Importation of Pork and Pork Products From Yucatan and Sonora, Mexico

Federal RegisterFeb 23, 1999

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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Part 94

[Docket No. 97-079-1]

RIN 0579-AA91

Importation of Pork and Pork Products From Yucatan and Sonora,

Mexico

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the regulations concerning the

importation of animal products to relieve certain restrictions on the

importation of pork and pork products from the Mexican State of

Yucatan. Currently, because of the existence of hog cholera in Mexico,

pork and pork products from Yucatan must be heated or cured and dried

to certain specifications to be eligible for entry into the United

States. This proposal would establish new conditions for the

importation of fresh and processed pork and pork products from Yucatan

into the United States and would also provide for the movement through

areas where hog cholera may exist of pork and pork products from

Yucatan in transit to the United States. We are also proposing to amend

the regulations that provide for the importation of fresh pork from the

Mexican State of Sonora to also allow the importation of pork products

from Sonora and to modify the import conditions for Sonoran pork and

pork products so that those conditions parallel the import conditions

proposed for pork and pork products from Yucatan. These proposed

amendments would provide for the importation of pork products from

Sonora and for the in-transit movement of Sonoran pork and pork

products through areas where hog cholera may exist and would make it

clear that pork and pork products from Sonora must be derived from

swine slaughtered at federally inspected slaughter plants.

DATES: Consideration will be given only to comments received on or

before April 26, 1999.

ADDRESSES: Please send an original and three copies of your comments to

Docket No. 97-079-1, Regulatory Analysis and Development, PPD, APHIS,

suite 3CO3, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please

state that your comments refer to Docket No. 97-079-1. Comments

received may be inspected at USDA, room 1141, South Building, 14th

Street and Independence Avenue SW., Washington, DC, between 8 a.m. and

4:30 p.m., Monday through Friday, except holidays. Persons wishing to

inspect comments are requested to call ahead on (202) 690-2817 to

facilitate entry into the comment reading room.

FOR FURTHER INFORMATION CONTACT: Dr. John Cougill, Senior Staff

Veterinarian, Products Program, National Center for Import and Export,

VS, APHIS, 4700 River Road Unit 40, Riverdale, MD 20737-1231, (301)

734-3399.

SUPPLEMENTARY INFORMATION:

Background

The Animal and Plant Health Inspection Service (APHIS) of the U.S.

Department of Agriculture (USDA) regulates the importation of animals

and animal products into the United States to guard against the

introduction of animal diseases not currently present or prevalent in

this country. The regulations pertaining to the importation of animals

and animal products are set forth in the Code of Federal Regulations

(CFR), title 9, chapter I, subchapter D (9 CFR parts 91 through 99).

Until recently, the regulations in parts 91 through 99 governed the

importation of animals and animal products according to the recognized

animal disease status of the exporting country. In general, if a

disease occurred anywhere within a country's borders, the entire

country was considered to be affected with the disease, and

importations of animals or animal products from anywhere in the country

were regulated accordingly. However, international trade agreements

entered into by the United States--specifically, the North American

Free Trade Agreement and the General Agreement on Tariffs and Trade--

require APHIS to recognize regions, rather than only countries, as well

as levels of risk, for the purpose of regulating the importation of

animals and animal products into the United States. Consequently, on

October 28, 1997, we published in the Federal Register a final rule (62

FR 56000-56026, Docket No. 94-106-9, effective November 28, 1997) that

established procedures for recognizing regions and levels of risk for

the purpose of regulating the importation of animals and animal

products. In that rule, we also established procedures by which a

region may request permission to export animals and animal products to

the United States under specified conditions, based on the region's

disease status.

[[Page 8756]]

On the same date, we also published a policy statement (62 FR

56027-56033, Docket No. 94-106-8) that explained that we will evaluate

such requests on a case-by-case basis by analyzing the level of disease

risk involved. Levels of risk exist upon a continuum. However, we

established five benchmark categories--negligible, slight, low,

moderate, and high--to give foreign regions a general idea of where

they fit upon the risk continuum. According to our policy, once we have

established the level of disease risk associated with the unrestricted

importation of a particular type of animal or animal product, we will

determine the import conditions needed to reduce that risk to a

negligible level. Because of the number of potential variables and the

vast number of possible combinations of those variables in assessing

the risk of the unrestricted importation of animals and animal products

from a region, the precise combination of measures necessary to reduce

the risk of disease introduction to a negligible level will likely vary

from region to region depending on the commodities to be imported and

the diseases of concern.

