[Federal Register Volume 73, Number 81 (Friday, April 25, 2008)]
[Rules and Regulations]
[Pages 22719-22758]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 08-1180]



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Part VI





Department of Health and Human Services





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Food and Drug Administration



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21 CFR Part 589



Substances Prohibited From Use in Animal Food or Feed; Final Rule

Federal Register / Vol. 73, No. 81 / Friday, April 25, 2008 / Rules 
and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 589

[Docket No. 2002N-0273] (Formerly Docket No. 02N-0273)
RIN 0910-AF46


Substances Prohibited From Use in Animal Food or Feed

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is amending the 
agency's regulations to prohibit the use of certain cattle origin 
materials in the food or feed of all animals. These materials include 
the following: The entire carcass of bovine spongiform encephalopathy 
(BSE)-positive cattle; the brains and spinal cords from cattle 30 
months of age and older; the entire carcass of cattle not inspected and 
passed for human consumption that are 30 months of age or older from 
which brains and spinal cords were not removed; tallow that is derived 
from BSE-positive cattle; tallow that is derived from other materials 
prohibited by this rule that contains more than 0.15 percent insoluble 
impurities; and mechanically separated beef that is derived from the 
materials prohibited by this rule. These measures will further 
strengthen existing safeguards against BSE.

DATES: This final rule is effective April 27, 2009. The Director of the 
Office of the Federal Register approves the incorporation by reference 
in accordance with 5 U.S.C. 552(a) and 1 CFR part 51 of a certain 
publication in new 21 CFR 589.2001 effective April 27, 2009.

FOR FURTHER INFORMATION CONTACT: Burt Pritchett, Center for Veterinary 
Medicine (HFV-222), Food and Drug Administration, 7519 Standish Pl., 
Rockville, MD 20855, 240-453-6860, e-mail: burt.pritchett@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Comments on the Proposed Rule
    A. General Comments
    B. Comments on Proposed New Sec.  589.2001--Cattle Materials 
Prohibited in Animal Food or Feed
    C. Comments on Proposed Amendments to Sec.  589.2000--Animal 
Proteins Prohibited in Ruminant Feed
III. Description of the Final Rule
    A. Definitions
    B. Requirements
    C. Recordkeeping and Access Requirements
    D. Changes to Sec.  589.2000--Animal Proteins Prohibited in 
Ruminant Feed
IV. Analysis of Economic Impacts
    A. Summary of Final Regulatory Impact Analysis
    B. Cost Effectiveness of Final Rule and Alternatives
    C. Need for Regulation
    D. Benefits
    E. Costs
    F. Government Costs
    G. Sensitivity Analysis
    H. Regulatory Flexibility Analysis
V. The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA)
VI. Paperwork Reduction Act of 1995
VII. Environmental Impact
VIII. Federalism
IX. References

I. Introduction

    BSE is a progressive and fatal neurological disorder of cattle that 
results from an unconventional transmissible agent. BSE belongs to the 
family of diseases known as transmissible spongiform encephalopathies 
(TSEs). All TSEs affect the central nervous system of infected animals. 
However, the distribution of infectivity in the body of the animal and 
mode of transmission differ according to the species and TSE agent. In 
addition to BSE, TSEs include, among other diseases, scrapie in sheep 
and goats, chronic wasting disease in deer and elk, and Creutzfeldt-
Jakob disease in humans.
    The agent that causes BSE has yet to be fully characterized. The 
theory that is most accepted in the international scientific community 
is that the agent is an abnormal form of a normal protein known as 
cellular prion protein. The BSE agent does not evoke a traditional 
immune response or inflammatory reaction in host animals. BSE is 
confirmed by post-mortem microscopic examination of an animal's brain 
tissue or by detection of the abnormal form of the prion protein in an 
animal's brain tissues. The pathogenic form of the protein is both less 
soluble and more resistant to degradation than the normal form. The BSE 
agent is resistant to heat and to normal sterilization processes.
    BSE is not a contagious disease, and therefore is not spread 
through casual contact between animals. The possibility of maternal 
transmission (i.e., from a bovine dam directly to her offspring) was 
suggested by a 1997 study conducted in the United Kingdom. However, 
subsequent studies have shown that it is unlikely that maternal 
transmission of BSE occurs at any epidemiologically significant level, 
if it occurs at all. Scientists believe that the primary route of 
transmission requires that cattle ingest feed that has been 
contaminated with a sufficient amount of meat and bone meal (MBM) from 
an infected animal. This route of transmission can be prevented by 
excluding potentially contaminated materials from ruminant feed.
    Scientific and epidemiological studies have linked variant 
Creutzfeldt-Jakob disease (vCJD) in humans to exposure to the BSE 
agent, most likely through human consumption of beef products 
contaminated with the agent. As of February 2007, 165 probable and 
confirmed cases of vCJD have been reported in the United Kingdom. It is 
believed that in the United States, where measures to prevent the 
introduction and spread of BSE have been in place for some time, there 
is far less potential for human exposure to the BSE agent. The Centers 
for Disease Control and Prevention (CDC) leads a surveillance system 
for vCJD in the United States. As of November 2006, CDC had detected 
two vCJD cases involving United States residents who were born and 
raised in the United Kingdom. A third case was confirmed by CDC in 
November 2006 and involved a United States resident living in Virginia 
who was born and raised in Saudi Arabia and had lived in the United 
States since 2005. This individual did not live in Europe at any time, 
and CDC has determined that this person was most likely infected from 
contaminated cattle products consumed as a child when living in Saudi 
Arabia.
    On December 23, 2003, the U.S. Department of Agriculture (USDA) 
diagnosed BSE in an adult cow in the United States that had been 
imported from Canada. Since then, USDA has confirmed two other cases of 
BSE in adult cows in the United States. One cow, which was diagnosed on 
June 24, 2005, was born and raised in Texas. The other cow, which was 
diagnosed on March 15, 2006, had been on a farm in Alabama for less 
than a year. The Texas cow was 12 years old and the Alabama cow was 
determined to be more than 10 years old. Therefore, both cows were born 
before FDA's 1997 ruminant feed rule (62 FR 30936, June 5, 1997) was in 
place.
    Under USDA's enhanced BSE surveillance program, 787,711 cattle were 
tested between June 1, 2004, and September 20, 2006. As previously 
noted, only two animals tested positive for BSE, one in Texas and one 
in Alabama. In September 2006, USDA transitioned to an ongoing 
surveillance plan under which approximately 40,000 cattle are tested 
per year.

[[Page 22721]]

    In the October 6, 2005, issue of the Federal Register (70 FR 
58570), FDA published a proposed rule (the October 2005 proposed rule) 
that would prohibit the use of certain cattle origin materials in the 
food or feed of all animals. The materials identified in the proposal 
include the following: (1) The brains and spinal cords from cattle 30 
months of age and older; (2) the brains and spinal cords from cattle of 
any age not inspected and passed for human consumption; (3) the entire 
carcass of cattle not inspected and passed for human consumption if the 
brains and spinal cords have not been removed; (4) tallow that is 
derived from the materials prohibited by the proposed rule that 
contains more than 0.15 percent insoluble impurities; and (5) 
mechanically separated beef that is derived from the materials 
prohibited by the proposed rule.
    The preamble to the proposed rule contained information regarding 
BSE, including a summary of the current animal feed safeguards in the 
United States and the risk of BSE in North America, other options FDA 
considered for strengthening animal feed protections, and the reasons 
for proposing to exclude certain cattle-derived risk materials from all 
animal food and feed. Also discussed in the preamble to the proposed 
rule was the Harvard Risk Assessment (referred to in the preamble to 
the proposed rule as the ``Harvard-Tuskegee Study''), completed for 
USDA in 2001. The authors released a revised risk assessment in 2003. 
Among other things, the Harvard-Tuskegee Study identified pathways or 
practices that, if addressed, could further decrease the already low 
risk of the spread of BSE if it were introduced into this country.
    In mid-July 2006, USDA's Food Safety and Inspection Service (FSIS) 
released a further revised Harvard Risk Assessment. Conducted in 2005, 
the risk assessment used an updated model to simulate the impact of 
measures adopted by USDA and considered by FDA in response to the 
detection of a BSE-positive cow in Washington State in December 2003. 
The 2005 study confirmed the original findings in the 2001 Harvard-
Tuskegee Study and noted that, with the protective measures in place in 
the United States in 2003, the introduction of BSE would result in 
limited spread, and the disease would be eliminated over time. Of the 
additional feed-related mitigation measures evaluated, the revised 
model predicted that removal of specified risk materials (SRMs) from 
all animal feed would result in a substantial reduction of any residual 
BSE disease agent not eliminated by the 1997 feed ban, because doing so 
eliminates transmissions resulting from cross-contamination and on-farm 
misfeeding.
    The current U.S. ruminant feed regulation (Sec.  589.2000 (21 CFR 
589.2000)) prohibits the use of certain mammalian-origin proteins in 
ruminant feed, but allows the use of these materials in feed for non-
ruminant animals. While the prevalence of BSE in the United States is 
very much lower than in European countries with BSE, evidence from the 
European experience has demonstrated that, in countries with a high 
level of circulating BSE infectivity, measures on only ruminant feed 
were not sufficient to eliminate all transmission of BSE; new cases 
continued to be found in cattle born in the United Kingdom after 
implementation of a ruminant-to-ruminant feed ban. As stated in the 
proposed rule, these new cases were attributed to either cross-
contamination during feed manufacture and transport, or to intentional 
or unintentional misfeeding on the farm. FDA believes that the presence 
of certain cattle-derived risk materials in the non-ruminant feed 
supply presents a potential source of exposure in the United States. 
Although in the United States, compliance with the 1997 ruminant feed 
rule by the U.S. animal feed industry, i.e., renderers, protein 
blenders, and feed mills, has been very high, inspections of feed 
manufacturing firms have identified some instances of inadequate 
cleanout procedures, mislabeling, and recordkeeping deficiencies.
    As discussed in the preamble to the proposed rule, data from both 
naturally infected and experimentally infected cattle indicate that 
roughly 90 percent of BSE infectivity is contained in the brain and 
spinal cord, and only about 10 percent of BSE infectivity is present in 
the retina, dorsal root and trigeminal ganglia, and the distal ileum 
(Ref. 1). The agency continues to believe that the 1997 ruminant feed 
rule provides a strong primary line of defense against BSE transmission 
by prohibiting the use in ruminant feed of all materials with potential 
BSE infectivity. The additional measures taken in this final rule will 
further reinforce the existing rule by removing certain cattle-derived 
risk materials from all animal feed. This action greatly minimizes the 
residual BSE risks not eliminated by the 1997 feed ban if cross-
contamination of ruminant feed with non-ruminant feed, or diversion of 
non-ruminant feeds to ruminants, were to occur.
    As discussed in greater detail in section II of this document, FDA 
received numerous comments on its proposed rule. Based on these 
comments, the agency has made some modifications to this final rule. 
Specifically, a statement has been added setting forth the purpose of 
the new section, i.e., to prohibit the use of certain cattle origin 
materials in the food or feed of all animals to further reduce the risk 
of the spread of BSE within the United States. This change was made to 
clarify that the cattle materials prohibited by this rule are being 
prohibited from use in all animal food or feed because of their risk 
for transmitting BSE. This rule, however, should not be construed to 
mean that it is legal to use any portion of an animal that is 
adulterated under the Federal Food, Drug, and Cosmetic Act (the act) in 
animal food or feed.
    Under section 402(a)(5) of the act (21 U.S.C. 342(a)(5)), animal 
feed and feed ingredients containing material derived from a BSE-
positive animal are adulterated because they are in whole or in part 
the product of a diseased animal. The definition of cattle materials 
prohibited in animal feed (CMPAF) has been revised to include the 
entire carcass of BSE-positive cattle. This change was made to be 
consistent with the agency's previous guidance entitled ``Use of 
Material from BSE-Positive Cattle in Animal Feed,'' for which a notice 
of availability was published in the Federal Register of September 30, 
2004 (69 FR 58448). In that guidance, the agency made clear that it was 
not going to exercise enforcement discretion with regard to the use of 
BSE-positive cattle in animal food or feed. Therefore, this rule 
prohibits the use of BSE-positive cattle in all animal food or feed.
    Additional changes have also been made in this final rule to the 
definition of CMPAF. As defined in the proposed rule, CMPAF included 
the brains and spinal cords from cattle of any age not inspected and 
passed for human consumption (or the entire carcass, if brain and 
spinal cord were not removed). FDA explained in the preamble to the 
proposed rule its rationale for applying these requirements to cattle 
of any age. This rationale cited surveillance data showing that cattle 
not inspected and passed for human consumption were included in the 
population of cattle at highest risk of BSE, and noted that inspection 
programs were not in place in the rendering industry for verifying the 
age of dead cattle. However, given the challenges of removing the brain 
and spinal cord from this class of cattle, FDA specifically requested 
comment on this issue.

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    FDA has revised the definition of CMPAF in the final rule (proposed 
Sec.  589.2001(a)(iii) and new section 589.2001(b)(iii)) to prohibit 
the use of the entire carcass of cattle not inspected and passed for 
human consumption that are 30 months of age or older from which brain 
and spinal cord have not been effectively removed or otherwise 
effectively excluded from animal feed. As a result, the rule now 
prohibits the use of the entire carcass of cattle not inspected and 
passed for human consumption unless: (1) The cattle are shown to be 
less than 30 months of age, or (2) the brains and spinal cords were 
effectively removed or effectively excluded from animal feed use. The 
final rule was further revised to require renderers to develop and 
maintain written procedures for determining the age of and/or removing 
the brain and spinal cord from, dead cattle, and to make the written 
procedures available for FDA inspection. FDA notes that, for cattle not 
inspected and passed that are diseased or that died otherwise than by 
slaughter, the entire carcass of such animals is adulterated under 
section 402(a)(5) of the act. FDA has traditionally exercised 
enforcement discretion with regard to the use of such animals in animal 
feed. For example, see Compliance Policy Guide 675.400. FDA intends to 
continue exercising such discretion for the use in animal feed of: (1) 
The remaining material from cattle that are diseased or that die 
otherwise than by slaughter when the brain and spinal cord are 
effectively removed or effectively excluded from animal feed use and 
(2) the entire carcass from cattle that are diseased or that die 
otherwise than by slaughter if such cattle are shown to be less than 30 
months of age.
    FDA made these revisions based on comments indicating that it is 
feasible to put processes in place to age such cattle and that very 
little risk reduction is gained by excluding material from such cattle. 
FDA also received many comments that raised concerns about the 
environmental impacts of disposing of these animals by means other than 
rendering them for animal feed use.
    FDA noted in the preamble to the October 2005 proposed rule (70 FR 
58570) that European surveillance data suggest that cattle not 
inspected and passed for human consumption are more likely to test 
positive for BSE than healthy cattle that have been inspected and 
passed. However, FDA considered the level of risk reduction that might 
potentially be achieved by prohibiting materials from cattle that are 
not inspected and passed for human consumption and that are less than 
30 months of age. FDA also considered the following: (1) Surveillance 
data indicate the current risk of BSE to U.S. cattle is very low, (2) 
the existing ruminant feed regulation provides strong protection 
against BSE, and (3) the new measures established by the final rule 
represent a secondary level of protection to address failures in 
compliance that may occur with the existing ruminant feed rule. After 
considering all of the previously mentioned factors, FDA determined 
that the proposed measure to prohibit materials from cattle that are 
not inspected and passed for human consumption and that are less than 
30 months of age is not necessary.
    Based on comments received, FDA has added a provision to this rule 
so that the agency may designate a country as not subject to the new 
requirements in this rule. As explained elsewhere in this document, a 
country seeking such a designation must submit a written request and 
include information about the country's BSE case history, risk factors, 
measures to prevent the introduction and transmission of BSE, and any 
other relevant information.
    Lastly, for renderers handling cattle materials, this final rule 
provides, as did the proposed rule, that such renderers must establish 
and maintain records sufficient to demonstrate that material rendered 
for animal feed was not manufactured from, processed with, or does not 
otherwise contain CMPAF. Based on comments received regarding 
verification of CMPAF segregation in slaughter facilities, this final 
rule has been revised to clarify that the renderer's records must also 
include documentation that establishments supplying cattle materials to 
the renderers have adequate procedures in place to effectively exclude 
CMPAF. These supplier-related records must include either certification 
or other documentation from the supplier that material supplied to the 
renderer does not include CMPAF or documentation of another method, 
acceptable to FDA, such as third-party certification, for verifying 
that suppliers have effectively excluded CMPAF from animal feed.

II. Comments on the Proposed Rule

    FDA received more than 840 comments on the proposed rule. They came 
from a wide variety of organizations, such as cattlemen, renderers, 
feed manufacturers, Federal agencies, State agriculture departments, 
trade associations, professional organizations, universities and 
research institutions, consumer organizations, and individuals. Many 
comments questioned the need for additional controls in light of the 
high compliance with FDA's 1997 feed rule by the U.S. animal feed 
industry, coupled with the low prevalence of BSE in this country. Some 
comments took the opposing view, stating that more aggressive steps 
should be taken by FDA and that all ruminant-derived material should be 
prohibited in all animal feed. Some comments urged that all exemptions 
(e.g., plate waste and poultry litter) be removed from the regulations. 
Other comments asserted that the proposed rule was not scientifically 
based and should not be finalized.
    Many comments from industry raised concerns about the increased 
burden--financial and otherwise--if the proposed rule is finalized. 
Some comments discussed the difficulty of ensuring complete removal of 
brain and spinal cord from dead cattle. Other comments expressed 
concerns about the increased volume of materials that would have to be 
disposed of through incineration, landfills, or other means. 
Potentially adverse environmental effects--and resultant adverse animal 
and public health consequences--from the increased volume of disposal 
materials were mentioned by several comments. Comments also expressed 
concerns about registration, certification, verification of segregation 
of CMPAF at slaughter establishments, recordkeeping, and record 
retention time.
    A description of the comments and FDA's responses follows.

A. General Comments

1. Need for Additional BSE Safeguards
    (Comment 1) Many comments, in addressing the proposed rule 
generally, said that the current BSE feed regulation does not need to 
be strengthened. Reasons given for this position were the low 
prevalence of BSE in this country as shown by USDA's surveillance 
results, the conclusion of the original Harvard Risk Assessment that 
the United States is resistant to BSE, and the effectiveness of the 
current ruminant feed rule (Sec.  589.2000) as evidenced by the high 
rate of industry compliance and the absence of BSE cases in cattle born 
after the 1997 ruminant feed rule. One comment said that FDA should 
develop a more accurate estimation of BSE risk to U.S. cattle by 
entering USDA's most recent prevalence data into the Harvard Risk 
Assessment model.
    (Response) FDA agrees that the prevalence of BSE in the United 
States is very low, and that compliance with the current feed ban by 
the U.S. animal feed industry is at a high level. Though the situations 
are not directly

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comparable, evidence from the European experience has demonstrated that 
BSE transmission can continue to occur even with a ruminant feed ban in 
place. FDA believes that eliminating the highest risk cattle-derived 
materials from the non-ruminant feed supply will further reduce the 
potential for cattle exposure to the BSE agent via cross-contamination 
of ruminant feed during feed manufacturing or transportation, or 
through on-farm misfeeding. As stated in the preamble to the proposed 
rule, without fully dedicated equipment, it may not be possible to 
completely prevent carryover of feed or feed ingredients even when 
cleanout procedures are in place.
    (Comment 2) One comment said that, because the cow found in Texas 
in June 2005 did not test positive as a typical case of BSE, this case 
does not support the need for additional regulation.
    (Response) FDA is aware that the PrPSC (disease-specific 
prion protein) isolates from the Texas and Alabama cases are atypical 
in that they have characteristics on immunohistochemical and western 
blot analyses that distinguish them from the typical BSE isolate. 
Because the significance of these differences, particularly with 
respect to origin and transmissibility, is not yet clear, the agency 
believes the atypical nature of these two cases does not diminish the 
need to strengthen BSE feed controls.
    (Comment 3) Several comments said that the proposed rule was not 
based on the BSE situation in the United States, but rather on the 
situation in Europe where the incidence of BSE was 500-fold greater and 
control measures were instituted after BSE cases were identified. One 
comment also thought FDA might have developed its proposal based on the 
BSE situation in Japan.
    (Response) While the data from Europe and Japan on BSE provided the 
agency with important information to help develop our response to BSE, 
the agency based its decision on the BSE situation in the United States 
and believes that these measures are appropriate to the United States 
situation. The agency believes, however, that the early firewalls 
(prohibition on imports of animals and ruminant feed from countries 
with BSE and the ruminant feed ban) put in place in the United States 
makes it possible and appropriate to strengthen feed controls with 
measures that are still less expansive than those that would be 
appropriate in countries with higher BSE prevalence such as in European 
countries and Japan. The measures being implemented are commensurate 
with the BSE prevalence in the United States.
    (Comment 4) Several comments declared that the recommendations in 
the International Review Team's (IRT) February 2005 report are not 
relevant to the development of this rule because they were not based on 
science, they do not reflect the difference in BSE risk between Europe 
and the United States, and they do not present an accurate 
understanding of the U.S. industry's compliance with the existing BSE 
feed regulation.
    (Response) FDA agrees that not all of the IRT recommendations are 
appropriate for the U.S. situation. However, FDA is adopting the IRT 
recommendation to require the removal of certain cattle-derived risk 
materials from all animal feed. FDA believes that the level of 
compliance with the current ruminant feed rule by the U.S. animal feed 
industry is high, but believes that the additional measures provide a 
secondary level of protection to address failures in compliance that 
may occur with the existing ruminant feed rule.
    (Comment 5) One comment said that cross-contamination is not a 
problem because the BSE prevalence is so low in the United States. 
Another comment asked for the data the agency is relying on to show 
that cross-contamination and feeding errors need to be controlled, 
especially since the agency's own statistics show the industry is in 
high compliance with the 1997 ruminant feed rule.
    (Response) FDA agrees that overall compliance with the 1997 
ruminant feed rule by the U.S. animal feed industry has been high, but 
there have been instances of noncompliance with the rule that could 
have resulted in cattle being exposed to prohibited material through 
cross-contamination, mislabeling, or intentional or unintentional 
misfeeding. Information describing these instances of noncompliance was 
set forth in the preamble to the October 2005 proposed rule (70 FR 
58570 at 58577). An updated summary of compliance information is 
provided in the References section of this document (Ref. 2).
    (Comment 6) A few comments asked FDA to recognize that the USDA 18-
month surveillance snapshot may not be an accurate indication of BSE 
prevalence in the United States. Specifically, because the BSE cases to 
date are likely clustered in time and location, USDA's surveillance 
results may underestimate the true risk.
    (Response) FDA stated in the preamble to the proposed rule that the 
detection of one BSE case in over 418,000 samples analyzed under USDA's 
enhanced surveillance program at the time of the publication of the 
proposed rule indicates that the prevalence of BSE is very low in the 
U.S. cattle population. FDA notes that USDA has conducted surveillance 
for BSE since 1990. A July 20, 2006, USDA report entitled ``An Estimate 
of the Prevalence of BSE in the United States'' supports FDA's 
qualitative statement of a very low prevalence of BSE in the United 
States (Ref. 3). According to the report, a model developed in Europe 
was used to calculate U.S. BSE prevalence from two BSE cases detected 
in 735,213 samples collected over a 7-year period ending in March 2006. 
Results of this analysis support a conclusion that the prevalence of 
BSE in the U.S. cattle population is less than one infected animal per 
million adult cattle.
    FDA remains confident in the two models used by USDA. The most 
likely values calculated by these models for the estimated number of 
cases were 4 or 7 infected animals out of 42 million adult cattle. 
USDA's analysis was submitted to the scrutiny of a peer review process, 
and the expert panel agreed with the appropriateness of USDA's 
assumptions and the factors it considered, as well as with the estimate 
of BSE prevalence.
    (Comment 7) One comment noted that the effectiveness of the feed 
ban, especially at the farm level, is not known.
    (Response) Inspection results indicate that compliance by U.S. 
animal feed industry is high. However, FDA agrees that it is very 
difficult to assess compliance with the ruminant feed rule at the farm 
level. FDA believes excluding certain cattle-derived risk materials 
from all animal feed channels will minimize any residual risks from on-
farm misfeeding.
    (Comment 8) Two comments indicated that the agency's feed control 
measures for ensuring compliance with the 1997 ruminant feed rule have 
been inadequate, citing a Government Accountability Office (GAO) study 
as evidence.
    (Response) FDA disagrees with these comments. FDA believes its 
enforcement activities are adequate for ensuring industry compliance 
with the 1997 ruminant feed rule. The agency's response to the GAO's 
study can be found in Appendix VI of the GAO's report (Ref. 4).
    (Comment 9) One comment speculated that, in some species, atypical 
BSE might be more pathogenic than typical BSE.
    (Response) FDA is not aware of any scientific evidence that 
atypical BSE is

