been proven adequate for diagnosis in
humans or animals before symptoms appear or for screening blood and other
products. Tests to detect proteins from cattle in animal feed do not
distinguish between milk and blood proteins that are allowed and meat and
bone proteins that are not. Furthermore, methods to test animal feeds are
based on the analysis of genetic material, bone, and protein, all of which
are degraded or destroyed in the rendering process. The lack of unique
genetic material associated with BSE prions has led scientists to look for
other biological markers for the disease, such as accumulations of abnormal
forms of the prion protein in various tissues. Development of valid,
sensitive, rapid, and reliable tests for live animals is difficult because
the specific agent has not been fully identified and elicits no detectable
immune response. Furthermore, efforts are hampered by the limited scientific
understanding of BSE and other TSEs, including when during the incubation
period infectivity appears, what mechanism causes infection, and whether
infectivity is ever present in blood.

Figure 2: Examples of Products Derived from Cattle

Four federal agencies are primarily responsible for overseeing the many
imported and domestic products that could pose a risk of BSE and for
surveillance programs designed to detect and monitor animal and human
diseases:

* The U.S. Customs Service screens all goods entering the country to enforce
Customs laws and laws for 40 other agencies.

* USDA's Animal and Plant Health Inspection Service monitors the health of
domestic animals and screens imported animals and other products to protect
animal health.

* USDA's Food Safety Inspection Service monitors the safety of imported and
domestically produced meat, poultry, and some egg products.

* FDA, within the Department of Health and Human Services (HHS), monitors
the safety of all other foreign and domestic food products (including
dietary supplements and animal feed), as well as vaccines for humans, drugs,
cosmetics, medical devices, and the human blood supply.

In addition, two other HHS agencies-the Centers for Disease Control and
Prevention and the National Institutes of Health-monitor human health to
detect vCJD should it appear and conduct research to better understand TSEs
and the prions thought to cause them.

In August 1997, FDA banned potentially BSE-infective animal proteins in feed
for cattle and other ruminants. Proteins are added to feed to promote animal
growth and can be derived from a number of sources, including animal meat
and bone meal, fishmeal, and plant products. The feed ban prohibits the use
of most animal-derived proteins in cattle feed.9 It also requires that,
among other things, feed and feed ingredients that contain the prohibited
proteins be labeled "Do not feed to cattle or other ruminants;" firms that
handle both prohibited and nonprohibited feed and feed ingredients have
procedures to ensure that the two are not commingled; and firms maintain
records sufficient to track feed materials through their receipt and
disposition for certain periods. The ban excludes animal blood and blood
products, gelatin, plate waste,10 milk and milk protein, and protein derived
from pigs and horses (and other equines). Renderers, feed manufacturers and
blenders, and feed distributors are subject to the ban.

Recent research on the ability of animals to be "silent" carriers of TSEs
from another species raises questions about the advisability of including in
feed for cattle, or other ruminants, proteins from animals such as pigs and
horses that are currently not thought to be susceptible to BSE and other
TSEs, according to researchers at the National Institutes of Health.
Specifically, in November 2001 these researchers reported that even though
mice experimentally infected with hamster scrapie did not develop clinical
disease, infectivity persisted in the brains and spleens of the mice

9Animal-derived protein may be used in pet food and in feed for horses,
swine, other non-ruminant animals, and poultry.

10Plate waste is cooked meat offered for human food that is further heat
processed.

throughout their life spans.11 Although available laboratory methods were
not sufficiently sensitive to detect the infectivity in these mice, the
researchers could infect other mice and hamsters with tissue from the
original asymptomatic mice.

The European Commission-the executive and legislative body of the European
Union12- has had its Scientific Steering Committee13conduct assessments of
the geographical risk of BSE for countries that requested an assessment.
Between July 2000 and November 2001 these scientific experts issued
assessments for 49 countries, including the United States, which the experts
stated was unlikely to have BSE, but they also stated that the possibility
could not be excluded.

BSE differs greatly from foot and mouth disease (FMD). FMD is a highly
contagious viral disease that primarily affects cloven-hoofed animals,
including cattle, sheep, swine, and goats, and last appeared in the United
States in 1929. In contrast to BSE, FMD does not threaten humans, rarely
causes death in afflicted animals, and has an incubation period of 24 hours
to 21 days. In addition, the virus that causes FMD can be killed using
standard sterilization procedures. This report deals only with BSE. We also
have a study underway, to be issued later in 2002, of federal measures to
control the threat FMD may pose to U.S. livestock.

The continuing absence of BSE in the United States today cannot be
sufficiently ensured by current federal prevention efforts. The introduction
and spread of BSE in the United States could stem from cattle and
cattle-derived products imported from countries that subsequently developed
BSE and from gaps in import controls, animal testing, and feed ban
enforcement. As a result of these problems, consumers may unknowingly

Weaknesses Exist in Federal BSE Prevention and Detection Efforts

11R. Race, A. Raines, G.J. Raymond, B. Caughey, and B. Chesebro, "Long-term
Subclinical

Carrier State Precedes Scrapie Replication and Adaptation in a Resistant
Species: Analogies to Bovine Spongiform Encephalopathy and Variant
Creutzfeldt-Jakob Disease in Humans," Journal of Virology, Vol. 75, No. 21
(2001), pp. 10106-12

12The European Union is composed of Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands,
Portugal, Spain, Sweden, and the United Kingdom.

13The Scientific Steering Committee provides scientific advice to the
European Commission on matters related to consumer protection and health,
including food safety.

eat foods that contain central nervous system tissue from a diseased animal.

BSE-Risk Products May Since 1989 and as recently as 2001, USDA and FDA have
identified Have Entered the Country countries with BSE or at risk for BSE
and issued import restrictions on before BSE Emerged in the cattle and other
ruminants, and on products containing cattle- and

ruminant-derived material from those countries. Figure 3 presents aExporting
Countries or timeline of the actions taken by USDA and FDA during that
period.through Gaps in Import

Controls

      Figure 3: Agencies' Implementation of Restrictions to Prevent the
            Importation of Animals and Products at Risk for BSE

Source: GAO analysis of USDA and FDA import restrictions.

Figure 4  shows the countries  on which the United  States currently imposes
trade restrictions for BSE-risk items.

 Figure 4: Countries Restricted from Exporting Animals and Products at Risk
                        for BSE to the United States

                         Source: USDA regulations.

Although federal agencies have acted to reduce the possible ways that
BSE-infected animals or products could enter the country, the United States
has imported about 1,000 cattle; about 23 million pounds of inedible meat
by-products, including meat and bone meal; about 101 million pounds of beef;
and about 24 million pounds of prepared beef products during the past 20
years from countries where BSE was later found. These numbers represent a
fraction of total imports in each category-0.003 percent of cattle, 0.665
percent of meat by-products, 0.314 percent of beef, and 0.728 percent of
prepared beef products. In light of the long incubation period for BSE (up
to 8 years), the possibility that some contaminated animals or products have
entered the United States cannot be ruled out.

The United States imported 334 breeding and dairy cattle from the United
Kingdom between 1980 and 1989.14 According to USDA, 173 of these animals
could have been used in animal feed or entered the human food supply. In
addition, the United States imported 443 breeding and dairy cattle from
continental Europe between 1983 and 1997, some of which may also have been
used in animal feed or in the human food supply. Since 1996, USDA has placed
under quarantine any of these imported cattle it has found still alive.
These animals are monitored and, when they die, USDA obtains brain samples
to test for BSE. Thus far, all tests on these animals have been negative. As
of November 16, 2001, three head of cattle from the United Kingdom and five
from continental Europe were still alive and being monitored.

The United States also imported 242 cattle from Japan between 1993 and 1999.
Japan reported its first case of BSE in September 2001. As of November 28,
2001, USDA had located 214 of these cattle. According to USDA, 24 of these
cattle had gone to slaughter or to rendering,15 40 had been exported, and
150 were still alive. USDA has begun monitoring those animals and is
attempting to locate the remaining 28 cattle.