The factors that we will consider in determining the level of risk

associated with unrestricted importation of a particular type of animal

or animal product from a region are:

(1) The authority, organization, and infrastructure of the

veterinary services organization in the region.

(2) The type and extent of disease surveillance in the region--

e.g., is it passive and/or active; what is the quantity and quality of

sampling and testing?

(3) Diagnostic laboratory capabilities.

(4) Disease status--is the disease agent known to exist in the

region? If ``yes,'' at what prevalence? If ``no,'' when was the most

recent diagnosis?

(5) The extent of an active disease control program, if any, if the

agent is known to exist in the region.

(6) The vaccination status of the region. When was the last

vaccination? What is the extent of vaccination if it is currently used,

and what vaccine is being used?

(7) Disease status of adjacent regions.

(8) The degree to which the region is separated from regions of

higher risk through physical or other barriers.

(9) The extent to which movement of animals and animal products is

controlled from regions of higher risk, and the level of biosecurity

regarding such movements.

(10) Livestock demographics and marketing practices in the region.

(11) Policies and infrastructure for animal disease control in the

region--i.e., emergency response capacity.

The regulations in 9 CFR part 94 pertain to, among other things,

the importation of meat and other animal products into the United

States. Currently, Sec. 94.20 allows fresh (chilled or frozen) pork

from Sonora, Mexico, to be imported if: The pork is meat from swine

that have been born, raised, and slaughtered in Sonora; the pork has

not been in contact with pork from regions other than those listed in

Sec. 94.9(a) as regions where hog cholera is not known to exist; and an

authorized official of Mexico certifies on the foreign meat inspection

certificate (required by 9 CFR 327.4) that the above conditions have

been met.

We are proposing to amend Sec. 94.20 to (1) expand the importation

of pork products from Sonora, (2) allow pork and pork products from

Yucatan, Mexico, and (3) amend some of the provisions pertaining to

pork from Sonora so that the same import requirements apply to pork and

pork products from both Sonora and Yucatan, Mexico.

Our Proposal

In June 1995, the Government of Mexico officially requested that

the United States recognize the Mexican State of Yucatan as free of hog

cholera. In October 1996, a team of APHIS veterinarians conducted a

site visit to verify that Yucatan was free of hog cholera and had the

veterinary infrastructure, disease control programs, diagnostic

capabilities, and surveillance programs necessary to prevent a

recurrence of the disease. The site visit confirmed the information

presented in the request by the Mexican Government. Copies of the APHIS

site visit report may be obtained by contacting the person listed under

FOR FURTHER INFORMATION CONTACT. The APHIS team also determined that

the Yucatan swine industry and Mexican agricultural officials were

exclusively interested in the exportation of pork and pork products and

not live swine to the United States.

Based on the information presented to APHIS by the Government of

Mexico and our site visit to Yucatan, we have established the following

facts, which correspond with the factors listed previously for

determining the risk associated with unrestricted importation of a

particular commodity from a region:

(1) In Mexico, animal health functions are carried out by officials

at the Federal level, who set policy, and by officials at the State

level, who carry out program operations. The success of all disease

eradication or control programs in Mexico largely depends on the

relationship between these two levels of government and between

governmental officials and the livestock industry. In Yucatan, a unique

collaborative relationship exists between the pork producer

associations and the State and Federal animal health officials. The

success of the hog cholera eradication program in Yucatan has been

largely due to the dedication and commitment of the industry and its

willingness to work with animal health officials. In addition, State

and Federal laws, regulations, policies, and infrastructure in Yucatan

and Mexico appear to be adequate to restrict movements of swine and

swine products into Yucatan from any regions of Mexico where hog

cholera may exist.

(2) Prior to Mexico's declaration of Yucatan as free of hog cholera

in April 1995, Yucatan State officials conducted an initial serological

survey from January through March 1995 to verify the State's hog-

cholera-free status. Yucatan maintained active surveillance on its

commercial and small, private ``backyard'' swine populations during

1996 and 1997. We have reviewed the sampling methodology used and are

generally satisfied with it.

(3) Laboratory and diagnostic capabilities are sufficient and meet

the standards of the International Office of Epizootics.