[[Page 22724]]

more pathogenic than typical BSE. Therefore, the agency believes that 
the controls in this final rule are appropriate.
    (Comment 10) Several comments said the proposed rule will hamper 
BSE surveillance by reducing the number of cattle available for 
sampling.
    (Response) FDA has conferred with USDA on the development of this 
rule. Further, USDA's transition from enhanced BSE surveillance to 
ongoing BSE surveillance places greater importance on collecting 
samples where clinical histories on sampled animals are more likely to 
be available, such as on farms and at diagnostic laboratories, and less 
importance on sampling at rendering plants where clinical histories are 
usually not available (Ref. 5).
2. Other Approaches for Strengthening Feed Controls
    A number of comments recommended ways to strengthen feed controls 
that they believed would provide better protection than the measures 
proposed by FDA.
    (Comment 11) Several comments stated that the proposed rule does 
not go far enough, that it still allows materials derived from ruminant 
species to be fed to other species, and that it does not include any of 
the actions announced on January 26, 2004. Several comments suggested 
that no animal or mammalian products be allowed in cattle feed or in 
feed for any other food-producing animal species. One comment noted 
that, although the proposed rule is a small step in the right 
direction, it is inadequate to close the existing loopholes. Two 
comments stated that the proposal ignores some of the recommendations 
made by the IRT and other BSE experts. Several comments stated that the 
proposed rule would leave 10 percent of the potential infectivity in 
the feeding system. One comment stated that the 10-percent infectivity 
may represent 780 ID50 (ID50 is the amount of 
infective material that would result in a case of BSE in 50 percent of 
the cattle that consumed it). Another comment remarked that distal 
ileum should be removed from animal feed, regardless of the disposal 
problems this could cause. In contrast, several comments were 
supportive of the agency's reasoning behind the proposed rule. These 
comments stated that removal of brain and spinal cord from cattle 30 
months of age and older is the single most important step that can be 
taken to prevent the amplification of BSE and thereby shorten the time 
it takes to eradicate any latent BSE infectivity that might be present 
but undetected in U.S. cattle. Some comments further noted that the 
proposal is consistent with the IRT recommendation regarding a staged 
approach to removing SRM from animal feed.
    (Response) The agency does not believe it is necessary, given the 
low prevalence of BSE in the United States, to prohibit all ruminant 
material from animal feed, nor is it necessary to prohibit all animal 
or all mammalian products in cattle feed. Our reasoning for deciding 
against the measures under consideration by FDA that were announced on 
January 26, 2004, and choosing instead to focus on certain cattle-
derived risk materials was fully explained in the preamble to the 
October 2005 proposed rule (70 FR 58570 at 58578). In deciding to 
prohibit brain and spinal cord only from cattle 30 months of age or 
older, rather than the full list of SRMs, FDA considered the following: 
(1) Surveillance data indicate the current risk of BSE to U.S. cattle 
is very low, (2) the existing ruminant feed regulation provides strong 
protection against BSE, and (3) the new measures in this rule represent 
a secondary level of protection to address potential failures in 
compliance that may occur with the existing ruminant feed rule. FDA 
believes that the existing ruminant feed rule provides a strong line of 
defense by prohibiting the use in ruminant feed of protein derived from 
mammalian tissues. The additional measures in this final rule will 
further reinforce existing ruminant feed protection measures by 
removing the highest risk cattle-derived materials from all animal 
feed.
    (Comment 12) One comment stated that the agency's proposal was too 
broad and asked that the rule be limited to removal of brain and spinal 
cord from dead and antemortem condemned cattle 30 months of age or 
older. The comment said this would have captured the two BSE cases in 
Washington and Texas.
    (Response) FDA believes that the rule should apply to cattle 
slaughtered for human consumption as well as to cattle not inspected 
and passed for human consumption at antemortem inspection. Infected 
cattle that are over 30 months of age and in the preclinical stage of 
disease could pass antemortem inspection, yet still harbor significant 
levels of BSE infectivity in the brain and spinal cord.
    (Comment 13) Numerous comments suggested that FDA prohibit the use 
of blood in animal feed. Reasons mentioned were that blood has been 
shown to contain TSE infectivity in several species, that vCJD has been 
found to be transmitted through blood, and that emboli created by 
stunning could carry infectivity. One comment said that, with more 
sensitive detection methods, BSE infectivity may be confirmed in blood. 
In contrast, numerous comments said FDA should continue to allow the 
use of blood in animal feed because there is no scientific basis for 
prohibiting blood in cattle feed and because calf health is dependent 
on colostrum supplements, which include blood products. One comment 
said that the chair of the IRT committee stated that blood does not 
transmit BSE.
    (Response) As explained in the preamble to the proposed rule, FDA 
is not prohibiting the use of blood and blood products in animal feed 
because we believe such a prohibition would do very little to reduce 
the risk of BSE transmission. Although TSE infectivity has been 
demonstrated experimentally in the blood (Ref. 6) of sheep and rodents 
(Ref. 7), species differences in the involvement of the lymphoreticular 
system in TSE diseases suggest that these findings cannot necessarily 
be extrapolated to cattle (Ref. 8). Studies using mouse and cattle 
bioassays have so far failed to detect BSE infectivity in bovine blood 
(Ref. 9). While FDA agrees that more sensitive detection methods might 
some day demonstrate BSE infectivity in bovine blood, the agency 
believes that it is highly unlikely that the BSE agent is present in 
blood of infected cattle at levels sufficient to transmit disease 
through oral administration of processed blood products. This 
conclusion is based on the inefficiency of the oral route of 
transmission relative to the intracerebral route, which was used in 
unsuccessful attempts to detect BSE infectivity in bovine blood. FDA 
believes that the prohibitions in this final rule make it unnecessary 
to also preclude the use of blood in animal feed.
    (Comment 14) A number of comments requested that poultry litter not 
be permitted to be fed to cattle, citing several reasons. One comment 
asked that FDA determine actual risk before deciding that poultry 
litter is not a risk factor. One comment stated that feces were 
infectious in rodents orally challenged with scrapie. Another comment 
noted that, in the United Kingdom, when cattle are orally challenged, 
the feces must be treated as medical waste for 1 month post-challenge. 
Another comment stated that TSE agents may be present in the porcine/
poultry intestinal content, while still another comment stated that the 
2001 World Health Organization/Food and Agriculture Organization of the 
United Nations/World Organisation for Animal Health (OIE) Technical

[[Page 22725]]

Consultation concluded that digestive contents and fecal material from 
livestock or poultry being fed meat and bone meal (MBM) potentially 
contaminated with BSE should not be used as an ingredient in animal 
feed.
    (Response) In the preamble to the October 2005 proposed rule, FDA 
provided calculations submitted in comments to the advance notice of 
proposed rulemaking (ANPRM) that published in the Federal Register on 
July 14, 2004 (69 FR 42288), showing that a cow would need to consume a 
very large volume of poultry litter to ingest an infectious dose of 
BSE, assuming that the poultry feed spilled into the litter was 
formulated with MBM derived from a BSE-infected cow. Based on this 
analysis, FDA believes that the risk of cattle exposure to an 
infectious dose of BSE through poultry litter is low. The measures 
contained in this final regulation should reduce that risk even further 
because removing CMPAF from all animal feed prevents BSE infectivity 
from reaching poultry in the first place.
    (Comment 15) Several comments disagreed with the need for 
prohibiting poultry litter in cattle feed if FDA finalizes the proposed 
measures. Two comments said that there is no scientific basis for 
prohibiting poultry material in ruminant rations. Another comment 
pointed out that banning poultry litter would create significant 
disposal issues.
    (Response) As discussed in the response to the previous comment, 
because the rule prohibits the use of the highest risk cattle-derived 
materials in all animal feed, FDA agrees that it is not necessary to 
prohibit poultry litter from being fed to cattle.
    (Comment 16) Several comments recommended that dedicated facilities 
and equipment be required in order to prevent cross-contamination. One 
comment disagreed, stating that requiring dedicated facilities would 
force some renderers to discontinue operations.
    (Response) As explained in the preamble to the October 2005 
proposed rule (70 FR 58570 at 58584), FDA fully expects this final rule 
to reduce substantially the remaining risk associated with cross-
contamination, and therefore does not believe that the rule needs to 
also require dedicated facilities and equipment.
    (Comment 17) One comment suggested a ``systems approach'' as a 
substitute for the measures presented in the proposed rule. This 
approach, according to the comment, would prohibit the entire carcass 
(except skeletal muscle) of mature dead cattle and the brain and spinal 
cord of mature slaughter cattle from all animal feed. It would also 
prohibit the use of hypobaric (vacuum) rendering for processing 
inedible ruminant material. The commenter submitted modeling data 
obtained using the Harvard Risk Assessment model, which showed that 
this approach is as protective of animal and public health as a 
complete SRMs ban, while creating a much smaller disposal challenge. 
According to the modeling results, the ``systems approach'' and the 
full SRMs approach would reduce cases of BSE by 97 percent and 99 
percent, respectively. FDA's proposed measures would reduce new cases 
by 40 percent to 63 percent, depending on the effectiveness of brain 
and spinal cord removal. The comment acknowledged that the ``systems 
approach'' would initially create disposal challenges, especially in 
the dairy sector, but that cost-effective carcass disposal methods 
could be implemented.
    (Response) The difference between the comment's ``systems 
approach'' and the approach in this final rule is that the ``systems 
approach'' would exclude the entire carcass of dead cattle 30 months of 
age or older rather than only the brain and spinal cord. As the comment 
acknowledges, eliminating the rendering option (other than disposal 
rendering) for disposal of all dead cattle 30 months of age or older 
may create major disposal challenges in some regions of the country 
(see ``Environmental Assessment'' for this final rule, Docket No. 
2002N-0273). Modeling results submitted by the same commenter in 
response to the ANPRM showed that eliminating vacuum rendering 
contributed very little to the effectiveness of the ``systems 
approach.'' The agency believes that excluding brain and spinal cord 
from all cattle 30 months of age or older, and not the complete list of 
SRMs, is the most appropriate course of action for the United States 
where the BSE prevalence is low and strong feed controls are already in 
place.
    (Comment 18) Citing the link of BSE cases in Alberta to hypobaric 
(or vacuum) rendering, one comment recommended that the use of 
hypobaric rendering be prohibited because it provides no TSE 
inactivation.
    (Response) FDA agrees that the cluster of BSE cases associated with 
a vacuum renderer in Alberta underscores the concern about the ability 
of this process to inactivate BSE infectivity. A major advantage of the 
measures in this final rule over other options considered is that they 
prevent the highest risk cattle-derived materials from all animal feed, 
thereby reducing concerns about vacuum rendering.
    (Comment 19) One comment said that FDA should prohibit the use of 
mammalian protein in feed for food producing animals, and cited the 
following recent research to support this position:
     Infectious dose may be smaller than previously thought: 
Attack rate studies in the United Kingdom have demonstrated 
transmission at a 0.001 gram (g) dose (no reference), 10 times lower 
than the 0.01 g dose described by FDA in the proposal.
     Repeated low dose exposure: A study in which scrapie was 
injected into mice (Jacquemot 2005) showed that repeated low doses 
caused scrapie when a single dose of the same size did not. A second 
study in which scrapie was administered orally to hamsters (Diringer 
1998) showed a higher incidence of scrapie in hamsters receiving 
repeated doses than in hamsters receiving a single dose.
     Additional organs may be infectious: Disease-specific 
prion protein (PrP\sc\) was found in the kidney, pancreas, and liver of 
scrapie infected mice when inflammation was induced in these organs 
(Heikenwalder 2005). Another study showed PrP\sc\ in the urine of 
scrapie infected mice with kidney inflammation. A third study found 
PrP\sc\ present in mammary glands of sheep with mastitis (Ligios 2005).
     Interspecies barrier may be smaller than previously 
thought: Some studies have shown interspecies inoculation produced 
subclinical disease but not clinical disease, suggesting that 
previously assumed species barriers were not complete (Hill 2000).
    (Response) FDA is aware that BSE transmission has been demonstrated 
at a 0.001 g dose. FDA is also aware of the other recent scientific 
findings and considered this information as we were developing the 
final rule. The agency believes that the risks associated with repeated 
low dose exposure, infectivity in inflamed organs, and unapparent 
carriers of BSE infectivity are very low. The agency believes the risks 
of BSE infection are adequately addressed by the 1997 ruminant feed 
rule and this final rule, and that it is not necessary to prohibit all 
mammalian protein in feed for food-producing animals.
    (Comment 20) One comment noted that species which appear to be 
resistant may in fact be unapparent carriers and over time could become 
sources of the BSE agent. Another comment added that failure to detect 
infectivity in tissues of experimentally infected pigs and chickens 
might be due to insufficiently sensitive bioassay techniques. Another

[[Page 22726]]

comment suggested that because swine and poultry may be silent 
carriers, materials derived from swine and poultry should not be fed to 
cattle.
    (Response) These concerns were first addressed in the 1997 ruminant 
feed rule (62 FR 30936 at 30939). The agency has received no new 
information that would lead us to conclude that the additional measures 
suggested by these comments are needed to protect against BSE at this 
time.
    (Comment 21) Several comments said that FDA should remove the 
exemptions in the current feed rule, with the possible exception of the 
exemption for milk.
    (Response) As discussed in the preamble to the October 2005 
proposed rule (70 FR 58570 at 58573), the agency considered eliminating 
certain of the current exemptions in the 1997 ruminant feed rule. 
However, as further discussed in that preamble, given low levels of BSE 
prevalence and high compliance with the 1997 ruminant feed ban, the 
agency determined that prohibiting the highest risk cattle-derived 
materials from all animal feed would be the most appropriate measure in 
the United States to further reduce the remaining risk of BSE infection 
not already addressed by the 1997 feed ban. Other responses to comments 
in the preamble to this final rule also discuss the agency's reasons 
for not eliminating certain exemptions in the 1997 ruminant feed rule.
    (Comment 22) Numerous comments suggested that the plate waste 
exemption be eliminated. Reasons cited were that plate waste could 
contain highly infectious material, FDA has not specified the reheating 
requirements sufficient to inactivate the agent, it could be a factor 
in the spread of scrapie, and it confounds feed testing. In contrast, 
one comment advised against eliminating the exemption, noting that 
potential infectivity in high risk material has already been removed 
from meat by USDA regulations.
    (Response) The exemption in the 1997 ruminant feed rule is 
specifically for ``inspected meat products which have been cooked and 
offered for human food and further heat processed for feed (such as 
plate waste and used cellulosic food casings)'' (Sec.  589.2000(a)(1)). 
FDA disagrees that it is necessary to eliminate the plate waste 
exemption because, since 2004, human food has been required to be free 
of SRMs by USDA and FDA (69 FR 1862, January 12, 2004 (affirmation of 
interim rule 72 FR 38699, July 13, 2007), and 69 FR 42256, July 14, 
2004, respectively).
3. International Trade Issues
    The agency received a number of comments about trade, particularly 
about international standards related to feed controls for the 
prevention of BSE.
    (Comment 23) One comment stated that FDA should not place more 
importance on trade considerations than on animal health, while another 
comment asserted that the proposed rule does not meet international 
standards, and therefore export markets may remain closed to U.S. 
products. In contrast, another comment stated that the proposed rule 
would satisfy trading partners and should help to reopen export 
markets.
    (Response) FDA's mission is to promote and protect public health. 
The agency's regulations are issued to achieve this mission. FDA is 
also aware of the international trade obligations of the United States 
and considers these obligations in rulemaking. FDA believes that this 
final rule, while based on its mission to promote and protect the 
public health, is consistent with international trade obligations.
    (Comment 24) One comment stated that the OIE recommends that feed 
and certain other commodities from controlled risk countries should not 
be traded if they contain protein from brains, eyes, spinal cord, 
skull, or vertebral column from cattle 30 months of age or older, or 
contain protein from the distal ileum or tonsils from cattle of any 
age. The comment added that if these commodities should not be traded 
internationally, then they should not be used domestically.
    (Response) The OIE guidelines described in the comment apply to 
meat products for human consumption and ruminant feed. They do not 
apply to all animal feed. FDA also notes that these risk materials are 
already prohibited from all ruminant feed. As discussed throughout the 
preamble to this final rule, FDA believes further prohibiting brain and 
spinal cord from cattle 30 months of age and older in all animal food 
or feed is appropriate for the U.S. situation.
    (Comment 25) Several comments stated that FDA should harmonize its 
new BSE feed regulations with those proposed by Canada. One comment 
provided a recommendation on how the United States and Canadian feed 
regulations should be harmonized, suggesting that both countries 
prohibit dead and downer cattle and require the removal of brain and 
spinal cord from cattle 30 months of age and older at slaughter. In 
contrast, another comment stated that trade with Canada should be 
restricted because of inadequate feed controls and inadequate 
surveillance in Canada.
    (Response) The governments of the United States and Canada 
discussed the differences between their proposed regulations and 
considered options for aligning the two regulations. This led to a 
better understanding of each country's situation. Having considered the 
circumstances related to each of the BSE-positive cows and the control 
systems in place in Canada and the United States, FDA has concluded 
that measures in the 1997 ruminant feed rule and in this final rule are 
the most appropriate for the situation in the United States.
    (Comment 26) Australia and New Zealand commented that they should 
not have to meet the proposed FDA requirements for exporting feed 
products to the United States because both countries have BSE-free 
status. Further, they stated that such requirements are contrary to 
World Trade Organization obligations under the Sanitary and 
Phytosanitary Agreement.
    (Response) As stated previously, FDA is aware of the international 
trade obligations of the United States and has considered these 
obligations throughout the rulemaking process for this regulation. In 
the preamble to FDA's interim final rule on prohibiting the use of 
certain cattle materials in human food and cosmetics (69 FR 42256, July 
14, 2004), FDA requested comment on standards to apply when determining 
another country's BSE status, providing an exemption for ``BSE-free'' 
countries, and how to determine that countries meet any standards that 
might be developed. On July 13, 2007, USDA's FSIS published a final 
rule ``Prohibition of the Use of Specified Risk Materials for Human 
Food and Requirements for the Disposition of Non-Ambulatory Disabled 
Cattle; Prohibition on the Use of Certain Stunning Devices Used to 
Immobilize Cattle During Slaughter'' (also referred to as ``the SRM 
final rule'') (72 FR 38700), which affirmed, with changes, interim 
measures implemented by FSIS to minimize human exposure to materials 
that could potentially contain the BSE agent. One change that FSIS made 
in the SRM final rule was to exclude from the definition of SRMs 
materials from cattle from a country that can demonstrate that its BSE 
risk status can reasonably be expected to provide the same level of 
protection from human exposure to the BSE agent as prohibiting the use 
of SRMs for human food does in the United States. In the preamble to 
the SRM final rule, FSIS explained that those countries that believe 
that they are eligible to have materials from their

[[Page 22727]]

cattle excluded from the definition of SRMs should provide sufficient 
scientific evidence to support their claimed BSE risk status, and FSIS 
would then develop criteria to evaluate the equivalence request. FDA 
has decided to adopt a similar approach, and will allow a foreign 
country to seek a designation from FDA by which the restrictions 
otherwise applicable to animal feed would not apply to cattle-derived 
material from that country. Any country seeking such a designation 
would have to provide sufficient scientific evidence to support its 
claimed BSE risk status.