In its evaluation of the potential for BSE in the United States, the Harvard
study considered the ban on imports of cattle from the United Kingdom as one
of the United States' key prevention measures. The study assumed

14In 1989, USDA prohibited all imports of cattle and other ruminants from
countries with BSE.

15Renderers recycle animals and animal tissues into, among other things,
animal feed; diseased animals, unfit for human consumption, are routinely
part of such recycling.

that remains from some of the cattle imported from the United Kingdom could
have been used in animal feed, food for human consumption, or both. Although
more than 95 percent of the study's simulations, based on exposure to a low
infective dose, resulted in no BSE cases in cattle, a few resulted in
substantial numbers of cases. The study also assumed that cattle imported
from continental Europe after 1996 had been traced and their movements
controlled; it states that these cattle present virtually no risk for
introducing BSE to the United States. However, the Harvard study did not
take into account the 242 cattle imported from Japan between 1993 and 1999.
The discovery of BSE in Japan occurred just before Harvard issued the
results of its study.

The United States also imported about 23 million pounds of inedible meat
by-products-which would include meat and bone meal and other animal-derived
meals, flours, and residues-between 1980 and 2000 from countries later found
to have BSE (see fig 5.). However, the amount of meat by-products derived
from cattle is uncertain because the code Customs uses to classify such
shipments includes by-products from cattle or other animals. Likewise, any
meat and bone meal imported under that code could be from cattle or other
animals. While experts, including the Harvard researchers, see the risk of
exposure posed by these shipments as extremely low, if any cattle feed
contained BSE-infected meat and bone meal, it could create an opportunity to
contaminate U.S. cattle.

Figure 5: Imports of Inedible Meat By-Products, Which Include Meat and Bone
Meal and Other Animal-Derived Meals, Flours, and Residues, from Countries
with BSE, 1980-2000

Source: GAO analysis of data from the International Trade Commission and the
Departments of Commerce and Treasury.

The beef and prepared beef products that the United States imported from
countries that later found BSE, were for human consumption. According to
scientific experts, meat products could represent a risk to people who ate
them if the meat came from a BSE-infected animal (see figs. 6 and 7). Until
February 2001, USDA regulations allowed the import of beef and beef products
from countries with BSE or at risk of BSE if the facility that processed the
meat did not receive, store, or process ruminant material from a country
with BSE or at risk for BSE.

Figure 6: Imports of  Beef and Edible Cattle Organs from Countries with BSE,
1980-2000

Note: These  trade data include beef only for  the years 1980-1988; the data
may include  meat and  organs from other  bovines, such as  bison, oxen, and
buffalo, for the years 1989-2000.

Source: GAO analysis of data from the International Trade Commission and the
Departments of Commerce and Treasury.

Figure 7: Imports of Prepared Beef Products from Countries with BSE,
1980-2000

Note: Prepared products include, among other things, processed meat, such as
sausage, and cured or pickled meat, such as corned beef. These trade data
may include products from other bovines, such as bison, oxen, and buffalo.

Source: GAO analysis of data from the International Trade Commission and the
Departments of Commerce and Treasury.

In addition to the BSE risk posed by past imports, a small but steady stream
of BSE-risk material may still be entering the United States through
international bulk mail. USDA inspectors at a New Jersey international bulk
mail facility have begun using new x-ray technology that clearly
distinguishes organic from inorganic matter to screen packages for products
that pose a risk of animal and plant diseases. At this facility, we saw USDA
inspectors seize one package that contained beef soup mix from Germany, one
of the countries from which the United States restricts trade in beef
products. Inspectors also showed us a package from Ireland that was labeled
"cutlery," but contained corned beef. From May through October 2001, USDA
inspectors, using the new x-ray technology, screened about 7 percent (about
116,000) of the over 1.5 million packages that passed through the New Jersey
facility. Of the screened packages, 570 contained one or more at-risk beef
or beef-derived products. However, USDA does not screen packages at the New
Jersey facility during the

24 hours each week when inspectors are not on duty. According to the
inspectors, the screening rate was low because only one or two inspectors
are on duty at any time, and each has only seconds to visually inspect
packages as they pass by on a conveyor belt. While all 14 international bulk
mail facilities in the United States have some sort of x-ray technology that
can distinguish organic from inorganic material, the new technology-used
only at the New Jersey facility-provides greater accuracy and clearer
imagery. The new technology is also compatible with the conveyor system and
can be placed over the conveyor belt. USDA officials told us that the new
x-ray technology would facilitate the inspection of international bulk mail
arriving in the United States.

At-risk items may also slip through federal inspections at ports of entry.
Customs often finds discrepancies with the accuracy of importer-provided
information during its annual reviews of trade compliance and, as a result,
BSE-risk products may not be flagged for further inspection. For example,
Customs found a shipment of animal feed ingredients incorrectly classified
as pet food by the importer. It also found a shipment of animal feed
identified by the importer as originating in Canada that inspectors
discovered originated in Switzerland. For fiscal year 1999, Customs reported
that importer-provided information on shipments of live bovine animals
(e.g., cattle, bison, and buffalo) was inaccurate in over 24 percent of
samples taken. Information on shipments of fresh or frozen beef was
inaccurate in over 21 percent of samples and on shipments of animal feed in
over 24 percent of samples.

Additionally, the ever-increasing volume of imported shipments strains
inspection resources for both FDA and USDA. In October 2001, we reported
that during fiscal year 2000, FDA inspected about 1 percent of the over 4
million imported food entries under its jurisdiction.16 Additionally, FDA
inspected less than one percent of the more than 146,000 entries of imported
animal drugs and feeds. FDA has acknowledged that the increased volume of
imports has severely hampered its ability to inspect a sufficient portion of
imports. Specifically, while imported shipments under FDA's jurisdiction
have risen dramatically in recent years, the agency's inspection staff has
remained almost static since 1992. Prompted by bioterrorism concerns, the
Secretary of Health and Human Services requested $61 million in October 2001
to hire 410 additional inspectors and

16Food  Safety and Security: Fundamental Changes Needed  to Ensure Safe Food
(GAO-02-47T; Oct. 10, 2001).

other personnel to allow increased inspections of imported food products. In
1997 we reported that USDA's inspection workload had increased dramatically
since 1990; we concluded that USDA had little assurance that it was
deploying its limited inspection resources at the ports of entry that are
most vulnerable to the introduction of pests and diseases.17 USDA has
acknowledged the lack of inspection coverage and, in the wake of foot and
mouth disease outbreaks in Europe and other countries, authorized $32
million in fiscal year 2001 to hire 350 new inspection personnel and
additional canine inspection teams at U.S. borders and ports of entry.

USDA Tests Many Cattle Brains for BSE in Its Surveillance Program but Does
Not Test Many from Cattle That Die on Farms

USDA began testing animal brains to detect BSE in domestic cattle in 1990.
This surveillance program consists primarily of collecting and analyzing
brain samples from adult cattle with neurological symptoms and adult animals
that were nonambulatory at slaughter.18 Testing animal brains is a key
measure to detect BSE, and USDA's surveillance program should build on
current efforts to increase the number of brain samples tested each year,
according to officials from organizations representing the beef and grain
industries, state officials, and consumers, as well as federal officials. As
table 1 shows, the number of samples collected and tested by USDA in its
surveillance program has generally increased each year.19 The table also
shows that a substantial portion of those samples have been taken from
nonambulatory cattle since 1994, when USDA first began to collect this
information. USDA has increased the portion of nonambulatory cattle because
research has shown that this population includes animals that might have
subtle neurological symptoms or injuries resulting from neurological
impairment. In fiscal year 2001 these animals accounted for more than 90
percent of the 4,870 brains collected and tested by USDA. The remainder
includes brain samples from animals rejected at slaughter for signs of
neurological disease.

17Agricultural Inspection: Improvements Needed to Minimize Threat of Foreign
Pests and Diseases (GAO/RCED-97-102, May 1997).

