    Mad Cow Disease: FDA's Management of the Feed Ban Has Improved,
    but Oversight Weaknesses Continue to Limit Program Effectiveness
    (25-FEB-05, GAO-05-101).

    More than 5 million cattle across Europe have been killed to stop
    the spread of bovine spongiform encephalopathy (BSE), commonly
    called mad cow disease. Found in 26 countries, including Canada
    and the United States, BSE is believed to spread through animal
    feed that contains protein from BSE-infected animals. Consuming
    meat from infected cattle has also been linked to the deaths of
    about 150 people worldwide. In 1997, the Food and Drug
    Administration (FDA) issued a feed-ban rule prohibiting certain
    animal protein (prohibited material) in feed for cattle and other
    ruminant animals. FDA and 38 states inspect firms in the feed
    industry to enforce this critical firewall against BSE. In 2002,
    GAO reported a number of weaknesses in FDA's enforcement of the
    feed ban and recommended corrective actions. This report looks at
    FDA's efforts since 2002 to ensure industry compliance with the
    feed ban and protect U.S. cattle.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-05-101
        ACCNO:   A18236
      TITLE:     Mad Cow Disease: FDA's Management of the Feed Ban Has
    Improved, but Oversight Weaknesses Continue to Limit Program
    Effectiveness
         DATE:   02/25/2005
      SUBJECT:   Animal diseases
    	     Cattle
    	     Federal regulations
    	     Feed additives
    	     Feed industry
    	     Infectious diseases
    	     Inspection
    	     Interagency relations
    	     Livestock products
    	     Materials handling
    	     Noncompliance
    	     Performance measures
    	     Regulatory agencies
    	     Contamination
    	     Disease surveillance
    	     Livestock
    	     Bovine Spongiform Encephalopathy
    	     FDA Field Accomplishment and Compliance
    	     Tracking System

    	     Variant Creutzfeldt-Jacob Disease

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    GAO-05-101

    Report to Congressional Requesters

    February 2005

    MAD COW DISEASE

    FDA's Management of the Feed Ban Has Improved, but Oversight Weaknesses
    Continue to Limit Program Effectiveness

    Contents

    Tables

    February 25, 2005Letter

    The Honorable Saxby Chambliss Chairman The Honorable Tom Harkin Ranking
    Member Committee on Agriculture, Nutrition, and Forestry United States
    Senate

    The Honorable Thad Cochran The Honorable Richard J. Durbin United States
    Senate

    Bovine spongiform encephalopathy (BSE), commonly known as mad cow disease,
    is an always fatal neurodegenerative animal disease that has been found in
    cattle in 26 countries since it was first identified in the United Kingdom
    in 1986. In December 2003, the United States discovered its first case of
    BSE in a cow in Washington State. The U.S. Department of Agriculture
    (USDA) later determined that this cow was imported from Canada. The agent
    believed to be responsible for BSE is a malformed type of protein called a
    prion, found in certain tissue-particularly brain and central nervous
    system tissue-of infected animals. Cattle contract BSE by eating feed
    derived from the remains of BSE-infected animals.1 In Europe, more than 5
    million head of cattle have been killed to thwart the spread of the
    disease. Scientists also generally believe that a fatal disease in
    humans-knows as variant Creutzfeldt-Jacob Disease (vCJD)-is linked to
    eating beef contaminated with the malformed protein. Research suggests
    that vCJD is difficult for humans to contract-about 150 people have died
    worldwide from vCJD. 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.

    USDA is primarily responsible for detecting the disease in cattle, and the
    Department of Health and Human Services' Food and Drug Administration
    (FDA) is primarily responsible for preventing its introduction and spread
    through animal feed. Both agencies recognize the importance of preventing
    BSE from becoming established in the United States-not only to protect the
    safety of the U.S. food supply but also to protect the economic viability
    of the $70 billion U.S. beef industry. With 95 million head of cattle, the
    United States is the world's largest beef producer, exporting a record 2.6
    billion pounds of beef, valued at over $3.1 billion, in 2003. In January
    2002, we reported that the potential impact of even a small outbreak of
    BSE in the United States could be economically devastating.2 Indeed,
    between January and September 2004, the industry lost more than 80 percent
    of its export trade, or an estimated $2 billion, following the discovery
    of the one BSE-infected animal in December 2003. Although most countries
    stopped importing U.S. beef for some period of time, domestic consumption
    did not drop. In fact, changing dietary trends have led to increased U.S.
    beef consumption in the last several years. The United States is in
    discussions with its major trading partners about renewing U.S. beef
    imports.

    To protect U.S. cattle and consumers, USDA and FDA have put in place three
    primary firewalls. These include the following:

    o Controls over imports. Since 1989, USDA has prohibited the importation
    of live cattle and certain cattle products from countries where BSE is
    known to exist. In 1992, FDA began identifying medical products and other
    FDA-regulated foods and products derived from cattle from countries with
    BSE. USDA and FDA, in cooperation with the Department of Homeland
    Security's Customs and Border Protection, screen shipments of such
    products.

    o Animal surveillance. Since 1990, to detect BSE, USDA has been testing
    brain tissue, primarily from cattle that exhibit neurological symptoms and
    adult cattle that die from unknown causes, as well as from cattle
    slaughtered for meat.

    o Feed ban.3 In 1997, FDA banned the use of most proteins derived from
    mammals in feed intended for cattle and other ruminants to keep
    potentially infectious tissue out of cattle feed.4

    This report focuses on FDA's implementation and enforcement of the animal
    feed-ban rule, which many industry and consumer groups consider the most
    important firewall against the introduction and spread of BSE in the
    United States.

    Under the feed-ban rule, FDA requires firms to (1) label feed and feed
    ingredients that contain or may contain most proteins from most mammals
    (referred to hereafter as prohibited material) with a cautionary statement
    that reads "Do not feed to cattle or other ruminants," (2) have procedures
    to protect against commingling or cross-contamination if they handle both
    prohibited and nonprohibited material for feed and feed ingredients, and
    (3) maintain records so that feed and feed ingredients that contain or may
    contain prohibited material can be tracked from receipt through
    disposition.5 Firms that transport both types of materials also must have
    procedures to prevent commingling.

    FDA's feed-ban rule applies to feed for cattle and other ruminants, such
    as sheep and goats. The material prohibited for use in cattle feed may
    continue to be used in pet food and in feed for poultry, swine, horses,
    and other nonruminant animals.

    The feed-ban rule designates a number of cattle- and other animal-derived
    items as exempt from the ban, and hence allowable in cattle feed. These
    exempt items include blood and blood products, plate waste, gelatin, and
    milk and milk proteins.6 In addition, poultry litter (a protein source
    comprised of poultry waste material, bedding, and spilled feed) is allowed
    in cattle feed. FDA has published, but not taken action on, several
    advance notices of proposed rulemaking for revising the ban to, among
    other things, end most of the exemptions and require that feed
    manufacturers and other such firms use dedicated equipment for cattle
    feed.

    To oversee compliance with the feed ban, inspectors from FDA and the 38
    states that have contracts or agreements with FDA periodically inspect
    firms, using FDA guidance and an inspection form that FDA developed to
    document inspection results.7 Since 1997, FDA and states have identified
    and inspected about 14,800 firms that are subject to the feed-ban rule.
    The types of firms inspected include renderers, protein blenders, feed
    mills, farms that mix their own feed, feed transporters, pet food
    manufacturers, and other firms subject to the feed-ban rule.8 In 2002, FDA
    began using a risk-based priority approach to determine which firms to
    inspect annually. Under this approach, FDA has designated firms that
    manufacture, blend, and otherwise directly process with prohibited
    material as the highest risk for potentially exposing U.S. cattle to BSE.
    Firms that do not process with prohibited material are designated as lower
    risk. FDA had designated about 570 firms as high risk in fiscal year 2004.
    FDA assigns a list of high-risk firms for inspection to each of its
    district offices and gives the district offices some discretion in
    deciding which lower risk firms to inspect. FDA also negotiates with
    states over the number of inspections that FDA will pay for under
    contract. States conduct about 70 percent of feed-ban compliance
    inspections. When FDA determines that firms are out of compliance, it can
    issue warning letters, encourage firms to conduct voluntary recalls, or
    seek court orders to seize feed or feed ingredients. FDA district offices
    review inspection results for accuracy and enter inspection information
    into FDA's central data system-the Field Accomplishments and Compliance
    Tracking System (FACTS)-and periodically post inspection results on FDA's
    Web site.

    Our January 2002 report identified a number of weaknesses in federal BSE
    prevention and detection efforts.9 Regarding the feed ban, we reported
    that FDA had not promptly taken actions, such as issuing warning letters
    or reinspecting firms that were out of compliance, to enforce the feed ban
    and keep prohibited material out of cattle feed. We also reported that
    FDA's data on inspections were so severely flawed that the agency could
    not know the extent of industry compliance. We made a number of
    recommendations to strengthen FDA's enforcement of the feed ban and its
    oversight and monitoring of compliance inspections.

    As you requested, this report examines the effectiveness of the actions
    FDA has taken, since our 2002 report, to ensure industry compliance with
    the animal feed ban and protect U.S. cattle from BSE. In addition,
    appendix III provides a chronology of FDA's and USDA's actions in response
    to the two cases of BSE discovered in North America in 2003.

    In conducting our work, we examined in detail 404 inspection reports from
    fiscal years 2003 and 2004, which we randomly selected from FDA's 18
    district offices responsible for inspections in the 50 states. We
    interviewed FDA district officials in the 18 districts and observed FDA
    and state investigators conduct 19 inspections in 12 states. The sites
    were selected to cover a range of firm types and sizes in various
    geographic locations with concentrations of cattle feeding operations,
    including dairy cattle. We met with FDA headquarters' officials
    responsible for procedures and actions taken to (1) oversee and enforce
    the feed ban, (2) maintain the inspection data system, and (3) propose and
    analyze regulatory decisions. We also surveyed state agency officials in
    the 38 states that had contracts or agreements with FDA in fiscal year
    2004 regarding their inspection programs, testing of animal feed and feed
    ingredients, and the training and guidance they received from FDA. The
    state survey instrument and summary of responses appear in appendix IV.
    Appendix I contains a detailed description of our scope and methodology.
    We performed our work from October 2003 through January 2005, in
    accordance with generally accepted government auditing standards, which
    included an assessment of FDA's BSE program data reliability and internal
    controls.