B. Comments on Proposed New Sec.  589.2001--Cattle Materials Prohibited 
in Animal Food or Feed

1. Definition of Cattle Materials Prohibited in Animal Feed (CMPAF)
    FDA received numerous comments addressing the definition of 
``cattle materials prohibited in animal food or feed'' (CMPAF) as set 
forth in proposed Sec.  589.2001(a). While some urged that all deads 
and downers, regardless of age, be included in the definition, others 
suggested that younger cattle be excluded from the definition because 
of science showing a lower infectivity risk in this group.
    (Comment 27) Numerous comments suggested that FDA exclude all deads 
and downers, regardless of their age, from the feed chain because they 
contain the highest level of infectivity and because the Harvard-
Tuskegee Study showed reduction of the risk of BSE transmission when 
these two categories of animals were eliminated from the feed stream. 
Several comments said that infectivity could be present in tissues 
other than brain and spinal cord. Specifically mentioned was new 
research showing infectivity in peripheral nerves, both in one cow 
using a new bioassay technique (Buschmann and Groschup, 2005 (Ref. 
10)), and in a 94-month-old BSE infected cow in Japan using a western 
blot method. One comment said that subclinical infection could be 
present in cattle younger than 30 months of age.
    (Response) FDA disagrees that it is necessary to prohibit all 
cattle not inspected and passed for human consumption from all animal 
feed to prevent BSE infection. BSE has a long incubation period. 
Epidemiological data from the United Kingdom epidemic have demonstrated 
that, on average, cattle develop clinical signs 4 to 6 years after 
infection (Bradley 1991; Anderson 1996 (Ref. 11)), though the 
incubation period can be longer or shorter than 4 to 6 years. With BSE, 
as with other TSEs, the total amount of infectivity in an animal 
increases throughout the incubation period, reaching the highest load 
at the end, very close to the death of the animal. Infectivity is 
considered to increase exponentially after exposure, reaching 4.5 logs 
less than clinical cases by 50 percent of the incubation period, and 3 
logs less than a clinical case at 70 percent of the incubation period 
(Comer and Huntly, 2003 (Ref. 12)). Therefore, FDA assumes that the 
benefit shown in the Harvard-Tuskegee Study of excluding animals that 
die on the farm from the animal feed chain (77 percent reduction in 
mean number of new cases) is primarily attributable to excluding older 
deadstock.
    FDA does not believe that studies showing BSE infectivity in 
peripheral nerves are sufficient to justify prohibiting all cattle not 
inspected and passed from use in all animal feed to prevent BSE 
infection. In the Buschmann and Groschup study, the experimental mice 
used were approximately 10 times more sensitive than cattle to the BSE 
agent, and the donor cow was showing severe signs of late-stage 
clinical BSE. Furthermore, based on end-point titration, incubation 
time, and transmission rate, the infectivity levels in peripheral 
nerves are extremely low compared to levels in brain and spinal cord. 
The mice were injected both intracerebrally and intraperitoneally, 
which is much more efficient than the oral route of administration. 
Therefore, the agency believes that very little BSE risk reduction 
would be realized if this final rule prohibited all cattle not 
inspected and passed for human consumption from use in all animal feed.
    (Comment 28) Several comments suggested that deads and downers 
under 30 months of age be allowed in non-ruminant feed without brain 
and spinal cord removal, pointing out that no risk reduction is 
achieved by this requirement, and that age of deadstock could be 
verified by dentition, records, animal identification systems, or an 
onsite inspection. One comment said that FDA should provide guidance to 
renderers for procedures to verify age of cattle.
    (Response). FDA agrees that very little BSE risk reduction would be 
realized by prohibiting from animal feed all cattle less than 30 months 
of age that were not inspected and passed for human consumption and 
from which brain and spinal cord had not been removed. In the preamble 
to the October 2005 proposed rule, the agency explained the rationale 
for the 30-month age criterion and stated that it should be applied in 
the animal feed context. However, the agency also explained that the 
decision to prohibit all cattle not inspected and passed for human 
consumption from which the brain and spinal cord were not removed from 
animal feed was based on the fact that procedures were currently not in 
place at rendering facilities to verify that firms were determining the 
age of cattle effectively (70 FR 58570 at 58578). Several comments 
suggested methods to determine the age of dead cattle, including animal 
identification systems, dairy herd records, dentition, body weight, or 
feed lot origin.
    Based on the limited scientific basis with regard to BSE risk 
reduction for prohibiting cattle not inspected and passed for human 
consumption less than 30 months of age and the comments suggesting ways 
to determine the age of such cattle, FDA has revised the definition of 
CMPAF in the final rule. The revised definition of CMPAF includes the 
entire carcass of cattle not inspected and passed for human consumption 
that are 30 months of age or older from which brains and spinal cords 
were not effectively removed or otherwise effectively excluded from 
animal feed. The final rule requires renderers to maintain written 
procedures if they remove brain and spinal cord from such cattle, or 
separate such animals based on whether or not they are 30 months of age 
or older. As suggested by one comment, FDA will issue separate guidance 
for industry on methods for determining the age of cattle. FDA will 
work with USDA to develop methods consistent with those of USDA.
    As FDA noted previously (70 FR 58570 at 58579), section 402(a)(5) 
of the act states that a food shall be deemed to be adulterated if it 
is, in whole or in part, the product of a diseased animal or of an 
animal which has died otherwise than by slaughter. Since the category 
of cattle defined in this final rule as ``cattle not inspected and 
passed for human consumption'' are animals that already fall within the 
category of animals referred to in section 402(a)(5) of the act as 
``diseased animals or animals which died otherwise than by slaughter,'' 
any animal feed derived from such animals would be considered 
adulterated. However, FDA has traditionally exercised enforcement 
discretion with regard to the use of such animals in animal feed. For 
example, see Compliance Policy Guide 675.400. With the implementation 
of this final rule, FDA will no longer exercise enforcement discretion 
over those materials prohibited by this regulation (i.e., CMPAF) that 
are derived from cattle not inspected and passed for

[[Page 22728]]

human consumption. FDA intends to continue exercising such discretion 
(relative to section 402(a)(5) of the act) for the use in animal feed 
of material derived from such cattle that are not defined as CMPAF. 
This includes (1) The remaining material from cattle not inspected and 
passed for human consumption when the brain and spinal cord are 
effectively removed or effectively excluded from animal feed use and 
(2) the entire carcass from cattle not inspected and passed for human 
consumption if such cattle are shown to be less than 30 months of age.
    (Comment 29) One comment asked that downer cattle not be allowed in 
animal feed.
    (Response) Under the final rule, to prevent BSE, cattle not 
inspected and passed for human consumption are prohibited from use in 
animal feed unless they are shown to be less than 30 months of age or 
the brain and spinal cord are effectively removed or effectively 
excluded from animal feed. FDA originally included cattle of any age 
that were not inspected and passed for human consumption in the 
definition of CMPAF because: (1) European surveillance data suggested 
that cattle not inspected and passed for human consumption posed a 
higher risk for BSE and (2) we believed that processes were currently 
not established in the rendering industry for verifying the age of such 
cattle through inspection. However, FDA received comments on the 
feasibility of aging such cattle and on the relatively low risk 
reduction achieved by excluding such cattle if they were less than 30 
months of age. FDA considered these comments, surveillance data 
indicating the current risk of BSE to U.S. cattle is very low, the 
strong feed protection provided by the existing ruminant feed rule, and 
the added secondary level of protection provided by the other 
provisions of this final rule. Based on these factors, FDA concluded 
that it was not necessary to include in the definition of CMPAF cattle 
not inspected and passed for human consumption that are under 30 months 
of age.
    (Comment 30) One comment requested that striated muscle from cattle 
that died otherwise than by slaughter be allowed to be harvested for 
use in non-ruminant feed.
    (Response) This final rule does not prohibit the use of cattle not 
inspected and passed for human consumption in animal feed if they are 
shown to be less than 30 months of age or if the brain and spinal cord 
are effectively removed or otherwise effectively excluded from animal 
feed. 4-D operations (plants that harvest skeletal muscle from dead, 
dying, diseased, or disabled cattle) that harvest skeletal muscle for 
such use as pet and mink food fall within the final rule's definition 
of renderer and must have written procedures in place describing the 
aging methods and specifying how brain and spinal cord, or parts of 
carcasses containing brain and spinal cord, will be effectively removed 
or effectively excluded from animal feed. As discussed in more detail 
in the response to Comment 28, FDA notes that the use in animal feed of 
materials from cattle not inspected and passed for human consumption 
that are diseased or that die otherwise than by slaughter is the 
subject of enforcement discretion.
    (Comment 31) One comment from a foreign country requested that FDA 
clarify whether beef recovered by Advanced Meat Recovery (AMR) systems 
from vertebral column, from which spinal cord has been removed, is 
permissible in animal feed.
    (Response) This final rule does not prohibit in animal feed an AMR 
product derived from the vertebral column of cattle from which spinal 
cord has been removed prior to the AMR process, provided that the other 
requirements of the final rule are also met.
2. Definition of Cattle Not Inspected and Passed for Human Consumption
    (Comment 32) Several comments stated that cattle carcasses and 
parts condemned on post-mortem inspection should not be considered 
CMPAF because some parts of the condemned carcass may have already been 
commingled with normal slaughter byproducts. The comments suggested 
that the definition ``cattle not inspected and passed for human 
consumption'' be changed to ``cattle that do not pass ante-mortem 
inspection.''
    (Response) The agency did not intend for the purposes of this 
regulation that the carcasses of cattle condemned on post-mortem 
inspection be included in the definition of cattle not inspected and 
passed for human consumption. The agency intended this category of 
cattle to include cattle that had been presented to a slaughter 
establishment and rejected (did not pass ante-mortem inspection) as 
well as cattle that had not been presented to a slaughter establishment 
and, hence, were not subject to inspection by an appropriate regulatory 
authority. To clarify this, FDA is modifying the definition of ``cattle 
not inspected and passed for human consumption'' in this final rule to 
mean ``cattle that did not pass ante-mortem inspection by the 
appropriate regulatory authority.
3. Restrictions on Tallow
    (Comment 33) One comment stated that the proposal is unclear as to 
whether the 0.15-percent insoluble impurity standard applies to all 
tallow or only to tallow derived from CMPAF. The comment requested that 
the tallow standard only apply to CMPAF-derived tallow.
    (Response) The final rule defines tallow as CMPAF if it is derived 
from: (1) BSE-positive cattle or (2) from other CMPAF material and 
contains insoluble impurities greater than 0.15 percent. The existing 
Sec.  589.2000 has been changed to clarify that protein derived from 
mammalian tissues does not include tallow containing 0.15 percent or 
less insoluble impurities. The result of these changes is that tallow 
usage is more restrictive in ruminant feed than in feed for non-
ruminants. All tallow that contains more than 0.15 percent insoluble 
impurities is prohibited in ruminant feed, but only tallow that 
contains more than 0.15 percent insoluble impurities and that is made 
from CMPAF is prohibited in the food or feed of all animals.
    (Comment 34) Five comments stated that tallow should be prohibited 
in animal feed. Two comments said that tallow should be entirely free 
of protein impurities. In contrast, another comment said that tallow 
from animals inspected and passed for human consumption with SRM 
removed should be allowed in animal feed without the 0.15 percent 
restriction.
    (Response) The agency disagrees that all tallow should be 
prohibited in animal feed or that tallow should be free of impurities 
to be used in animal feed. The OIE considers tallow with less than 0.15 
percent insoluble impurities to be protein-free. Further, OIE 
guidelines recommend that tallow meeting this standard is safe for use 
in animal feed, regardless of the exporting country's BSE status. As 
explained in the proposed rule, the agency is concerned about protein 
impurities that may be present in tallow particularly now that an 
attack rate study in the United Kingdom has found that oral 
administration of a very low dose (1 milligram (mg)) of BSE-infected 
brain produced disease in 1 of 15 calves receiving the dose. The agency 
sought comment on its proposed action, but no comments were received 
that provided a scientific basis for the agency to modify its position. 
Therefore, FDA has decided to prohibit all tallow containing more than 
0.15 percent insoluble impurities from use in ruminant feed, but 
prohibit only tallow that contains more than 0.15 percent insoluble

[[Page 22729]]

impurities and is made from CMPAF from use in food or feed for other 
animal species.
    (Comment 35) Two comments said that, because no BSE risk is 
associated with the dirt, bone, and sand that comprise the impurities 
in tallow, the agency does not need to prohibit tallow containing more 
than 0.15 percent impurities.
    (Response) These comments imply that protein is not a component of 
tallow impurities. A 2001 report from a European Scientific Steering 
Committee stated that analysis of impurities in six tallow samples 
found that crude protein levels ranged from 5 percent to 16 percent, 
assuming that all nitrogen in the impurities was of protein origin 
(Ref. 13). Since protein may be a component of tallow impurities, FDA 
believes that limiting tallow impurities to the OIE recommended level 
of 0.15 percent is appropriate.
4. Feasibility of Removing Brain and Spinal Cord
    (Comment 36) Many comments stated that brain and spinal cord cannot 
be removed completely from some dead cattle, and that the feasibility 
of removal depends on such things as condition of the carcass, size of 
the animal, worker skill, weather conditions, and distance between the 
production site and the rendering facility. Some comments submitted 
estimates of the percentage of dead animals from which brain and spinal 
cord could feasibly be removed. Those estimates ranged from as low as 
15 percent to as high as 54 percent.
    (Response) FDA acknowledges that removing brain and spinal cord 
from dead cattle may be difficult for the reasons mentioned, and that 
the agency may have overestimated the number of independent renderers 
that would choose to remove brain and spinal cord from dead cattle. 
However, FDA believes that, unless cattle not inspected and passed for 
human consumption are shown to be less than 30 months of age, the brain 
and spinal cord must be removed prior to use in animal food or feed to 
prevent BSE. As discussed in more detail in the response to Comment 28, 
FDA notes that the use in animal feed of materials from cattle not 
inspected and passed that are diseased or that die otherwise than by 
slaughter is the subject of enforcement discretion.
    (Comment 37) FDA was asked to define what constitutes an 
``acceptable'' level of brain/spinal cord removal. Another comment 
recommended that renderers maintain written procedures for processes 
used to remove brain and spinal cord and verify that such processes 
meet FDA standards for removal.
    (Response) During an inspection, FDA will review the adequacy of a 
firm's written procedures for removal of brain and spinal cord and will 
verify that the firm is following its procedures and effectively 
removing all the brain and spinal cord or otherwise excluding it from 
animal feed use.
    (Comment 38) One comment said that custom-slaughter plants (not 
federally or State inspected) will need to remove the brain and spinal 
cord of all cattle, regardless of the animal's age.
    (Response) Meat from cattle slaughtered under the custom-slaughter 
exemption is exclusively for the use by the owner of the animal, 
members of his or her household, and nonpaying guests and employees 
(Federal Meat Inspection Act, section 623(a)). Because such cattle are 
slaughtered without inspection by an appropriate regulatory authority, 
these animals would be considered cattle not inspected and passed for 
human consumption. The rule prohibits their use in animal feed if they 
are not shown to be less than 30 months of age or the brain and spinal 
cord are not effectively removed or effectively excluded from animal 
feed.
    (Comment 39) One comment stated that FDA should require firms that 
intend to render deadstock for use in animal feed to obtain a special 
permit and demonstrate to FDA's satisfaction that they have implemented 
a system that is consistently effective in removing brain and spinal 
cord.
    (Response) This final rule requires that rendering firms maintain 
written procedures specifying how brain and spinal cord are effectively 
removed. The agency does not believe that requiring such firms to 
obtain a permit is necessary at this time. FDA believes that following 
its current approach of working collaboratively with its State 
counterparts to ensure compliance with BSE regulations will continue to 
be effective.
5. Determining the Age of Cattle Not Inspected and Passed for Human 
Consumption
    (Comment 40) Two comments stated that dentition will not work for 
the process of determining the age of cattle and that an animal 
identification system is needed.
    (Response) The final rule has been revised to emphasize that firms 
are responsible for having processes in place to ensure cattle not 
inspected and passed for human consumption from which brain and spinal 
cord are not removed are shown to be less than 30 months of age. If a 
firm is unable to determine the age of an animal, the brain and spinal 
cord must be removed in order for the remaining carcass to be used for 
animal feed and not violate the prohibitions in this final rule. As 
discussed in more detail in the response to Comment 28, FDA notes that 
the use in animal feed of materials from cattle not inspected and 
passed that are diseased or that die otherwise than by slaughter is the 
subject of enforcement discretion.
    Cattle under 30 months of age may be adequately identified through 
dentition. Veterinary texts and academic articles indicate that the 
second set of permanent incisors erupt when cattle are between 24 and 
30 months of age. Thus, cattle would be considered to be 30 months of 
age and older if at least one of the second set of permanent incisors 
has erupted. However, environmental or operational conditions could 
make aging by dentition difficult. Therefore, firms' written procedures 
may need to include other means of age determination or adopt the 
default assumption that the animal is over 30 months.
6. Disposal of Prohibited Materials
    A significant number of comments were submitted pertaining to 
disposal problems that could be created if the proposed rule is 
finalized. These problems ranged from the financial burden created by 
collection fees to State and local regulations that restrict non-feed 
disposal of prohibited materials.
    (Comment 41) Numerous comments said that FDA underestimated the 
volume of material that will require alternative disposal when FDA's 
proposed measures force renderers to increase collection fees or 
discontinue deadstock pickup. One comment said that as a result of the 
new regulation, pig, horse, and deer mortalities will no longer be 
picked up on discontinued routes. Another comment stated that farmers 
and dairymen will probably bury, compost, landfill, or dump carcasses 
to avoid the increased collection fee that renderers will charge.
    (Response) FDA agrees that renderers who continue to collect 
deadstock will likely increase collection fees to cover the costs of 
complying with the new requirements, and that we may have 
underestimated the impact that higher fees will have on deadstock 
collection. In the October 2005 proposed rule (70 FR 585701 at 58592), 
we estimated that the 17 percent of dead cattle currently being 
collected would decrease by 3.5 percent, and did not assume a decrease 
in the collection of dead animals of other species. The revised 
economic

[[Page 22730]]

impact analysis that accompanies this rule estimates that collection of 
calves and cattle will decline by 29.4 percent to 44.8 percent, with an 
additional 10-percent loss in rendering volume throughput to reflect a 
decrease in collection of dead animals of other species. Dead animals 
no longer collected should be disposed of in an environmentally and 
legally acceptable manner.
    (Comment 42) Some comments stated that rendering is the best 
disposal option and that burial, composting, and incineration are 
undesirable alternatives. One comment said that if SRMs and deadstock 
are diverted from animal feed use, FDA will no longer have control over 
this material. Another comment pointed out that it takes 14 months to 
properly compost a 1500-pound (lb) cow.
    (Response) FDA believes this final rule appropriately controls 
materials to be rendered for animal feed. FDA intends to work with 
relevant local, State, and other Federal agencies concerning disposal 
issues.
    (Comment 43) Some comments stated that an infrastructure is not in 
place to provide alternative disposal in all areas of the country. 
Several comments said the rule will create a disposal crisis. One 
comment said that landfill operators and solid waste regulators are not 
prepared to deal with the magnitude of the disposal problem, and that 
some landfills will not accept dead animals or slaughter byproducts. 
Another comment said that they found no incinerators in their service 
area that would accept dead animals. One comment said that disposal 
rendering is feasible, but may not be locally available or that 
collection fees may be prohibitive. The last comment also said that 
alkaline hydrolysis digesters are not feasible, strict air pollution 
measures might preclude the use of incinerators, composting is 
prohibited in some areas, and land for burial is unavailable in densely 
populated areas.
    (Response) FDA recognizes that no single method of disposal is 
available or suitable in all regions of the country and acknowledges 
that the transition from rendering to other forms of disposal will be 
challenging in some parts of the country. The regulation will not 
become effective until 12 months after publication of this final rule, 
so that livestock producers, meat packers, renderers, and regulators 
have sufficient time to arrange for disposal of CMPAF using one or more 
of the alternatives mentioned or any other legal alternative.
    (Comment 44) A number of comments stated that, due to disposal 
restrictions at the State and local levels, a comprehensive disposal 
plan is needed before the proposed rule is implemented. Several 
comments said that FDA should consult with Federal, State, and local 
agencies, and with the affected industries, on environmentally safe 
disposal of deadstock. One comment said that neither FDA nor USDA has 
jurisdiction over on-farm disposal. Another comment said that USDA 
should use its broad animal health authority to lead a Federal agency 
task force on disposal.
    (Response) Non-feed disposal of carcasses and slaughter byproducts 
is primarily regulated by State and local agencies. Under certain 
circumstances, Federal agencies, such as the Environmental Protection 
Agency (EPA), may use their authorities to regulate disposal of this 
material. FDA consulted with EPA and participated in an industry 
sponsored roundtable in July 2006 to discuss practical solutions for 
non-feed disposal throughout the United States. FDA is ready to work 
with industry and other governmental agencies in identifying 
appropriate ways to dispose of CMPAF.
    (Comment 45) Some comments pointed out that Europe avoided massive 
disposal problems through government subsidies to the rendering 
industry for picking up and rendering prohibited material. Subsidies 
would help with disposal problems in the United States.
    (Response) FDA does not have authority to subsidize alternative 
disposal of CMPAF.
    (Comment 46) Several comments urged FDA to explore alternative ways 
to use CMPAF, such as in the production of biofuel.
    (Response) FDA welcomes innovative ways of disposing of animal 
byproducts, such as using them for the production of biofuels. The 
agency has participated in industry/government workshops that explored 
ideas for using deadstock and animal byproducts for the production of 
energy. The agency encourages environmentally sound, commercial uses of 
these materials so that the disposal burden is minimized.
    (Comment 47) One comment indicated that FDA should not expect a 
disposal-only rendering industry to develop if the proposed rule is 
implemented.
    (Response) FDA acknowledges that many factors, including the 
implementation of this final rule, play a role in determining whether 
facilities dedicated to disposal rendering may emerge in the 
marketplace.
    (Comment 48) One comment stated that prohibited brain and spinal 
cord material should not be diverted for use as fertilizer because the 
infectious agent can survive in soil and be recycled to cattle through 
crops.
    (Response) FDA is not aware of any data showing that BSE can be 
transmitted by this route.
    (Comment 49) One comment asked that the U.S. Government focus on 
research and on supporting the rendering industry's development of 
alternative uses for animal byproducts.
    (Response) FDA agrees that alternative uses for animal byproducts 
need to be encouraged and studied further.
7. Ensuring Appropriate Handling of Prohibited Material
    (Comment 50) Several comments addressed certification/registration 
of facilities handling cattle materials. One comment suggested that FDA 
should require annual certification to ensure that every facility 
handling cattle materials is in compliance with the rule. Another 
comment suggested registration of entities that handle prohibited 
cattle material, including renderers, farms that feed or mix feed for 
ruminants, and other parties that handle prohibited material, except 
where government inspection is already present (packer-associated 
renderers).
    (Response) The agency does not believe that requiring certification 
or registration of firms is necessary at this time. FDA believes that 
continuing its current approach of working collaboratively with its 
State counterparts to ensure compliance with BSE regulations will 
continue to be effective.
    (Comment 51) One comment asked whether written statements from 
slaughter and processing establishments would be acceptable to FDA as 
evidence that offal is free of prohibited material. One comment said 
that, due to liability concerns, renderers will be reluctant to accept 
material from plants that are not federally inspected. Two comments 
said that slaughter plants should be required to verify that raw 
materials sent for rendering into animal feed are free of prohibited 
cattle materials.
    (Response) The proposed rule provided that renderers that handle 
cattle materials must establish and maintain records sufficient to 
demonstrate that materials rendered for animal feed are not 
manufactured from, processed with, or does not otherwise contain CMPAF. 
The final rule has been revised to further clarify that renderers' 
records must also include certification or other documentation from 
each supplier, or other documentation acceptable to FDA, that CMPAF has 
been excluded from materials to be