18Nonambulatory or "downer" animals include primarily animals that are
unable to walk for various reasons ranging from broken limbs to neurological
diseases and some animals that died before slaughter.

19USDA also tests in its BSE surveillance program about 300 samples each
year submitted by practicing veterinarians and veterinary schools and
hospitals. Some of these samples come from cattle that displayed
neurological symptoms but tested negative for rabies, another neurological
disease.

Table  1: Cattle  Brain Samples  USDA Collected  and Tested  for BSE in  Its
Surveillance Program, Fiscal Years 1994-2001

  Fiscal year Brain samples tested 1994 1995 1996 1997 1998 1999 2000 2001

            Number from
            nonambulatory
              cattlea        199 223 266  219 344  651 1,895 4,464
            Number from
         ambulatory cattle   296 242 318  636 387  342   414   406
             Total brain
              samples
            collected and
               tested        495 465 584  855 731  993 2,309 4,870

aAccording to USDA, it did not track brain samples from cattle that had died
on farms; the few that were taken would have been counted in with the
nonambulatory cattle.

Source: GAO presentation of USDA data.

In addition to increasing the sample size and the number of nonambulatory
cattle tested, USDA has broadened its testing efforts. USDA tests samples
using two complementary laboratory methods and conducts surveillance for two
TSEs-scrapie in sheep and chronic wasting disease in deer and elk-that
already exist in the United States. USDA officials and many scientific
experts believe surveillance and eradication of scrapie and chronic wasting
disease is important, in part, because of the suspected link between scrapie
in the United Kingdom and the appearance of BSE, and because both have been
experimentally transferred to other species.

Although USDA has strengthened its surveillance efforts, the program does
not include many samples from cattle that die on farms. Scientific experts
consider these animals a high-risk population because they are generally
older and the reasons for their death are often unknown.20 USDA told us that
efforts to obtain samples more systematically from such animals are limited
largely by the dispersed nature of the domestic livestock industry, the lack
of adequate laboratory capacity to conduct the tests, and the lack of
sufficient staff and time to collect the samples. When animals die on farms
they may be buried on the farm, taken to landfills, or collected by
renderers who recycle animals and other animal tissues into, among other
things, animal feed. In 1998 USDA implemented a cooperative program with the
rendering industry to ensure that carcasses of animals condemned at
slaughter for signs of neurological disease are held until test

20 Older animals  are at  risk because,  if infected,  they have  lived long
enough for disease symptoms to appear.

results are completed. Under this program, USDA may share the expenses to
store or dispose of carcasses during the testing period. USDA was not able
to provide us with information on how frequently the program has been used,
but it has been used only sporadically, according to USDA officials and the
USDA veterinarians and renderers we spoke with in nine states and Puerto
Rico.

In its evaluation of the potential for BSE in the United States, the Harvard
Center for Risk Analysis included animals that die on farms as a potential
source of BSE exposure. According to their simulation model, excluding from
the rendering process those animals that die on farms significantly reduces
the potential for cattle to be exposed to BSE through animal feed. Harvard's
report also notes that farmers may not be willing to send animals displaying
neurological symptoms to slaughter, thereby reducing the likelihood that
infected animals would be inspected by USDA at slaughterhouses. Once dead,
these animals might be rendered, as assumed in the simulation model, or
disposed of on farms. According to USDA officials, when the Harvard study
was issued to the public, the Secretary of Agriculture announced plans to
more than double the number of BSE tests conducted in FY 2002 to more than
12,000.

FDA's Enforcement of the Feed Ban Is Limited and Inspection Data Are Flawed

Federal and state officials and the scientific community agree that if BSE
were to be found in a U.S. herd, a well-enforced feed ban would prevent its
spread to other herds. State inspectors (who conduct about 80 percent of
inspections) and FDA inspectors document their feed ban inspections on
inspection forms. FDA headquarters compiles and maintains this information
in a database, and it provided to us the information in that database
through October 26, 2001. According to FDA's data, more than 12,000
inspections have been conducted since 1997 at more than 10,000 firms,21
including renderers, feed manufacturers, feed haulers, and distributors, as
well as at on-farm feed operations. According to FDA's October 2001
quarterly update that summarized results of feed ban inspections, 364 firms
were out of compliance. In addition, FDA believes that not all firms that
should be subject to the ban have been identified and inspected, at least
1,200 or more based on industry estimates (see table 2). However, we could
not verify these data because we found significant flaws in FDA's database,
which we discuss later in this report.

21FDA carries out feed ban inspections in 12 states and has entered into
partnership and contract arrangements with the other states to conduct feed
ban inspections.

        Table 2: FDA Feed Ban Inspection and Compliance Information

FDA's estimate of the universe of this type of firm

Number of firms inspected

Number of firms out of complianceType of firm 
    4,237 81

Note: Because of
the severe flaws
in FDA's
inspection
database, we were
unable to verify
these data or use
the database for analysis of oversight and enforcement.

aFeed mills that must be licensed by FDA because they handle restricted
medicines.

bOther firms include feed blenders, on-farm mills, and feed haulers.

Source: FDA's Center for Veterinary Medicine Update, Oct. 30, 2001.

FDA did not take prompt enforcement action to compel firms to comply with
the feed ban. When we began this study, in April 2001, the only enforcement
action FDA had taken was to issue two warning letters in 1999.22 The first
letter was issued in May 1999-21 months after inspections began.23 However,
since inspections began in 1997, FDA has reported hundreds of firms out of
compliance-most often for failure to meet requirements to label feed that
contained prohibited proteins or for including prohibited proteins in cattle
feed. In our analysis of individual inspection forms, we found several
instances in which firms were out of compliance in repeated inspections, yet
FDA had not issued a warning letter. We also found instances in which firms
were out of compliance but had not been reinspected for a year or more-and
in some cases for more than 2 years.

Between February and November 2001, FDA issued warning letters to another 48
firms. In addition, 17 firms voluntarily recalled feed, including 9 that had
been issued a warning letter. As of November 30, 2001, FDA or states had
reinspected 33 of the total of 50 firms that had been issued

22A warning letter generally represents FDA's first official notification to
a firm that FDA has found one or more products, practices, processes, or
other activities violate its regulations.

23Five firms also voluntarily recalled mislabeled or potentially
contaminated feed during 1999.

warning letters (2 in 1999 and 48 in 2001). Six of the firms were still out
of compliance on reinspection. FDA has no enforcement strategy for feed ban
compliance that includes a hierarchy of enforcement actions, criteria for
actions to be taken, time frames for firms to correct violations, and time
frames for follow-up inspections to confirm that violations have been
corrected.

According to FDA, rather than taking enforcement actions, it has emphasized
educating firms subject to the feed ban about the ban's requirements and
working with those firms to establish cooperative relationships. FDA
reported that some states might have taken enforcement actions, including
requiring firms to recall noncompliant feed. However, FDA does not track
enforcement actions taken by states; therefore, it does not know the extent
of such actions.

Even if FDA were to actively enforce the feed ban, its inspection database
is so severely flawed that-until corrected-it should not be used to assess
compliance. Nonetheless, FDA uses the database to manage and oversee
compliance, respond to congressional inquiries about compliance, and keep
industry and the public informed.

From our review of FDA's database of 12,046 feed ban inspection records (as
of October 26, 2001), we found records lacked unique identifiers, were
incomplete, contained inconsistent or inaccurate information, and were not
entered into the database in a timely manner. Examples of the severe flaws
we found include:

* Entries for 5,446 inspections-or about 45 percent of all inspections-lack
information to uniquely identify individual firms. As a result, the data
cannot be used to reliably determine the number of firms inspected,
compliance trends over time, or the inspection history of an individual
firm. In at least one case, the same unique identifier had been applied to
six different firms and, in another case, a firm had two unique identifiers.
In addition, we found 232 cases in which one or more inspections of the same
firm lacked the unique identifier.