    Results in Brief

    FDA has taken a number of important actions, as we recommended in our 2002
    report, to improve its implementation of the feed ban. FDA developed a
    uniform format for federal and state inspectors to document inspection
    results, implemented a new data system that more reliably tracks
    inspection results, and entered inspection results into the data system in
    a more timely fashion. FDA also issued guidance and trained its inspectors
    along with state inspectors on how to conduct BSE inspections. However, we
    found the following weaknesses in FDA's oversight and enforcement of the
    feed ban, which continue to limit the effectiveness of this critical BSE
    firewall and could place U.S. cattle at risk for BSE:

    o FDA acknowledges that more firms are subject to the feed ban than the
    nearly 14,800 that have been inspected to date, but it does not have
    uniform procedures for identifying additional firms. Because these firms
    have never been inspected, FDA has no assurance that they are in
    compliance with the feed ban. FDA officials told us the agency has asked
    Congress for more resources, which it plans to use, in part, to support
    states' efforts to identify and inspect additional firms. We observed one
    possible approach to help FDA identify additional firms with existing
    resources: some inspectors wrote down the names of the suppliers and
    customers of firms during inspections to check against the inventory of
    active firms. Inspectors do not routinely note such information, however,
    because FDA's guidance does not instruct them to do so.

    o We found that about 2,800 firms had not been reinspected since 1999 or
    earlier. While those early inspections indicated that most did not process
    with prohibited material at that time, the firms could have changed their
    practices over the last 5 years. Our analysis showed that about two-thirds
    of those firms were farms that fed cattle and did not feed other types of
    animals; FDA believes such farms are unlikely to change their practices.
    However, about 400 firms were feed mills, which FDA would consider at high
    risk of potentially exposing cattle to BSE if they started to use
    prohibited material. Because firms are not required to notify FDA if they
    change their operations and begin to process feed using prohibited
    material, FDA would not target them for annual inspection as high-risk
    firms.

    o FDA's inspection guidance does not include routinely sampling feed
    intended for cattle, in cases where such tests would be useful, to augment
    the visual examination of facilities and equipment and review of documents
    carried out during inspections. According to FDA, the presence of exempt
    items, such as cattle blood, which are allowed in cattle feed, would
    negate the value of the tests because the tests cannot distinguish between
    prohibited material and these exempt items. However, 18 of the 38 states
    that conduct BSE inspections under agreement with FDA told us they take
    samples of feed during inspections to test for animal material. State
    officials told us that tests could confirm the presence of potentially
    prohibited material in cattle feed at firms that assert they do not use
    exempt items. Tests would also be useful to confirm the adequacy of
    procedures for cleaning equipment and vehicles used for both cattle feed
    and feed with prohibited material. However, FDA began testing bags of feed
    sold at retail stores and bulk feed sold to cattle feedlots in August
    2003. These samples were not taken as part of the compliance inspections
    and were not selected systematically. According to FDA officials, tests on
    some of these samples indicated the presence of animal material and the
    agency was investigating those test results at the completion of this
    report. We plan to provide our analysis of FDA's collection, testing, and
    follow-up of these samples later this year.

    o FDA's regulations do not require the cautionary statement-"Do not feed
    to cattle or other ruminants"-on feed or feed ingredients that contain
    prohibited material if they are intended for export, although that feed
    could be intentionally or inadvertently redirected back into feed for U.S.
    cattle. In addition, the exported feed containing prohibited material
    could be fed to cattle in other countries and meat from those animals
    could subsequently be imported into the United States. However, according
    to FDA officials, FDA cannot require feed intended for export to carry the
    cautionary statement without a change to the law that governs the export
    of food and feed.

    o Although FDA has procedures for alerting USDA and states when it
    discovers that cattle may have consumed feed that contains prohibited
    material, FDA officials told us that they had never given such
    notification, even though they had identified instances when prohibited
    material had been used in cattle feed in the past. FDA said that
    notification was not needed because BSE had not been discovered in a cow
    born in the United States. However, FDA's position is inconsistent with
    the purpose of the feed ban-to be a firewall for safeguarding U.S. cattle
    from the introduction and spread of BSE. On one inspection we observed, an
    inspector discovered that a firm's process had been allowing prohibited
    material into cattle feed for nearly a year. The firm voluntarily
    conducted a recall, but FDA did not alert USDA and the state. FDA
    maintained that the recall was sufficient; however, USDA officials told us
    that the department would have tracked the animals that may have been fed
    contaminated feed and tested them for BSE when slaughtered.

    o FDA has not identified or inspected many transportation firms. In
    addition, inspectors do not routinely review and document firms'
    procedures for ensuring that the vehicles they use to haul cattle feed are
    free of prohibited material. Routine review and documentation does not
    occur in part because FDA's inspection form does not have specific
    questions to capture that information. Eighty-two of the inspection
    reports we examined were for renderers, protein blenders, feed mills, and
    other firms that handled cattle feed and feed ingredients and also
    processed with prohibited material. Inspectors documented vehicle
    clean-cut procedures for only 11 of those 82 firms. Research suggests that
    cattle can get BSE from ingesting even a small amount of infected
    material-an amount that could be introduced in feed that was transported
    in a poorly cleaned vehicle. FDA told us it has requested resources to
    identify and inspect more transportation firms. However, because thousands
    of trucks could transport cattle feed, we believe it would be more
    effective to review and document cleanout procedures and inspect vehicles
    as part of inspections at feed mills or other firms that use the vehicles
    to haul their cattle feed or feed ingredients.

    In addition to these weaknesses in the feed-ban firewall, we also
    identified a related issue that needs to be addressed. FDA is reporting
    information to Congress and the public on industry compliance without
    providing a full and complete context for that information. That is, FDA
    reported a 99 percent compliance rate in January 2004. While FDA noted the
    rate was based on renderers, protein blenders, and feed mills that process
    with prohibited material, it did not note that the rate was based on
    inspections of only about 570 firms. Some industry officials have cited
    that high rate of compliance as support for their position that FDA does
    not need to strengthen the feed-ban rule. Furthermore, FDA does not
    include all serious violations in its calculations of compliance on its
    Web site because it reclassifies firms as "in compliance" once they
    correct violations, regardless of how long the problem may have existed.
    In addition, in 42 of the 404 inspection reports that we analyzed in
    depth, FDA had counted firms as "in compliance" that lacked written
    procedures to prevent commingling or cautionary statements on feed that
    contained prohibited material-violations that can result in cattle being
    fed prohibited material. Because of these concerns and the fact that FDA
    is still identifying firms subject to the ban-as well as the fact that
    inspections are largely paperwork reviews without tests to confirm
    compliance, and some inspections are 5 or more years old-we do not believe
    that FDA has enough information or enough current information to cite a
    rate of compliance. Any compliance information FDA cites must be reported
    in its complete context.

    To further strengthen oversight and enforcement of the animal feed ban and
    better protect U.S. cattle and American consumers, we are making nine
    recommendations to the Commissioner of FDA, including that FDA develop
    procedures for identifying additional firms subject to the ban; ensure
    that it alerts USDA and states when inspectors discover that feed with
    prohibited material may have been fed to cattle; and develop guidance for
    inspectors to use tests to verify the safety of cattle feed and confirm
    the adequacy of procedures for ridding equipment and vehicles of
    prohibited material before using them for cattle feed.

    In commenting on a draft of this report, FDA said we had conducted a
    thorough and diligent study. However, FDA believes that the weaknesses we
    identified are not sufficiently material to place U.S. cattle at risk for
    BSE and that its risk-based inspection approach assures adequate oversight
    of the feed-ban rule. We believe that the problems described in this
    report are serious and that, given the fact that BSE has been discovered
    in North American cattle, breaches in FDA's oversight of the feed-ban rule
    place U.S. cattle at risk for BSE. FDA generally disagreed with four of
    our nine recommendations. FDA did not agree that, among other things, it
    should use tests as part of compliance inspections, as we recommend,
    because current tests cannot detect the prions that cause BSE. That is
    true. However, the existing test can detect animal tissue, and FDA is
    using it to test samples of bagged feed and feed sold at mills. We believe
    tests, in conjunction with document review and visual examination carried
    out during compliance inspections, will give FDA greater assurance that
    inspection results are accurate. FDA also disagreed with our
    recommendation that it require firms that process with prohibited material
    to notify FDA. FDA believes it would need significant additional resources
    to implement a notification program and said that its current approach of
    working collaboratively with states gives FDA a good opportunity to learn
    when firms change to using prohibited material. If there are not
    significantly more high-risk firms than the approximately 570 firms FDA
    already knows about, then the cost of implementing this recommendation
    would be minimal. However, if the number of firms that process with
    prohibited material is significantly larger, FDA needs to know that.
    Appendix VI contains FDA's written comments and our detailed response.

    Background

    BSE and vCJD belong to a family of diseases known as transmissible
    spongiform encephalopathies (TSE). Other TSEs include scrapie in sheep and
    goats, chronic wasting disease in deer and elk, feline spongiform
    encephalopathy in domestic cats, and mink encephalopathy. Currently, no
    therapies or vaccines exist 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 type
    of protein, called a prion, which causes normal molecules of the same type
    of

    protein in the brain to become malformed and eventually results in
    death.10 Prions are neither viruses nor bacteria and contain no genetic
    material-no deoxyribonucleic acid (DNA). Prions cannot be readily
    destroyed by conventional heat, irradiation, chemical disinfection, or
    sterilization procedures.11 TSE prions have been found to accumulate in
    central nervous system tissue-specifically the brain, spinal cord, and
    eye-and have been found in other body tissues, such as the tonsils and
    small intestines, of animals and humans. For BSE, the precise amount of
    infective material needed to cause disease is unknown, but research
    suggests that it is very small. According to scientific experts in the
    European Commission, in careful feeding experiments, less than 1 gram of
    infected brain tissue induced disease in all the recipient cattle.

    The original source of BSE is not known with certainty. However, based on
    available evidence, experts generally agree 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 1986, BSE was first identified
    in the United Kingdom; and in 1988, that government banned the practice of
    feeding ruminant-derived protein to ruminants to thwart its spread. The
    number of new cases of BSE has declined from a high in 1992 of 37,316 to a
    total of 764 new cases in 2004. BSE has been found in about 189,000
    animals worldwide, most of which (about 184,000) were discovered in the
    United Kingdom. The remaining cases were discovered in 26 countries,
    including Canada and the United States. Three nations-the United States,
    Oman, and the Falkland Islands-have only detected the disease in imported
    animals. The following are the number of reported cases, by region and/or
    country:12

    o Europe. United Kingdom-184,045; the rest of Europe-5,107;

    o North America. Canada-4; United States-1;

    o Middle East. Oman-2; Israel-1;

    o Asia-Pacific. Japan-14; and

    o South America. Falkland Islands-1.