(4) and (5) The last case of hog cholera in Yucatan was reported in

1982, and Mexico declared the State free of the disease in April 1995.

(6) Vaccination for hog cholera in Yucatan was discontinued in

1993.

(7) and (8) Yucatan is bordered only by two Mexican States and the

Gulf of Mexico. The State of Quintana Roo, which adjoins Yucatan to the

south and southeast, was declared free of hog cholera in 1996. The

State of Campeche, which adjoins Yucatan to the south and southwest,

was declared free of hog cholera in December 1997. Very little swine

production occurs in either Campeche or Quintana Roo.

(9) Yucatan strictly controls the inter-and intrastate movement of

livestock, poultry, and livestock and poultry products into and through

the State. Trade and travel through the maritime port and international

airport are strictly monitored, as is vehicular movement within the

State. Commercial vehicles with agricultural cargo from Quintana Roo or

Campeche must present proper health documentation for the cargo or

entry is denied. In addition, all vehicles entering Yucatan from

Campeche are inspected. (Quintana Roo is largely a tourist State and

has little commercial

[[Page 8757]]

swine production, so vehicles from Quintana Roo are not routinely

inspected.) Pork products produced in States of lower health status

than that of Yucatan may be imported only if the products meet time and

temperature processing requirements and originate from a slaughter

plant approved and inspected by the Government of Mexico.

(10) Commercial swine production in Yucatan is concentrated among

approximately 200 producers, who collectively own about 65,000 sows.

Three producers alone own 65 percent of these sows, all of which are

housed in highly integrated operations similar to those found in the

United States. Such fully integrated operations in Yucatan implement

good biosecurity measures at all levels, from parent herds to

processing plants. While the number of backyard herds in Yucatan is

dwindling, they still constitute a sizable population, and biosecurity

measures at these operations vary. Live hogs are imported into Yucatan

only from hog-cholera-free States and regions, and most of Yucatan's

replacement breeding stock originates in the United States.

(11) State and Federal laws, regulations, policies, and

infrastructure in Yucatan and the rest of Mexico appear to be adequate

to maintain surveillance and control of hog cholera and to eradicate

hog cholera rapidly in the event of an outbreak in the State of

Yucatan.

The findings just described are described in further detail in a

qualitative risk assessment that we conducted in accordance with the

regionalization final rule and policy statement discussed previously.

Our qualitative risk assessment concerning the importation of pork and

pork products from federally inspected slaughtering establishments in

Yucatan may be obtained by contacting the person listed under FOR

FURTHER INFORMATION CONTACT. The risk assessment indicated that the

importation of pork and pork products from federally inspected

slaughtering establishments in Yucatan, Mexico, would present a

negligible risk of introducing hog cholera into the United States.

Based on the finding of negligible risk, we are proposing to allow

the importation of pork and pork products from Yucatan, Mexico.

However, we are proposing to allow these importations to occur only

under certain conditions, which are set out below, to help prevent the

possibility that pork or pork products from swine raised in regions of

Mexico other than Yucatan or Sonora could be exported to the United

States via Yucatan. We are proposing to amend the import conditions for

pork from Sonora at Sec. 94.20 to provide the same import conditions

for pork and pork products from both Sonora and Yucatan. We want to

prevent the following possibilities: That swine from regions of Mexico

other than Sonora or Yucatan could be moved to Yucatan or Sonora for

slaughter, processing, and export to the United States; that pork or

pork products from other regions could be moved to Yucatan or Sonora

for export to the United States; or that, once leaving Yucatan or

Sonora, pork and pork products from Yucatan or Sonora could be

commingled with pork or pork products from other regions of Mexico in

transit to the United States. We believe that the proposed import

conditions would provide a higher degree of safety against the

occurrence of any of these scenarios than the current requirements

listed in Sec. 94.20. Following the list of import conditions is our

basis for them.

Proposed Conditions

1. The pork or pork product must be from swine that were born and

raised in Sonora or Yucatan and slaughtered in Sonora or Yucatan at a

federally inspected slaughter plant under the direct supervision of a

full-time salaried veterinarian of the Government of Mexico, and the

slaughter plant must be approved to export pork and pork products to

the United States in accordance with 9 CFR 327.2.

2. If processed in any manner, the pork or pork product must be

processed at a federally inspected processing plant in Sonora or

Yucatan under the direct supervision of a full-time salaried

veterinarian of the Government of Mexico.