[[Page 22731]]

rendered for use in animal feed. Certification or other documentation 
from the supplier would be considered acceptable provided it includes a 
description of the supplier's segregation procedures, documentation 
that the supplier confirms that its segregation procedures are in place 
prior to supplying any cattle material to the renderer, and records of 
the renderer's periodic review of the suppliers' certification or other 
documentation. Other methods acceptable to FDA, such as third-party 
certification, may also be used by renderers to document that suppliers 
have excluded CMPAF from material supplied to the renderer.
    (Comment 52) One comment asked that FDA clarify whether separate 
lines of equipment (barrels, room storage, pick-up vehicles) are 
required for handling SRM material. Another comment said the proposal's 
requirement that facilities be dedicated may cause renderers to 
discontinue processing CMPAF. A third comment stated that equipment for 
processing and transportation of prohibited cattle materials should be 
specifically designated for such purposes only. A fourth comment 
suggested that renderers and slaughter plants should have verifiable 
separation and identification procedures in place.
    (Response) Under the final rule, renderers that provide a service 
to a slaughter plant by disposing of CMPAF must ensure that there is no 
cross-contamination, either through direct contact or via equipment 
surfaces, between CMPAF and animal feed or feed ingredients. In 
addition, CMPAF material is required to be marked and labeled ``Do not 
feed to animals.'' Renderers are responsible for ensuring that firms 
collecting such material on their behalf meet these requirements.
8. Enforcement Issues
    FDA received many comments that addressed enforcement issues. 
Specifically, concerns were raised about an increased inspection 
burden, prohibited materials being illegally transported and dumped, 
and the need for agency guidance on recordkeeping.
    (Comment 53) Several comments said that additional resources will 
be needed to effectively enforce the new measures. One comment said 
that additional inspectors may be needed to ensure proper removal and 
disposal of the CMPAF. Two other comments said that increased 
inspectional presence will be necessary to ensure that firms comply 
with aging and brain and spinal cord removal requirements.
    (Response) FDA agrees that successful enforcement of the new 
measures will require an increased inspectional presence at firms that 
render cattle materials. Any reallocation of inspections needed to 
enforce this new rule should not affect the inspections of high-risk 
firms that are already being conducted to enforce the current ruminant 
feed rule.
    (Comment 54) One comment said the proposed rule creates too much of 
an inspectional burden with an over reliance on the examination of 
records. Another comment, in contrast, said that visual inspection by 
investigators ultimately cannot determine the presence or absence of 
the BSE agent.
    (Response) The agency considers both onsite observations of firms' 
operations and examination of records to be important and valuable 
components for ensuring compliance with the new rule. Inspections are 
not intended to detect the presence of the BSE agent, but rather are 
intended to ensure that CMPAF are not used in animal feed. Records 
examination is intended to verify that firms maintain and follow 
written procedures and to facilitate tracking the receipt, processing, 
and distribution of CMPAF.
    (Comment 55) One comment stated that increases in renderer pick-up 
fees will result in illegal transportation and dumping of deads, 
downers, and CMPAF.
    (Response) FDA intends to vigorously enforce this new rule to 
ensure that CMPAF is not used in animal feed. FDA believes this final 
rule appropriately controls materials to be rendered for animal feed. 
FDA intends to work with relevant local, State, and other Federal 
agencies concerning disposal issues.
    (Comment 56) One comment said the proposal may cause independent 
renderers to stop accepting offal from red meat slaughter and 
processing establishments unless assurances are received that 
prohibited materials have been removed. Another comment cited a 
statement from a USDA OIG report saying that slaughter establishments 
are not adequately removing SRMs under current USDA regulations 
(Ref.14). The comment expressed concern that assurance cannot be 
provided for the removal of CMPAF from slaughter cattle under the 
proposed FDA regulation.
    (Response) As stated in the proposed rule, this final rule requires 
renderers to establish and maintain records sufficient to demonstrate 
that raw materials to be rendered for animal feed are free of CMPAF. 
The agency expects that, as a condition of collection, renderers will 
require beef slaughter establishments to provide sufficient 
documentation to enable the renderers to meet their obligation for 
establishing and maintaining records demonstrating CMPAF removal. As 
discussed above, this final rule clarifies that renderers' records must 
include documentation, such as certification or other documentation 
from the supplier that material supplied to the renderer does not 
include CMPAF, or documentation of another method acceptable to FDA to 
verify that CMPAF has been segregated from slaughter byproducts that 
are to be rendered for animal feed use.
    (Comment 57) Several comments stated that renderers might not 
collect offal from 4-D plants and custom slaughter establishments 
because there is not routine government inspection of these operations 
to ensure removal of CMPAF. Several comments suggested that FDA require 
written certification of CMPAF removal.
    (Response) Because 4-D plants meet the definition of renderer, 
these firms are subject to the requirements of this rule. The final 
rule requires that renderers maintain written procedures for how they 
will remove brain and spinal cord from cattle not inspected and passed 
for human consumption and, if such cattle are to be rendered without 
brain and spinal cord removal, written procedures for how they will 
verify that such cattle are less than 30 months of age. Rendering firms 
that collect material from a 4-D operation would have the 
responsibility of showing that CMPAF had been removed by the 4-D plant 
prior to collection, or that any CMPAF-containing material collected is 
not introduced into animal feed.
    With respect to custom slaughter, the final rule defines CMPAF to 
include certain cattle not inspected and passed for human consumption 
by the appropriate regulatory authority. Since the slaughter and 
processing of cattle in custom slaughter operations are not subject to 
inspection, the cattle handled by custom slaughter facilities would be 
considered not inspected and passed for human consumption. Therefore, 
cattle materials from custom slaughter establishments cannot be 
rendered for use in animal feed if the brain and spinal cord are not 
effectively removed from cattle that are 30 months of age or older. It 
is the renderer's responsibility to establish and maintain records 
sufficient to demonstrate that material rendered for use in animal feed 
does not contain CMPAF. The final rule clarifies that these records 
must include certification or other documentation from the supplier 
demonstrating that adequate segregation procedures are in place at 
slaughter establishments, including custom slaughter

[[Page 22732]]

establishments, that supply cattle materials to the renderers.
    If renderers receive CMPAF for disposal, they are responsible for 
ensuring that it is excluded from animal feed. As discussed in more 
detail in the response to Comment 29, FDA notes that the use in animal 
feed of materials from cattle not inspected and passed for human 
consumption that are diseased or that die otherwise than by slaughter 
is the subject of enforcement discretion.
    (Comment 58) Numerous comments asked that FDA provide guidance on 
several aspects of the rule, such as proper recordkeeping, acceptable 
processes for removing brain and spinal cord from cattle not inspected 
and passed for human consumption, and separation and dedication of 
processing areas.
    (Response) FDA has specified in the final rule the recordkeeping 
requirement for renderers receiving raw materials from slaughter 
facilities. FDA will provide guidance as needed for meeting other 
requirements of the new rule.
    (Comment 59) One comment suggested that FDA require firms handling 
prohibited material to be registered.
    (Response) Pursuant to the Public Health Security and Bioterrorism 
Preparedness and Response Act of 2002, facilities that manufacture, 
process, pack, or hold food for consumption in the United States must 
register with FDA. The agency does not believe that requiring 
additional registration of all firms handling prohibited material is 
necessary at this time. FDA believes that following its current 
approach of working collaboratively with its State counterparts to 
ensure compliance with BSE regulations will continue to be effective.
    (Comment 60) One comment suggested that FDA license firms handling 
prohibited cattle material just as it licenses feed mills that use 
Category II drugs as Type A medicated articles.
    (Response) The agency does not believe that requiring that firms be 
licensed is necessary at this time. FDA believes that continuing its 
current approach of working collaboratively with its state counterparts 
to ensure compliance with BSE regulations will continue to be 
effective.
    (Comment 61) Two comments questioned whether FDA has jurisdiction 
to inspect slaughter establishments to verify proper segregation of 
CMPAF. Another comment said it strongly opposes new FSIS inspectional 
activity to oversee CMPAF removal from animal feed. In addition, two 
comments said that the proposed rule amounts to an unfunded mandate 
requiring States to conduct additional inspections at slaughter 
establishments to ensure proper removal of CMPAF.
    (Response) Under this final rule, it is the responsibility of the 
renderer to ensure that material rendered for use in animal feed is 
free of CMPAF. FDA acknowledges that it does not conduct inspections in 
USDA-regulated slaughter establishments. Nevertheless, the agency 
believes that ensuring the segregation of CMPAF from other slaughter 
byproducts is pivotal to enhancing the safety of all animal feed. 
During inspections at rendering facilities, FDA intends to verify that 
renderers maintain records sufficient to demonstrate that material 
rendered for use in animal feed does not contain CMPAF. In response to 
comments regarding recordkeeping and the need for verification of the 
raw materials, the final rule has been revised to clarify that a 
renderer's records must either include certification or other 
documentation from the supplier that material supplied to the renderer 
does not include CMPAF, or documentation of another method acceptable 
to FDA, such as third party certification, for verifying that suppliers 
have effectively excluded CMPAF.
    (Comment 62) Two comments stated that distribution records should 
be sufficiently detailed to allow for conducting trace forward and 
trace back investigations of prohibited cattle materials.
    (Response) As finalized herein, Sec.  589.2001(c)(2)(vi) (21 CFR 
589.2001(c)(2)(vi)) requires renderers that handle CMPAF to establish 
and maintain records sufficient to track CMPAF to ensure such material 
is not introduced into animal feed, and make the records available for 
inspection and copying by FDA. And under Sec.  589.2001(c)(3)(i), 
renderers that handle any cattle materials must establish and maintain 
records sufficient to demonstrate that material rendered for use in 
animal feed was not manufactured from, processed with, or does not 
otherwise contain, CMPAF, and make the copies available for inspection 
and copying by FDA. FDA expects to provide guidance, as needed.
    (Comment 63) One comment stated that renderers should maintain 
records on how they dispose of prohibited cattle material.
    (Response) The final rule requires renderers to maintain records 
sufficient to track CMPAF to ensure that the material was not 
introduced into animal feed.
    (Comment 64) Several comments suggested that instead of requiring 
that records be kept for 1 year, FDA should require that records be 
maintained for a longer time period. Suggestions ranged from 3 to 12 
years.
    (Response) FDA does not consider it necessary to extend the 
recordkeeping requirement. As discussed in greater detail in the 
preamble to the October 2005 proposed rule (70 FR 58570 at 58582), FDA 
believes 1 year is appropriate, considering the amount of time the 
products will be in the animal feed production and distribution 
systems.
9. Implementation of New Requirements
    (Comment 65) Several comments pointed out that time may be needed 
for implementation of the rule. Two comments suggested that it would 
take more than a year for renderers to develop dedicated rendering 
facilities or other types of disposal in California. Two other comments 
suggested a staged approach.
    (Response) FDA received numerous comments regarding the impacts of 
the proposed new requirements, particularly with respect to the 
separation and appropriate disposal of CMPAF. The analysis of economic 
impacts completed for this final rule estimates that slaughter and 
rendering facilities will incur substantial one-time capital costs in 
order to comply with the new requirements. Furthermore, this analysis 
indicates that a substantial component of the total cost of this rule 
is associated with the disposal of CMPAF. Based on comments received on 
the proposed rule and on FDA's impact analysis completed for this final 
rule, FDA agrees that sufficient time will be needed to effectively 
implement the new requirements of this final rule including the 
development of alternate methods for disposing of CMPAF. FDA believes 
that 12 months should be a sufficient amount of time for the U.S. 
animal feed industry to come into compliance with this final rule.
    (Comment 66) Several comments said that instead of implementing new 
measures, FDA should provide additional resources to support compliance 
and enforcement of the current ban. Two comments stated that 
implementation of the new rule should not lessen enforcement of the 
current rule.
    (Response) The basis for the measures in this final rule was 
discussed in the preamble to the October 2005 proposed rule (70 FR 
58570 at 58578). Implementation of this new rule should not diminish 
inspection and enforcement of the 1997 ruminant feed

[[Page 22733]]

rule at firms that handle prohibited mammalian protein. Current 
resources should allow for effective enforcement of both rules.
    (Comment 67) One comment said that rendering plants will need time 
to modify equipment and procedures before the rule is implemented.
    (Response) FDA understands that rendering plants will have to make 
a variety of modifications to comply with the final rule. For this 
reason, FDA has made the new rule effective 12 months from the date of 
publication.

C. Comments on Proposed Amendments to Sec.  589.2000--Animal Proteins 
Prohibited in Ruminant Feed

    The final rule amends Sec.  589.2000 to exclude from the definition 
of ``protein derived from mammalian tissues'' tallow containing no more 
than 0.15 percent insoluble impurities and tallow derivatives as 
specified in Sec.  589.2001(b)(6). FDA also received several comments 
related to other requirements in Sec.  589.2000.
    (Comment 68) Three comments stated that salvaged pet foods, 
including distressed pet food, should be prohibited in cattle feed.
    (Response) Pet food containing prohibited mammalian protein is 
prohibited from use in ruminant feed by the 1997 ruminant feed rule. 
Pet food products sold or intended for sale as distressed or salvage 
items must be labeled with the statement ``Do not feed to cattle or 
other ruminants'' if they contain or may contain prohibited mammalian 
protein (see Sec.  589.2000(d)(4)). This final rule further reduces the 
risk that cattle could be exposed to the BSE agent through pet food 
because it requires the removal of certain cattle-derived risk 
materials from all animal feed.
    (Comment 69) Two comments requested that the current feed rule be 
revised to exempt firms that handle retail pet food from recordkeeping 
requirements.
    (Response) The 1997 ruminant feed rule requires firms to maintain 
records sufficient to track products containing prohibited mammalian 
protein. Exempting retail pet food distributors from recordkeeping 
requirements would diminish the ability of the agency to trace feed or 
feed ingredients that are adulterated under the 1997 ruminant feed 
rule. The agency intends to issue guidance that addresses what 
constitutes records sufficient to track prohibited protein associated 
with the sale of retail pet food.
    (Comment 70) One comment suggested that the current rule be revised 
to require feed labels that clearly, concisely, and accurately inform 
users about the source of animal protein ingredients in feeds. The 
comment said that requiring new feed ingredient definitions such as 
``non-ruminant derived animal proteins,'' ``ruminant derived animal 
proteins,'' and ``non-mammalian derived animal proteins'' would be 
helpful.
    (Response) Section 589.2000 requires that feed products that 
contain or may contain prohibited mammalian protein be labeled with the 
caution statement ``Do not feed to cattle or other ruminants.'' Part 
501 (21 CFR part 501) contains most of the labeling requirements for 
animal feed. Under Sec.  501.4, ingredients must be listed on the 
product label by their common or usual name. Section 501.110 provides 
for the use of collective terms, such as ``animal protein products,'' 
in lieu of listing each ingredient by its common or usual name. For FDA 
recommendations regarding the common or usual names for animal feed 
ingredients, see Compliance Policy Guide 7126.08. In response to the 
FDA Amendments Act of 2007, FDA intends to develop new regulations on 
processing and ingredient standards and ingredient definitions for all 
animal feed, and updated labeling standards for pet food.

III. Description of the Final Rule

A. Definitions

    Section 589.2001(a)(1) is being added to the final rule, and it 
sets forth the purpose of new Sec.  589.2001, which is to prohibit the 
use of certain cattle origin materials in the food or feed of all 
animals to further reduce the risk of the spread of BSE within the 
United States.
    To address the BSE risk, Sec.  589.2001(b)(1) defines cattle 
materials prohibited in animal feed (CMPAF) to include the following: 
(1) The entire carcass of BSE-positive cattle; (2) the brains and 
spinal cords of cattle 30 months of age and older; (3) the entire 
carcass of cattle not inspected and passed for human consumption that 
are 30 months of age or older from which brains and spinal cords were 
not effectively removed or otherwise effectively excluded from animal 
feed; and (4) mechanically separated beef and certain tallow that is 
derived from materials prohibited by this rule. The definition of CMPAF 
does not include tallow derivatives or certain tallow that contains no 
more than 0.15 percent insoluble impurities. This definition differs 
from the proposed rule in that the entire carcass from BSE-positive 
cattle has been added to the definition. This was done to clarify that 
all materials from such animals are prohibited from use in animal feed. 
Further, the regulations were revised to exclude from the definition of 
CMPAF certain cattle that have not been inspected and passed for human 
consumption. Under the proposed rule, cattle that were not inspected 
and passed for human consumption were excluded from the definition of 
CMPAF if their brains and spinal cords were removed. The final rule was 
revised to indicate that such cattle are not considered CMPAF if the 
animals were shown to be less than 30 months of age, regardless of 
whether the brain and spinal cord have been removed. The regulations 
have also been revised to exclude from the definition of CMPAF certain 
cattle materials that originate from a country that has been designated 
by FDA as exempt from the requirements of this rule based on its BSE 
risk status. This exclusion is being added in response to comments and 
because the agency has determined that it is not necessary for all BSE-
related restrictions to apply to animal feed regardless of a country's 
BSE status. Epidemiological evidence indicates that the BSE epidemic in 
the United Kingdom (U.K.) was a result of consumption of animal feed 
contaminated by the BSE agent. The spread of BSE outside the U.K. has 
been attributed to the export of BSE-contaminated feed from the U.K. to 
other countries prior to the realization of the role of feed in 
transmitting the disease and the subsequent restrictions on such trade. 
FDA acknowledges that a country may not have engaged in commercial 
trade in animal feed with the U.K. or other affected countries, and it 
may have had preventive measures in place for a length of time adequate 
to make remote the chance that BSE is present in that country.
    Such a country may be able to demonstrate to FDA that its BSE case 
history, risk factors, and measures to prevent the introduction and 
transmission of BSE make certain BSE-related restrictions unnecessary 
with respect to cattle materials from that country. Allowing cattle 
materials from such a country to be used in non-ruminant animal feed 
manufactured from, processed with, or otherwise containing CMPAF is 
consistent with OIE's recommendation that other prohibited materials 
from negligible risk countries not be restricted. The process for 
seeking designation to be covered by this exclusion is set forth in 
Sec.  589.2001(f).
    In its application, the requesting country will be expected to 
provide information to FDA on its BSE case history, including whether 
cattle in that

[[Page 22734]]

country have tested positive for BSE, and, if so, the circumstances and 
the country's response. In addition, FDA will review information that 
addresses the extent to which the requesting country has identified and 
taken into account relevant risk factors such as the following:
     Possible presence of BSE in indigenous and/or imported 
cattle;
     Geographic origin of imported cattle;
     Materials used in the production of ruminant feed and feed 
ingredients; and
     Importation of ruminant feed and feed ingredients.
    FDA will consider information relating to the possible presence of 
BSE in indigenous and imported cattle in the requesting country as well 
as the requesting country's production and importation of ruminant feed 
and feed ingredients. With respect to imported cattle, relevant 
information includes the identification of any countries where imported 
cattle were born or raised and the dates any cattle were imported. With 
regard to ruminant feed, FDA will consider, among other things, how 
ruminant feed was produced in the requesting country, including what 
animal origin materials were allowed to be included. FDA will also 
consider whether ruminant feed and feed ingredients were imported, and 
if so, the source countries and dates of import.
    In addition to reviewing risk factors such as those identified 
previously, FDA will assess how the requesting country has addressed 
and managed any identified BSE risks through the implementation of 
appropriate measures to prevent the introduction and transmission of 
BSE. FDA will consider how long such preventive measures have been in 
place and whether they have been effectively carried out. Examples of 
preventive measures include the following:
     A prohibition on the use of ruminant feed that might carry 
a risk of transmitting the BSE agent;
     A prohibition on the import of cattle and cattle-derived 
products that might carry a risk of transmitting the BSE agent;
     Surveillance systems for BSE in cattle populations with 
appropriate examination of brain or other tissues collected for 
surveillance in approved laboratories;
     Mandatory notification and examination of all cattle 
showing signs consistent with BSE; and
     Protocols or other written procedures for investigating 
potential cases of BSE, including ability to trace former herdmates of 
BSE-positive animals.
    As part of its evaluation of a requesting country's feed 
restrictions, FDA will consider factors including whether appropriate 
feed restrictions are in place and the adequacy of enforcement of those 
restrictions (e.g., the frequency of facility inspections and level of 
compliance). FDA also will consider a requesting country's import 
controls for cattle material. Such consideration will include whether 
the country effectively monitors and controls potential pathways of 
cattle materials and other potentially infective materials into its 
country from other countries for which such controls are necessary.
    In addition, FDA will consider the requesting country's 
surveillance and monitoring efforts with respect to BSE. For example, 
FDA will evaluate the level at which the country performs surveillance 
and monitoring, whether tissue samples are collected and examined at 
approved laboratories, and whether recognized diagnostic procedures and 
methods are used, such as those procedures and methods provided in the 
OIE Manual of Diagnostic Tests and Vaccines for Terrestrial Animals 
(Ref. 15).
    FDA also will consider whether the requesting country has an 
ongoing program for notification and investigation of all cattle 
showing signs consistent with BSE. In evaluating such a program, FDA 
will consider, among other factors, whether notification and 
investigation is mandated, whether veterinarians, producers, and others 
involved in cattle production have been provided sufficient information 
about BSE, such as through an awareness program, and whether there are 
additional measures in place to stimulate reporting of suspect cattle, 
such as compensation or penalties.
    FDA also will consider a requesting country's written procedures 
for investigating potential cases of BSE. Such a consideration will 
include whether the country has written procedures for the 
investigation of suspect animals and whether the country has the 
investigative capability to follow up positive findings by tracing 
former herdmates of animals determined to be BSE positive. Finally, FDA 
also will consider any other information relevant to determining 
whether the country should be designated under Sec.  589.2001(f).
    FDA and the USDA agencies, APHIS and FSIS, have different 
regulatory responsibilities with respect to preventing BSE and ensuring 
food safety. Therefore, FDA cannot rely on the evaluations of APHIS and 
FSIS in making a determination on country designations. FDA will, 
however, consult with APHIS and FSIS as part of its evaluation process. 
In addition, FDA will take into consideration available risk 
assessments of other competent authorities in conducting its 
evaluation. Although it is not required, a previous BSE evaluation by 
USDA, OIE, or by another government or another competent authority, 
will be helpful to FDA in its review and may decrease the time needed 
for FDA to make a determination.
    Upon completion of its review, FDA will provide written 
notification of its decision to the requesting country, including the 
basis for the decision. FDA may impose conditions in granting a request 
for designation. Further, any designation granted under Sec.  
589.2001(f) will be subject to future review by FDA to ensure that the 
designation remains appropriate. As part of this process, FDA may ask 
designated countries to confirm that their BSE situation and the 
information submitted by them in support of their original application 
remain unchanged. Further, FDA may revoke a country's designation if 
FDA determines that it is no longer appropriate.
    FDA will provide further information on its evaluation process, the 
scope of the review, and the types of supporting information that it 
would find helpful in reviewing a country's submission at the time of 
the request.
    Section 589.2001(b)(2) defines cattle not inspected and passed for 
human consumption as cattle that did not pass antemortem inspection by 
the appropriate regulatory authority. This term includes nonambulatory 
disabled cattle. Nonambulatory disabled cattle are cattle that cannot 
rise from a recumbent position or that cannot walk, including, but not 
limited to, those with broken appendages, severed tendons or ligaments, 
nerve paralysis, fractured vertebral column, or metabolic conditions. 
The definition of cattle not inspected and passed for human consumption 
was revised to add the word ``ante-mortem'' to clarify that cattle 
referred to in this definition are those that did not pass (or were not 
subjected to) antemortem inspection.
    Section 589.2001(b)(3) defines mechanically separated beef as a 
finely comminuted meat food product, resulting from the mechanical 
separation and removal of most of the bone from attached skeletal 
muscle of cattle carcasses and parts of carcasses.
    Section 589.2001(b)(4) defines renderer to mean any firm or 
individual that processes slaughter byproducts, animals unfit for human 
consumption, or meat scraps. The term includes

[[Page 22735]]

persons who collect such materials and subject them to minimal 
processing, or distribute them to firms other than renderers (as 
defined in this paragraph) whose intended use for the products may 
include animal feed, industrial use, or other uses. The term includes 
renderers that also blend animal protein products.
    Section 589.2001(b)(5) defines tallow to mean the rendered fat of 
cattle obtained by pressing or by applying any other extraction process 
to tissues derived directly from discrete adipose tissue masses or to 
other carcass parts and tissues.
    Section 589.2001(b)(6) defines tallow derivative to mean any 
product obtained through initial hydrolysis, saponification, or 
transesterification of tallow; chemical conversion of material obtained 
by hydrolysis, saponification, or transesterification may be applied to 
obtain the desired product.
    The definitions in Sec.  589.2001(b)(3), (b)(4), (b)(5), and (b)(6) 
are unchanged from the proposed rule.