    In 1996, the United Kingdom reported the first case of the human disease,
    vCJD. Scientists believe vCJD is linked to exposure to the BSE prion, most
    likely through consuming beef and beef products infected with BSE.13 While
    scientists and regulatory officials believe that millions of people in the
    United Kingdom may have ingested BSE-infected tissue, many also believe
    vCJD is difficult to contract. As of December 1, 2003, 153 cases of vCJD
    had been reported worldwide, with 143 of these cases in the United
    Kingdom. The Department of Health and Human Services' Centers for Disease
    Control and Prevention, which is responsible for surveillance of vCJD,
    reported that almost all of the vCJD victims had multiple-year exposures
    in the United Kingdom during the height of the outbreak of BSE-infected
    cattle-between 1980 and 1996. Most vCJD victims have been young-the
    average age at death was 28-and half died within 13 months from the time
    they first showed symptoms.

    The first indigenous case of BSE in North America was discovered in Canada
    in May 2003. (Canada's first infected cow, discovered in 1993, had been
    imported from the United Kingdom.) A Canadian government investigation
    concluded that the infected cow discovered in 2003 most likely contracted
    the disease by consuming feed containing BSE-contaminated ruminant
    material, probably before Canada imposed its feed ban in 1997.14 Canadian
    authorities believe that BSE entered the feed chain through slaughtered
    and rendered cattle imported from the United Kingdom. In December 2003, an
    animal infected with BSE was discovered in the United States. According to
    U.S. authorities, that animal-a dairy cow in Washington State-had been
    part of a herd of 81 cattle imported from Canada in September 2001.
    Appendix III describes FDA's and USDA's actions in response to the 2003
    discoveries. In January 2005, Canada discovered two more cases of BSE.

    Following the discovery of the infected cow in the United States, U.S.
    beef exports dropped precipitously. The United States is currently engaged
    in discussions with its major trade partners to reestablish beef exports.
    In October 2004, Japan, previously the largest importer of U.S. beef,
    agreed in principle to resume imports of certain beef products from cattle
    slaughtered at 20 months or younger; as of February 11, 2005, the two
    countries were working out the details of this agreement.

    To detect potentially prohibited material in feed, FDA uses a test called
    "feed microscopy," which is a visual examination of a sample under a
    microscope for the presence of animal tissue, such as hair and bone
    particles. According to FDA officials, when performed by an experienced
    analyst, the species can sometimes be identified. FDA is evaluating a more
    sensitive test called "polymerase chain reaction" (PCR), which detects
    animal DNA and can distinguish ruminant DNA. However, feed containing
    exempt items (e.g., milk and blood proteins) derived from ruminants would
    test positive for ruminant DNA using PCR.

    When inspectors find violations of the feed-ban rule, FDA can issue
    warning letters, and firms may conduct voluntary feed recalls. FDA has the
    authority to take immediate enforcement action, including seeking a court
    order to seize feed products that violate the feed ban or obtaining a
    court-ordered injunction ordering a firm to cease operations. Of the 38
    states we surveyed, 37 told us they have authority to take action for
    violations of the feed ban. FDA directs its districts to issue warning
    letters within 30 workdays-approximately 45 calendar days after the
    inspection. Warning letters give firms the opportunity to voluntarily take
    corrective action before FDA initiates enforcement actions.

    Under the risk-based priority inspection system that FDA adopted in 2002,
    FDA and states have focused inspection resources on the following types of
    firms, which FDA has designated as high-risk for potentially exposing
    cattle to BSE:

    o renderers that accept dead ruminant animals and/or the waste materials
    from beef slaughter facilities;

    o feed mills that use prohibited material, which can include FDA-licensed
    mills that handle certain new animal drugs for use in animal feeds and
    nonlicensed mills that do not handle such animal drugs; and

    o protein blenders that use prohibited material.

    Other firms subject to the feed ban include the following:

    o firms that manufacture only pet food;

    o firms that transport or distribute animal feed;

    o firms that salvage animal feed or pet food; and

    o other firms that handle animal feed, including retailers, grocery
    warehouses, and specialty food companies.

    In addition to inspections of high-risk firms, FDA asks states to perform
    a number of inspections at the lower risk firms under their contracts or
    agreements with FDA. FDA also performs inspections of some lower risk
    firms. Table 1 shows the number of firms inspected during fiscal year
    2004.

    Table 1: Number of Firms Inspected by FDA and States for Compliance with
    the Feed-Ban Rule, by Firm Type, Fiscal Year 2004

    Firm type                                                  Number of firms
    Renderers                                                              195
    Protein blenders                                                       164
    FDA-licensed feed mills                                                747
    Nonlicensed feed mills                                               2,615
    Othersa                                                              2,285
    Total                                                                6,006

    Source: GAO's analysis of FDA's online database.

    Note: Since many firms engage in more than one activity (for example, a
    feed mill may also be a protein blender), this analysis makes assumptions
    about firms' primary activities to avoid counting firms in more than one
    category.

    aOther firm types include cattle feeders, transporters, pet food
    manufacturers, and retail establishments.

    Our 2002 report found that

    o FDA was not acting promptly to compel firms to keep prohibited materials
    out of cattle feed and to label animal feed that cannot be fed to cattle;

    o FDA's data on feed inspections was so severely flawed that FDA did not
    know the full extent of industry compliance;

    o FDA had no clear enforcement strategy for firms that do not obey the
    feed ban and did not know what enforcement actions states had taken; and

    o FDA had been using inaccurate, incomplete, and unreliable data to track
    and oversee feed-ban compliance.

    A 2001 study by the Harvard Center for Risk Analysis noted that the
    greatest risk of BSE exposure to cattle in the United States is through
    mishandling, mislabeling, or contaminating cattle feed.15 The study
    developed a simulation model for predicting the number of infected animals
    that would result from the introduction of BSE into the United States.
    Using this model, the Harvard study concluded that, if 10 cattle infected
    with BSE were imported into the United States, only three new cases of BSE
    would likely occur, on average, and that BSE is virtually certain to be
    eliminated from the United States within 20 years following its
    introduction. According to the study, any new cases of BSE would come
    primarily from industry's failure to comply with the feed ban. A
    subsequent 2003 Harvard reassessment-following the discovery of the
    BSE-infected cow in Canada that year-arrived at a similar conclusion.16

    FDA Has Taken Important Steps to Improve Implementation of the Feed Ban

    Since our January 2002 report, FDA has changed the way it collects,
    tracks, and reports inspection data. In April 2002, FDA implemented a
    uniform inspection form for federal and state inspectors to document
    inspection results. Although FDA had an inspection form earlier,
    inspectors were not always completing the required information, and
    several states did not use FDA's form.

    FDA has also issued feed-ban inspection guidance and appointed BSE
    coordinators in each of its district offices to review inspection forms
    for completeness.17 The district BSE coordinators told us that FDA has
    trained inspectors on using the inspection form and carrying out
    inspections. Although most states reported that this training was
    sufficient, a few told us that they had not received training since the
    late 1990s or were not able to attend training because of state budget
    constraints. However, in commenting on a draft of the report, FDA
    officials said that the agency always offers to provide training to
    states, when requested.

    Regarding the data deficiencies we reported in 2002, FDA implemented a
    newly designed feed-ban database and data entry procedures in its Field
    Accomplishment and Compliance Tracking System (FACTS) in April 2002.
    According to our analysis, this new approach and data system are designed
    to more reliably track feed-ban inspection results. As a result, FDA has a
    better management tool for overseeing compliance with the feed-ban rule
    and a data system that better conforms to standard database management
    practices. Specifically, FDA's new approach makes the following
    improvements:

    o All firms have unique identifiers. Inspection records in FDA's data
    system-including those that were previously missing unique identifiers-now
    have them, according to our data reliability analysis. Before the new
    approach, about 45 percent of FDA's feed inspection records lacked
    information to identify individual firms. As a result, the earlier data
    could not be used to reliably determine the number of firms inspected,
    compliance trends over time, or the inspection history of an individual
    firm. These problems should not occur with FDA's new system.

    o Information is substantially complete and accurate. FDA has corrected
    information problems we had identified in our 2002 report, according to
    our data reliability analysis of the inspections conducted since April 15,
    2002. The new FACTS database contains edit checks to detect any incomplete
    or inaccurate data. Furthermore, FDA's current feed-ban inspection
    guidance directs district BSE coordinators or their designees to review
    BSE inspection forms for completeness and accuracy. Previously,
    headquarters staff had entered the data received from district offices and
    did not have sufficient knowledge to detect irregularities in the data
    they were entering. In addition, states that have contracts or agreements
    with FDA are now using the same inspection forms as FDA. Previously,
    several states used state-developed forms, which did not always provide
    comparable information.

    o Data are more timely. Since April 15, 2002, about 95 percent of
    inspections with serious violations have been entered into the FACTS
    database within 45 days of the inspection date, according to our analysis.
    This rate of entry is a significant improvement over the timeliness of
    entry rates we reported in 2002. At that time, we found that some
    inspections were entered into FDA's database 2 or more years after the
    date of inspection. For such inspections, FDA could not accurately report
    on firms' compliance with the feed ban and could not clarify inconsistent
    or conflicting information, or obtain answers to missing
    information-situations that FDA's new approach should help avoid.

    As a result of these improvements, FDA is able to present more reliable
    feed ban inspection information on its Web site for the approximately
    10,000 firms inspected since April 15, 2002, or about two-thirds of the
    approximately 14,800 firms inspected since 1997. Appendix II provides a
    detailed description of actions FDA has taken on the recommendations in
    our 2002 report.

    Program Weaknesses Continue to Limit the Effectiveness of FDA's Animal
    Feed Ban

    While FDA has made many improvements to its oversight and enforcement of
    the feed ban in response to our 2002 report recommendations, we found a
    number of oversight weaknesses that limit the effectiveness of the ban and
    could place U.S. cattle at risk for BSE. Specifically, we found that FDA
    does not

    o have a uniform procedure to identify all firms subject to the feed ban,

    o require firms to notify FDA if they process with prohibited material,

    o routinely use tests to verify compliance with the feed ban,

    o alert USDA or states when cattle may have been fed with feed containing
    prohibited material, and

    o adequately overseeing the procedures for cleaning vehicles that haul
    cattle feed.

    Furthermore, we found that cautionary statements are not required on feed
    or feed ingredients intended for export that contain prohibited materials.
    In addition, FDA has not been reporting BSE inspection results to Congress
    and the public in a full and complete context.

    FDA Does Not Have Uniform Procedures to Identify Additional Firms Subject
    to the Feed- Ban Rule

    When the feed ban took effect in 1997, FDA first focused on identifying as
    many firms as possible that were subject to the ban. As of September 30,
    2004, FDA officials had identified approximately 14,800 firms that are
    subject to the feed ban (see table 2). That is about 4,200 more firms than
    the 10,576 firms FDA had identified approximately 3 years earlier. FDA
    officials acknowledge that the agency has not identified all firms subject
    to the feed-ban rule.