3. The pork or pork product must not have been in contact with pork

or pork products from any State in Mexico other than Sonora or Yucatan

or from any other region not listed in Sec. 94.9(a) as a region where

hog cholera is not known to exist.

4. The foreign meat inspection certificate for the pork or pork

product (required by 9 CFR 327.4) must be signed by a full-time

salaried veterinarian of the Government of Mexico. The certificate must

include statements that certify the above conditions have been met. The

certificate must also show the seal number on the shipping container if

a seal is required (see below).

5. In addition, if the pork or pork product is going to transit any

State in Mexico other than Sonora or Yucatan or any other region not

listed in Sec. 94.9(a) as a region where hog cholera is not known to

exist, a full-time salaried veterinarian of the Government of Mexico

must apply serially numbered seals to the containers carrying the pork

or pork products at the federally inspected slaughter or processing

plant in Sonora or Yucatan, and the seal numbers must be recorded on

the foreign meat inspection certificate.

6. Prior to its arrival in the United States, the shipment of pork

or pork products must not have been in any State in Mexico other than

Sonora or Yucatan or in any other region not listed in Sec. 94.9(a)

unless the pork or pork products have remained under seal until arrival

at the U.S. port and either (1) the numbers on the seals match the

numbers on the foreign meat inspection certificate or (2) if the

numbers on the seals do not match the numbers on the foreign meat

inspection certificate, an APHIS representative at the port of arrival

is satisfied that the pork or pork products were not contaminated

during movement to the United States.

Basis for Proposed Conditions

We are proposing to require that the pork and pork products come

only from swine slaughtered at federally inspected slaughter plants in

Sonora or Yucatan because such plants handle only swine that were born

and raised in Sonora or Yucatan in establishments that practice strict

biosecurity measures. Therefore, this proposed requirement would serve

as a safeguard against the possibility that pork or pork products from

swine raised in backyard farms in Sonora or Yucatan, where biosecurity

measures are variable, could be exported to the United States. Although

Sec. 94.20 does not currently include this proposed requirement, all

pork from Sonora has come exclusively from federally inspected

slaughtering plants.

We are proposing that processed pork or pork products from Sonora

or Yucatan come only from federally inspected processing plants in

Sonora or Yucatan because those plants have been found to meet the

requirements of the USDA's Food Safety and Inspection Service and have

been approved to export pork and pork products to the United States in

accordance with 9 CFR part 327. Further, those plants are under the

direct supervision of full-time salaried veterinarians of the

Government of Mexico.

The proposed requirement that the pork and pork products must not

have been in contact with pork or pork products from any State in

Mexico other than Yucatan or Sonora, or from regions other than those

listed in Sec. 94.9(a), is intended to ensure that the pork and pork

products were not exposed to pork or pork products from a region with a

[[Page 8758]]

greater risk of hog cholera. These requirements are the same as those

currently in place for pork from Sonora, except that they would allow

commingling of pork and pork products from Sonora and Yucatan.

We are proposing to allow the pork and pork products to transit

other regions not listed in Sec. 94.9(a) en route to the United States

if the pork and pork products are shipped in containers sealed with

serially numbered seals at the federally inspected slaughtering plant

or processing plant in Sonora or Yucatan and the containers arrive in

the United States with the seals intact. The seal numbers would have to

be listed on the foreign meat inspection certificate that accompanies

the shipment. This precaution would ensure that the pork and pork

products have remained in closed containers during transit to the

United States and have not become contaminated.

This proposed rule would also allow the importation of the pork and

pork products in containers bearing seals with different numbers than

those listed on the foreign meat inspection certificate if our port

inspectors can determine that an official of the Government of Mexico

opened the original seals and then applied new seals. Section 94.20

does not currently provide for such in-transit movements under seal for

pork from Sonora. However, we now realize the need to allow some

flexibility in shipping and recognize that valid reasons may exist for

the containers to have been opened and for the seal numbers to have

been changed in transit. For example, many flights from Yucatan to the

United States stop in Mexico City, and the containers may have to be

opened for inspection by Mexican customs officials.