* Entries for 301 inspections of firms that handle prohibited proteins
contain no response to whether feed was properly labeled; entries for 438
inspections of firms that handled both prohibited and non-prohibited
proteins had no response to whether prohibited proteins were included in
feed intended for cattle.

* Entries where responses to questions about feed labeling or whether
prohibited proteins were included in feed intended for cattle indicated that
the firms were in compliance; however, inspectors' notes contained in

  other sections of the database contradicted the responses and indicated

the firms were not in compliance. * Inspections were not entered into the
database. In assessing the warning letters, we discovered references to
inspections that do not appear in the database. In fact, the inspection
record for the firm that received the first warning letter-in May 1999-does
not appear in the database.

* Inspections were not entered into the database in a timely fashion. We
found several instances where inspections dating back to 1998 and 1999 were
not entered into the database until mid to late 2001-too late for FDA to
reinspect in a timely fashion if violations existed. Also, too much time had
passed for FDA to reliably clarify inconsistent or conflicting information
or obtain answers to questions left blank on the inspection forms. Moreover,
any compliance information FDA reported to congressional overseers and
others would not have been reliable.

* Several states did not use FDA's inspection form, but instead used their
own state-developed forms. Because the questions were different, certain
assumptions had to be made when these data were entered into FDA's database.
The HHS Office of Inspector General noted, in a June 2000 report, that many
FDA agreements with states, whose inspectors conducted about 80 percent of
feed ban inspections, do not ensure that states routinely provide FDA with
standardized information on the inspections they conduct.24 In September
2001 FDA revised the inspection form and asked states to use the revised
form. States are free to ask other questions during the inspections, but FDA
has also asked them to include FDA's questions in FDA's format.

* The database is incomplete. It does not include all firms subject to the
feed ban. FDA officials relied on the personal knowledge of state and FDA
field staff and on membership lists from industry groups to identify and
locate firms. However, our review of membership records for the National
Renderers Association-for the years 1998 to 2001-disclosed 21 rendering
firms that were not in FDA's database. According to association records,
those firms process meat and bone meal and other products that could contain
proteins subject to the feed ban. FDA did not count data entries with
blanks-no responses-in the selected data fields it uses when it reports on
compliance. Therefore, when FDA provided compliance information to the
Congress-and when it publishes that information electronically-the data are
misleading and the number of firms identified as out of compliance are
undercounted. For

24 FDA  Oversight  of  State  Food  Firm  Inspections: A  Call  for  Greater
Accountability (HHS-OIG, June 2000, OEI-01-98-00400).

example, for the 364 firms identified as out of compliance in FDA's October
2001 update-the source for information in table 1 above-FDA assumed that all
entries with blanks in the compliance fields were in compliance. However, we
found entries where firms had blanks in the data fields FDA used, yet
contained inspector comments in other fields showing that the firms were not
in compliance. FDA also did not include these firms on published lists of
noncompliant firms. About half of the inspection records contain inspector
comments. On those entries where blanks also existed, the inspector comments
showed that firms were in compliance in some instances and out of compliance
in others.

An FDA official told us that the database was not originally intended to
track compliance of individual firms, but rather to guide the agency's
efforts to educate firms subject to the ban by illustrating particular
states or practices that needed more intensive focus. However, FDA has no
information system other than the inspection database to track compliance
with the feed ban.

FDA has not placed a priority on oversight of the feed ban. From the
implementation of the feed ban in August 1997 until early 2001, one person
in FDA's Center for Veterinary Medicine was responsible for feed ban
management. Although state and FDA District Office inspectors conducted the
inspections, this individual designed the inspection form, compiled
inspection data, and made enforcement decisions-in addition to that
individual's other duties. Furthermore, the inspection form had not been
pretested-a standard practice to ensure that questions are interpreted and
answered consistently.

In the course of our review, FDA attempted to clean up the database so that
it could serve as an accurate management tool. However, in October 2001, FDA
turned that effort over to a contractor to (1) review the completeness of
the feed ban inspection database to ensure that findings have been captured,
including written comments by the inspectors on inspection forms; (2)
analyze the data and present the findings in a report; and (3) review the
current enforcement strategy to determine program strengths and weaknesses
and to make recommendations for improvements that will better support FDA's
compliance goals. FDA expects this work to be completed by February 2002.
Also in October 2001, FDA entered into a separate contract to reconfigure
the data so that they can be incorporated into FDA's primary database for
all other inspection activities. Work on the two contracts is to be carried
out concurrently. This work is to be completed in the spring of 2002.

In evaluating the potential for BSE in the United States, the Harvard study
noted that the feed ban is key to preventing the spread of BSE. It added,
however, that the effectiveness of the feed ban is somewhat uncertain
because compliance rates are not "precisely" known. Harvard's simulation
model assumed the feed ban was compromised to some extent by on-farm feeding
of prohibited proteins to cattle and by some noncompliance with the
requirement that feed containing prohibited protein carry a warning label.
The study's observations underscore the importance of the problems we found
in FDA's oversight and enforcement of the feed ban.

Consumers Cannot Tell Which Beef Products May Contain Central Nervous System
Tissue

Some consumers in the United States regularly eat cattle brains and central
nervous system tissue. Brains are a routine part of the diet in several
cultures. Eating such foods would not pose a safety concern unless they were
from a BSE-infected animal. However, most consumers would not realize that
central nervous system tissue could be found on many beef cuts and in
several beef products.25 For example, bone-in meat cuts, such as T-bone
steaks, are stripped directly from the animal's vertebrae and may contain
portions of the spinal cord. Many other edible products, such as beef stock,
beef extract, and beef flavoring, are frequently made by further processing
(e.g., boiling) the skeletal remains (including the vertebral column) of the
carcass after most of the meat has been removed. USDA officials told us that
they would expect to find central nervous system tissue in these foods.

However, based on food quality-not food safety-concerns, USDA does prohibit
central nervous system tissue in beef products that are labeled as meat and
that are made using technology that mechanically removes meat from the bones
of slaughtered animals in a way that approximates deboning by hand. Products
made from meat using this technology include sausages and hot dogs. USDA has
found central nervous system tissue in meat that was mechanically removed
using a technology known as advanced meat recovery systems. USDA estimates
that 28 beef processing plants use this technology and, in 2000, recovered
257 million pounds of beef. According to a beef industry official, this
technology recovers up to 10 additional pounds of meat per carcass.

25USDA is responsible for overseeing the health of cattle and ensuring the
safety of fresh and processed beef and beef products, while FDA is
responsible for ensuring the safety of many edible products made from
cattle, including bouillon, flavorings, and dietary supplements.

Because it is not a food safety issue, USDA has not rigorously enforced its
prohibition against the presence of central nervous system tissue in meat
extracted by using the advanced meat recovery system technology. Since 1997,
USDA has tested a total of 63 beef samples from 18 of the plants that use
this technology. Of those samples, 12 tested positive for central nervous
system tissue. USDA has not tested beef samples from the other plants that
use the technology in at least 4 years. When its tests found central nervous
system tissue in samples, USDA did not track to ensure that the processing
plants relabeled the contaminated meat products as something other than
meat.

USDA plans to use the Harvard study to help it determine whether the
presence of central nervous system tissue should be a food safety
matter-whether all or some central nervous system tissue should be
considered unsafe for human consumption. The Harvard study notes that a ban
on the use of spinal cords, brains, and vertebral columns in human food or
animal feed significantly reduced the risk of exposure in its simulation
model. As part of its evaluation of the implications of the study, USDA will
issue a Federal Register Notice after January 2002 to solicit comments on,
among other things, the safety of the advanced meat recovery technology and
any meat that comes from the vertebral column.