    Table 2: Number of Firms FDA Has Identified that Are Subject to the Feed
    Ban, by Firm Type, as of the End of Fiscal Year 2004

    Firm type                                                  Number of firms
    Renderers                                                              249
    Protein blenders                                                       281
    FDA-licensed feed mills                                              1,061
    Nonlicensed feed mills                                               4,922
    Othersa                                                              8,252
    Total                                                               14,765

    Source: GAO analysis of FDA's online database.

    Note: Since many firms engage in more than one activity (for example, a
    feed mill may also be a protein blender), this analysis makes assumptions
    about firms' primary activities to avoid counting firms in more than one
    category.

    aOther firm types include cattle feeders, transporters, pet food
    manufacturers and retailers.

    FDA has identified firms by reviewing

    o its list of firms that manufacture feed that contains certain new animal
    drugs; FDA knew about these firms because it requires them to be licensed
    and because it has certain regulatory responsibility over these firms.

    o a list of the firms or individuals that USDA has identified as violating
    USDA's and FDA's requirements with respect to chemical and drug residues
    in animals slaughtered for human consumption.18

    o lists of firms that states identified. For example, 27 of the 38 states
    we surveyed register renderers, 28 register protein blenders, and 34
    register feed mills that FDA has not licensed, and provide this
    information to FDA during meetings to set up annual inspection plans.

    o membership lists of industry associations, such as the National
    Renderers Association.

    In addition, FDA officials told us that FDA districts have used multiple
    approaches, including looking through telephone books to identify the
    names of additional firms. However, FDA has not developed a systematic
    approach for identifying additional firms subject to the feed ban. For
    example, FDA does not have an approach for identifying additional
    nonlicensed feed mills in states that do not provide that information. FDA
    also acknowledged that it has identified only a small percentage of the
    thousands of transportation firms that may haul cattle feed. Moreover, in
    commenting on a draft of this report, FDA told us that there are an
    estimated 1 million businesses (e.g., dairy farms feedlots, and other
    facilities) that feed cattle and other animals. FDA also told us that it
    does not consider farms that mix their own feed or feed cattle as well as
    other animals as low risk. However, FDA does not have a strategy for
    ensuring that this industry sector is in compliance with the feed-ban
    rule.

    We observed one approach for expanding the number of firms subject to the
    feed ban: some FDA and state inspectors we accompanied on firm inspections
    wrote down the names of the firm's suppliers and customers during the
    inspection and checked these names against FDA's inventory of firms to
    help identify additional firms. According to officials in one district
    where we observed this practice, they inspect these additional firms as
    resources allow. However, FDA does not have guidance for inspectors to do
    this routinely, and we observed other inspectors who did not record the
    names of firms' suppliers and customers. The approach we observed was one
    that may be largely applied with existing resources. Congress provided FDA
    with an additional $8.3 million in the fiscal year 2005 budget, which

    FDA officials told us would be used, in part, to funds states' efforts to
    identify and inspect additional firms.19

    FDA Does Not Require Firms to Notify the Agency if They Process with
    Prohibited Material

    Under FDA's risk-based inspection system, FDA's goal is to annually
    inspect all renderers, feed mills, and protein blenders that process with
    prohibited material-about 570 firms-and to inspect a number of other firms
    that FDA considers lower risk. The number of other firms varies according
    to the inspection resources available. As previously stated, in total, FDA
    and states inspected 6,006 firms in fiscal year 2004. However, once FDA
    has inspected a firm and determined that it does not process with
    prohibited materials, FDA may not reinspect that firm for many years. In
    the interim, FDA does not know whether the firm has changed operations and
    now processes prohibited materials because it does not require firms that
    do so to notify the agency. FDA and state agencies only learn of a change
    in operations if they inspect the firms. Without a requirement to notify
    FDA, these firms are not annually inspected to monitor for compliance with
    the feed ban, as are other high-risk firms.

    We found that 2,833 or about 19 percent, of these firms FDA has identified
    as subject to the feed-ban rule have not been reinspected in 5 or more
    years. These firms include

    o 1,224 farms that fed ruminant animals;

    o 846 farms that mixed their own feed;

    o 377 feed mills; and

    o 386 other types of firms, such as distributors and retailers.

    According to FDA officials, of these four types of firms that have not
    been reinspected, about 2,100 or two-thirds are farms, which FDA believes
    are not likely to change their practices. However, feed mills, which
    account for about 400 of the firms, would be classified as high risk if
    they process with prohibited material.

    FDA officials also believe that the number of firms processing with
    prohibited material is declining and that in all likelihood firms that
    have not been inspected for a number of years would not change their
    practices and start doing so. As FDA pointed out, firms may decrease their
    use of prohibited material because of the requirement that they maintain
    records sufficient to track all receipt, processing, and distribution of
    that material. Nonetheless, some firms that did not use prohibited
    material when they were last inspected may begin to use that material in
    processing their feed.

    FDA officials told us that they have considered options for identifying
    firms that process feed with prohibited material, including requiring
    those firms to be licensed. The officials noted, however, that some firms
    may not comply with a notification requirement; thus, FDA would still not
    know about all high-risk firms, and it would incur the additional costs of
    overseeing the notification requirement.

    FDA Does Not Routinely Sample Feed and Feed Ingredients during Inspections
    for Analysis to Verify Compliance with the Feed Ban

    While FDA inspection procedures include guidance for reviewing firm
    documents and procedures, examining their invoices, and inspecting
    facilities and equipment, they do not include guidance on when samples
    should be taken and tested. For example, the feed-ban inspection guidance
    does not instruct inspectors to routinely sample cattle feed to verify
    firms' claims that they do not use prohibited materials or exempt
    ingredients, or to ensure that firms' cleanout and flushing procedures to
    prevent commingling are followed and are effective.

    We recognize that the usefulness of testing is limited at firms that use
    exempt items-cattle and other ruminant blood, milk proteins, poultry
    litter, and plate waste-as ingredients in cattle feed. FDA officials told
    us that they did not want to routinely test samples at firms during
    inspections because the tests would likely have many false positives as a
    result of the exemptions. Consequently, officials believed testing would
    not use resources wisely.

    However, in 9 of the 19 inspections we observed, inspectors could have
    used tests to verify feed-ban compliance because the firms claimed they
    did not use any animal-derived exempt items. Even in these instances,
    where tests would be beneficial, inspectors did not sample the feed. For
    instance, inspectors did not take samples to confirm the adequacy of
    cleanout procedures at firms that use nondedicated production facilities
    to manufacture cattle feed but do not use any exempt materials. FDA's
    feed-ban inspection guidance allows inspectors to draw samples at their
    discretion, but FDA officials told us that inspectors rely on their
    judgment of whether the cleanout procedures appear to be adequate and
    rarely use testing to verify their assessment. FDA officials did not give
    us a clear reason why they would not advise testing in situations where
    tests would be useful to help confirm compliance.

    Some states have also done significant testing that FDA could use to
    verify compliance with the feed ban but do not provide their test results
    to FDA, although that information could give FDA a more complete picture
    of feed ban compliance. In response to our survey, 18 of the 38 states
    that have agreements with FDA to conduct feed-ban inspections told us they
    had collected and tested over 1,500 feed samples during 2003.20 For
    example, according to a North Carolina Department of Agriculture official,
    the state collected and tested 738 samples; and, according to a Kansas
    Department of Agriculture official, the state collected and tested 94
    samples. In these states, if the tests find what appears to be prohibited
    material, the states followed up with the firms to determine what
    ingredients they used. According to the officials, no contaminated cattle
    feed was found. In California, which collected and tested about 100
    samples, officials found tests to be useful for demonstrating to cattle
    feed manufacturers the difficulties of cleaning equipment that has been
    used for prohibited material. FDA and state agency officials told us that
    most California feed firms have switched to using dedicated equipment for
    cattle feed. Eleven of the 18 states share test results with FDA, but FDA
    does not use these results to verify industry compliance with the feed
    ban.

    In August 2003, FDA instructed its districts to begin testing finished
    feed and feed ingredients, such as bags of feed sold at retail stores and
    bulk feed sold to cattle feedlots. These tests were not taken in
    conjunction with feed-ban compliance inspections. FDA inspectors took 660
    samples nationwide. The samples were submitted to FDA regional
    laboratories for analysis, where analysts used feed microscopy. Although
    in its instructions to districts for the collection effort, FDA called the
    tests "a method to monitor for compliance with" the feed ban, FDA
    officials told us that the test results could not be the sole basis for
    enforcement action at individual firms because microscopic analysis cannot
    distinguish prohibited bone and tissue from exempted material.
    Nonetheless, the officials also told us the testing gives FDA further
    assurance of industry's compliance with feed ban.

    Because FDA did not use an approach that allows it to generalize the
    results, the test results cannot be used as assurance of industry
    compliance. In fact, because FDA did not provide instructions on how to
    randomly select firms for sampling and how to take a random sample of feed
    at the firms, the results cannot even help confirm compliance by the
    stores, feedlots, and other firms where the samples were taken. In
    initiating this effort without a sampling plan, FDA wasted its already
    limited inspection resources. FDA has committed resources to collect and
    analyze 900 additional samples in fiscal year 2005. With the same
    resources, FDA could have developed a sample design that would have
    allowed it to generalize the test results to industry.

    FDA officials told us the agency would have to conduct an investigation to
    determine whether an enforcement action was warranted. FDA provided us
    some information on test results for the 660 samples that were taken and
    analyzed. The data showed 145 potential violations, including 8 that FDA's
    laboratories originally classified as serious. About one-third of the 145
    samples with potential violations were of cattle feed. Several of those
    samples had evidence of mammalian matter. Without more information, we
    could not determine whether the cattle feed contained exempt items or
    prohibited material. As of February 2005, FDA was in the process of
    gathering the information we requested from its district offices on the
    results of its investigation of the 145 potential violations and what, if
    any, enforcement actions were taken based on the tests and follow-up
    investigations. We plan to provide our analysis of FDA's collection,
    testing, and follow-up of these samples later this year.

    The Cautionary Statement Is Not Required on Feed Intended for Export

    Animal feed and feed ingredients containing prohibited material (including
    material from rendered cattle) are not required to be labeled with the
    cautionary statement, "Do not feed to cattle or other ruminants," when
    that material is intended for export. Shipping containers for such
    material, however, must be labeled that they are for export only; and, if
    prohibited material is put back into domestic commerce, the containers
    must be relabeled with the cautionary statement.