Prior to the final rule that established Sec. 94.20 and allowed the

importation of fresh (chilled or frozen) pork from Sonora (see 62 FR

25439-25443, Docket 94-106-6, May 9, 1997, effective July 8, 1997),

pork and pork products from all of Mexico were prohibited entry into

the United States unless they were processed in accordance with

Sec. 94.9. Section 94.9 requires that pork and pork products from

regions where hog cholera is considered to exist meet stringent

conditions to ensure the pork's freedom from hog cholera. Among other

things, the pork or pork product must be fully cooked, or deboned and

heated to a specified temperature, or cured and dried to specifications

in the regulations. Because Sec. 94.20 applies specifically to the

importation of fresh (chilled or frozen) pork from Sonora, Mexico, any

processed pork from Sonora must meet the conditions of Sec. 94.9 to be

eligible for importation into the United States. However, as stated

previously, we believe that any type of pork or pork product from

Sonora or Yucatan imported under the conditions specified in this

proposed rule would present a negligible risk of introducing hog

cholera. Therefore, this proposed rule would allow the importation from

Sonora and Yucatan of processed pork that does not meet the conditions

of Sec. 94.9.

Executive Order 12866 and Regulatory Flexibility Act

This proposed rule has been reviewed under Executive Order 12866.

The rule has been determined to be significant for the purposes of

Executive Order 12866 and, therefore, has been reviewed by the Office

of Management and Budget. A summary of the analyses required by

Executive Order 12866 and the Regulatory Flexibility Act are set forth

below. Copies of the entire analyses may be obtained by contacting the

person listed under FOR FURTHER INFORMATION CONTACT.

The hazard of concern regarding the proposed importation of pork

and pork products from the Yucatan region of Mexico is hog cholera. A

qualitative risk assessment prepared by APHIS indicates that the

expected costs of disease introduction are likely to be zero, as the

proposed imports pose a low probability of causing a hog cholera

outbreak in the United States. APHIS also conducted a quantitative risk

assessment based only on serological survey data of commercial swine

operations in the Yucatan. Due to modeling constraints, the

quantitative risk assessment could not include some of the information

most pertinent to risk evaluation, such as the fact that an outbreak of

hog cholera has not occurred in the Yucatan since 1982. However, the

quantitative model is useful in that it provides an upper limit on the

estimated probability of a hog cholera outbreak and acknowledges that

the actual risk is likely to be lower. Expected costs associated with

the proposed trade are calculated by multiplying the estimates from the

quantitative model of the likelihood of an outbreak and the estimated

economic consequences of an outbreak.

In accordance with Executive Order 12866, APHIS has compared the

benefits of the increased trade to the expected costs resulting from

disease outbreak. The benefits are calculated as the net change in

consumer and producer surplus that results from the estimated volume of

trade. Assuming that, among other things, Yucatan pork would be a

perfect substitute for domestic pork, it is estimated that the net

benefits of Yucatan pork imports would be positive. Allowing

importations of Yucatan pork would cause U.S. farm gate prices to

decrease marginally, benefitting U.S. consumers.

Commercial swine production in Yucatan is concentrated among

approximately 200 producers, who collectively own about 65,000 sows

(1996 data). Three producers alone own 65 percent of these sows, all of

which are housed in highly integrated operations similar to those found

in the United States. Most of the remaining commercial producers are

communal producers who operate small shared commercial herds with 15-40

sows. The number of ``backyard'' herds in Yucatan is decreasing.

Yucatan generates 7-8 percent of Mexico's pork production. The

State is a net exporter of pork, with 65 percent of its pork going to

the tourist centers in the neighboring State of Quintana Roo,

population centers in and around Mexico City, and Japan. Pork intended

for export is slaughtered at the State's only federally inspected

slaughter facility. At full capacity, this facility can slaughter up to

1,000 head per day, with a maximum annual production of 10,000 metric

tons of pork.

Based on existing Yucatan hog production and slaughter capacity, it

is expected that Yucatan producers could export between 200 and 10,000

metric tons of fresh and frozen pork to the United States per year. The

high-volume scenario is based on the maximum output of the federally

inspected slaughter facility and assumes that all 10,000 metric tons

produced there would be shipped to the United States. Because this

scenario is unlikely, we also evaluated more realistic scenarios of

1,000 and 200 metric tons. The most likely amount of pork imported into

the United States from Yucatan would probably be between these two

amounts. Therefore, the regulatory impact analysis summarized here

examines the potential economic impact of such imports under low- (200

metric tons per year), medium- (1,000 metric tons per year), and high-

(10,000 metric tons per year) volume scenarios.