B. Requirements

    Section 589.2001(c)(1) provides that no animal food or feed 
ingredient shall be manufactured from, processed with, or otherwise 
contain CMPAF. Section 589.2001(c)(2) provides new requirements for 
renderers that handle CMPAF. Section 589.2001(c)(3) provides new 
requirements for renderers that handle any cattle material.
1. Requirements for Renderers That Receive, Manufacture, Process, 
Blend, or Distribute CMPAF
    Section 589.2001(c)(2) of the final rule has been revised to 
include requirements for renderers that intend to render for use in 
animal feed cattle not inspected and passed for human consumption. If 
such cattle are to be rendered for animal feed, the renderer must 
ensure that the brain and spinal cord are effectively removed or 
otherwise effectively excluded from material rendered for use in animal 
feed. If such cattle are to be rendered without brain and spinal cord 
removal, the renderer must ensure that such animals are less than 30 
months of age. In addition, written procedures must be maintained 
specifying the procedures used to ensure compliance with these 
requirements.
    As provided in the proposed rule, Sec.  589.2001(c)(2) of the final 
rule also requires that renderers that handle CMPAF use separate 
equipment or containers to handle such material once it has been 
separated from other cattle materials. This requirement is intended to 
ensure that equipment used to manufacture, process, blend, store, or 
transport CMPAF or products that contain or may contain CMPAF do not 
serve as a source of cross-contamination.
    In addition, Sec.  589.2001(c)(2) requires renderers that handle 
CMPAF or products that contain or may contain CMPAF to: (1) Label the 
prohibited materials in a conspicuous manner with the statement ``Do 
not feed to animals''; (2) mark the prohibited material with an agent 
that can be readily detected on visual inspection, and (3) establish 
and maintain records sufficient to track the prohibited materials to 
ensure such material is not introduced into animal feed, and make the 
records available for inspection and copying by FDA. These requirements 
are intended to ensure that CMPAF do not enter the animal feed chain 
and thus have no opportunity for inclusion in animal food or feed. FDA 
believes that such material must be both labeled and marked to ensure 
that it does not enter the feed channels, since without such measures 
this material would be indistinguishable from other cattle materials. 
Marking the material will provide a readily detectable method on visual 
examination by which all persons in the animal feed chain can be made 
aware that the product is prohibited material or contains prohibited 
material. Marking also will serve as a way to make the status of the 
material known if, for some reason, the label ``Do not feed to 
animals'' is separated from the product.
2. Requirements for Renderers That Receive, Manufacture, Process, 
Blend, or Distribute Any Cattle Materials
    Section 589.2001(c)(3) requires that renderers that handle any 
cattle materials shall: (1) Establish and maintain records sufficient 
to demonstrate that material rendered for use in animal feed was not 
manufactured from, processed with, or does not otherwise contain, 
CMPAF; (2) make copies of records available for inspection and copying 
by FDA; and (3) be in compliance with requirements under Sec.  589.2000 
regarding animal proteins prohibited in ruminant feed. These 
requirements are unchanged from the proposed rule.

C. Recordkeeping and Access Requirements

    Section 589.2001(c)(2)(v) requires that renderers that receive, 
manufacture, process, blend, or distribute CMPAF establish and maintain 
records sufficient to demonstrate that such material was not introduced 
into animal feed and make them available to FDA for inspection and 
copying. Furthermore, Sec.  589.2001(c)(3) requires that renderers that 
receive, manufacture, process, blend, or distribute any cattle 
materials establish and maintain records sufficient to demonstrate that 
material rendered for use in animal feed was not manufactured from, 
processed with, or does not otherwise contain CMPAF. Such records shall 
be considered sufficient to meet this requirement if they include 
documentation that establishments supplying cattle materials to the 
renderers have adequate procedures in place to effectively exclude 
cattle materials prohibited in animal feed. The exclusion of CMPAF by 
establishments supplying cattle materials to renderers must be 
demonstrated either by certification or other documentation provided by 
the supplier or by another method acceptable to FDA such as third-party 
certification. Certification or other documentation provided by the 
supplier is acceptable provided such records include a description of 
the supplier's segregation procedures, documentation that the supplier 
confirms that such procedures are in place prior to supplying any 
cattle material to the renderer, and records of the renderer's periodic 
review of its suppliers' certification or other documentation. Copies 
of all records established and maintained by renderers must be made 
available for inspection and copying by FDA.
    In the preamble to the October 2005 proposed rule (70 FR 58570 at 
58581), FDA explained that these recordkeeping requirements were 
intended to ensure that no CMPAF would enter the feed channel. At that 
time, the agency explained that it did not believe it was necessary for 
persons other than renderers that are involved in the manufacture or 
processing of feed or feed ingredients to maintain records documenting 
the exclusion of CMPAF. The agency went on to state its belief that 
requiring the maintenance of such records at all manufacturing and 
processing points downstream would be redundant and provide little 
additional information of value. FDA, however, sought comments on the 
need to require that records be maintained by persons other than 
renderers. The agency did not receive any comments on this point. 
Therefore, FDA is requiring that such records be established and 
maintained by renderers for the reasons explained in the preamble to 
the proposed rule.
    FDA also sought specific comments on what types of records would be 
appropriate for satisfying the recordkeeping requirements and whether 
further detail would be needed

[[Page 22736]]

in the regulation regarding specific record requirements. FDA received 
one comment asking whether written statements from slaughter and 
processing establishments would be acceptable to FDA as evidence that 
CMPAF has been removed. Several comments stated that slaughter plants 
should be required to verify that raw materials sent for rendering into 
animal feed are free of CMPAF. In addition, a few comments stated that 
the records should be detailed enough to allow trace forward and trace 
back as part of any investigation of prohibited cattle materials and 
asked that FDA provide guidance on proper recordkeeping. As discussed 
above, FDA has provided additional details about the recordkeeping 
requirements for renderers. Furthermore, as discussed in section II of 
the preamble, the agency plans to issue guidance, as needed, to assist 
renderers in complying with the recordkeeping and other requirements.
    Section 589.2001(e) provides that the records required by this 
final rule be maintained for a minimum of 1 year. The 1-year record 
retention period is consistent with the existing requirements for 
ruminant feeds in Sec.  589.2000(h). We believe that, for the purposes 
of the recordkeeping requirements, 1 year is appropriate in light of 
the time that the products will be in the animal feed production and 
distribution systems. Extending the record retention period would have 
little practical value in determining the source of BSE in an animal. 
In reaching this conclusion, the agency considered the potentially long 
time period from ingestion of the BSE agent in feed to manifestation of 
clinical signs and lesions and the lack of a reliable estimate for the 
latency period.

D. Changes to Sec.  589.2000--Animal Proteins Prohibited in Ruminant 
Feed

    Section 589.2000(a)(1) has been amended to add language that 
excludes, from the definition of protein derived from mammalian 
tissues, tallow containing no more than 0.15 percent insoluble 
impurities and tallow derivatives as specified in Sec.  
589.2001(b)(1)(v). As discussed in the preamble to the proposed rule, 
Sec.  589.2000 previously did not include tallow in the definition of 
protein derived from mammalian tissues. However, in light of concerns 
about protein impurities present in tallow, FDA has included tallow in 
the definition of protein derived from mammalian tissues unless it 
contains no more than 0.15 percent insoluble impurities.

IV. Analysis of Economic Impacts

    FDA has examined the impacts of the final rule under Executive 
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order 
12866 directs agencies to assess all costs and benefits of available 
regulatory alternatives and, when regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts, and equity). The Regulatory 
Flexibility Act requires agencies to analyze regulatory options that 
would minimize any significant impact of a rule on small entities.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before finalizing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $122 million, using the most current (2005) Implicit 
Price Deflator for the Gross Domestic Product.
    FDA finds that the final rule constitutes an economically 
significant regulatory action as defined in section 3(f)(1) of 
Executive Order 12866 because the sum of the recurring costs and 
capital costs that could be incurred in 1 year rounds to $100 million. 
We base this conclusion on both a study of the impacts on industry of 
the final rule (conducted for FDA by the Eastern Research Group (ERG), 
a private consulting firm (Ref. 16)) and the discussion in the 
remainder of this section. Under the requirements of the Regulatory 
Flexibility Act (RFA), the agency has determined that the regulation 
will have a significant impact on a substantial number of small 
entities. Therefore, the agency has prepared a final regulatory 
flexibility analysis in accordance with the RFA (5 U.S.C. 604). The 
analysis can be located in section IV.H of this document. This final 
rule imposes no mandates on government entities, and does not require 
the expenditure of over $122 million in any 1 year by the private 
sector. As such, further analysis of anticipated costs and benefits is 
not required by the Unfunded Mandates Reform Act.

A. Summary of Final Regulatory Impact Analysis

    The existing rule, which provides the baseline for this analysis, 
prohibits the use of certain protein derived from mammalian tissues in 
ruminant feeds. This final rule expands this restriction to prohibit 
certain cattle-derived risk materials in all animal feeds. The final 
rule, which is very similar to the proposed rule, would define those 
CMPAF to include the brain and spinal cord of all cattle 30 months of 
age or older slaughtered for human consumption, as well as the brain 
and spinal cord of cattle not inspected and passed for human 
consumption 30 months of age or older, the entire carcass of cattle not 
inspected and passed for human consumption 30 months of age or older 
unless the brain and spinal cord have been effectively removed or 
effectively excluded from animal feed, as well as other materials. The 
final rule makes a notable change from the proposed rule by not 
defining as CMPAF the brain and spinal cord from cattle under 30 months 
of age that are not inspected and passed for human consumption. FDA has 
also revised the final rule to clarify that the records established and 
maintained by renderers that receive cattle materials to be rendered 
for use in animal feed must include certification or other 
documentation from the supplier, or other documentation acceptable to 
FDA, that material supplied to the renderer does not include CMPAF. For 
the purposes of this final rule, the term ``cattle not inspected and 
passed for human consumption'' includes non-ambulatory disabled cattle. 
The final rule prohibits tallow derived from BSE-positive cattle from 
use in animal feed and prohibits tallow derived from other CMPAF from 
use in animal feed unless it contains no more than 0.15 percent 
insoluble impurities. The final rule also prohibits mechanically 
separated (MS) beef derived from any of the CMPAF from use in animal 
feed. Additional provisions of the final rule would require renderers 
that handle CMPAF to use separate equipment or containers to handle 
this material once it has been separated from other cattle materials. 
Such renderers would also be required to follow certain procedures for 
labeling and marking CMPAF and recordkeeping and records access.
    The benefits of the final rule include the elimination of the vast 
majority of the risk not addressed by the 1997 ruminant feed ban of 
spreading BSE to other cattle from intentional or unintentional use of 
non-ruminant feed for ruminants or cross-contamination of

[[Page 22737]]

ruminant feed with non-ruminant feed or ingredients intended for non-
ruminant feed. The final rule would effectively remove from use in non-
ruminant feeds those cattle tissues that account for approximately 90 
percent of potential BSE infectivity (Ref. 17). Although the animal and 
public health benefit associated with the additional BSE risk reduction 
is paramount, the U.S. economy may also benefit from regained market 
access in countries that remain fully or partially closed to U.S. beef 
and beef products to the extent that the final rule persuades foreign 
governments that more U.S. beef products are safe to import. Although 
we are unable to quantify the effects of this final rule on removing 
restrictions to foreign markets, the benefits are potentially large 
because the economy as a whole loses an annual surplus equal to about 
$58 million from the remaining restrictions.
    This final rule that prohibits the use of these materials in animal 
food or feed would impose four types of costs: Disposal costs, the 
opportunity cost of the MBM and tallow not produced, direct costs of 
new equipment and re-allocated labor, and feed substitution costs. 
Total compliance costs of the final rule are estimated to range from 
about $64.4 to $80.9 million per year annualized over 10 years assuming 
a 7-percent discount rate; at a 3-percent discount rate, total 
compliance costs are estimated at $64.0 to $80.5 million per year.
    Compliance costs include those imposed by the rule's prohibition on 
the use of certain tissues from cattle 30 months of age or older 
slaughtered for human food and cattle 30 months of age and older not 
inspected and passed for human consumption in any animal feed as well 
as the cost to substitute other feed ingredients for those foregone 
from further processing of CMPAF. First, we discuss the brain and 
spinal cord ban as direct costs to the affected firms (including 
disposal costs, where applicable) and the social cost of the ban on the 
raw materials used in feed product inputs. Then, we discuss the feed 
substitution costs. Table 1 of this document shows a summary of these 
costs.
    The ban on the use of certain cattle materials in all animal feed 
from cattle 30 months of age and older slaughtered for human 
consumption and cattle 30 months of age and older not inspected and 
passed for human consumption would require renderers that process 
either materials from cattle 30 months of age and older slaughtered for 
human consumption or cattle not inspected and passed for human 
consumption 30 months of age and older to separate the CMPAF from the 
remaining offal. Renderers may require slaughter facilities to separate 
such materials as a condition of collection. We estimate the one-time 
capital costs of such a requirement for slaughterers at about $2.1 
million (Table 1, line 2) (or $299,000 annualized at 7 percent over 10 
years and $246,000 annualized at 3 percent over 10 years). We estimate 
that the annual cost of the additional labor to separate this CMPAF 
from other cattle offal at about $972,000 (Table 1, line 3) (including 
maintenance on new equipment). Although compliance costs of these 
activities will be borne initially by slaughterers, a portion of the 
costs are likely to be passed along to cattle producers and consumers. 
For renderers, average annualized capital investment and labor costs 
for CMPAF separation and segregation are estimated at about $7.0 
million (Table 1, lines 9 and 10).
    Our analysis does not project a specific disposal route for CMPAF 
due to the variability of State and municipal laws for disposal of 
organic wastes. As it did for the proposed rule, our analysis of the 
final rule estimates a $12 per 100 lbs (hundredweight (cwt)) of CMPAF 
disposal cost (including any transportation costs) from slaughter and 
rendering establishments. We estimate annual disposal costs for CMPAF 
from independent renderers at about $11.3 million (Table 1, line 11) 
and from slaughterers at about $3.4 million (Table 1, line 23). We 
expect that the disposal costs for slaughter CMPAF are immediately 
passed on to animal producers as lower prices for animals delivered to 
slaughter. Additional disposal costs to animal producers for other 
animals that would no longer be rendered as a result of this rule will 
range from $24.7 million to $35.7 (Table 1, line 22) million annually. 
We estimate the social cost of the loss of MBM sales to range from $0.8 
to $1.0 (Table 1, lines 4 and 14) million and the social cost from lost 
tallow sales to range from $0.7 to $0.8 million (Table 1, lines 5 and 
15). These costs include the lost value from CMPAF from cattle 30 
months of age and older slaughtered for human consumption, cattle not 
inspected and passed for human consumption 30 months of age and older, 
as well as calves, cattle under 30 months not inspected and passed for 
human consumption and other species that would no longer be rendered as 
a result of this rule. We judge the social cost of the loss of hide 
value resulting from this rule to range from $9.2 million to $13.7 
million (Table 1, line 12) annually. The estimated cost of both 
creating and executing procedures for the aging of animals at greater 
or less than 30 months of age is $2.4 million (Table 1, lines 6 and 13) 
annually. To the extent some slaughter establishments already have 
aging procedures in place to comply with FSIS' SRM rule, this amount 
may be an overestimate.
    The final rule, as in the proposed rule, requires that tallow 
derived from certain CMPAF contain no more than 0.15 percent insoluble 
impurities. Even though the estimate of CMPAF is much larger in the 
final rule, because the amount handled directly by independent 
renderers would remain relatively small, we concluded that it would not 
be economical for renderers or tallow manufacturers to further process 
into tallow the brains and spinal cords from all cattle that have their 
brains and spinal cords removed while complying with the additional 
equipment separation and tallow testing and purification requirements. 
We therefore did not include any additional cost for this provision.

                                     Table 1.--Total Costs ($ Millions) \1\
----------------------------------------------------------------------------------------------------------------
                                                                                                    Annualized
             Line                           Cost item              One-time cost   Annual costs      costs \2\
----------------------------------------------------------------------------------------------------------------
1.............................  Slaughter Facilities............  ..............  ..............  ..............
2.............................  Capital investments.............           $2.1   ..............           $0.30
3.............................  Labor...........................  ..............           $0.97            0.97
4.............................  Social cost of lost MBM.........  ..............            0.04            0.04
5.............................  Social cost of lost tallow......  ..............            0.03            0.03
6.............................  Creating/Performing cattle aging  ..............            1.10            1.10
                                 procedures.
7.............................  Subtotal--Slaughter Facilities..            2.1             2.14            2.44
8.............................  Renderer Facilities.............  ..............  ..............  ..............

[[Page 22738]]

 
9.............................  Capital investments.............           20.25            3.04            5.92
10............................  Labor...........................  ..............            1.09            1.09
11............................  Disposal of CMPAF from cattle >   ..............           11.30           11.30
                                 30 months.
12............................  Value of cattle hides...........  ..............      9.16-13.69      9.16-13.69
13............................  Creating/Performing cattle aging  ..............            1.28            1.28
                                 procedures.
14............................  Social cost of lost MBM.........  ..............       0.80-0.98       0.80-0.98
15............................  Social cost of lost tallow......  ..............       0.64-0.78       0.64-0.78
16............................  Plant modification for tallow     ..............  ..............  ..............
                                 purification.
17............................  Slaughter and renderer marking    ..............       0.02-0.06       0.02-0.06
                                 of CMPAF.
18............................  Slaughter and renderer                      0.30            0.21            0.27
                                 recordkeeping/labeling.
19............................  Subtotal--Renderer Facilities...           20.55     28.20-33.09     31.14-36.04
20............................  Animal Producer.................  ..............  ..............  ..............
21............................  Disposal of cattle > 30 months    ..............     24.70-35.70     24.70-35.70
                                 not inspected and passed, all
                                 other animals.
22............................  Disposal of slaughter cattle      ..............            3.38            3.38
                                 CMPAF.
23............................  Feed substitution...............  ..............       2.92-3.51       2.92-3.51
                               ---------------------------------------------------------------------------------
24............................   Subtotal--Animal Producers.....  ..............      31.0-42.59      31.0-42.59
                               =================================================================================
25............................   Final Rule Total Costs.........           22.65     61.34-77.82     64.58-81.06
----------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to rounding.
\2\ Annualized cost equal to annual cost plus one-time costs at 7 percent over 10 years. Using a 3-percent rate,
  annualized costs equal $63.99-$80.48 million.

B. Cost Effectiveness of Final Rule and Alternatives

    Compared with the final rule, we do not offer any alternative that 
would impose greatly lower costs. The only feasible lower-cost 
alternative that would reduce the risk of cross contamination would be 
to require separate facilities or equipment to produce ruminant and 
non-ruminant feed.
Alternative 1--Dedicated Facilities and Equipment
    This alternative would strengthen FDA's 1997 feed rule by 
preventing cross contamination of feed ingredients for ruminants with 
mammalian proteins currently prohibited from ruminant feed. To prevent 
cross contamination, this alternative would require dedicated equipment 
in those facilities producing or handling feed or feed ingredients for 
ruminants and mammalian proteins currently prohibited from ruminant 
feed. In the analysis of the alternatives to the proposed rule, ERG 
estimated that only independent renderers and feed mills would incur 
compliance costs for this dedicated facilities or equipment (70 FR 
58593). It should be noted, however, that this requirement for 
dedicated facilities and equipment differs from the dedicated equipment 
requirement of the SRM ban (Alternative 3 in this document). Since the 
dedicated facilities and equipment option is analyzed here as a 
separate alternative (i.e. not as part of the SRM ban), the tonnage of 
rendered ruminants would not be reduced (without the SRM ban), and the 
resulting transportation costs would be larger than had the SRM ban 
been included as part of this alternative.
    To dedicate facilities, independent renderers would invest about $8 
million in one-time costs and feed mills would invest about $43.2 
million in one-time costs. Annualized over 10 years at 7 percent, 
capital investment for dedicated facilities would equal about $7.3 
million, or about $1.1 million for independent renderers and about $6.2 
million for feed mills. ERG forecast that this alternative would have 
little effect on MBM production, but would force firms to spend more to 
transport MBM because they could no longer backhaul ruminant feed in 
trucks used to transport feed containing mammalian proteins currently 
prohibited in ruminant feed (70 FR 58593 to 58594). In the analysis for 
the proposed rule, ERG estimated that dedicated equipment would 
increase transportation costs by $8 million to $16 million for 
renderers and $14.2 million to $28.4 million for feed mills (70 FR 
58594). Accounting for ERG's revised fuel costs (Ref. 16), the 
estimated costs for dedicated transportation equipment range from $14.6 
million to $29.3 million annually for renderers and from $22.5 million 
to $45.0 million annually for feed mills. The total estimated 
annualized compliance costs of this alternative range from $44.4 
million to $81.6 million.
    This alternative addresses the problem of animal feed being cross-
contaminated with prohibited mammalian protein in firms that 
manufacture animal feeds and also handle prohibited mammalian protein 
by requiring such firms to have dedicated facilities or equipment for 
animal feeds. The compliance costs of this alternative are similar to 
the costs of the final rule. In contrast to the final rule, however, 
this alternative would allow CMPAF with the highest BSE infectivity to 
remain in the animal feed supply, allowing potential exposure to BSE 
infectivity when cattle consume feed intended for other species through 
cross-contamination or misfeeding. We conclude, therefore, that the 
final rule more effectively reduces the risk from cross-contamination 
and misfeeding than this alternative to require dedicated facilities or 
equipment. Given the general similarity in compliance costs, we 
therefore judge this alternative to be less cost-effective than the 
final rule.
Alternative 2--The Proposed Rule
    The proposed rule would require that the brain and spinal cord from 
all cattle 30 months of age or older slaughtered for human consumption, 
and from all cattle not inspected and passed for human consumption of 
any age to be defined as CMPAF. The main difference between the 
proposed rule and the final rule is that the proposed rule would also 
define as CMPAF the brain and spinal cord of cattle under 30 months of 
age that were not inspected and passed for human consumption. Compared 
with the final rule, this alternative produces more tissue for disposal 
by deadstock renderers, increasing the compliance costs for independent 
renderers.