    Not placing the warning label on exported feed poses a potential risk to
    U.S. and foreign cattle and consumers from two perspectives. First, feed
    with prohibited materials could be intentionally or inadvertently
    redirected into feed for U.S. cattle if firms fail to add the cautionary
    label to the product that they had initially intended to export. Second,
    exported feed containing prohibited material could mistakenly be fed to
    cattle that are subsequently imported into the United States or whose meat
    and other products are imported into the United States.

    We observed one situation where a problem could occur because a cautionary
    statement was not on an exported product. One firm we visited processed
    fishmeal, which is normally considered a safe ingredient for cattle feed.
    However, this plant processed the fishmeal on the same equipment it used
    for prohibited materials. If it were sold domestically, the fishmeal would
    have to be labeled with the cautionary statement because it is potentially
    contaminated with prohibited materials. However, the product was shipped
    to overseas customers without the cautionary statement. Because the
    fishmeal was not labeled, and fishmeal would not be expected to contain
    prohibited material, customers could unwittingly mix the fishmeal with
    other ingredients for their cattle. The FDA inspector did not document in
    the inspection report which countries were sent the fishmeal. When we
    asked FDA officials about this situation, they were concerned only about
    whether feed intended for export was actually being diverted to domestic
    cattle, a situation that they believed was unlikely to occur because FDA
    rules prohibit it. However, according to the report by the international
    panel of experts on BSE convened by USDA, the United States has an
    obligation to act responsibly toward its global neighbors when exporting
    feed and feed ingredients.

    FDA officials told us that FDA cannot require the cautionary statement on
    feed intended for export without a change to the Federal Food, Drug, and
    Cosmetic Act.21 Under that act, animal feed intended for export only
    cannot be deemed to be adulterated or misbranded if it (1) meets the
    foreign purchasers specifications, (2) is not in conflict with laws of the
    country to which it is intended for export, (3) is labeled on the outside
    of the shipping package that it is intended for export, and (4) is not
    sold or offered for sale in domestic commerce.

    FDA Did Not Alert USDA or State Regulatory Authorities When It Learned
    That Cattle Feed Containing Prohibited Material Was Marketed

    When an FDA district office learns that ruminant animals may have been fed
    contaminated feed, the feed-ban inspection guidance directs the district
    office to oversee efforts to appropriately dispose of the contaminated
    feed and to ensure that the animals that had consumed this feed are not
    slaughtered for human food or other animal feed. The guidance also advises
    FDA to consider coordination with USDA and the affected states.

    While FDA districts have monitored voluntary recalls of feed that did not
    comply with the feed ban, they had not been alerting USDA or state
    departments of agriculture when they learned that such feed had been given
    to cattle and other ruminants-in some cases for an extensive period of
    time. FDA district and headquarters officials responsible for the feed-ban
    program were not aware that the guidance instructed FDA to alert USDA and
    states.

    In our observations at inspections and our review of inspection records,
    we found the following instances in which FDA did not alert USDA or state
    authorities or take further action.22

    o A producer of cattle, hogs, and goats had inadvertently fed salvaged pet
    food containing prohibited materials to goats, which are ruminants.23 We
    observed the mislabeled feed in a March 2004 inspection. The feed mill
    that manufactured and sold the feed had not labeled the salvaged pet food
    with the required cautionary statement "Do not feed to cattle or other
    ruminants." Shortly after this discovery, the firm recalled the misbranded
    feed. In April 2004, a state feed inspector found out about the misfed
    animals from the feed mill, not from FDA, and alerted his state program
    managers. The state contacted FDA, and after determining that FDA did not
    intend to take action beyond issuing a warning letter, the state seized
    and destroyed the animals in May 2004 under state authority to prevent the
    meat from entering the food supply. FDA did not alert the state or USDA
    and did not issue the warning letter to the feed mill until June 2004.

    o A feed mill had inadvertently contaminated cattle feed with prohibited
    material. The firm had made a mistake in designing and placing equipment
    in the manufacturing process, which allowed spilled feed containing
    prohibited material to become commingled with ingredients used to make
    cattle feed. We observed this problem during an April 2004 inspection. FDA
    issued a warning letter in June 2004 demanding that the firm correct the
    violations; the firm also conducted a voluntary recall of the feed in
    June. Because the mill operated with this flawed system for about 1 year
    before the discovery, potentially contaminated feed was marketed and sold
    for cattle feed for that period of time. FDA did not contact USDA or state
    authorities to alert them that cattle had consumed the feed.

    o A feed mill did not clean mixing equipment and transportation vehicles
    used for processing and transporting feed containing prohibited and
    nonprohibited materials. The firm also failed to properly label feed
    containing prohibited materials with the required cautionary statement and
    did not maintain sufficient records for tracking the sale of cattle feed
    to its customers, as FDA requires. We identified these problems during our
    review of inspection reports. The inspection occurred in March 2003. The
    firm corrected the violations and recalled all cattle feed that had not
    yet been consumed in March 2003. FDA issued a warning letter to the firm
    in May 2003 and took no further action.

    When we discussed these findings with FDA headquarters officials, they
    told us they were not familiar with the guidance recommending this
    communication. As a result, FDA, USDA, and state authorities had not
    assessed the health risk to humans and the animals that may have ingested
    that feed and may not have taken sufficient action to prevent those cattle
    and other ruminants from entering the human food or animal feed supply.
    The FDA officials said they had not considered coordinating with USDA and
    state officials but that USDA and the states were notified of the recalls
    because the recalls are posted on the FDA Web site. However, we found that
    the posted recall notices do not include information on whether, or for
    how long, cattle or other ruminants had been given the contaminated feed.
    Furthermore, FDA officials asserted that no action was needed beyond a
    recall in these incidents because BSE has not been discovered in a cow
    born in the United States. According to the officials, the meat would not
    make people ill and the feed would not make cattle ill. Before this report
    was issued, these same FDA officials told us that in the future, FDA will
    alert USDA and states when cattle may have consumed prohibited feed. USDA
    officials told us that they were not aware of these three incidents. They
    said that, had they known, USDA would have tracked the animals and tested
    them for BSE when they were slaughtered.

    FDA Has Limited Assurance That Vehicles Used to Haul Cattle Feed Comply
    with the Feed Ban

    According to FDA's feed-ban rule, transportation firms that haul
    prohibited material and use the vehicles to haul feed or feed ingredients
    for cattle must have and use procedures to prevent commingling or
    cross-contamination. The procedures must provide for cleaning out the
    vehicles or other adequate preventative measures. Research suggests that
    cattle can get BSE from ingesting even a small amount of infected
    material-an amount that could be introduced in feed that was transported
    in a poorly cleaned vehicle. As part of an inspection of transportation
    firms, inspectors review the adequacy of these procedures, but the
    inspection form does not prompt them to do so during inspections of other
    types of firms. The following two problems impede the effectiveness of
    FDA's current procedures:

    o FDA has not identified and does not inspect many transportation firms.
    According to FDA officials and transportation data, thousands of
    independent truckers, large and small trucking companies, and rail
    companies may carry cattle feed and feed ingredients. FDA officials told
    us that it would be virtually impossible to identify and inspect all of
    these firms, given its limited resources. However, FDA agrees that
    transportation compliance is important. In commenting on a draft of this
    report, the agency noted that it is planning to increase oversight of
    transportation firms based on FDA's assessment of compliance and risk in
    this industry sector.

    o Inspecting transportation firms at their home base would not ensure that
    the required procedures are being used and that the nearly 200,000 large
    trucks that haul animal feed would be clean at the time they picked up
    cattle feed, in part, because vehicles that carry prohibited material may
    also carry cattle feed and other loads in succession before returning to
    their home base. For example, at an inspection of one high-risk protein
    blender, we observed an FDA inspector talking with an independent trucker
    who had dropped off a load of cattle feed ingredients, was picking up
    prohibited materials at the protein blender, and was scheduled later to
    pick up a load of corn, which could be used in cattle feed. The trucker
    explained that if he saw anything in the truck between loads, he would
    climb in and sweep the material out with a broom; if he did not see
    anything, he did not sweep out the truck between loads. The trucker also
    said it would be extremely difficult to find washout facilities to clean
    the truck between loads while on the road.

    Consequently, we believe that it would be more effective to require FDA
    and state inspectors to review and document procedures that feed mills and
    other firms use to ensure that the vehicles they use to haul cattle feed
    and feed ingredients are free of prohibited material as part of their
    inspections at feed mills and other firms. During our observations of
    inspections, we found that some FDA and state inspectors were already
    doing so. However, our observations and analysis of inspection reports
    showed that the inspectors did not routinely do so and did not uniformly
    report on the adequacy of the firms' procedures for preventing the
    introduction of prohibited material. We believe that inspectors were
    overlooking the adequacy of firm's procedures to ensure the safe transport
    of cattle feed because the BSE inspection form does not have any questions
    to capture that information. Specifically, 82 of the 404 inspection
    reports we reviewed were for renderers, protein blenders, feed mills, and
    other firms that processed with prohibited material and handled cattle
    feed and feed ingredients. We found that inspectors had documented the
    required cleanout procedures for transportation equipment at only 11 of
    these 82 firms. Without requiring inspectors to uniformly review and
    document vehicle cleaning procedures, FDA has insufficient assurance that
    the vehicles are safe to carry cattle feed and feed ingredients.24

    FDA Does Not Fully Report BSE Inspection Results

    In January 2004, FDA's Deputy Commissioner testified that inspectors "at
    least annually, targeted BSE inspections of 100 percent of known
    renderers, protein blenders, and feed mills processing" with prohibited
    material. He testified that compliance by those firms was "estimated to be
    better than 99 percent." Subsequently, some industry officials claimed
    that overall compliance with the feed ban is nearly 100 percent and used
    that figure to support their claim that the feed ban does not need to be
    strengthened. However, as noted earlier, those groups are comprised of
    about 570 firms-approximately 4 percent of the firms in FDA's inventory.

    In addition, FDA periodically publishes compliance information on its Web
    site for all industry segments. This information has also been used to
    cite high industry compliance. However, FDA and industry do not have a
    basis for citing a compliance rate for a segment of firms subject to the
    feed ban or industrywide because there are too many unknowns.
    Specifically, FDA does not know the status of compliance for firms that

    o have never been inspected,

    o have not been reinspected in 5 or more years, and

    o may have started to process with prohibited materials since their last
    inspection.

    Furthermore, as we previously discussed, because FDA does not routinely
    sample feed to confirm compliance, inspection results are largely based on
    a review of paper documents and a visual inspection. All these concerns
    apply to compliance information FDA reports to Congress and the public on
    its Web site.