Results of computer simulation iterations for the low-volume

simulations indicate positive net benefits in 90 percent of the

iterations run. Results of the medium-volume simulations indicate

positive net benefits in 85 percent of the iterations run. Results from

the high-volume scenario indicate positive net benefits in 75 percent

of the iterations run. In the absence of disease (when likelihood

[[Page 8759]]

estimates are zero), the annual net benefits of trade for the low-,

medium-, and high-volume scenarios are estimated, in 1997 dollars, as

$6,478, $32,429, and $329,011, respectively. Therefore, based on these

calculations, positive net benefits would result from any of the

scenarios. The likelihood of introducing hog cholera and its associated

biological and economic consequences are sufficiently low as to warrant

allowing the proposed trade. It should be noted that the low-volume

scenario is considered by far the most likely; as stated previously,

the high-volume scenario is considered extremely unlikely.

Initial Regulatory Flexibility Analysis

In accordance with 21 U.S.C. 111, the Secretary of Agriculture is

authorized to promulgate regulations to prevent the introduction or

dissemination of any contagious, infectious, or communicable disease of

animals from a foreign country into the United States.

This proposed rule would amend the regulations to relieve certain

restrictions on the importation of pork and pork products from the

Yucatan by establishing new conditions for the importation of fresh and

processed pork and pork products from Yucatan into the United States

and would also provide for the movement of pork and pork products from

Yucatan through areas where hog cholera may exist while in transit to

the United States. This proposed rule would also amend the regulations

regarding the importation of fresh pork from Sonora to allow the

importation of pork products from Sonora and to modify the import

conditions for Sonoran pork and pork products so that those conditions

parallel the import conditions proposed for pork and pork products from

Yucatan. These proposed amendments would provide for the importation of

pork products from Sonora and for the in-transit movement of Sonoran

pork and pork products through areas where hog cholera may exist and

would make it clear that pork and pork products from Sonora must be

derived from swine slaughtered at federally inspected slaughter plants.

Over the past several decades, the U.S. pork industry has

experienced enormous structural change, which mirrors the overall trend

toward ``concentration'' in U.S. agriculture. According to the 1992

Census of Agriculture (the most recent census available at the time

this analysis was performed), the shift toward fewer but larger farms

has been dramatic: From 1969 to 1992, hog sales rose roughly 23

percent, while the number of hog farms decreased by about 70 percent.

During that same time period, the average-sized hog farm increased from

138 head per farm to 588 head per farm, and production became

increasingly more concentrated among larger producers. In 1992, for

example, roughly 6 percent of U.S. hog farms held over 50 percent of

U.S. hog inventory. The pork processing industry is also characterized

by a decreasing number of companies, operating increasingly large,

capital-intensive processing and packing plants that are dependent on

high volumes of raw product and that begin to realize economies of size

at about 4 million hogs per year.

The potential economic impacts of the proposed importation of pork

and pork products from the Yucatan region of Mexico are dependent on a

number of factors, such as where the products would be consumed in the

United States. While it is currently unknown exactly how Yucatan pork

would enter U.S. marketing and distribution channels and where it would

ultimately be consumed, it is likely that the pork would be shipped by

ocean vessel from Progreso, Yucatan, to a U.S. gulf port, most likely

in Texas or Florida, perhaps in Louisiana. If Yucatan pork were

purchased by a local retail chain or wholesaler in those States, it

would likely be consumed locally. If it were purchased by a national

wholesaler, it could be consumed anywhere in the United States. For the

purposes of this analysis, we examined both the possibility that

Yucatan pork would be consumed locally in selected Gulf Coast States

and also the possibility that it would enter national distribution

channels.

The Small Business Administration (SBA) defines small hog farms

(Standard Industrial Code 0213) as those earning less than $500,000 in

annual receipts. Industry experts suggest that only those hog

operations with inventories in excess of 2,000 animals would earn

$500,000 or more in sales annually. However, because the 1992 Census of

Agriculture combines all hog farms with more than 1,000 animals into

one category, for the purposes of this analysis, we counted operations

with more than 1,000 animals as large and operations with fewer than

1,000 as small.