[[Page 22739]]

However, these costs would be offset somewhat because, under the 
proposed rule, deadstock renderers would not need to determine the age 
of the animal. The annualized compliance costs for independent 
renderers would range from $34.9 million to $41.5 million. Similar to 
the final rule, livestock producers would likely pay higher prices for 
feed substitutes and on-farm disposal of deadstock. Annualized 
compliance costs for livestock producers would range from $36.4 million 
to $51.9 million. Slaughterers would incur about $2.5 million in 
annualized costs. Table 2 of this document shows that, in total, the 
estimated annualized compliance costs for this alternative range from 
$73.8 million to $95.9 million and exceed the annualized compliance 
costs of the final rule.
    Although this regulatory action would prohibit more material from 
animal feed than would the final rule, it would only add the brain and 
spinal cord of cattle not inspected and passed for human consumption 
under 30 months of age to the list of prohibited cattle material. 
Scientific evidence indicates that the probability that the brain and 
spinal cord from cattle under 30 months of age contains BSE infectivity 
is extremely low (Ref. 18). Consequently, this alternative is less 
cost-effective than the final rule because it cost $9.2 to $14.8 
million more without a commensurate reduction of risk.

                       Table 2.--Summary of the Compliance Costs of the Proposed Rule \1\
----------------------------------------------------------------------------------------------------------------
                                                     Annual costs ($ million)         Annualized costs \2\ ($
                                  One-time costs --------------------------------            million)
            Cost item               ($ million)                                  -------------------------------
                                                   Low estimate    High estimate   Low estimate    High estimate
----------------------------------------------------------------------------------------------------------------
Capital investments.............            26.2  ..............  ..............             3.7             3.7
Labor...........................  ..............             8.4             8.4             8.4             8.4
Loss of net revenue.............  ..............            12.8            19.4            12.8            19.4
Disposal costs..................  ..............            44.9            59.9            44.9            59.9
Marking.........................  ..............             0.0             0.1             0.0             0.1
Recordkeeping/Labeling..........             0.2             0.1             0.1             0.1             0.1
Feed substitution...............  ..............             3.8             4.4             3.8             4.4
                                 -------------------------------------------------------------------------------
    Total costs.................            26.3            70.0            92.1            73.8            95.9
----------------------------------------------------------------------------------------------------------------
\1\ Numbers may not sum due to rounding.
\2\ Costs are annualized over 10 years at 7 percent.

Alternative 3--The SRM Ban
    The third alternative we considered would prohibit the use of the 
full list of specified risk material (SRM) from animal feed and require 
the use of dedicated equipment by renderers. The scope of this 
alternative is similar to Canada's 2006 enhanced feed rule and is the 
most restrictive regulatory action we considered.\1\ This alternative 
expands the list of prohibited material and would substantially 
increase the amount of prohibited material generated by regulatory 
action. It also requires that renderers have dedicated equipment used 
to process or transport protein prohibited from being fed to ruminants 
and to process or transport protein not prohibited from being fed to 
ruminants.
---------------------------------------------------------------------------

    \1\ The enhanced Canadian feed ban exempts feed mills from the 
requirement for dedicated equipment. Although ERG included feed 
mills in its analysis of the SRM ban, we have excluded these costs 
from our analysis.
---------------------------------------------------------------------------

    In practice, some tissues that are not defined as SRM would be 
difficult to separate and are treated as SRM. Canada made a similar 
distinction in its enhanced feed rule. Thus, in addition to the 
material prohibited in the final rule, this alternative would prohibit 
from all animal feed: The skull, eyes, trigeminal ganglia, vertebral 
column (excluding the vertebrae of the tail, the transverse processes 
of the thoracic and lumbar vertebrae, and the wings of the sacrum), and 
dorsal root ganglia of cattle 30 months of age and older, and the 
tonsils and distal ileum of all cattle.
    As shown in Table 3 of this document, the estimated annualized 
costs of this alternative range from $332.0 million to $344.7 million. 
Slaughterers would incur annualized costs of about $19.5 million in 
lost revenues and increased labor and capital costs. Independent 
renderers would incur from $42.9 million to $55.6 million in annualized 
costs of lost revenues and increased labor and capital costs. Animal 
producers would incur about $12.7 million annually in feed substitution 
costs. Disposal costs for animals that would no longer be rendered as a 
result of the SRM ban and the disposal costs for slaughter SRM would 
account for the majority of the estimated annualized costs and equal 
about $257 million. Because most slaughterers can immediately pass 
disposal costs back to cattle producers by adjusting the prices they 
pay for slaughter animals, cattle producers would likely incur the 
entire cost of SRM disposal in the short run. ERG estimated that over 
time, markets would adjust to the impacts of an SRM ban and about 50 
percent of the total incremental costs of this alternative would be 
passed on to consumers as higher beef prices, 38 percent of the total 
incremental costs would be passed back to cattle producers as lower 
cattle prices and 12 percent of the total incremental costs would be 
incurred by processors.
    Although this option would increase the material removed from 
animal feed when compared with the first alternative, the incremental 
reduction in the potential risk would not be commensurate with the 
costs as shown in Table 3 of this document. Thus, this regulatory 
alternative would be much less cost-effective than either the final 
rule or the proposed rule.

[[Page 22740]]



                                Table 3.--Compliance Costs of a Full SRM Ban \1\
----------------------------------------------------------------------------------------------------------------
                                                     Annual costs  ($ million)       Annualized costs \2\  ($
                                  One-time costs --------------------------------            million)
            Cost item               ($ million)                                  -------------------------------
                                                   Low estimate    High estimate   Low estimate    High estimate
----------------------------------------------------------------------------------------------------------------
Capital investments.............            37.8  ..............  ..............             5.4             5.4
Labor...........................  ..............            12.7            12.7            12.7            12.7
Loss of net revenue.............  ..............            35.8            35.8            35.8            35.8
Transportation..................  ..............             7.9            20.5             7.9            20.5
Disposal costs..................  ..............           257.0           257.0           257.0           257.0
Marking.........................  ..............             0.6             0.6             0.6             0.6
Recordkeeping/Labeling..........             0.2             0.1             0.1             0.1             0.1
Feed substitution...............  ..............            12.7            12.7            12.7            12.7
                                 -------------------------------------------------------------------------------
    Total compliance costs......            38.0           326.6           339.3           332.0          344.7
----------------------------------------------------------------------------------------------------------------
\1\ Numbers may not sum due to rounding.
\2\ Costs are annualized over 10 years at 7 percent.

Summary of Regulatory Alternatives
    Table 4 of this document shows the annualized and incremental costs 
of each regulatory alternative considered. The safeguards put in place 
by the 1997 ruminant feed rule have substantially reduced the potential 
risk that tissues infected with the agent that causes BSE could get 
into ruminant feed. The final rule further reduces the possible risk of 
cross contamination of ruminant feed with prohibited material. As 
explained previously, we have determined that the final rule is the 
most cost-effective action for reducing the potential risk that animal 
feed or feed ingredients intended for ruminants could contain the agent 
that causes BSE.

                                     Table 4.--Costs of Alternative Policies
----------------------------------------------------------------------------------------------------------------
                                                    Annualized costs \1\  ($       Incremental annualized costs
                                                            million)             (from previous alternative)  ($
                  Alternative                  ---------------------------------             million)
                                                                                --------------------------------
                                                  Low estimate    High estimate   Low estimate    High estimate
----------------------------------------------------------------------------------------------------------------
Separate facilities and equipment for                      44.4            81.6
 renderers and feed mills.....................
Final rule....................................             64.6            81.1            20.2            (0.5)
Proposed rule.................................             73.8            95.9             9.2            14.8
Full SRM ban; separate facilities and                     332             344.7           258.2          248.8
 equipment for renderers......................
----------------------------------------------------------------------------------------------------------------
\1\ Costs are annualized over 10 years at 7 percent.

C. Need for Regulation

    Executive Order 12866 directs agencies to assess the need for any 
significant regulatory action and to provide an explanation of how the 
regulation will meet that need. Comments on the October 2005 proposed 
rule did not address the accuracy of the theoretical argument FDA put 
forth in the preamble to the October 2005 proposed rule related to 
private incentives and market failure (70 FR 58570 at 58587). 
Therefore, FDA retains this argument here in the final rule. In this 
instance, FDA concludes that private incentive systems for both 
suppliers and purchasers in markets for cattle, rendering, and ruminant 
feed may inadequately address the risk of BSE. This market failure is a 
result of inadequate information being available to buyers of 
potentially infective animal feed. Because of the risk of cross 
contamination during feed production and the risk of inadvertently 
feeding non-ruminant feed to ruminants on an integrated farm, buyers of 
ruminant and non-ruminant feed would likely value a decrease in risk of 
BSE transmission if the market were able to provide it. Buyers, 
however, have little information about the BSE infectivity of feed 
because the costs to them of ascertaining infectivity are very high and 
higher than the costs to the feed producers. As a result, buyers may 
unknowingly buy feed contaminated with BSE because of the presence of 
CMPAF.
    The potential market failures created by the continued use of 
materials that this final rule would eliminate are the same as 
described in the 1997 ruminant feed rule. If feed purchasers could 
easily identify the risk of the infective agent associated with 
products from specific suppliers, they could more easily reduce these 
risks by refusing to buy feed products derived from ruminants known to 
have consumed processed CMPAF. Feed purchasers, however, are unlikely 
to obtain the information they need due to the long incubation period 
for BSE, which could lead to a suboptimal level of risk prevention by 
purchasers during the incubation period. Moreover, ruminant producers 
have no way of knowing whether a particular batch of feed or feed 
ingredients intended for ruminants is free of potentially infective 
proteins due to the possibility of CMPAF being introduced through 
cross-contamination with feed or feed ingredients intended for non-
ruminants.

D. Benefits

    FDA received few comments on the proposed rule that focused on the 
benefits section. One comment stated that the proposal was unnecessary 
because it addressed only a very small risk. FDA agrees that the risk 
is low but reiterates, as in the proposed rule, that by requiring 
removal of the highest risk cattle-derived materials from use in any 
animal feed, the final rule further reduces BSE risks not already 
addressed by the 1997 feed ban.
    The purpose of the final rule is to further strengthen existing 
safeguards against BSE in the United States. Reduced risk of BSE among 
cattle also reduces human risk of vCJD, which is believed to be caused 
by consumption

[[Page 22741]]

of beef products contaminated with the BSE agent. The final rule also 
increases the potential for exports by reducing foreign governments' 
concerns about the safety of U.S. beef. In this section, we first 
address the reductions in the risk of BSE to cattle in the United 
States and the corresponding protection of human health from the major 
provisions of the proposal. We then summarize the available evidence 
about the likely effect of this final rule on U.S. exports of beef and 
other livestock products.
1. Risk Reduction
    FDA estimates that banning CMPAF from use in any animal feed would 
effectively remove about 90 percent of any remaining potential 
infectivity from possible spread through the feed system. To derive 
this estimate of the risk reduction from the ban on CMPAF, we assume 
that the number of new BSE cases is proportional to the amount of all 
infectious material included in feed. Given this assumption, we 
estimate the percentage reduction in the risk of new BSE cases as the 
percentage reduction in infectious material. A 1999 report by the 
Scientific Steering Committee of the European Union suggests that the 
brain and spinal cord constitute 89.7 percent of the total infective 
load in a case of BSE. This rule would prohibit use in all animal feed 
of these tissues from all cattle 30 months of age or older. Brain and 
spinal cord taken from cattle under 30 months of age would not be 
defined as CMPAF, however, because the probability is extremely low 
that tissues from cattle of this age would contain BSE infectivity. 
Thus, banning CMPAF from animal feed would effectively remove about 90 
percent of total infectivity from animal feed. The absolute level of 
animal health risk reduced by this rule would depend on the number of 
infected animals in the United States and the extent to which cattle 
are exposed to infected material.
    The potential human exposure to infectious materials from consuming 
beef is already small, because USDA and FDA prohibit the use of certain 
cattle materials, including SRMs, from human food. The 2005 Harvard 
Risk Assessment that USDA's Food Safety and Inspection Service made 
available to the public in July 2006 estimates that interim measures 
implemented by FSIS on January 12, 2004, and finalized on July 13, 
2007, reduce potential human exposure to BSE infectivity by 99.6 
percent (see 69 FR 1862 and 72 FR 38700).
    Assessing the public health implications from estimates of the 
human exposure to the BSE agent is difficult because there is no 
agreed-upon relationship between human exposure to cattle 
ID50s (ID50 is the amount of infective material 
that would result in a case of BSE in 50 percent of the cattle that 
consumed it) and vCJD cases. During the 1980s and 1990s, in the absence 
of preventive control measures, millions of ID50s may have 
been available for consumption by residents of the United Kingdom, 
because each cow with clinical symptoms of BSE contains an average of 
about 7,800 ID50s. While the United Kingdom totaled over 
183,000 cases of BSE (Ref. 19) through January 21, 2007, the cumulative 
number of definitive or probable vCJD cases identified in the United 
Kingdom as of February 2007 was 165 (Ref. 20). Thus, the experience of 
the United Kingdom suggests that the BSE agent is many times less 
infective in humans than in cattle.
2. Increased Export Potential
    A second major category of benefits largely accrues to U.S. cattle 
producers and reflects the potential for increased exports of U.S. beef 
and beef products to countries that have acted to curtail exports since 
the discovery of the infected cow in Washington State in December 2003. 
USDA assessed this category of benefits in the FSIS SRM interim final 
rule that it issued in January 2004. In its assessment, USDA concluded 
that ``the 2004 beef export demand forecast has been reduced by 90 
percent'' (Ref. 21). Foreign trade data shows that from 2003 to 2004, 
the quantity of beef, veal, and beef variety meat exported by the 
United States decreased by about 75 percent, whereas the value of these 
exports declined by about 80 percent (Ref. 22). According to USDA data, 
total U.S. exports of beef, veal, and variety meats amounted to $3.9 
billion in sales in 2003, and exports of live cattle resulted in an 
additional $63 million. USDA reports that the value of total beef and 
veal exports for 2006 amounted to $2 billion. In 2006 prices, the 
decline in export value comes to $2.2 billion (= ($3.85 billion * 1.09 
[price adjustment]) - $2 billion). The quantity exported fell from 
1,274,110 metric tons in 2003 to 653,205 metric tons in 2006. Some 
export markets disappeared almost overnight: Exports of U.S. beef to 
Japan fell from 375,452 metric tons in 2003 to 517 metric tons in 2004; 
exports to South Korea fell from 246,595 metric tons in 2003 to 144 
metric tons in 2004. Exports have increased since 2006 but remain below 
2003 levels.
    Numerous foreign governments have cited perceived weaknesses in the 
1997 feed ban as a justification for not fully opening their markets to 
U.S. beef and beef products. The preventive measures contained in this 
final rule may increase the likelihood that foreign governments ease 
some restrictions on imports of U.S. beef products and cattle.
    We cannot estimate the trade benefits of this final rule. We can 
estimate the net effect on social surplus of the continuing 
restrictions on beef exports, as well as the potential gain from 
removing those restrictions. To do so, we use a standard economic model 
of the effects of export restrictions on consumer and producer surplus. 
The closing of export markets, all else being the same, leads to a fall 
in exports and a rise in domestic consumption as more beef is sold on 
the domestic market (Ref. 23). The forced sale to U.S. consumers 
increases consumer surplus and decreases producer surplus. Over time, 
the quantity produced in the domestic economy falls as well, as 
producers respond to the restrictions. If the trade restrictions on 
U.S. beef are removed, beef exports will increase, domestic consumption 
will decrease, and domestic production will increase. Once all 
adjustments are made to the withdrawal of the restrictions, we estimate 
the gain in social surplus to be about $105 million per year, with a 
range of $80 million to $120 million.
    We estimate the effects of the export restrictions using changes in 
beef prices and exports. Price changes in the U.S. market, however, are 
dominated by seasonal and trend effects, fluctuations in feed costs, 
and a host of other factors. These complications make it difficult to 
use actual beef price changes to estimate the effect of diminished 
exports on price. As an alternative to direct estimates of price 
changes, we impute the price effect by estimating the decline in 
domestic price needed to clear the market if beef intended for export 
is instead sold on the domestic market. Again, we do not estimate the 
actual change in price but the imputed contribution of the increased 
quantity of beef on average price. Our imputed price change draws on 
the price elasticity of demand for beef, which is the percentage change 
in the quantity of beef demanded divided by the percentage change in 
price. The estimates in the literature show the mean price elasticity 
of demand for beef is about -1.086, although the variance of the 
estimates is high (Ref. 24).
    To estimate the continued effect of the export restrictions and the 
potential gains from their removal, we assume that in their absence, 
the proportion of U.S. production exported would return to the 2003 
level, 9.6 percent (Ref. 25). In 2006, the shortfall in beef exports 
compared with 2003 accounted for

[[Page 22742]]

about 5.2 (= 0.096 - 0.044) percent of 2003 beef production (Ref. 25). 
If we assume that the price elasticity of U.S. beef supply is about 
0.5, removing the trade restriction would lead to responses on the 
supply about one-half as large as on the demand side, so domestic 
consumption would decline by 3.7 percent (= 0.035/(1 - 0.044 - 0.017)). 
With a price elasticity of -1.086 and a 3.7 percent decline in quantity 
demanded, we estimate the imputed price effect to be a rise of about 
3.4 percent (= 3.7 percent/1.086).
    The rise in social surplus can be approximated using the rise in 
price and the average value of exports in 2003 and 2006. We estimate 
this gain to be about $105 million (= \1/2\ * ($4.2 billion + $2.0 
billion) * 3.4 percent). This social surplus represents the continuing 
annual loss from the restrictions and the annual gain from their 
removal.
    The estimated gain in social surplus is highly sensitive to the 
assumptions made about the responses of domestic beef consumers and 
producers to the removal of export restrictions. Our base estimate of 
the gain in social surplus assumes that in the long-run, the changes in 
consumption are about twice as large as the change in production (the 
price elasticity of supply is about half as large as the price 
elasticity of demand in absolute value). If increased U.S. beef 
production accounts for one-half of the response to the removal of 
trade restrictions (the price elasticity of supply is about the same as 
the price elasticity of demand in absolute value), the gain in social 
surplus is about $80 million per year. By contrast, if reduced 
consumption of beef in the United States accounts for three-fourths of 
the response to the removal of trade restrictions (the price elasticity 
of supply is about one-third the price elasticity of demand in absolute 
value), the gain in social surplus is about $120 million per year.
    The estimates we present here are all based on a simplified model 
of the effects of trade restrictions. The estimates represent the gains 
from removing all remaining restrictions on beef exports, which will 
increase the world demand for U.S. beef. The estimates do not represent 
the gains from this final rule. The gains from this final rule would be 
estimated based on any relaxation of trade restrictions resulting from 
the rule. If other public and private policies reduce trade 
restrictions, then the potential gains from this rule would be 
correspondingly reduced. New safety events, such as more BSE cases, 
would also reduce the potential effects of this final rule on trade. We 
also expect that as time passes, the effects measured here will 
dissipate to be dominated by other changes in the world and domestic 
markets for beef. The social surplus estimated here would only be the 
short-term benefit of this final rule if publication of this rule leads 
directly to the return of U.S. beef to its status in world markets 
before the discovery of the infected cow in Washington State in 
December 2003, assuming that no other policies or events intervene.

E. Costs

    FDA has examined the numerous public comments that addressed the 
analysis of impacts section published with the proposed rule. 
Furthermore, FDA contracted with ERG to update the analysis it prepared 
for the proposed rule, taking into account the comments and data 
provided during the public comment period, as well as any other new or 
amended provisions that FDA made to the final rule. This section 
summarizes the ERG report on the final rule, responds to comments on 
the costs of the proposed rule, and describes the composition, size, 
and scale of economic activity for the various affected industry 
sectors that would be impacted by the final rule.
    The feasible regulatory alternatives to the final rule include the 
following: (1) Separate facilities and equipment for renderers and feed 
mills; (2) the proposed rule, which would prohibit the use of brain and 
spinal cord from cattle 30 months of age and older slaughtered for 
human consumption as well as from all cattle not inspected and passed 
for human consumption from animal feed; and (3) a full SRM ban in 
animal feed and separate facilities and equipment for renderers. The 
ERG report also includes estimates of impacts on small entities in the 
sectors that are impacted to a significant degree to fulfill 
requirements of a regulatory flexibility analysis.
    In the development of its final report on the brain and spinal cord 
prohibition, ERG reviewed the public comments to the rule that 
concerned the economic impacts of the proposed rule, focusing closely 
on the data and analysis included in a report prepared for and 
submitted by the National Renderers Association. ERG utilized the 
services of industry consultants and other contractors for their 
technical expertise, including contracting with an agricultural 
engineering firm to generate capital cost estimates for independent 
rendering operations. Additionally, ERG prepared and administered a 
small survey to independent renderers with additional questions about 
their operations, including logistics of animal pick-up services, days 
of operation, decomposition of deadstock, and their ability to comply 
with the rule.
1. Public Comments on Costs
    One of the most comprehensive comments to the proposed rule was 
prepared by Informa Economics for the National Renderers Association 
entitled ``Economic Impacts of Proposed Changes to Livestock Feed 
Regulations'' (Ref. 26). It concluded that the economic impact on 
renderers would far exceed the impacts that FDA estimated in the 
proposed rule, resulting in a significant economic burden of $127.7 
million annually in direct economic impacts. Many of the individual 
comments or criticisms of our analysis of the proposed rule contained 
in the Informa report reflected other public comments from other 
individuals, companies, associations, and State governments. We have 
assembled similar comments together and will address them throughout 
the summary of the latest ERG analysis.
    Approximately $113 million of the $127.7 million (about 88 percent) 
of the direct costs in the 2005 Informa report represent the estimated 
deadstock collection fees that would be paid by livestock producers for 
picking up those deadstock that would still be rendered under the 
proposed rule. The Informa analysis assumes that the average individual 
pick-up fees that would be charged across the four cattle categories 
represent the costs that renderers would incur to remove the CMPAF from 
cattle not inspected and passed for human consumption, as well as costs 
to handle, process, and dispose of the material. The assumption, 
however, leads to an estimate of costs that represents not the expected 
marginal fee increases from the proposed rule, but rather the total 
pick-up fee that the animal producer would pay. Using only the marginal 
pick-up fee per cwt that would be imposed by this rule reduces the 
total cost from $112.7 million to $62.9 million. The remainder of the 
original $112.7 million in fees ($49.8 million) represents costs that 
are currently incurred by the animal producers and are therefore not 
compliance costs of this rule. Further, the other 12 percent of the 
total direct costs represent the market value of the tallow and MBM 
that would be foregone due to this rule. Accounting for only the social 
costs of these lost revenues, estimated at the renderer's net income 
rate of 5.65 percent (use of net income as social cost is explained 
later in this document), reduces the $15.7 million to only about $0.89 
million, a reduction of about $14.81 million.