    Additionally, our analysis of inspection reports also disclosed that FDA
    was not including all serious violations in its calculation of the
    compliance rate because it reclassified firms as "in compliance" once they
    correct violations, regardless of how long the problem may have existed.

    Finally, we found that FDA has classified 42 firms as having less serious
    violations that it counted as "in compliance" with the feed ban.
    Inspectors reported that 18 of these firms failed to include a cautionary
    statement on feed containing prohibited materials. Although FDA's feed-ban
    inspection guidance designates the lack of a cautionary statement as a
    serious violation, and lack of such a statement should result in the feed
    being deemed misbranded under the Federal Food, Drug, and Cosmetic Act,
    FDA excluded the violations at these firms from its calculation of the
    compliance rate. Inspectors also reported that the remaining 24 firms had
    procedures for preventing commingling but did not have these procedures in
    writing. FDA's guidance designates the lack of written procedures as a
    less serious violation, but we believe these violations should be
    classified as serious. Without written procedures, FDA has no assurance
    that the firms consistently take the necessary steps to prevent
    commingling. FDA officials told us that the guidance is advisory and
    therefore gives the agency the discretion to reclassify the violations
    based on its review.

    Conclusions

    Diligent FDA oversight and enforcement of the feed ban is essential, not
    only because of the potential threat to public health but also because of
    the economic impact on the cattle and beef industry; this impact was
    clearly demonstrated by the sharp drop in U.S. beef exports after one
    infected cow was discovered in 2003. The ongoing discussions and
    agreements to reopen beef export markets could be derailed if more cattle
    were discovered with BSE.

    FDA has taken positive steps since our 2002 report. Today FDA can say with
    greater confidence that it has more timely and reliable inspection data.
    Also, the risk-based system FDA has adopted to target inspection resources
    on high-risk firms will increase the likelihood that firms inspected
    annually will remain in compliance with the feed ban.

    FDA's processes, however, still have considerable room for improvement.
    FDA does not have uniform procedures for identifying additional firms that
    are subject to the ban but have never been inspected or for learning about
    firms that change their practices and begin to handle prohibited material.
    Furthermore, because inspectors are not using tests optimally-to help
    confirm, when appropriate, that cattle feed, production equipment, and
    transportation vehicles are free of prohibited material-FDA is limiting
    its ability to assure that firms are in compliance with the feed ban and
    that cattle feed is safe. Additionally, FDA is not taking advantage of
    state test results to provide greater assurance that industry is adhering
    to the feed ban and is not using its own program for sampling finished
    feed and feed ingredients in a manner that will allow it to project test
    results.

    Moreover, the lack of a requirement for warning labels on feed and feed
    ingredients intended for export that contain prohibited material, creates
    opportunities for having the material fed to domestic or foreign cattle,
    either intentionally or inadvertently. As the international group of BSE
    experts convened by USDA pointed out, the United States has an obligation
    to act responsibly toward its global neighbors when exporting feed and
    feed ingredients.

    Especially troubling was our discovery that FDA did not alert USDA and
    state authorities when it became aware that cattle had been given feed
    that contained prohibited material. FDA, and its key partner, USDA,
    together provide critical firewalls that the federal government has in
    place to protect U.S. cattle and consumers. In addition, the lack of
    notification was contrary to FDA's own guidance and FDA's inaction
    prevented USDA and states from being able to make an informed decision on
    how to respond to the discovery that cattle had consumed prohibited
    material.

    Given these weaknesses and the fact that FDA does not include all
    violations in its estimates, we believe FDA is overstating industry's
    compliance with the animal feed ban and understating the potential risk of
    BSE for U.S. cattle in its reports to Congress and the American people.
    Despite the problems in FDA's calculation, some in the feed industry claim
    that overall compliance with the feed ban is nearly 100 percent-a claim
    that FDA's compliance information does not support.

    Recommendations for Executive Action

    To further strengthen oversight and enforcement of the animal feed ban and
    better protect U.S. cattle and American consumers, we recommend that the
    Commissioner of FDA take the following nine actions:

    o Develop uniform procedures for identifying additional firms subject to
    the feed ban.

    o Require firms that process with prohibited material to notify FDA. If
    FDA believes it does not have the necessary statutory authority, it should
    seek that authority from Congress.

    o Develop guidance for inspectors to systematically use tests to verify
    the safety of cattle feed and to confirm the adequacy of firms' procedures
    for ridding equipment and vehicles of prohibited material before they are
    used for processing or transporting cattle feed or feed ingredients.

    o Collect feed test results from states that sample feed to help verify
    compliance with the feed ban.

    o Develop a sample design for FDA's inspectors to use for sampling
    finished feed and feed ingredients that will allow FDA to more accurately
    generalize about compliance with the feed ban from the test results.

    o Seek authority from Congress to require the cautionary statement on feed
    and feed ingredients that are intended for export and that contain
    prohibited material.

    o Ensure that USDA and states are alerted when inspectors discover that
    feed or feed ingredients with prohibited material may have been fed to
    cattle.

    o Modify the BSE inspection form to include questions inspectors can use
    to document whether firms that process or handle cattle feed or feed
    ingredients have procedures to ensure the cleanliness of vehicles they use
    to transport cattle feed and feed ingredients.

    o Ensure that inspection results are reported in a complete and accurate
    context.

    Agency Comments and Our Evaluation

    We provided FDA with a draft of this report for review and comment. FDA
    stated that our report was thorough and that it recognized the
    enhancements FDA has put in place in its feed-ban program. However, FDA
    said the report did not identify material weaknesses to support our
    position that oversight weaknesses limit FDA's program effectiveness and
    place U.S. cattle at risk of spreading BSE. FDA believes that its current
    risk-based inspection approach is adequate to protect U.S. cattle.
    According to FDA, given the wide variety of firms subject to the feed ban
    and its resource limitations, it "is obligated to set priorities for
    inspecting a meaningful subpopulation of these regulated firms." We
    recognize that FDA has made many improvements, including adopting a
    risk-based approach for inspections, that have substantially improved its
    oversight of the feed-ban rule. However, our report identifies significant
    problems in FDA's oversight that continue to place cattle at risk for BSE.
    The importance of a strictly enforced feed ban is heightened now that BSE
    has been found in North American cattle. As Harvard and the international
    panel of experts pointed out, the feed ban is the most important fire wall
    against the spread of BSE. Given the problems we identified and the
    significance of a well enforced feed ban, it is important that FDA
    improves its feed ban oversight and optimizes its use of resources.

    In addition, FDA does not agree with our criticism of its compliance
    reporting. FDA believes that it provides the inspection results in a
    transparent, complete, and accurate context. FDA notes that the BSE
    inspection data posted on its Web site "allows the user to analyze the
    data, in a multitude of ways, to provide their own contextual reference."
    Our concern is precisely that the data are being analyzed and interpreted
    in an erroneous context. Specifically, when FDA and industry used those
    data to assert a 99 percent compliance rate with the feed ban, they took
    that information out of context. While FDA's calculation of compliance by
    a subset of regulated industries may in fact be quite high, FDA's data are
    not sufficient to make that projection to all regulated industries. In
    addition, FDA does not know the status of compliance for firms that have
    never been inspected or have not been reinspected in years. Nor does it
    know if previously inspected firms have started using prohibited material.
    Furthermore, because FDA reclassifies firms from "out-of-compliance" to
    "in-compliance" on its Web site when the firms correct violations, the
    information posted on that Web site does not tell the user when serious
    and/or long-standing violations have occurred. Lastly, inspection results
    are largely based on a review of paper documents and a visual inspection,
    with little or no feed testing. Given these data concerns and compliance
    unknowns, FDA's data should not be used to project industry compliance;
    and, anytime those data are cited, they should be reported in a complete
    and accurate context.

    Regarding the nine recommendations we make in the report, FDA did not take
    issue with the need for five and generally disagreed with four. Although
    FDA noted implementation concerns, it did not take issue on the need for
    (1) developing uniform procedures for identifying firms subject to the
    feed ban, (2) collecting test results from the states that sample feed,
    (3) including a cautionary statement on feed and feed ingredients intended
    for export, (4) notifying USDA and states when feed or feed ingredients
    containing prohibited material may have been fed to cattle, and (5)
    modifying the inspection form to include questions to better oversee the
    cleanliness of vehicles used to transport cattle feed or feed ingredients.

    FDA disagreed with our recommendation that it require firms that process
    with prohibited material to notify the agency. FDA believes that it is
    already getting information on changes to firms' practices from states and
    that requiring an additional notification process would be costly to
    implement. However, FDA acknowledged that it has generally not identified
    high-risk feed salvagers and farms that mix their own feed or those that
    feed cattle as well as other animals. The cost of the notification program
    will depend on the requirements FDA puts in place. In developing the
    program, FDA could target the notification to firms that pose a
    potentially high risk for exposing cattle feed to prohibited material. We
    believe that FDA should know which firms are high risk and that industry
    self-reporting is a mechanism that would help the agency identify those
    firms and help it ensure compliance with the feed ban.

    FDA also disagreed with our recommendation to systematically use tests in
    conjunction with compliance inspections. While we recognize the
    limitations of current test methodologies, we believe that tests are
    useful. In fact, states and FDA are currently using these tests on feed.
    Our recommendation speaks to systematically using these tests where
    appropriate, to augment inspections, which are largely observation and
    paperwork reviews. We expanded the recommendation to recognize that FDA
    may validate other tests in the future.

    With respect to our recommendation that FDA develop a sample design for
    testing finished feed and feed ingredients, FDA disagreed with the need
    for a sample design that will allow it to more accurately generalize about
    compliance. FDA stated that tests alone cannot serve as a basis to
    generalize compliance. We agree that tests that indicate potential
    violations need to be confirmed, because of the limitations of the current
    tests. However, FDA is using the test results to identify potential
    problems, and it tested 660 samples in 2003/2004 and plans to test 900
    samples this year. The point of our recommendation is that any testing
    activity of this magnitude should have a sampling plan.

    Finally, FDA believes that it already reports inspection results in a
    complete and accurate context, as we recommend. We disagree. As noted
    above, given the data concerns and compliance unknowns raised in this
    report, FDA's data should not be used to project industry compliance.
    Anytime those data are cited, they should be reported in a complete and
    accurate context. FDA also provided technical comments, which we have
    incorporated into this report, as appropriate. FDA's written comments and
    our responses are in appendix VI.

    We also provided USDA with a draft of appendix III, which summarizes FDA's
    and USDA's actions in response to the 2003 discovery of BSE in North
    America, for review and comment. USDA had no comments on the draft
    appendix.