Despite the trend toward fewer and larger hog farms described

above, according to the 1992 Census of Agriculture, fewer than 6

percent of U.S. hog and pig operations held inventories in excess of

1,000 animals (the average U.S. small hog farm held 160 head of stock

and had annual sales of roughly $27,000). So, by SBA standards, at

least 94 percent of all U.S. hog farms (191,347) were small entities in

1992. In Texas, Florida, and Louisiana, roughly 99 percent of hog farms

were small entities; in those States, small hog farmers held generally

22-40 head per farm and earned $3,000-$6,000 annually. In 1992, there

were at least 179,478 small hog farms nationwide, with 9,017 being in

Texas, Florida, and Louisiana.

The segment of the U.S. swine industry most likely to be first

exposed to hog cholera from imported pork products would be swine

operations that use human food waste as a feed source. Because the hog

cholera virus remains infective in pork products for a long time unless

the products are cooked, the disease could be transmitted to swine fed

discarded uncooked pork. Therefore, waste-feeding swine operations

would most directly bear the risk associated with the unlikely

importation of contaminated pork products from Yucatan. The risk to the

remainder of the U.S. swine industry would be through possible spread

from these initially infected waste-feeding operations, which must be

licensed by USDA.

In 1994, there were about 2,000 licensed waste-feeding

establishments in the continental United States, and this number has

not changed greatly since then. The majority of these premises were

located in Texas (871), Arkansas (248), Florida (309), and North

Carolina (178). Based on a 1994 APHIS survey, 1,173 waste-feeding

operations in the 48 conterminous states contained a total of about

114,000 pigs. Waste-feeding operations are predominantly small. Based

on the 1994 survey, the median number of swine per waste-feeding

premises was 34 (average of 97). Only 10 of the premises had more than

1,000 swine.

Whether we consider the United States as a whole or just selected

Gulf Coast States, the overwhelming majority of hog farms are small

entities, so it is reasonable to conclude that a substantial number of

small entities could be affected by this proposed rule.

Economic Impact on Small Entities

There is no general rule that sets threshold or trigger levels for

``significant economic impact;'' however, it has been suggested that an

economic effect that equals a small business' profit margin--5 to 10

percent of annual sales--could be considered significant.

We used estimated changes in producer surplus together with the

Census of Agriculture data on hog inventories and hog sales to develop

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very rough estimates of the potential economic impact of the proposed

rule on small hog farmers across the United States and in selected Gulf

Coast States. To do this, we assumed that losses in producer surplus

would be shared equally among all hog farms in the geographic area

under consideration (either the entire United States or selected Gulf

Coast States). We then compared per-farm changes in producer surplus

with small farms' annual sales to determine whether the economic

impacts approach the 5-10 percent threshold.

If Yucatan pork entered national distribution channels and,

therefore, impacts were shared by all U.S. producers, there would not

be a significant economic impact on small entities no matter which

level (low, medium, or high volume) of imports is assumed. Producer

surplus losses per U.S. hog farm would range from $0.45 to $22.05 per

year, and these amounts are substantially less than 1 percent of the

typical small hog farmer's annual sales in every scenario.

If, under the high-volume scenario, the maximum 10,000 metric tons

were imported annually from the Yucatan and consumed locally in

Louisiana, Texas, and Florida, there could be a significant economic

impact on small pork producers in those States. In this case, a subset

of small hog farmers with considerably fewer head per farm and

considerably less in annual revenues than the average small U.S. hog

farm would face the most significant impacts of an increase in imports

resulting from the proposed trade. The producer surplus losses per

small hog farm in those States would range from $9.60 to $479.52. The

larger amount is equivalent to almost 8.14 percent of the typical small

hog farmer's annual sales and, therefore, could be considered a

significant impact.

In conclusion, it is clear that the proposed rule could affect a

substantial number of small hog farms because, as of the 1992 Census of

Agriculture, almost all hog farms meet the SBA size criteria for small

entity. However, it is unclear whether the rule would have a

significant economic impact on small hog farms. The latter issue

depends on how much Yucatan pork is imported and where it is consumed.

Under the most extreme assumptions (highest volume imports and limited

geographic area affected), small hog producers in selected Gulf Coast

States could experience losses in producer surplus equaling

approximately 8 percent of annual sales. Such losses would meet

``significant economic impact'' criteria. Under the most likely import

volume scenario (1,000 metric tons per year), the proposed rule would

not have a significant economic impact on small hog farmers either

nationwide or in selected Gulf Coast States.