[[Page 22743]]

    This adjustment in estimated pick-up fee and MBM and tallow social 
cost losses reduces Informa's total direct costs to about $63.1 
million. This figure is actually below our final rule estimate of $64 
million to $81 million, which includes a cost reduction from the 
exemption from the definition of CMPAF for cattle under 30 months not 
inspected and passed for human consumption. If, however, we were to 
include the upper end of the range of marginal fee increases from the 
Informa report (Informa's $112.7 million cost represents only the lower 
bound of the data it presented), the range of the total direct costs 
from the Informa report (after accounting for the changes mentioned 
previously) would be $63.1 million to $113.53 million.
    The Informa report also concludes that additional indirect costs 
for slaughter facilities to handle and dispose of CMPAF (which is not 
calculated separately in the report) and capital investments made by 
renderers to handle, process and dispose of CMPAF would likely result 
in a total cost exceeding $150 million annually. We agree that 
slaughtering facilities will incur additional capital costs, and ERG 
has increased its estimate from $676,000 in the proposal to about $1.27 
million annually in the final rule. The capital investments for 
renderers that are detailed in the Informa report (amounting to an 
annualized total of $11.3 million) are based on an assumption that 26 
renderers would actually install additional equipment to render the 
CMPAF for disposal, which is 50 percent of the number that replied that 
they might consider installing such equipment. Those 26 rendering 
operations in question, however, would also have been included in the 
survey's question on the expected increase in pick-up fees. The 
increase in pick-up fees, therefore, would account for these additional 
capital costs if they were indeed anticipated. The previously mentioned 
modifications to Informa's calculations result in a significantly lower 
total cost for the final rule. Additionally, we disagree with Informa's 
conclusion that, due to State and local prohibitions against its 
disposal in landfills, there is a high likelihood that all CMPAF would 
need to be rendered prior to disposal, although we agree that there is 
some uncertainty about the disposal methods that will be used 
throughout the United States.
    Various other comments focused on the general subject of increased 
costs to slaughterers and other meat processors for disposal of 
byproducts, the reduction in the value of the slaughtered animals, and 
the reduction in the profitability of renderers. Although almost none 
of these comments contained additional data to support these 
conclusions, ERG performed additional analyses of the relevant 
industries that largely support the main concerns expressed in these 
comments.
    Other comments stated that increased costs would be passed on to 
farmers. We agree that some compliance costs will be immediately passed 
on to farmers; ERG therefore concluded that animal producers would 
incur $28.1 million to $39.1 million in annual costs for alternative 
disposal of CMPAF from cattle slaughtered for human consumption and 
cattle not inspected and passed for human consumption (Table 1, lines 
21 and 22). Other comments requested that we offer other economic 
incentives or remuneration in order to compensate renderers for 
converting operations to alternative disposal methods or for the cost 
of disposal, as has occurred in Europe. We did not consider subsidies 
as a policy option because FDA does not have this authority. 
Furthermore, the use of subsidies would not change the total social 
costs of the final rule, but rather transfer the costs to others. 
Likewise, the social cost does not change, as one comment suggested, if 
the number of cattle available for USDA's BSE testing program decreases 
because the renderer refuses to waive pick-up fees. In this case, the 
social cost is transferred to the general public.
    We also received some comments that made claims about costs to 
individual States, such as the claim that the proposed rule would 
impose $10 million in costs on California dairy farmers, feedlots, and 
beef cattle producers. While we cannot verify this estimate without 
additional data necessary to support such claims, we agree that the 
costs of this final rule will be proportionally heavier in states with 
large populations of affected cattle.
    One comment stated that removal of brain and spinal cord would 
reduce processing ability by 40 percent to 50 percent, without 
providing supporting information. Another comment stated that FDA 
should focus on removal of SRMs from 4D and antemortem condemned 
animals greater than 30 months, the cost of which would be from $64 
million to $76 million, according to some industry estimates that were 
not disclosed. Without supporting information, we cannot respond 
directly to these comments. The ERG report, however, takes into account 
a number of public comments and changed many of its assumptions due to 
these public comments.
    In general, this final rule, which prohibits certain cattle-derived 
risk materials from all animal food or feed, would impose four types of 
costs: Disposal costs, lost revenue measuring the value of the MBM and 
tallow not produced, direct costs of new equipment and re-allocated 
labor, and feed substitution costs.
2. Disposal Costs
    For the proposed rule, ERG identified and discussed five options 
for disposal of CMPAF. These included landfilling of the CMPAF without 
rendering, rendering for disposal, disposal through alkaline hydrolysis 
digesters, incineration, and composting. The analysis concluded that 
landfilling would likely be one of the methods used to dispose of 
CMPAF, and that rendering for disposal would be unlikely due to the 
relatively small amount of CMPAF. The disposal cost estimate of the 
proposal was set at $12/cwt, based on discussions with industry members 
and ERG's other report on alternative regulatory options, including a 
full SRM prohibition. ERG concluded that the per cwt disposal cost 
would be higher than the full SRM prohibition disposal cost due to the 
lower volume of CMPAF for the brain and spinal cord prohibition as well 
as the uncertainty in disposal methods and unfamiliarity with some of 
the disposal methods in the industry. At this $12/cwt rate, disposal 
costs of the proposed rule for CMPAF from slaughter and render 
facilities were estimated at $7.72 million.
    ERG also calculated the disposal costs of cattle not inspected and 
passed for human consumption that would no longer be rendered as a 
result of the proposed rule. This ban was expected to result in an 
increase in the number of on-farm disposals. For its analysis of the 
proposed rule, ERG estimated that 17 percent of cattle not inspected 
and passed for human consumption were currently rendered. In addition, 
ERG had predicted that an additional 0.6 percent of all cattle not 
inspected and passed for human consumption (or 3.5 percent of all 
cattle not inspected and passed for human consumption that are 
currently rendered) would no longer be rendered due to the proposed 
rule. These animals were estimated to result in an increase in capital 
and labor costs for on-farm burial of about $1.02 million.
    We received numerous public comments concerning the estimates on 
the rendering of cattle not inspected and passed for human consumption. 
Some were more specific than others, but the prevailing theme was that 
we had

[[Page 22744]]

significantly underestimated the number of cattle not inspected for 
human consumption that are currently rendered. In particular, the 
Informa report questioned the accuracy of the estimate that only 17 
percent of cattle not inspected and passed for human consumption are 
currently rendered. In fact, FDA had included in the proposal a 
discussion of the uncertainty of its own estimate along with Informa's 
previous estimate of this number at about 42 percent, and also 
incorporated this 42-percent estimate as the high end of the range of 
cost estimates for the proposal, where appropriate. Accepting Informa's 
2004 estimate that 42 percent of cattle not inspected and passed for 
human consumption were rendered, we modified the proposal's disposal 
cost estimate for CMPAF from cattle slaughtered for human consumption 
and cattle not inspected and passed for human consumption that would 
continue to be rendered, from $7.72 million to a range of $7.72 million 
to $9.97 million. Similarly, we modified the proposal's disposal cost 
estimate for cattle not inspected and passed for human consumption that 
would no longer be rendered as a result of the proposed rule from $1.02 
million to a range of $1.02 million to $2.5 million.
    In its analysis of the final rule, the ERG report uses the Informa 
survey data of renderers (conducted for its November 2005 report) and 
USDA data, which show that about 45 percent of cattle not inspected and 
passed for human consumption are currently rendered. We therefore base 
our cost estimates for the final rule solely on the 45 percent figure, 
and do not include those based on the former range of 17 percent to 42 
percent.
    We also received many comments concerning the ERG estimate that 
about 26,000 cattle not inspected and passed for human consumption (or 
0.6 percent of all cattle not inspected and passed for human 
consumption) would no longer be rendered as a result of the rule. 
Informa's 2005 results showed that renderers replied that, in total, 
about 67 percent of cattle not inspected and passed for human 
consumption that are currently rendered would no longer be rendered due 
to the proposed rule. That is, 45 percent times 67 percent = 30 percent 
of all cattle not inspected and passed for human consumption due to 
either renderer refusal to accept the animal or the producer's refusal 
to pay a higher pick-up fee, would no longer be rendered. The final ERG 
report, relying on estimates it received from deadstock renderers and 
estimated price elasticities of deadstock to renderers, projects that 
pick-up charge increases would range from 25 percent to 50 percent for 
all cattle under 30 months and 100 percent to 150 percent for cattle 30 
months of age or older. We note that one comment stated that California 
renderers would increase their pick-up fees by 50 percent. These higher 
pick-up fees, coupled with expected closures of rendering plants 
handling about 10 percent of these cattle, support ERG's revised 
estimate that 29.4 percent to 44.8 percent of currently rendered cattle 
not inspected and passed for human consumption will no longer be 
rendered as a result of this rule. We accept this estimate as well and 
include it in this analysis. The Informa estimate of 67 percent may 
overstate the probability of an animal no longer being rendered because 
some of the carcasses that one renderer says will no longer be picked 
up by his company may still be picked up by another renderer. As a 
result of this and other changes in the final report, we estimate that 
the total amount of CMPAF would range from 610 million to 733 million 
lbs, a significant increase from the 64 million lbs estimated in the 
proposed rule.
    Due to many public comments that FDA underestimated disposal costs 
in the proposed rule, ERG re-analyzed its methodology and assumptions 
concerning disposal in its report for the final rule. It reviewed 
various disposal technologies and a range of estimated costs for each 
based on literature compiled by researchers at Kansas State University, 
National Agricultural Biosecurity Center Consortium. The Kansas State 
University report presents a most likely representative estimate of 
costs, although it was derived from a graphic figure in the source 
document and thus contains some uncertainty. It also identified another 
disposal method that ERG had not considered in the proposed rule, 
namely that cattle would be left to decompose in the field or range 
without any additional treatment of the carcass. Some comments 
reflected the overall conclusions of the Kansas State University 
report, stating that incineration and composting are currently 
prohibitively expensive or complicated. One comment stated that burying 
CMPAF could be very expensive if a minimum of 4 hours rent for a 
backhoe is required, giving further support to the conclusion that when 
possible, these cattle would likely be left to decompose in the field. 
Several other comments questioned the availability of landfills for 
disposal of CMPAF. Another comment asked that we consult cost data in 
the 2004 publication on carcass disposal technologies by the National 
Agricultural Biosecurity Center Consortium. Table 7 in that publication 
shows disposal costs per ton for various carcass disposal methods. For 
both burial and landfilling, it presents cost estimates that are below 
the estimates ERG uses in its analysis of this final rule (Ref. 27).
    Although many other comments questioned what they perceived to be 
low total disposal costs published in the proposed rule, the 2005 
Informa survey reported an average disposal cost estimate of $11.51/cwt 
among those firms that indicated they would accept the CMPAF. 
Additionally, the Kansas State study reported 7 disposal options 
greater than $12/cwt and 4 options lower than $12/cwt. Accordingly, ERG 
has retained the overall average of $12/cwt disposal cost for CMPAF 
(from brain and spinal cord removal) from independent rendering 
operations for the final rule. Some comments questioned the economic 
feasibility of using dedicated trucks to transport CMPAF to disposal or 
for further processing. We have in fact included these costs in our 
totals because in its analyses of disposal costs, ERG included the 
transportation costs in the $12 per cwt estimate. Further, the Informa 
survey of renderers (reporting that renderers expect disposal costs 
would average $11.51 per cwt.) based its questions on CMPAF as defined 
by the proposed rule, which would require separate transportation 
trucks or compartments. Based on this $12/cwt rate, we estimate that 
CMPAF disposal costs of the final rule for slaughter facilities will be 
$3.4 million (Table 1, line 22).
    Disposal costs for CMPAF removed at independent renderers are 
estimated using the same $12/cwt estimate used in the proposal (we 
explained the $12/cwt figure and public comments in detail earlier in 
the document). The Informa report and many other comments remarked that 
much more than just the brain and spinal cord would need to be removed 
from those cattle not inspected and passed for human consumption that 
were not too decomposed to undergo separation. Furthermore, comments 
stated that a significant number of them would be too decomposed to 
separate the brain and spinal cord. For both the proposed and final 
rule, ERG judged that from 1.3 lbs to 53.0 lbs of CMPAF would be 
removed from cattle 30 months of age or older, but for the final rule 
it also included an allowance for the number of cattle 30 months of age 
or older not inspected and passed for human consumption that are picked 
up but that are too decomposed to undergo tissue separation. The 
Informa claim

[[Page 22745]]

that 54 percent of these animals being too decomposed to undergo tissue 
separation added significant weight to the volume of CMPAF that would 
be prohibited. Based on the aggregate weight of CMPAF removed, ERG 
estimated disposal costs at $11.3 million for the CMPAF that is removed 
by independent renderers and for the cattle not inspected and passed 
for human consumption that are picked up by renderers but are too 
decomposed to undergo tissue separation.
    For the disposal of the additional cattle not inspected and passed 
for human consumption that are no longer picked up for rendering, ERG 
adjusted the $12/cwt disposal cost for those carcasses that are likely 
to be buried on the farm. For on-farm burial, the most likely 
representative cost listed in the Kansas State University report was 
$6/cwt. ERG increased this to an estimated $8/cwt to account for those 
farms where burial is less economical or less viable due to the absence 
of available land. The cattle carcasses were then distributed among the 
following four types: Calves, feedlot, cattle 30 months of age or 
older, and cattle under 30 months. For its disposal cost calculations, 
ERG used only the incremental social cost, which is the difference 
between the disposal method and the existing charge for renderer pick-
up cost (per cwt) as developed in the Informa report. For cattle 30 
months of age or older not inspected and passed for human consumption, 
ERG calculated the incremental cost per cwt at $4.65 ($8.00/cwt minus 
the current $3.35/cwt); for cattle under 30 months ERG calculated the 
incremental cost at $5.49 ($8.00/cwt minus the current $2.51/cwt). For 
feedlot cattle, whose full disposal cost remains at $12/cwt because it 
is unlikely they would be buried at the producer site, ERG calculated 
the incremental cost at $10.24/cwt ($12.00/cwt minus the current $1.76/
cwt). For calves, ERG assumed current pick-up charges to increase by 
$4.00/cwt, noting that their current reported pick-up fee exceeds $12/
cwt. As a result, we estimate total disposal costs for the additional 
cattle not inspected and passed for human consumption to range from 
$22.0 million to $33.0 million annually.
    To account for the additional tonnage of non-cattle species that 
died at the animal producer establishment and would no longer be 
rendered as a result of this rule as suggested by some comments, ERG 
added an additional 10 percent of the cost of the midpoint in the range 
of total disposal costs for the combined calves, feedlot, cattle 30 
months of age or older, and cattle under 30 months ($2.7 million) 
(Table 1, line 21 adds $2.7 million to the disposal cost range of $22.0 
to $33.0 million). We acknowledge additional uncertainty in this 10-
percent estimate as we lack the data to present a more robust estimate. 
In sum, we find that the total disposal costs for slaughter 
establishments ($3.4 million), renderers ($11.3 million), cattle not 
inspected and passed for human consumption that would no longer be 
picked up by renderers ($22.0 million to $33.0 million), and other non-
cattle species ($2.7 million) will range from $39.4 million to $50.4 
million.
3. Lost Value of CMPAF and Hides
    For the proposed rule, ERG had calculated that the 64 million lbs. 
of CMPAF from both slaughter operations and from those cattle not 
inspected and passed for human consumption that would no longer be 
rendered would have yielded about 10,800 lbs. of MBM and 4,400 lbs. of 
tallow. Using historical byproduct prices, ERG had estimated the value 
of the MBM and tallow at $1.0 million and $0.8 million. Accepting the 
2004 Informa estimate of a larger number of cattle currently rendered, 
we had included in the proposed rule an upper estimate of lost revenues 
of MBM at $1.7 million and tallow at $1.2 million.
    The final rule differs from the proposed rule in that it exempts 
certain cattle-derived risk materials (brain and spinal cord from 
cattle under 30 months not inspected and passed for human consumption) 
from the definition of CMPAF. The final rule continues to prohibit the 
use of CMPAF in all animal feeds to prevent BSE.
    Both ERG's 2004 report (relied upon for our analysis of the 
proposed rule) and the Informa report included the foregone revenues 
from MBM and tallow that would have been produced from the CMPAF as 
costs of the rule. This approach, however, overstates the true social 
cost of the rule because it includes value added from the use of 
capital and labor at rendering facilities that would not be used if the 
CMPAF goes to disposal without further rendering. A better estimate of 
social cost would include only the lost value attributable to the now-
prohibited raw materials, or the difference in total cost between final 
products made with MBM or tallow from the CMPAF and the total cost of 
final products made with alternative raw materials. A more accurate 
estimate of the social cost of the rule would be the net income that 
would otherwise have been generated from the processing of CMPAF into 
MBM and tallow. For the final rule, ERG has estimated renderer average 
net income for both MBM and tallow at 5.65 percent of their foregone 
sales, based on 2002 Census of Manufacturers data. Marginal net income 
may be more appropriate because it takes into account the existence of 
fixed costs. The lack of detailed revenue and cost data for those 
independent renderers affected by the rule, however, prevents us from 
estimating the cost functions necessary for a measure of marginal net 
income. The significance of the difference between marginal and average 
net income is not likely to be large in this case, since the supplies 
of raw materials are highly elastic and the amount affected is a small 
fraction of all ingredients. Industry data show that 18 percent of 
cattle 30 months of age or older are slaughtered for human consumption, 
thus requiring CMPAF removal. Consequently, ERG estimated the CMPAF 
removed at slaughterhouses to be about 28 million lbs. Using industry 
data on byproduct yields as well as historical averages prices for MBM 
and tallow of $180/ton and $360/ton, ERG estimated the value of this 
foregone MBM at $0.6 million and tallow at $0.5 million. Using a 5.65 
percent net income rate, ERG estimated the social cost of the foregone 
MBM and tallow from slaughtered cattle at $64,000 per year (Table 1, 
lines 4 and 5).
    Additionally, ERG estimated the value of the MBM and tallow 
foregone from the carcasses of the cattle not inspected and passed for 
human consumption that would no longer be collected by renderers as a 
result of this rule (and would likely be disposed of on the farm or 
elsewhere). This reduction in rendering would include those cattle not 
rendered due to the reduced quantity demanded for rendering services of 
cattle not inspected and passed for human consumption caused by the 
substantial expected increase in pick-up charges. In addition, fewer 
cattle will be rendered due to a number of rendering plant closures. 
Using various price elasticities of demand, ERG's calculations forecast 
a 29.4 percent to 44.8 percent reduction in the number of cattle not 
inspected and passed for human consumption that are picked up for 
rendering. Using industry averages of animal weights for cattle of 
different ages, ERG calculated the total weight of animals that would 
no longer be picked up for rendering at 489 million lbs to 719 million 
lbs. Applying the yield rates of MBM and tallow for whole carcasses (25 
percent for MBM, 10 percent for tallow) results in MBM revenue losses 
ranging from $11.0 million to $16.2 million, and tallow

[[Page 22746]]

revenue losses from $8.8 million to $12.9 million. Additional MBM and 
tallow revenue losses are estimated at $3.1 million and $2.5 million, 
respectively, for animals that were picked up by the renderer but were 
too decomposed to undergo tissue separation. Based on a 5.65 percent 
annual net income rate for both MBM and tallow, the resulting net 
income losses would range from $1.4 million to $1.8 million (Table 1, 
lines 14 and 15). Adding these losses to the net income loss from CMPAF 
derived from slaughterhouses results in total net income losses of $1.5 
million to $1.8 million annually.
    ERG also calculated the social cost of the hides that would be lost 
due to an increase in the number of cattle not inspected and passed for 
human consumption that would no longer be rendered as a result of this 
rule. The same assumptions and calculations that form the basis for the 
29.4-percent to 44.8-percent increase in cattle not inspected and 
passed for human consumption that would no longer be rendered as a 
result of this rule apply to loss of cattle hide value as well. ERG has 
taken the reduction in each of the four individual cattle categories 
(the total reduction ranges from 29.4 percent to 44.8 percent over all 
calves, feedlot, cattle 30 months of age or older, and cattle under 30 
months), and applied the average market value of the hide for each to 
estimate the total hide value lost due to this rule at $9.16 million to 
$13.69 million. In this case, ERG concludes that the social cost would 
include almost the entire market value of the hide because the only 
value added to the process is a very small amount of labor required for 
hide removal. Because this value was not calculated and subtracted from 
the average market values, the previously mentioned total may slightly 
overestimate the social costs.
4. Direct Costs
    In the proposed rule we reported five categories of direct costs, 
including: (1) Capital and labor costs for slaughtering and rendering, 
(2) the tallow restriction, (3) MS beef restriction, (4) marking costs, 
and (5) labeling and recordkeeping costs. For the final rule, we 
address these same costs as well as the cost of (6) creating procedures 
for training on, and actual administration of, the age determination 
process for cattle.
    a. Capital and labor costs for slaughtering and rendering. This 
final rule will result in cattle slaughter operations that separate 
CMPAF and arrange for its disposal separate from other cattle offal. 
FSIS' regulations at 9 CFR 310.22 prohibit SRMs for use as human food 
but do not prohibit these materials from being rendered into MBM and 
tallow for use in feed for non-ruminant animals. Under this final rule, 
CMPAF from slaughterhouses (which are a small subset by volume of SRMs) 
could not be used in any animal feeds. Therefore, slaughterers would 
need to use separate offal lines for offal of non-prohibited material-
origin and offal of CMPAF-origin.
    For the proposed rule, we relied on the previous ERG report to 
project that slaughterers would incur annualized capital and labor 
costs that totaled $676,000 ($597,000 in annual labor costs plus 
$555,000 in capital costs annualized at 7 percent over 10 years). These 
costs included the additional offal bins that all slaughterers were 
expected to require, the modified procedures and processes for the 
larger slaughterers, and additional labor to segregate the CMPAF. 
Comments on the proposed rule did not offer specific costs for 
slaughterers but generally maintained that slaughterers would be 
affected.
    For the final rule, ERG revised its estimated number of USDA-
inspected plants upward to 1,545 from 689, but revised the estimated 
number of cattle having CMPAF removed at slaughterers down from 100 
percent to about 18 percent due to the change in approach whereby only 
cattle 30 months of age or older would have CMPAF removed at slaughter. 
ERG estimated the resulting one-time capital expenditures of the final 
rule at $2.10 million (or $299,000 annualized at 7 percent over 10 
years). With the addition of maintenance costs of about $315,000 and 
labor costs of $656,000, ERG estimated the total annualized slaughter 
costs for capital and labor at about $1.27 million (Table 1, lines 2 
and 3), representing a small increase from the proposed rule.
    In the proposed rule, we concluded that renderers would also incur 
additional capital and labor costs to handle CMPAF segregation from 
cattle not inspected and passed for human consumption. ERG projected 
equipment purchases and installation at a one-time cost of $3.1 million 
(or $442,000 at 7 percent over 10 years), as well as additional labor 
costs of $1.4 million annually. We used this cost as the low end of the 
range of costs, and used a figure 2.46 times greater as the upper end 
based on the 2004 Informa assertion that 42 percent of cattle not 
inspected and passed for human consumption were currently rendered, 
compared with ERG's previous finding of this number at 17 percent. The 
proposed rule's estimate for both renderer capital and labor costs was 
$1.9 million to $4.6 million annually. Numerous public comments 
addressed the capital and labor costs to renderers. In general, the 
comments stated that FDA greatly underestimated the cost to renderers 
of removing brain and spinal cord from cattle not inspected and passed 
for human consumption.
    For the final rule, ERG reassessed the conclusions in its analysis 
of the proposed rule using the information provided in the 2005 Informa 
Economics report and presents final rule estimates that are 
substantially larger. ERG now estimates that there are 70 deadstock 
renderers, including 25 very small renderers that were likely not 
included in the Informa survey's result of 45 deadstock renderers. The 
estimated number is, however, a decrease from the proposed rule's 
estimate of 141 independent renderers because it is now accepted that 
deadstock renderers are a small subset of independent renderers, and 
non-deadstock renderers would not incur these additional capital and 
labor costs.
    ERG contracted with an engineering firm to estimate the renovation 
of deadstock rendering facilities in order to remove CMPAF. The 
engineering firm created a detailed capital cost estimate for a 
deadstock renderer handling 150 animals per day at about $600,000. ERG 
used this estimate as well as results of its discussions with other 
deadstock renderers to produce capital cost estimates across the range 
of deadstock renderers by size. The capital costs on a per plant basis 
have increased substantially for this final rule, most notably to 
account for the planning and construction of a separate structure for 
the removal of CMPAF. Whereas ERG had estimated one-time costs for 
capital improvements for renderers at $3.1 million for the proposed 
rule (or $442,000 annualized at 7 percent over 10 years), it estimated 
if all renderers initiated such renovations, the one-time costs for 
capital improvements for the final rule would be $32.2 million (or $4.6 
million annualized at 7 percent over 10 years). The engineering 
estimates did not include a specific cost for construction permits, as 
one comment suggested would be needed, but the cost of construction 
permits would likely amount to a small part of the separate contingency 
costs that were included at $54,000 per rendering facility.
    ERG also increased its estimate of deadstock renderer labor costs 
on a per plant basis, due to further discussions with rendering 
facility managers. Whereas ERG estimated the additional