In addition, FDA's TSE Advisory Committee-composed of USDA, National
Institutes of Health, Centers for Disease Control and Prevention, and other
federal experts, as well as academic scientists and medical experts, and
consumers-recommended, in October 2001, that FDA consider taking regulatory
action to ban brains and other central nervous system tissue from human food
because of the potential risk of exposure to BSE-infected tissue. According
to FDA, it is considering banning central nervous system tissue from the
foods it regulates as well as from cosmetics and over-the-counter drugs. FDA
told us it is taking this action to ensure that consumers are protected from
consuming BSE-contaminated products. Representatives of two consumer groups
we interviewed expressed concern that central nervous system tissue remains
a part of food generally and that the use of advanced meat recovery
technology could expose consumers unknowingly to such tissues.

The Economic Impacts of a U.S. Outbreak Could Be Severe, and the Health
Risks Are Uncertain

If BSE were discovered in U.S. cattle, beef exports and domestic beef
consumption would drop, damaging many sectors of the economy, according to
federal economists. If the infected cattle were to enter the food supply,
some people might develop vCJD.

The economic impacts of a BSE outbreak in the United States would include
the direct impacts on certain sectors, such as the beef and livestock
industries, and indirect impacts on related industries, such as the animal
feed and restaurant industries. In addition, an assessment of economic
impacts would include costs relating to the public sector, such as farmer
compensation payments, increased spending on research and development, and
increased costs to government agencies.26 While the extent to which economic
impacts would pass from one sector to another is unclear, these effects
would eventually channel through to several sectors of the economy. Figure 8
lists the sectors and some of the likely qualitative impacts within each
sector in the event of a BSE outbreak in the United States.

26For the most part, these costs represent transfer payments from the public
sector or taxpayers to farmers and other related industries.

Figure 8:  Economic Sectors That Would Be Affected if BSE  Were Found in the
United States

aBeef  packers slaughter cattle and other  animals and package carcasses and
large cuts for further processing.

bBeef processors cut, slice, grind and package beef for consumers and for
other end users, such as grocery stores, restaurants, and institutions.

Source: GAO analysis.

To date, however, there are no comprehensive economic studies of the total
direct and indirect economic impacts of a potential BSE crisis in the United
States. A complete assessment of these impacts is difficult to forecast
given the uncertainties surrounding key assumptions, such as the source of
the BSE, the number and timing of cases, and the public's reaction. For
instance, if BSE were to enter the country through the importation of meat
and bone meal rather than live cattle imports, the economic consequences
could be more pervasive, because the meat and bone meal could potentially
contaminate many cattle. Another difficulty in estimating impacts is the
problem of determining how the increased costs of BSE would be passed on
from the farmer to the final consumer in the beef-marketing channel.
Moreover, studies that estimate losses due to BSE from other countries may
not be totally applicable to the United States.

Food safety experts have noted that perceptions about food safety risks vary
from country to country, and the consumer impacts of BSE in one country may
not be applicable to another country. If BSE were found here, the economic
impact on the $56 billion beef industry and related industries could be
devastating, according to USDA economists. For instance, consumers in the
United States, in response to reports of BSE-infected cattle, may for a
period of time restrict their purchases of beef and products containing
beef. That response would be felt not only by the cattle and beef
industries, but also by peripheral industries. For example, hamburger chains
and soup and frozen dinner manufacturers could see dramatic declines in
business.

Similarly, in international trade, a loss in beef exports may be more
devastating for the United States than for other beef-producing countries.
In particular, since the United States exports nearly 10 percent (by volume)
of its total beef production (about 25 percent of total world beef exports),
the trade sector is also critical in estimating total economic impacts.

As a first approximation, however, FDA officials estimated the direct
effects to the beef and livestock industries based on a 1998 study of the
economic impacts of the first year of the BSE outbreak in the United

Kingdom.27 They estimate that if the United States were to experience an
outbreak as severe as the one in the United Kingdom, the beef industry could
lose as much as $15 billion in sales revenue. Specifically, these costs were
based on the assumption that in the event of a BSE crisis, U.S. domestic and
export demand would decrease by the same amounts as in the United Kingdom-a
24 percent decline in domestic beef sales and an 80 percent decline in beef
and live cattle exports. In addition, the FDA estimated the livestock sector
would incur a minimum of $12 billion to slaughter and dispose of at-risk
cattle. This estimate was based on an assumption that the United States
would need to destroy about four times as many cattle as the United Kingdom.
However, the FDA analysis did not include the offsetting effects of
government payments, as occurred in the United Kingdom, shifts in consumer
demand for other types of meat, or the effects on other related sectors of
the economy. Overall, however, FDA noted that those firms primarily engaged
in the production of beef products would incur severe economic disruption.

In terms of the health risks, if infected cattle were to enter the food
supply, some people might develop vCJD; however, scientific experts disagree
about how many people could develop the disease. Many experts believe that
vCJD is difficult to contract and, therefore, that relatively few people
would develop the disease. However, other scientific experts believe that,
because of the long incubation period, no one can predict whether few or
many might contract vCJD. According to some scientific experts in the United
Kingdom, as many as 100,000 people in Europe may develop vCJD as a result of
the BSE outbreak there. This could include Americans who lived in countries
where BSE occurred. In addition to these direct health implications, an
outbreak of BSE in the United States would carry an emotional toll on
consumers who believe federal regulators will protect them from this
devastating disease. Moreover, according to a National Institutes of Health
scientist, the appearance of vCJD could cast doubt on the safety of organ
donations and the U.S. blood supply.28,29 Any health

27Using an input-output model of the British agricultural economy, a study
prepared by the Ministries of Agriculture, Fisheries, and Food, commissioned
by United Kingdom agricultural departments and Her Majesty's Treasury,
estimates that economic losses for the first year of the crisis in the
United Kingdom were between $1.07 and $1.4 billion. Economic Impact of BSE
on the UK Economy, by DTZ Pieda Consulting, March 1998.

28BSE and vCJD: Background, Evolution, and Current Concerns, Brown et al.,
Emerging Infectious Diseases Journal. Vol 7, No 1, Jan-Feb 2001.

The United States Set Controls on Importing Animals and Met BSE Testing
Goals Earlier Than Many Countries, but Its Feed Ban Is More Permissive

implications would translate into medical treatment and related financial
and economic costs, such as lost productivity.

The United States prohibited the import of cattle and other ruminants 3 to 5
years earlier than many other countries. Its surveillance program to test
cattle brains for BSE also met international targets for the number of
animals tested earlier than many other countries. However, the United States
has a more permissive feed ban than other countries-one that allows cattle
feed to contain proteins from horses and pigs. FDA is reviewing whether
these ingredients should continue to be allowed in cattle feed. Finally, as
in most countries that are BSE-free, including the United States, cattle
brains and other central nervous system tissue can be sold as human food.

The European Commission's Scientific Steering Committee has had scientific
experts assess countries, including the United States, for the risk that BSE
could enter the country through imported animals and feed and be spread
through recycled animal proteins in feed. As of November 30, 2001, risk
assessments had been completed for 49 countries. According to the scientific
experts, most European countries are likely to have BSE, even if it has not
yet been confirmed by surveillance testing, or to have BSE at a higher level
of incidence than thought. The scientific experts assessed the United States
as unlikely to get BSE, but indicated that the possibility could not be
excluded. Table 3 presents the results of the 49 BSE risk assessments
completed through November 30, 2001.

29FDA monitors the BSE-related safety of the blood supply and has
recommended deferring donors of blood and blood products based on exposure
to the BSE agent, for example donations from individuals who traveled or
resided in the United Kingdom for 3 or more months between 1980 and the end
of 1996.