Alternatives Considered

In developing this proposed rule, we considered either (1) making

no changes to the existing requirements for the importation of fresh

and processed pork and pork products from Yucatan and Sonora, (2)

proposing to allow the importation of pork and pork products from

Yucatan and Sonora under conditions different from those proposed, or

(3) proposing to allow the importation of pork and pork products from

Yucatan and Sonora under the conditions proposed in this document.

We rejected the first alternative because it would continue to

restrict the importation of pork and pork products from Yucatan under

the same conditions that apply to the remainder of Mexico. Because we

have determined that pork and pork products could be imported under

specified conditions from Yucatan and Sonora with negligible hog

cholera risk, taking no action would not be scientifically defensible

and would be contrary to trade agreements entered into by the United

States. We also rejected the second alternative, which would allow the

importation of pork and pork products from Yucatan and Sonora under

conditions other than those proposed. In developing the proposed

criteria for the importation of such pork and pork products, we

determined that conditions less stringent than those proposed would

present a risk of the introduction of hog cholera into the United

States via pork or pork products from regions of Mexico other than

Sonora or Yucatan. We further concluded that more stringent conditions

would be unnecessarily restrictive. We consider the proposed conditions

to be both effective and necessary in ensuring that the risk of hog

cholera introduction via pork and pork product imports from Yucatan and

Sonora remains at a negligible level.

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. If this proposed rule is adopted: (1) All State

and local laws and regulations that are inconsistent with this rule

will be preempted; (2) no retroactive effect will be given to this

rule; and (3) administrative proceedings will not be required before

parties may file suit in court challenging this rule.

National Environmental Policy Act

An environmental assessment and finding of no significant impact

have been prepared for this proposed rule. The assessment provides a

basis for the conclusion that the importation of pork and pork products

from Sonora and Yucatan, Mexico, under the conditions specified in this

proposed rule would not present a significant risk of introducing or

disseminating hog cholera disease agents into the United States and

would not have a significant impact on the quality of the human

environment. Based on the finding of no significant impact, the

Administrator of the Animal and Plant Health Inspection Service has

determined that an environmental impact statement need not be prepared.

The environmental assessment and finding of no significant impact

were prepared in accordance with: (1) The National Environmental Policy

Act of 1969, as amended (NEPA) (42 U.S.C. 4321 et seq.), (2)

regulations of the Council on Environmental Quality for implementing

the procedural provisions of NEPA (40 CFR parts 1500-1508), (3) USDA

regulations implementing NEPA (7 CFR part 1b), and (4) APHIS' NEPA

Implementing Procedures (7 CFR part 372).

Copies of the environmental assessment and finding of no

significant impact are available for public inspection at USDA, room

1141, South Building, 14th Street and Independence Avenue SW.,

Washington, DC, between 8 a.m. and 4:30 p.m., Monday through Friday,

except holidays. Persons wishing to inspect copies are requested to

call ahead on (202) 690-2817 to facilitate entry into the reading room.

In addition, copies may be obtained by writing to the individual listed

under FOR FURTHER INFORMATION CONTACT.

Paperwork Reduction Act

In accordance with section 3507(d) of the Paperwork Reduction Act

of 1995 (44 U.S.C. 3501 et seq.), the information collection or

recordkeeping requirements included in this proposed rule have been

submitted for approval to the Office of Management and Budget (OMB).

Please send written comments to the Office of Information and

Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington,

DC 20503. Please state that your comments refer to Docket No. 97-079-1.

Please send a copy of your comments to: (1) Docket No. 97-079-1,

Regulatory Analysis and Development, PPD, APHIS, suite 3C03, 4700 River

Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer,

OCIO, USDA,

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room 404-W, 14th Street and Independence Avenue SW., Washington, DC

20250. A comment to OMB is best assured of having its full effect if

OMB receives it within 30 days of publication of this proposed rule.

This proposed rule would amend the regulations to relieve certain

restrictions on the importation of pork and pork products from Yucatan

by establishing new conditions for the importation of fresh and

processed pork and pork products from Yucatan into the United States

and would also provide for the movement of pork and pork products from

Yucatan through areas where hog cholera may exist while in transit to

the United States. This proposed rule would also amend the regulations

that provide for the importation of fresh pork from Sonora to allow the