    As agreed with your offices, unless you publicly announce the contents of
    this report earlier, we plan no further distribution of it until 30 days
    from the date of this letter. We will then send copies to interested
    congressional committees; the Secretary of Health and Human Services; the
    Secretary of Agriculture; the Director, Office of Management and Budget;
    and other interested parties. We will make copies available to others on
    request. In addition, the report will be available at no charge on GAO's
    Web site at http://www.gao.gov.

    If you or your staffs have any questions about this report, please call me
    at (202) 512-3841. Key contributors to this report are listed in appendix
    VII.

    Robert A. Robinson Managing Director, Natural Resources and Environment

    Scope and MethodologyAppendix I

    As discussed below, to assess the effectiveness of the Food and Drug
    Administration's (FDA) actions to ensure industry compliance with the feed
    ban and protect U.S. cattle from bovine spongiform encephalopathy (BSE),
    we (1) analyzed 404 inspection reports for BSE inspections performed
    during fiscal year 2003 and 2004; (2) observed 19 inspections in 12 states
    that were conducted by either FDA or state inspectors; (3) assessed the
    reliability of FDA's feed-ban inspection database; (4) interviewed
    officials at FDA headquarters and district offices, state agencies, and
    industry associations, as well as reviewed documents provided by these
    officials concerning oversight of the animal feed ban; and (5) surveyed
    state agency officials in 38 states.

    To assess FDA's oversight, we analyzed BSE inspection records to identify
    types of firms inspected; types of material processed (prohibited,
    nonprohibited, or both); oversight of transportation equipment; violations
    identified during inspections (if applicable); and final inspection
    classifications. We randomly selected 413 inspection reports from the
    universe of BSE feed inspections conducted during fiscal year 2003 and
    fiscal year 2004 (up to February 7, 2004). For each of the 18 FDA
    districts, responsible for inspections in the 50 states, we randomly
    selected inspection reports from one state (most FDA district offices
    cover more than one state). We included all of the 314 high-risk firms
    that process prohibited materials for the 18 selected states. In addition,
    we randomly selected 12 other firms that process with prohibited
    materials; 68 firms that distribute prohibited materials; and 19 firms
    that do not process or distribute prohibited materials. We examined only
    404 of the 413 inspection reports because 9 of the report files that we
    requested were still open-case files at the time of our review.

    To evaluate the inspection process, we accompanied inspectors on 19 BSE
    inspections of firms in 12 states covered by the feed ban. The sites were
    selected to cover a range of firm types and sizes in various geographic
    locations with concentrations of cattle feeding operations, including
    dairy cattle. The 19 inspections included renderers, protein blenders,
    feed mills, farms with ruminants and other animals, and pet food
    manufacturers. Seven of these firms processed or handled only prohibited
    material, and the remaining 12 processed or handled both types of
    material. On 12 of the inspections, we accompanied FDA inspectors, and on
    7 we accompanied state inspectors.

    To assess the reliability of the data FDA uses when reporting industry
    compliance, we analyzed the agency's database for inspections conducted on
    or after April 15, 2002, when FDA implemented its newly designed feed-ban
    database.1 Specifically, we analyzed the 9,230 inspection records in this
    database, as of February 7, 2004. To complete the reliability assessment,
    we (1) reviewed existing documentation related to the data sources; (2)
    electronically tested the data to identify obvious problems with
    completeness, accuracy, or timeliness of data entry; and (3) interviewed
    knowledgeable agency officials about the data. We determined that the data
    were sufficiently reliable for purposes of this report.

    We interviewed officials or reviewed documents at FDA headquarters and at
    the 18 FDA district offices that are responsible for overseeing and
    enforcing the feed ban in the 50 states, maintaining the inspection
    database system, and proposing and analyzing regulatory decisions. In the
    18 district offices, we used a structured interview to uniformly gather
    information on various issues, such as methods used to identify the
    universe of firms subject to the feed ban; the process for selecting firms
    for inspection; training programs for FDA and state inspectors; feed-ban
    inspection guidance and procedures; the processes for reviewing inspection
    results, classifying findings, and determining what, if any, enforcement
    action should be taken; and oversight of contracts and agreements with
    state agencies that perform BSE inspections. We received information and
    documentation on FDA's oversight and enforcement of the feed ban from the
    following specific FDA units: Center for Veterinary Medicine, Office of
    Management, Office of Surveillance and Compliance; Office of Regulatory
    Affair's Office of Regional Operations; Center for Food Safety and Applied
    Nutrition's Office of the Director; and Office of the Chief Counsel. We
    reviewed various FDA program documents, including the BSE/Ruminant Feed
    Ban Inspections Compliance Program Guidance; BSE feed inspection form;
    advance notices of proposed rulemakings to strengthen the feed ban,
    including public comments; and the reports on the feed samples collected
    and tested. We also interviewed state agency officials and reviewed
    documents from the California Department of Food and Agriculture; the
    Departments of Agriculture of Georgia, Illinois, Kansas, Missouri, North
    Carolina, and Pennsylvania; and the Texas Feed and Fertilizer Control
    Service. Lastly, we interviewed officials and reviewed documents from the
    American Feed Industry Association, the Association of American Feed
    Control Officials, the National Renderers Association, the Association of
    Analytical Communities, and the Harvard Center for Risk Analysis.

    To understand the role that states play in the feed inspection program, we
    surveyed state officials in the 38 states that have contracts or other
    agreements with FDA to perform feed-ban compliance inspections and report
    the inspection results to FDA.2 The survey included questions about the
    states' inspection programs, testing of animal feed ingredients, and FDA's
    training and guidance for feed-ban inspections and enforcement. Before
    implementing our survey, we pretested the questionnaire with state
    agriculture officials in five states. During these pretests, we
    interviewed the respondents to ensure that (1) questions were clear and
    unambiguous, (2) terms were precise, and (3) the survey did not place an
    undue burden on the staff completing it. We received completed
    questionnaires from all 38 states surveyed. The state information
    presented in this report is based on information obtained from this survey
    and interviews with state officials.

    We performed our work from October 2003 through January 2005, in
    accordance with generally accepted government auditing standards, which
    included an assessment of data reliability and internal controls.

    GAO's Analysis of the Status of Actions on Recommendations to FDA in Our
    January 2002 ReportAppendix II

    Source: GAO analysis of FDA documents.

    GAO's Summary of FDA's and USDA's Actions in Response to the Two Cases of
    BSE Discovered in North America in 2003 Appendix III

    Source: GAO analysis of FDA and USDA documents.

    Survey of State AgenciesAppendix IV

    Chronology of FDA's Feed Ban and Proposed RulemakingsAppendix V

    August 4, 1997

    FDA feed ban took effect, prohibiting certain materials in ruminant feed
    to prevent the establishment and spread of BSE if it were to appear in
    U.S. cattle herds. FDA took this action because it had been an industry
    practice to feed proteins to ruminant animals that could transmit the
    infective agent that causes BSE. Additionally, research in the United
    Kingdom suggested that variant Creutzfeldt-Jacob Disease (vCJD) in humans
    is linked to eating cattle infected with BSE. The feed ban requires that
    firms, with some exceptions, take the following actions:

    o label feed and feed ingredients that contain most proteins from mammals
    (prohibited material) with a cautionary statement "Do not feed to cattle
    or other ruminants,"

    o have procedures to protect against commingling or cross-contamination if
    they handle both prohibited and nonprohibited feed and feed ingredients by
    using either equipment dedicated exclusively to feed or ingredients
    intended for cattle or using cleanout procedures or other adequate means
    to prevent carryover, and

    o maintain records so that feed and feed ingredients that contain or may
    contain prohibited material can be tracked from receipt through
    disposition.

    According to FDA's rules, firms that transport both types of materials
    must also follow these procedures. Additionally, prohibited materials may
    be used in pet food and in feed for poultry, swine, horses, and other
    nonruminant animals. Lastly, FDA designated a number of cattle- and other
    animal-derived items as exempt from the ban-and hence, allowable in cattle
    feed. These items include blood and blood products, plate waste, gelatin,
    milk and milk protein, and any product whose only mammalian protein
    consists entirely of protein from pigs and horses. FDA has also not
    regulated the use of poultry litter in feed.

    October 30, 2001

    FDA held a public hearing to solicit information and views regarding ways
    in which the current feed ban and its enforcement might be improved or to
    determine if any new objectives should be considered. FDA took this action
    because BSE had spread beyond the United Kingdom to most countries in
    western and central Europe and Japan. FDA asked for responses to 17
    questions, including the following:

    o Should FDA require dedicated facilities for the production of animal
    feed containing mammalian protein?

    o Should FDA require dedicated transportation of animal feed containing
    mammalian protein?

    o Should FDA license renderers and other firms engaged in the production
    of animal feed containing mammalian proteins?

    o Should FDA revoke or change any of the current exemptions in the current
    rule?

    o Should FDA require pet food to contain the cautionary statement?

    o Should FDA extend the recordkeeping requirement beyond 1 year?

    o Should FDA request authority to assess civil monetary penalties?

    November 6, 2002

    FDA published an advanced notice of proposed rulemaking announcing that it
    was considering revising the feed ban and asking the public to comment on
    certain possible modifications. FDA explained that shortly after its
    October 2001 public hearing, USDA released a report by the Harvard Center
    for Risk Analysis on the findings of a major, 3-year initiative to develop
    a risk assessment model and assess the risk of BSE in the United States.
    The model concluded that the risk to U.S. cattle and to consumers from BSE
    is very low, but certain new control measures could reduce that small risk
    even further. Therefore, based on comments received at the public hearing
    and the findings of the Harvard Study, FDA asked for public comment on
    various ways that the BSE feed ban could be strengthened, including the
    following questions:

    o Should tissues that are known to be at higher risk for harboring the
    infective agent for BSE, such as brain and spinal cord from ruminants 2
    years of age or older be excluded from all rendered products?

    o How extensive is the use of poultry litter in cattle feed, what is the
    level of feed spillage in poultry litter, and what would be the impacts
    resulting from banning poultry litter in ruminant feed?

    o Should pet food for retail sale carry the cautionary statement "Do not
    feed to cattle or other ruminants?"

    o Are there practical ways, other than dedicated facilities, for firms to
    demonstrate that the level of carryover of prohibited material in a feed
    mill could not transmit BSE to cattle or other ruminants? If so, what is
    the safe level of carryover of prohibited material and what is the
    scientific rationale for establishing this safe level?

    o To what extent is plate waste used in ruminant feed and what would be
    the impacts from excluding this material from ruminant feed?

    January 26, 2004

    FDA announced that it would be issuing interim final rules to strengthen
    existing BSE firewalls, including banning a wide range of cattle material
    from human food, dietary supplements, and cosmetics, and strengthening the
    1997 feed ban through an extended list of banned feeding and manufacturing
    practices.