 Table 3: BSE Level of Risk Assessed for 49 Countries by European Commission
                           Experts BSE risk level

Number of
countries
(percent of
total assessed) European Union countries Other countries

Highly unlikely - Level I 16 (32.7) Argentina, Australia, Botswana, Brazil,
Chile, Costa Rica, El Salvador, Namibia, Nicaragua, Norway, New Zealand,
Panama, Paraguay, Singapore, Swaziland, Uruguay

Unlikely but not excluded - Level II 12 (24.5) Austria, Finland, Sweden
Canada, Colombia, India, Kenya, Mauritius, Nigeria, Pakistan, Slovenia,
United States

 Likely but not confirmed                                   Albania, Cyprus, Czech
     or confirmed at       19 (38.8)   Belgium, Denmark,    Republic,

 a lower level - Level III                 Germany, France,          Estonia, Hungary,
                                                  Ireland,         Lithuania, Poland,
                                       Italy, Luxembourg,   Romania, Slovakia,
                                                            Switzerland
                                       Netherlands, Spain
   Confirmed at a higher                    United Kingdom,
     level - Level IV       2 (4.1)               Portugal

Notes: Countries with reported cases of BSE as of December 13, 2001, are in
bold type. BSE was found in Austria, Czech Republic, Finland, Slovakia, and
Slovenia after their BSE risk assessments had been completed. Greece, the
only European Union country that did not provide the data for an assessment,
reported its first case of BSE in 2001.

Source: GAO analysis of 49 BSE risk assessments.

Using information on each country's past and present potential exposure and
ability to stop the spread of BSE, the scientific experts qualitatively
assessed the probability that an animal in a country is infected with BSE.
The assessments relied on data voluntarily supplied by the countries and on
discussions with the officials familiar with BSE prevention efforts from
each country on (1) the potential import of BSE via live cattle or
contaminated feed, (2) the adequacy of surveillance testing to detect the
presence of BSE, (3) cattle feeding and rendering practices, and (4) the use
of potentially infective tissue from cattle. The scientific experts also
focused on the import of infected animals and animal feed as the only
initial sources of infection and on animal feed as the only source of
spread. The experts did not evaluate the risks from consumer products that
could contain BSE-infected tissue. The scientific experts reported using a
conservative, reasonable worst-case approach, whenever data or information
from countries were insufficient. Based on our analyses of the 49 risk
assessments, the United States compared with the other countries as follows
in terms of the potential to import BSE, surveillance testing, cattle
feeding practices, and use of potentially infective tissue.

* Potential to import BSE. The United States acted earlier than many
countries to ban the import of cattle and meat and bone meal for use in

cattle feed from the United Kingdom and other countries where BSE had
appeared. The United States was one of three countries that banned trade in
cattle from the United Kingdom by 1989; six other countries did so by 1994.
Nine other countries had formal bans in place by 1996, the year that the
United Kingdom stopped all trade in cattle. Actions to halt trade in cattle
with other countries where BSE had appeared has been variable, and the
United States and some other countries phased in restrictions as cases
appeared.30 Also, many of the assessed countries, particularly those in
South America and in Africa, had little or no trade in cattle with the
United Kingdom or other countries where BSE had appeared. With regard to the
import of meat and bone meal for use in cattle feed, the United States
banned imports from the United Kingdom in 1991 and phased in restrictions
from other countries as cases of BSE appeared. While one country banned such
imports from the United Kingdom as early as 1978, due to concerns about foot
and mouth disease, a few countries imported significant amounts of meat and
bone meal from the United Kingdom and other BSE countries as recently as
1999.

* Surveillance testing to detect BSE. The United States is one of three
countries that reported meeting Office International Des Epizooties
(OIE)-recommended cattle testing levels by 1994.31 Most countries either had
not met OIE levels at the time of their assessments or met the levels after
1994. However, nine countries, including six with BSE,32 had started or
planned to start targeting cattle that die on farms in their surveillance
testing.33 In their assessments of the United States and the other
countries, the scientific experts most often recommended that countries
improve surveillance largely by including tests of high-risk populations,
such as animals that die on farms.

* Cattle feeding practices (feed bans). Of the 49 countries assessed, 41 had
some sort of feed ban in place; however, those bans varied on the extent
that they allowed protein from mammals in feed for cattle.

30In 1997 the United States restricted trade in cattle and cattle-derived
products, among other things, from most European countries, regardless of
whether the countries had BSE.

31The OIE recommends minimum testing levels for BSE surveillance in
countries based on the size of the adult cattle population.

32The six countries with BSE that have targeted testing animals that die on
farms are Switzerland, Ireland, Portugal, France, the Czech Republic, and
Slovenia.

33The three countries that do not have BSE that have targeted testing
animals that die on farms are Estonia, Cyprus, and Singapore.

Compared to other countries with a ban, the United States and 16 others
allow at least some mammalian protein in feed for cattle. For example, the
United States and Canada allowed cattle feed to contain protein from horses
and pigs.34 The remaining 24 countries with a feed ban (including 13 that
have BSE) prohibit all mammalian protein in cattle feed, although 9 allow
such protein in feed for pigs and poultry. Four of the 24 countries have
more stringent bans that prohibit mammalian protein in feed for all farm
animals-a practice the European Commission asked its member countries to
adopt on a temporary basis in 2000. In the assessments, scientific experts
found that the potential for commingling prohibited protein with cattle feed
existed in most countries. Enforcing existing feed bans was the second most
common recommendation made by the scientific experts. In October 2001, FDA
officials held a public hearing to elicit comments on, among other things,
whether the existing feed ban exemptions should be modified. As of December
17, 2001, FDA had not announced whether it would propose any changes to the
ban.

* Use of potentially infective tissue. Most of the countries assessed that
had not found BSE-infected cattle, including the United States, generally
allowed the sale of brains and other central nervous system tissue in human
food. Nearly half of the countries with BSE prohibited this high-risk tissue
in human food, and at least three countries-the United Kingdom, Ireland, and
Switzerland-banned mechanically recovered beef, such as that used in meat
pies, that may contain central nervous system tissue and had been linked to
vCJD. However, the Court of Auditors-the investigative agency for the
European Commission-found that efforts by European Union countries to remove
potentially high risk tissue from the human food and animal feed chains have
not been fully implemented and that the countries could not reach agreement
on what constituted high-risk tissue.35

BSE and vCJD are devastating, incurable, inevitably fatal diseases. If they
enter the country, they can bring dire economic consequences to the cattle

                                 Conclusions

and beef industries. Therefore, forceful federal prevention efforts are

34FDA allowed these exemptions either because scientific evidence had not
shown infectivity in the protein sources or because the species involved
were not known to contract BSE or other TSEs.

35Special Report No 14/200/1: Follow up on the Courts' Special Report No
19/98 on BSE Together with the Commission's Replies, Sept. 30, 2001.

warranted to keep BSE away from U.S. shores. Nevertheless, Customs has
reported significant error rates in importer-provided information for
BSE-risk shipments, import controls over bulk mail are weak, and inspection
capacity has not kept pace with the growth in imports. Because of these
import weaknesses-and because BSE may have entered in imports from countries
that have since developed the disease-BSE may be silently incubating
somewhere in the United States. If that is the case, then FDA's failure to
enforce the feed ban may already have placed U.S. herds and, in turn, the
human food supply at risk. FDA has no clear enforcement strategy for dealing
with firms that do not obey the feed ban, and it does not know what, if any,
enforcement actions the states may be taking. Moreover, FDA has been using
inaccurate, incomplete, and unreliable data to track and oversee feed ban
compliance.

Furthermore, if there is even a slight chance that BSE is incubating in U.S.
cattle, consumer groups believe that the American public has the right to
know when food and other consumer products may contain central nervous
system tissue that may pose a risk to the food supply. The importance of
informing consumers is heightened by concerns raised in the Harvard study
and by FDA's TSE Advisory Committee regarding the potential public health
risk posed by consuming such tissue. In addition, although USDA has been
proactive in increasing the number of cattle brains tested, it does not test
many animals that die on farms, even though it recognizes that older animals
and animals that die from unknown causes are at higher risk for BSE.

To better ensure that the United States is protected from the emergence and
spread of BSE, we make the following recommendations:

In order to strengthen inspections of imported products that could pose a
risk of BSE, we recommend that the Secretaries of Health and Human Services
and of Agriculture, in consultation with the Commissioner of Customs,
develop a coordinated strategy, including identifying resource needs.

In order to strengthen oversight and enforcement of the animal feed ban, we
also recommend that the Secretary of Health and Human Services direct the
Commissioner of FDA to take the following actions:

Recommendations for Executive Action

* Develop a strategy, working with states, to ensure that the information
FDA needs to oversee compliance is collected and that all firms subject to
the feed ban are identified and inspected in a timely fashion.

* Develop an enforcement strategy with criteria for actions to address firms
that violate the ban and time frames for reinspections to confirm that firms
have taken appropriate corrective actions.

* Track enforcement actions taken by states.

* Ensure that, as contractors modify the inspection database, they
incorporate commonly accepted data management and verification procedures so
that the inspection data can be useful as a management and reporting tool.

In order to help consumers identify foods that may contain central nervous
system tissue, we recommend that, as USDA evaluates whether such tissue from
cattle poses a health risk, the Secretary of Agriculture

* consider whether some interim action, such as public service announcements
or caution labels or signs, might be appropriate to advise consumers that
certain beef cuts and beef products may contain central nervous system
tissue; and

* better enforce the existing labeling requirement for products that contain
beef extracted using advanced meat recovery technology and contain central
nervous system tissue.

Additionally, to further help consumers identify foods and other products
that may contain central nervous system tissue, we recommend that the
Secretary of Health and Human Services consider whether the products it
regulates, including food, cosmetics, and over-the-counter drugs, should be
labeled to advise consumers that the products may contain central nervous
system tissue.

In order to strengthen the BSE surveillance program, we further recommend
that the Secretary of Agriculture increase the number of tests from cattle
that die on farms in the BSE surveillance program.

                               Agency Comments
                             and Our Evaluation

We provided HHS, USDA, and Customs with a draft of this report for review
and comment. HHS conveyed comments from FDA. FDA concurred with our
recommendations and said the report highlighted some key areas where U.S.
efforts to prevent BSE could be bolstered. FDA agreed that further
improvements in compliance with the feed ban would reduce the risk of
introducing and spreading BSE in the United States. However, FDA did not
agree that it had misled Congress and the public in reporting on compliance.
It is true, as FDA pointed out, that its June 22, 2001, transmittal of
compliance information to the Chairman of the House Committee on Energy and
Commerce "made an effort to identify the fact

that there were reporting problems, including incomplete data, i.e.,
blanks." However, we do not believe that caveat conveyed the extent to which
the information could be inaccurate. In fact, noncompliance could be much
higher than FDA reported, because FDA treated all firms with blanks on
compliance questions as if they were in compliance, even though some of
those records contained inspector comments stating that the firms were not
in compliance. FDA's transmittal to the Chairman did not disclose this.
Therefore, we believe our report is correct in characterizing FDA's data as
misleading. FDA also disagreed with our conclusion that it had not placed a
high priority on oversight of the feed ban. However, throughout our review,
FDA repeatedly pointed out that one individual, along with that individual's
other responsibilities, designed the feed ban program, the inspection form,
and the database to monitor inspections and, until January 2001, made all
decisions regarding enforcement actions. FDA's comments and our detailed
responses are presented in appendix II.

USDA largely agreed with our recommendations and said that it will address
them as it seeks public comment on any proposed regulatory changes. USDA
stated that a portion of the funding it received to bolster USDA's homeland
security efforts in the January 10, 2002, Defense Appropriations legislation
will be used to increase BSE surveillance. It plans to more than double the
number of animals sampled and to obtain more samples from animals that die
on farms. USDA also acknowledged its support for providing consumers with
information on product contents and for an open process that allows
consumers to make choices. However, USDA stated that labeling and warning
statements should be reserved for known hazards, which BSE is not in the
United States. In light of the experiences in Japan and other countries that
were thought to be BSE free, we believe that it would be prudent for USDA to
consider taking some action to inform consumers when products may contain
central nervous system or other tissue that could pose a risk if taken from
a BSE-infected animal. This effort would allow American consumers to make
more informed choices about the products they consume. USDA's comments and
our detailed responses are presented in appendix III.

Customs concurred with the report and the recommendations as they related to
Customs. Its letter is presented in appendix IV. USDA and FDA also made
technical clarifications, which we incorporated as appropriate.

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days from
the date of this letter. At that time, we will send copies to the
Secretaries of Agriculture and HHS, the Commissioner of Customs, and other
interested parties. We will make copies available to others upon request.

If you have any questions about this report, please contact me or Erin
Lansburgh at (202) 512-3841. Key contributors to this report are listed in
appendix V.

Lawrence J. Dyckman Director, Natural Resources and Environment

                      Appendix I: Scope and Methodology

To address the effectiveness of federal efforts to prevent BSE or its
spread, we focused on oversight activities in four key areas: import
controls, compliance with feed rules, meat production, and disease
surveillance. This included analysis of import data for calendar years 1980
through 2000 maintained by the U.S. Department of Commerce, the Treasury
Department, and the International Trade Commission; analysis of FDA data on
inspections for compliance with the feed ban for fiscal years 1997 through
2001; and review of USDA slaughter and meat processing procedures and BSE
surveillance documents. To assess the effectiveness of compliance with the
animal feed ban, we obtained and analyzed FDA's feed inspection database to
determine the accuracy, completeness, and reasonableness of key data
elements, and timeliness of data entry. We interviewed FDA and feed industry
officials and reviewed various FDA documents, including BSE inspection
forms, assignment memorandums for conducting BSE inspections, and listings
of firms that were out of compliance and firms that received FDA warning
letters. In addition, we reviewed FDA contract information for evaluating
the existing data in the BSE inspection database and for cleaning up the
data and incorporating it into the agency's main database. We did not
independently verify the accuracy of trade data maintained by the
International Trade Commission or inspection data maintained by FDA. We also
visited two large ports of entry to observe procedures to screen shipments
for BSE-risk products, one state to observe feed ban inspections, and
another state to observe slaughter and advanced meat recovery operations.

To assess the potential health risks and economic impacts of a BSE outbreak
in the United States, we met or spoke with federal and state officials, as
well as academic experts, industry representatives, and consumer groups, and
we reviewed scientific literature. Specifically, we interviewed USDA
officials responsible for oversight of imported animals and products, meat,
animal disease surveillance, and agricultural statistics; FDA officials
responsible for oversight of the feed ban, vaccines and blood, food
regulated by FDA, dietary supplements, and imported products; officials at
the U.S. Customs Service, International Trade Commission, United States
Trade Representative, Department of State, Centers for Disease Control and
Prevention, and National Institutes of Health. In addition, we attended
public meetings on BSE-related topics sponsored by FDA, HHS, and the
American Meat Institute. We also discussed risks and impacts with
representatives from the National Association of State Departments of
Agriculture, American Association of Feed Control Officials, Center for
Science and the Public Interest, Public Citizen, American Feed Industry
Association, American Meat Institute, National Cattlemen's Beef Association,
National Grain and Feed

Appendix I: Scope and Methodology

Association, National Milk Producers Federation, National Renderers
Association, Inc., and the Pet Food Institute. We interviewed officials at
the Harvard Center for Risk Analysis and reviewed their report,

Evaluation of the Potential for Bovine Spongiform Encephalopathy in the
United States, issued in November 2001.

To compare federal efforts to those taken by other countries, we reviewed
BSE risk assessments of 49 countries, including most major U.S. trading
partners, prepared by the European Commission's Scientific Steering
Committee. We compared the U.S. prevention efforts with those of countries
that have not reported a case of BSE and with countries in which existing
prevention measures did not prevent the emergence of BSE. We also reviewed
evaluations of BSE prevention programs in member states of the European
Union conducted by the European Commission's Food and Veterinary Office and
the European Communities' Court of Auditors. We conducted our study from
April through December 2001 in accordance with generally accepted government
auditing standards.

Appendix II: Comments from the Department of Health and Human Services

Note: GAO comments supplementing those in the report text appear at the end
of this appendix.

Appendix II: Comments from the Department of Health and Human Services

                               See comment 1.