    July 14, 2004

    FDA, with USDA, announced that the agencies are considering additional
    measures to protect the public from the health risk associated with BSE
    and to prevent the spread of the disease in U.S. cattle and are asking for
    public comment. The agencies are considering additional safeguards based
    on the recommendations of a panel of international experts convened by the
    Secretary of Agriculture to review the U.S. regulatory response following
    the finding of a BSE-positive cow in Washington State in December 2003. In
    addition to some of the measures FDA had planned to take in an interim
    final rule, the international panel recommended broader measures, such as
    banning all mammalian and poultry protein from ruminant feed. Since these
    recommendations would require significant changes in current feed
    manufacturing practices and could make some previously announced proposals
    unnecessary, FDA requested additional information and public comment on
    the panel recommendations and other measures, including the following:

    o What information is available to support or refute the assertion that
    removing tissues that are known to be at higher risk for harboring the BSE
    infective agent, such as brain and spinal cord tissue, from all animal
    feed is necessary to effectively reduce the risks of cross-contamination
    of ruminant feed or of misfeeding on the farm?

    o If FDA prohibits high-risk tissues from all animal feed, would there be
    a need to require dedicated facilities, equipment, storage, and
    transportation?

    o What information is available to support banning all mammalian and
    poultry meat and bone meal from ruminant feed?

    o If FDA prohibits high-risk tissues from all animal feed, what
    information is available to support banning all mammalian and poultry meat
    and bone meal from ruminant feed?

    o Can high-risk tissues be effectively removed from dead stock and
    nonambulatory cattle so that the remaining material can be used in animal
    feed, or is it necessary to prohibit the entire carcass from use in all
    animal feed?

    o Do FDA's existing authorities under the Federal Food, Drug, and Cosmetic
    Act and under the Public Health Service Act provide a legal basis to ban
    the use of high-risk cattle tissues and other cattle material in
    nonruminant animal feed, given that such materials have not been shown to
    pose a direct risk to these animals?

    FDA also issued an interim final rule on July 14, 2004, to prohibit
    certain cattle materials in FDA-regulated food, including dietary
    supplements, and cosmetics, to minimize potential human exposure to the
    BSE infective agent. Specifically, FDA prohibited use of the brain, skull,
    spinal cord, and other specified tissues of cattle that are 30 months or
    older; small intestine and tonsils of all cattle; material from
    nonambulatory disabled cattle or cattle not inspected and passed for human
    consumption; and beef that is mechanically separated from bones. FDA took
    this action in response to the finding of a BSE-positive cow in Washington
    State in December 2003 and to conform with an interim final rule issued by
    USDA in January 2004 declaring these materials unfit for human
    consumption.

    Comments from the Food and Drug AdministrationAppendix VI

    The following are GAO's comments on the Food and Drug Administration's
    letter dated January 13, 2005.

    GAO Comments

    1.We believe the report identifies numerous oversight weaknesses that
    continue to limit program effectiveness and place cattle at risk. The
    purpose of the feed ban firewall is to prevent the exposure and spread of
    BSE. A well enforced feed ban is even more critical now that BSE has been
    discovered in cattle in North America. As shown in our report, FDA does
    not know the compliance status or risks posed by firms it has not
    identified, inspected or reinspected for many years. FDA acknowledged that
    many more firms are subject to the feed ban than have been inspected to
    date but said the agency must set priorities for the number and types of
    firms it can identify and inspect with limited inspection resources. We
    agree with FDA's use of a risk-based inspection approach; however, FDA
    acknowledges the need to increase inspections of certain industry
    segments, such as transporters and animal feed salvagers. Moreover, for
    firms that FDA inspects, it does not routinely sample feed to verify
    whether the operating procedures observed by its inspectors are actually
    preventing prohibited materials from contaminating cattle feed. Our
    recommendations are aimed at ensuring that FDA has a strategy for
    maximizing the effectiveness of its limited inspection resources,
    targeting inspections, and using feed tests to minimize the risk of cattle
    being fed prohibited material.

    2.Our concern is precisely that the data are being analyzed and
    interpreted in an erroneous context. Specifically, when FDA and industry
    used those data to assert a 99 percent compliance rate with the feed ban,
    they took that information out of context. While industry compliance may
    in fact be quite high for firms FDA has inspected recently, FDA's data are
    not sufficient to project compliance industrywide. FDA does not know the
    status of compliance for firms that have never been inspected or have not
    been reinspected in years. In addition, compliance history is lost-firms
    that had serious and long-standing violations are classified as
    "in-compliance" once FDA determines that the problems are corrected. FDA
    is not reporting that the firms were ever out of compliance or the length
    of time that the feed ban was violated. Lastly, inspection results are
    largely based on a review of paper documents and a visual inspection, with
    little or no feed testing. Given these data concerns and compliance
    unknowns, we believe that FDA's data should not be used to project
    industry compliance and, anytime those data are cited, they should be
    reported in a complete and accurate context.

    3.FDA agrees that there are industry sectors (such as transporter and
    animal feed salvagers) that need to be assessed to determine their
    potential risk to U.S. cattle. In fact, FDA acknowledges that there are
    millions of firms potentially subject to the feed-ban rule. At the same
    time, FDA implies that it has identified all high-risk firms. FDA has no
    basis for that assertion. The example we suggest in this report is one way
    of identifying additional firms that we observed during our review. FDA
    identified other approaches that its districts used to identify other
    firms. We believe that any approaches FDA identifies as useful should be
    applied uniformly across all FDA districts. We included information in the
    report on how FDA plans to use the $8.3 million it received in the 2005
    budget. We also revised the report to include FDA's estimate of the number
    of firms that feed cattle and other ruminants and revised the
    recommendation in recognition that it may be impossible for FDA to
    identify all firms subject to the feed-ban rule.

    4.FDA suggests that requiring notification would take significant
    resources. The cost of the notification program will depend on the
    requirements FDA puts in place. In developing the program, FDA could
    target the notification to firms that pose potentially high-risk for
    exposing cattle feed to prohibited material. According to FDA, of the
    14,800 firms it has inspected, about 570 renderers, protein blenders, and
    feed mills comprise the high-risk firms subject to notification because
    they manufacture or process prohibited material. While we believe there
    may be more firms that fall into this group, it should not be a
    significantly larger number. If it is significantly larger, that is
    something FDA needs to know. Furthermore, requiring industry to
    self-report is another mechanism that would help FDA identify firms and
    oversee compliance. Finally, FDA has registration requirements in place
    for medicated feed firms and for food facilities, and could draw on its
    experience with those programs for developing a notification program for
    firms subject to the feed-ban rule.1 Because firms can change their
    practices over time, we believe it is important that firms notify FDA
    whenever such changes occur.

    5.While we agree that the current test methods have certain limitations,
    we believe that testing can be a valuable tool for helping FDA oversee
    compliance with the feed ban. FDA maintains that, because the current test
    methods cannot differentiate prohibited material from exempt material,
    they cannot be used to verify the presence or absence of prohibited
    material or to confirm the adequacy of cleanout measures. However, states
    told us that they are using tests for these purposes. Moreover, FDA is
    currently testing finished feed and using the test results, together with
    follow-up inspections, to determine whether the feed ban had been
    violated. We believe tests would help inspectors who now rely on only
    paperwork review and visual examination to determine the adequacy of
    cleanout procedures. Tests would also be useful for vegetable-based cattle
    feed, where detecting the presence of animal protein would indicate a
    violation. We revised the recommendation to recognize that FDA may elect
    to use other test methods in addition to feed microscopy and polymerase
    chain reaction (PCR). With respect to FDA's sampling of finished feed, the
    660 samples FDA tested were not collected during feed-ban compliance
    inspections. We plan to report later this year on FDA's sampling of
    finished feed.

    6.We agree that FDA's current test methodology will not allow it to use
    test results alone to verify feed-ban violations. However, testing
    combined with follow-up inspections would allow FDA to be in a better
    position to generalize about compliance with the feed-ban rule if FDA
    developed a random sample methodology for inspectors to use for sampling
    finished feed and feed ingredients. (Also see comment 5.)

    7.After clarifying FDA's comment with an attorney in FDA's Office of the
    Chief Counsel, we revised the report and the recommendation to delete
    references that FDA should encourage firms to include a cautionary
    statement on feed exports that may contain prohibited material. We believe
    that it would be more prudent for FDA to focus its efforts on obtaining
    statutory authority to require that the cautionary statement be used on
    such exports.

    8.We revised the recommendation to clarify that FDA should be alerting
    USDA and the affected states whenever inspectors discover that cattle may
    have consumed feed with prohibited material.

    9.Based on the inspections we observed and the 404 inspection reports that
    we reviewed in detail, we believe that inspector activities during
    feed-ban compliance inspections are driven by the checklist
    items/questions on the BSE inspection form. Therefore, we believe the
    checklist should include specific questions to prompt inspectors to
    examine vehicles and firms' cleanout procedures on every inspection.

    10.As noted in the report, FDA believes that it provides the inspection
    results in a transparent, compete, and accurate context. FDA notes that
    the BSE inspection data posted on its Web site "allows the user to analyze
    the data, in a multitude of ways, to provide their own contextual
    reference." Our concern is precisely that the data are being analyzed and
    interpreted in an erroneous context. Specifically, when FDA and industry
    used those data to assert a 99 percent compliance rate with the feed ban,
    they took that information out of context. While FDA's calculation of
    compliance by a subset of regulated industries may in fact be quite high,
    FDA's data are not sufficient to make that projection for all regulated
    industries because of the many problems we cite in the report.
    Specifically, FDA does not know the status of compliance for firms that
    have never been inspected or those that have not been reinspected in
    years. FDA also does not know if a firm that it previously inspected and
    classified as low-risk has started using prohibited material; and FDA
    reclassifies a firm in the database from "out-of-compliance" to
    "in-compliance" when it corrects a violation-even when the violation was
    serious and long-standing. Lastly, inspection results are largely based on
    a review of paper documents and a visual inspection, with little or no
    feed testing. Given these data concerns and compliance unknowns, FDA's
    data should not be used to project industry compliance and, anytime those
    data are cited, they should be reported in a complete and accurate
    context.

    GAO Contacts and Staff AcknowledgmentsAppendix VII

    GAO Contacts

    Robert A. Robinson, (202) 512-3841 Erin Lansburgh, (202) 512-3017

    Staff Acknowledgments

    In addition to the individuals named above, Vincent Balloon, Jim Dishmon,
    Natalie Herzog, Lynn Musser and John C. Smith made key contributions.
    Other contributors included George Quinn, Carol Herrnstadt Shulman, Joan
    Vogel and Amy Webbink.

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