                               See comment 2.

                               See comment 3.

Appendix II: Comments from the Department of Health and Human Services

                               See comment 4.

                               See comment 5.

Appendix II: Comments from the Department of Health and Human Services

Appendix II: Comments from the Department of Health and Human Services

                               See comment 6.

Appendix II: Comments from the Department of Health and Human Services

                               See comment 7.

Appendix II: Comments from the Department of Health and Human Services

                               See comment 8.

                               See comment 9.

Appendix II: Comments from the Department of Health and Human Services

Appendix II: Comments from the Department of Health and Human Services

Appendix II: Comments from the Department of Health and Human Services

GAO Comments

The following are GAO's comments on the Department of Health and Human
Services' letter dated January 9, 2002.

1. Our report acknowledged FDA's ongoing review but also notes that FDA has
not set a date to announce a decision on the exemptions. The report also
recognizes that recent research suggests the possibility of "silent"
incubation in species not previously thought susceptible to TSEs. This
research argues against waiting until BSE is found to strengthen measures
shown to prevent the spread of the disease. As FDA notes, other countries
strengthened their feed bans due to concerns about commingling prohibited
and non-prohibited proteins. Such commingling is a common area of
noncompliance in the United States.

2. As FDA points out, its June 22, 2001, transmittal of compliance
information to the Chairman of the House Committee on Energy and Commerce
"made an effort to identify the fact that there were reporting problems,
including incomplete data, i.e., blanks." However, we do not believe that
this caveat conveyed the extent to which the information could be
inaccurate. In fact, noncompliance could be much higher than FDA reported,
because FDA treated all firms with blanks on compliance questions as if they
were in compliance. We found that over 700 inspection records for firms that
handled prohibited proteins had blanks on compliance questions. In its
response to the Chairman, FDA did not disclose that some of those records
contained inspector comments stating that the firms were not in compliance.
Nor did FDA disclose that, at the time it responded to the Chairman, it was
aware of the need for "significant improvements in its data collection
system for enforcing the feed ban." As a result, we believe the data were
misleading.

3. We believe that the nature and severity of the problems we found in FDA's
management, oversight, and enforcement of the feed ban point to insufficient
attention by FDA management. Moreover, the fact that FDA gave all
headquarters responsibility to one individual-as an add-on to that
individual's other duties-is further evidence of the relatively low priority
FDA gave to its regulatory responsibility.

4. Although FDA's field inspectors and state inspectors carried out the
inspections, FDA headquarters tracked overall compliance with the feed ban
and brought together data on FDA field and state compliance inspections. In
meetings with FDA officials, we were repeatedly told

Appendix II: Comments from the Department of Health and Human Services

that a single person had designed the program and the database to monitor
inspections and, until January 2001, made all enforcement decisions. While
administrative and other support may have been available for this person,
the overall design and direction of feed ban implementation rested with this
individual. Moreover, because FDA had no other information system, the
database that individual developed was FDA's only mechanism to monitor the
program and track feed ban compliance.

5. Although FDA cites a number of high-level interagency policy and
technical initiatives aimed at ensuring that BSE-risk products do not enter
the United States, our recommendation is grounded in problems we found at
the operational level. First, the high error rates in importer-provided
information found by Customs are unacceptable. Second, the ever-increasing
volume of imported shipments strains inspection resources at both USDA and
FDA. Third, we observed or were told by federal field personnel about
problems affecting USDA and FDA staff responsible for reviewing import
documentation and conducting inspections of shipments. FDA staff told us
that they need integrated information technologies, dedicated inspection
facilities, and additional staff to effectively address their workload.

6. We do not agree that FDA has made extensive progress implementing our
recommendation, based on the fact that it periodically meets with states on
BSE-related issues and has increased the number of states under contracts to
conduct inspections. With regard to its progress in identifying the universe
of firms subject to the ban, our work shows that FDA's efforts have not been
successful. In reports, FDA states that the number of on-farm feed mills,
feed blenders, and feed haulers is still unknown. FDA also asserts that the
feed industry has undergone extensive consolidation, but it has not
reconciled the number of firms inspected with industry or state estimates.
Although FDA asserts it has incorporated into state contracts a requirement
to identify firms subject to the ban, the contracts we reviewed did not
include such provisions. Moreover, as recently as May 2001, we found that
FDA was adding to its database information on inspections conducted in 1998
by states under contract.

7. FDA agrees on the need for a comprehensive strategy for BSE but points
out that it began an enforcement strategy in 1998. However, our review shows
that the strategy did not contain criteria and timeframes for specific
enforcement actions against firms that fail to comply with the feed ban, as
our recommendation envisions. FDA's contention that

Appendix II: Comments from the Department of Health and Human Services

its initial approach was to educate firms does not explain its failure to
take action against firms found out of compliance on repeated inspections.
Now that the feed ban has been in effect for more than 4 years, FDA points
out that inspections have resulted in more than 200 recalls. However, those
recalls consist of actions taken by 22 firms, one of which accounted for
about 150 recalls. By FDA's own estimates, more than 300 firms are out of
compliance.

8. Regardless of variations in state laws, FDA has instructed states to
provide specific information on the feed ban inspections they conduct. We
believe FDA should request these states to also include information on
enforcement actions taken as a result of those feed ban inspections.

9. While we agree that FDA has initiated efforts to increase the integrity
and usefulness of the BSE inspection data, it has not taken the steps
necessary to ensure that the inspection data are accurate and complete and
recorded in a timely manner. For example, neither the steps listed in FDA's
letter nor the terms of the contracts we reviewed include periodic
assessment of error rates or controls to help ensure data entered are
complete and accurate. Moreover, FDA's response does not address how the
data on past BSE inspections will be merged with the Field Accomplishment
Compliance Tracking System. Many of the firms have never before been subject
to FDA oversight and would not have such control numbers to effectively
merge the old and new data. Also, FDA has not included steps to capture
timeliness of inspections, enforcement actions, and follow up, especially
for past inspections.

Appendix III: Comments from the Department of Agriculture

                               See comment 1.

         Appendix III: Comments from the Department of Agriculture

                               See comment 2.

                               See comment 3.

Appendix III: Comments from the Department of Agriculture

GAO Comments

The following are GAO's comments on the Department of Agriculture's comments
received January 11, 2002.

1. While USDA states that it agrees with our recommendation, in its
discussion of policy-level coordination and strategic planning among various
agencies, USDA does not fully address the substance of our recommendation.
Our recommendation focuses on actions to strengthen the inspection of
imported products at an operational level, including identifying resources
needed to do so.

2. With regard to our recommendation to consider interim action to advise
consumers when products may contain central nervous system tissue, USDA
acknowledged its support for providing consumers with information on product
content and for an open process that allows consumers to make choices.
However, USDA stated that labeling and warning statements should be reserved
for known hazards. We believe that it would be prudent for USDA to consider
taking some action to inform consumers when products may contain central
nervous system or other tissue that could pose a risk if taken from an
infected animal, especially in light of the experiences in Japan and other
countries that were believed to be BSE free. This would allow consumers to
make informed choices about the products they consume. Caution labels or
signs, if used, could facilitate more timely removal of products that could
pose a health risk if BSE were to appear.

3. USDA states that it is more than doubling the number of animals sampled
in its BSE surveillance program for 2002 and that it intends to obtain more
samples from animals that die on farms. USDA notes that properly equipped
laboratory facilities will be needed to support the increased surveillance.
Because of this uncertainty, we are keeping the recommendation.

Appendix IV: Comments from the Customs Service

Appendix V: GAO Contacts and Staff Acknowledgments

GAO Contacts Lawrence J. Dyckman (202) 512-3841 Erin Lansburgh (202)
512-3017

Acknowledgments In addition to those named above, Cheryl Williams, James
Dishmon, Stuart Ryba, Janice Turner, Jason Holliday, Barbara Johnson,
Barbara El-Osta, and Carol Herrnstadt Shulman made key contributions to this
report.

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