[[Page 22747]]

labor required for the proposed rule to range from 0.04 to 2.21 
employees, it estimated the range for the final rule at 0.17 to 8.00 
employees. Due to the estimated reduction in the number of rendering 
plants that would undertake such renovations and additional hiring, ERG 
concluded that total labor costs would only increase by $1.4 million to 
$1.7 million. ERG also found that an additional maintenance cost 
estimated at 15 percent of aggregate capital costs would add another 
$4.8 million annually. Several comments on the proposed rule mentioned 
efficiency losses for renderers due to slower line speeds. We agree 
with the comment that this may be a possibility and have included 
additional labor costs, which would tend to offset those efficiency 
losses.
    Public comments and industry discussions with ERG indicate that 
many facilities would not undertake the capital improvements and 
additional labor necessary to renovate facilities and change their 
operating procedures. In its analysis of the final rule, ERG adjusted 
the total costs to account for the number of deadstock renderers that 
would not undergo these renovations, assuming that the expected decline 
in the percentage of renderers would equal the percentage reduction in 
material sent to rendering. To do this, ERG relied on renderers' 
predictions (through direct discussions with renderers as well as in 
public comments) that they would require very large increases in pick-
up fees. Some predicted that the pick-up fees would more than double. 
As a result, ERG estimated that the increase in fees would range from 
100 percent to 150 percent for cattle 30 months of age or older, and 25 
percent to 50 percent for all other cattle. Using estimated price 
elasticities ranging from 0.25 for feedlot cattle to 0.6 for calves 
(Informa also suggests an inelastic demand for rendering services by 
many livestock producers), ERG calculated the total reduction in raw 
material going to rendering at 29.4 percent to 44.8 percent, including 
an additional 10 percent reduction for facilities that abandon 
deadstock rendering. The 29.4 percent reduction in raw material going 
to rendering represent a decrease of 549,000 from the current total 
number of 1,870,000 cattle rendered (549,000/1,870,000 = 29.4 percent). 
This decrease is the combined decrease in numbers of calves, feedlot 
cattle, cattle 30 months or older, and cattle under 30 months. The 
number of calves going to rendering will decrease by 216,000, or 25 
percent from the current number, 865,000 calves (865,000 times 25 
percent = 216,000). The 25 percent decrease includes a 15 percent 
decrease due to increased pick-up fees (0.6 elasticity times 25 percent 
increased pick-up fees) plus a 10 percent further reduction in non-
cattle rendering due to plant closures. The number of feedlot cattle 
going to rendering will decrease by 27,000, or 6.3 percent from the 
current number, 424,000 feedlot cattle (424,000 times 6.3 percent = 
27,000). The 6.3 percent is the result of a 0.25 elasticity times a 25 
percent increase in pick-up fees. The number of cattle 30 months of age 
or older going to rendering will decrease by 281,000, or 60 percent 
from the current number, 469,000 cattle 30 months of age or older 
(469,000 times 60 percent = 281,000). The 60 percent decrease includes 
a 50 percent decrease due to increased pick-up fees (0.5 elasticity 
times 100 percent increased pick-up fees) plus a 10 percent further 
reduction in non-cattle rendering due to plant closures. The number of 
cattle under 30 months of age going to rendering will decrease by 
25,000, or 22.5 percent from the current number, 111,000 cattle under 
30 months of age (111,000 times 22.5 percent = 25,000). The 22.5 
percent decrease includes a 12.5 percent decrease due to increased 
pick-up fees (0.5 elasticity times 25 percent increased pick-up fees) 
plus a 10 percent further reduction in non-cattle rendering due to 
plant closures.
    The total reduction in cattle equals 29.4 percent of the currently 
rendered number of cattle (549,000/1,870,000 = 29.4 percent). The upper 
end of the range (44.8 percent) was calculated by the same method using 
the upper end range of factors. Using the midpoint of this 29.4-percent 
to 44.8-percent range, ERG predicted that about 37.1 percent of the 
renderers will not undergo these necessary capital renovations, thereby 
reducing the $32.2 million one-time cost to $20.25 million and the 
$11.2 million in annualized capital, maintenance, and labor costs to 
$7.0 million (Table 1, lines 9 and 10). Additionally, the number of 
cattle 30 months of age or older going to rendering would be reduced by 
60 percent to 85 percent, thereby reducing the disposal costs to $11.3 
million. Without the adjustment for these two factors, the annualized 
capital, operating, maintenance, and disposal costs for deadstock 
operators would be estimated at $52.4 million, not $18.4 million.
    b. Tallow restriction. The final rule would prohibit entirely the 
use of tallow derived from BSE-positive cattle and prohibit the use of 
certain other CMPAF-derived tallow unless it contains less than 0.15 
percent insoluble impurities, as did the proposed rule. For the 
proposed rule, we concluded that it would not be economical for 
renderers or tallow manufacturers to further process the separated 
brains and spinal cords and other tissues from those cattle undergoing 
tissue separation into tallow while complying with the additional 
equipment separation and tallow testing and purification requirements. 
We therefore did not include any additional cost for this provision. We 
received one comment that stated that the capital investment for 
dedicated equipment to be used to produce tallow (that would then need 
to meet the purity requirements) would be substantial. We agree with 
this comment. The final rule contains an estimate of a much larger 
volume of CMPAF than the original estimate for the proposed rule. 
However, the amount of CMPAF that is handled directly by renderers is 
still a relatively small amount (because most is either on-farm 
disposal or other disposal of cattle not inspected and passed for human 
consumption), which would still not be economical to further process, 
due to the same equipment separation and tallow testing/purification 
requirements in this final rule. We have, therefore, not included 
additional costs for this provision. This analysis previously accounted 
for the net income lost on the value of this tallow and MBM.
    c. MS beef restriction. In the proposed rule, we predicted that 
there would not be any costs for the provision that would prohibit the 
use of MS beef in animal feeds if the brain and spinal cord of cattle 
30 months of age or older or the brain and spinal cord of all cattle 
not inspected and passed for human consumption has not been previously 
removed from the cattle material used to make MS beef. ERG's previous 
analysis concluded that the brain and spinal cord are already removed 
from the carcasses of dead cattle at the ``4D'' plants (independent 
renderers that collect dead and downer cattle and process the carcasses 
for red meat to be used for pet food manufacturers, zoos, and other 
animal feeding operations) that process them.
    The ERG report maintains that all or almost all 4D plants already 
remove the brain and spinal cord. To the extent that a small percentage 
of 4D plants might not remove these materials, we agree that there 
could be some additional compliance costs to this final rule but 
believe them to be small due to the small number of establishments. As 
such, we have slightly revised our previous conclusion that there would 
not be additional compliance costs as a

[[Page 22748]]

result of the MS beef provision of the final rule.
    d. Marking costs. The final rule, like the proposed rule, would 
require that renderers that handle CMPAF or products containing CMPAF 
mark this material or product so that it can be identified by visual 
inspection. For the proposed rule, ERG used various assumptions to 
characterize the cost of adding marker dyes to this material. It 
concluded with an estimate ranging from $1,700 to $13,000 annually for 
total industry compliance. Public comments on the proposed rule did not 
address the marking cost estimate.
    For the final rule, ERG used the same assumptions to calculate its 
estimate of marking costs, resulting in the same marking ranging from 
$0.11 to $0.78 per ton of CMPAF. In this case, though, ERG included as 
an upper bound estimate of marking costs the tonnage of MBM and tallow 
from cattle not inspected and passed for human consumption that would 
not be rendered for non-ruminant feed as a result of this rule. In 
effect, ERG has allowed for the possibility that the additional cattle 
that would not be rendered for feed as a result of this rule would be 
rendered for disposal instead. Taking this possibility into account 
provides for a worst-case scenario for marking costs. We now estimate 
the final rule marking costs to range from $18,000 to $64,000 annually, 
a relatively large increase from those of the proposal but a very small 
part of total compliance costs.
    e. Labeling, recordkeeping, certification, and access costs. The 
proposed rule would require that renderers that handle CMPAF or 
products that contain CMPAF ensure that the CMPAF are not used in 
animal feed. The proposed requirements included labeling for products 
with CMPAF that states ``Do not feed to animals,'' the establishment 
and maintenance of records sufficient to track CMPAF to ensure the 
materials are not introduced into animal feed, and making such records 
available to FDA. ERG judged that the proposed labeling requirements 
would impose only modest compliance costs since the labeling 
requirements (applying primarily to bulk shipments) could be 
incorporated into current labeling practices. ERG estimated total 
industry costs at about $62,000 annually (one-time costs of $101,000 
annualized at 7 percent over 10 years plus annual costs of $48,000). We 
did not receive any substantive public comments concerning the labeling 
and recordkeeping costs.
    For the final rule, ERG increased the hours needed for label 
design, production, and review, but did not revise hourly estimates for 
recordkeeping modification and review. In total, we estimate this 
labeling and recordkeeping provision to cost industry about $90,000 
annually (a $165,000 one-time cost annualized at 7 percent over 10 
years plus $67,000 in annual costs). Additionally, the final rule has 
been revised to clarify that a renderer's records must either include 
(1) certification or other documentation from the supplier that 
material supplied to the renderer does not include CMPAF, provided that 
it includes a description of the segregation procedures used, 
documentation that the supplier confirms that its segregation 
procedures are in place prior to supplying any cattle material to the 
renderer, and records of the renderer's periodic review of the 
suppliers' certification or other documentation; or (2) documentation 
of another method, acceptable to FDA, such as third party 
certification, for verifying that suppliers have effectively excluded 
CMPAF.
    Based on the levels of effort estimated for the 2007 dietary 
supplement cGMP final rule (72 FR 34752) requiring certification of 
procedures, FDA projects that the initial certification or other 
documentation of the suppliers' procedures will require a 20-hour 
effort by a management level employee of an independent renderer. The 
Bureau of Labor Statistics (BLS) provides data on employee costs for 
management occupations classified within the North American Industrial 
Classification System (NAICS) code 311600--the animal slaughtering and 
processing industry (BLS data on individual occupations within NAICS 
code 311613--rendering and meat product processing, is not available). 
We have adjusted the BLS wage data, including a 40 percent increase for 
benefits and adjusting for inflation in employment costs. FDA estimates 
the initial certification or other documentation of suppliers to an 
independent renderer to cost about $1,030 (annualized at $250 per year 
over 10 years at a 7 percent discount rate). FDA estimates that the 
periodic review of the certification or other documentation to take 8 
hours annually, resulting in a $412 annual cost. FDA expects daily 
recordkeeping to amount to 5 minutes per day for an administrative 
support employee. Using the BLS data, this recordkeeping cost is 
estimated at about $460 annually. Total annualized certification or 
other documentation costs per independent renderer establishment are 
estimated at about $1,125.
    FDA projects that the initial certification or other documentation 
of the internal system of a packer/renderer will require 6 hours for a 
management level employee. An additional 3 hours is expected to be 
expended each year for periodic review of the internal certification or 
other documentation. Packer/renderers will also be expected to incur 
recordkeeping costs estimated at about 5 minutes per day. Using the 
same BLS wage data as above, FDA projects annualized certification or 
other documentation costs per packer/renderer establishment to be about 
$690. The total annualized costs of the new recordkeeping costs 
associated with the certification or other documentation of suppliers 
(slaughterers) for the estimated 125 independent renderers and 50 
packer/renderers handling CMPAF is estimated at about $175,000.
    f. Animal age determination. The final rule does not include in the 
definition of CMPAF cattle not inspected and passed for human 
consumption under 30 months of age. FDA originally included these 
cattle in the definition of CMPAF because of European surveillance data 
suggesting that cattle not inspected and passed for human consumption 
pose a higher risk for BSE, and due to concerns that processes were 
currently not established in the rendering industry for verifying the 
age of such cattle through inspection. However, FDA received comments 
on the feasibility of aging such cattle and on the relatively low risk 
reduction achieved by excluding such cattle. FDA considered these 
comments, surveillance data indicating the current risk of BSE to U.S. 
cattle is very low, the strong feed protection provided by the existing 
ruminant feed rule, and the added secondary level of protection 
provided by the other provisions of this final rule. Based on these 
factors, FDA concluded that it was not necessary to include in the 
definition of CMPAF cattle not inspected and passed for human 
consumption that are under 30 months of age.
    The ERG report concludes that, in the absence of a national cattle 
identification system, deadstock renderers will need to make the 
judgments regarding age on an animal-by-animal basis. Compliance costs 
for such a system would include administrative costs for the creation 
of procedures for employees to judge the age of animals, and training 
costs for educating employees on these procedures, as well as annual 
labor costs for the employees that administer the age determination 
process.
    ERG assumed that the cost of procedure development, normally a

[[Page 22749]]

one-time cost, would likely be revised annually as the industry moves 
toward a national cattle identification system. Additionally, ERG 
estimates that annual training times for non-clerical workers will be 4 
hours for deadstock renderers and 2 hours for non-deadstock independent 
renderers. In addition, 1 hour per year of supervisor time for employee 
training will be required for deadstock renderers and 0.5 hour for non-
deadstock independent renderers. The total estimated costs to renderers 
of annual procedure development and updating and annual employee 
training will amount to about $491,000. For large slaughterers that 
also perform their own rendering, ERG estimated the costs of procedure 
development and employee training for slaughter animal age 
identification at $1.10 million annually. To the extent some 
slaughterers already have aging procedures in place to comply with 
FSIS' SRM rule, this may be an overestimate.
    For the age determinations, ERG judged that the rendering truck 
drivers would make the actual age determinations at the animal producer 
site by reviewing the paperwork or using the dentition method. ERG 
judged that this procedure would not add to the total time an employee 
spends at each pick-up site. It therefore did not include additional 
compliance costs for the rendering truck driver. Review of these 
determinations and paperwork would be made at the rendering facility by 
supervisory personnel. ERG estimated total annual labor costs for the 
in-plant reviews of the age determination at about $790,000. Total 
annual costs for renderer age determination efforts are estimated at 
$1.28 million ($491,000 plus $790,000).
5. Feed Substitution Costs
    For the proposed rule, we included in the compliance costs the 
incremental cost for the feed ingredients that would be needed to 
replace the MBM in non-ruminant animal feeds. Animal feed producers 
would be expected to substitute more costly protein sources for the MBM 
that was previously manufactured from CMPAF. In the analysis of the 
1997 final rule prohibiting the use of mammalian proteins (with 
exceptions) from use in ruminant feeds, we calculated the cost to 
substitute MBM in a typical cattle ration. Assuming a $20 per ton price 
difference between MBM and a substitute feed ingredient, in this case 
soybean meal, we estimated that the reformulated cattle ration would 
cost an additional $31.76 per ton (including other ingredients). 
However, the prices of MBM and equivalent substitutes vary constantly 
based on weather, global markets, slaughter rates, and other factors. 
We have no other information on the types of rations or feed 
formulations that will be affected by this final rule. Consequently, we 
accept the cattle ration example as a conservative estimate of the 
long-term cost of feed substitution.
    Accordingly, for the October 2005 proposed rule, we inflated the 
unit cost from $31.76 per ton to $38.33 per ton to account for 
inflation through 2005 and determined the tonnage of MBM that would no 
longer be processed from the CMPAF. Multiplying this total, 15.6 
million lbs, by $38.33 per ton resulted in about $300,000 in feed 
substitution costs for the proposed rule. Accounting for the high end 
of the range of animals currently rendered (as noted in the 2004 
Informa report) led to an upper end cost of about $450,000.
    We received one comment that the removal of ruminant proteins from 
non-ruminant feed may increase the price of other protein sources, but 
it did not address the method used to account for feed substitution 
costs. We received many comments concerning the total amount of cattle 
byproducts that would no longer be made available for further 
processing for use in non-ruminant feeds. As noted previously in the 
section on disposal costs, ERG concluded that a much larger amount of 
cattle byproducts would no longer be available for this use. In total, 
the ERG calculations imply that the amount of MBM foregone from 
slaughterer and renderer CMPAF, as well as MBM that could have been 
produced from cattle not inspected and passed for human consumption 
that will no longer be rendered due to this rule, will range from 
76,100 tons to 91,500 tons; a significant increase from the 7,800 tons 
estimated for the proposed rule. Based on the incremental feed 
substitution cost of $38.33 per ton of MBM, we estimate that long-term 
total feed substitution costs for the final rule will range from $2.92 
million to $3.51 million annually.

F. Government Costs

    For the proposed rule, we concluded that there may be an increase 
in Federal fund expenditures for inspection activities, but did not 
expect it to be significant. The total number of establishments 
inspected was not expected to change substantially, as all 
establishments that would be inspected for compliance under Sec.  
589.2001 are already subject to Sec.  589.2000 or other Federal rules. 
The additional materials that would be included as CMPAF may result in 
an increase in the number of inspections or the length of time 
necessary to inspect an establishment. We did not estimate the 
additional costs that would be required because we judged that the 
additional resources would not be substantial. ERG judged that no new 
rendering facilities would be constructed or dedicated to rendering for 
disposal due to the proposed rule, and thus our inspection activities 
would not noticeably increase.
Country Designation
    The final rule contains a provision that was not included in the 
proposed rule. This provision exempts CMPAF from designated countries 
from the prohibition on its use in animal feed. A foreign country 
seeking this designation will submit a written request to FDA that 
includes (1) information about the country's BSE case history, (2) risk 
factors, (3) measures to prevent the introduction and transmission of 
BSE, and (4) any other information relevant to determine how cattle 
materials from the country will be defined under 21 CFR 589.2001(b)(1). 
FDA will respond to a country's request in writing and may specify 
certain conditions when granting a request. Country designations will 
be subject to future review by FDA and can be revoked if a review shows 
that BSE-related restrictions are necessary.
    a. Number of countries affected. Although we do not know how many 
countries will submit a request to FDA for a designation under Sec.  
589.2001(f), we can use information from OIE and USDA to estimate the 
number of requests that might be submitted to the Center for Veterinary 
Medicine. According to the requirements of the OIE Terrestrial Animal 
Health Code (16th edition 2007), OIE officially recognizes five 
countries as having a ``negligible BSE risk,'' including Australia, 
Argentina, New Zealand, Singapore, and Uruguay. In addition, OIE 
recognizes Iceland and Paraguay as ``provisionally free'' from BSE. 
According to OIE recommendations, SRM removal is not a condition for 
importing fresh meat or meat products from a negligible risk country. 
Allowing animal feeds or animal feed ingredients containing CMPAF to be 
imported from designated countries is consistent with the lack of any 
restrictions on SRMs from negligible risk countries in the OIE 
guidelines.
    In addition to the countries recognized by OIE, a country exporting 
a large quantity of cattle products into the United States may submit a 
request for country designation to FDA. Table 1 presents data from 
USDA's Foreign Agricultural Service showing countries

[[Page 22750]]

that exported cattle products to the United States in 2006. Comparing 
the seven countries officially recognized by OIE as having a negligible 
BSE risk or being provisionally free of BSE and the countries listed in 
Table 5, approximately nine countries might submit a request. Because 
we are uncertain about the actual number of requests, for this analysis 
we estimate that 10 countries could submit a request to FDA to be 
exempted from CMPAF restrictions applicable to animal feed. Our 
estimate is not intended to suggest that all of these countries would 
qualify for a designation under Sec.  589.2001(f).

      Table 5.--Bovine Product Imports to the United States (2006)
------------------------------------------------------------------------
                                                           Percentage of
                                                             imported
                    Exporting country                         bovine
                                                             products
------------------------------------------------------------------------
Canada..................................................              31
Australia...............................................              28
New Zealand.............................................              17
Uruguay.................................................               9
Brazil..................................................               7
Argentina...............................................               2
Nicaragua...............................................               2
Mexico..................................................               1
Costa Rica..............................................               1
Other Countries.........................................              2
------------------------------------------------------------------------
Source: USDA, Foreign Agricultural Service, HS 6-Digit Imports. Report
  for bovine product codes generated January 28, 2008 at http://www.fas.usda.gov/ustrdscripts/USReport.exe.

    b. Cost of designation provision. We make certain assumptions 
concerning the effort to prepare and submit a request for country 
designation in preparation of these costs estimates. Because a country 
that submits a request to be designated as exempt from certain BSE-
related restrictions for animal feed may also petition USDA for 
exclusion from USDA's BSE-related requirements, we assume that a 
country wishing to submit a request to FDA to be designated as exempt 
from CMPAF restrictions has already completed a risk assessment and put 
risk management strategies into place. Whether these risk assessment 
and mitigation strategies are sufficient for a country to be so 
designated by FDA will be determined on a case-by-case basis. Moreover, 
we assume a request would include other technical information on the 
country's BSE status, a detailed outline of risk mitigation strategies, 
and information on the country's cattle-derived products that are 
exported to the United States. We assume that a foreign government 
employee earning the wage equivalent of a GS-14 step 1 would spend 
about 80 hours to collect and prepare this information for each country 
submitting a request for country designation at an estimated cost of 
$5,395.20 (80 hours x $67.44 per hour including overhead). The request 
will also be reviewed by government managers before being submitted to 
the FDA. Assuming it takes a foreign government executive 40 hours to 
review the request, at a wage equivalent to a GS-15 step 3, it would 
cost approximately $3,384.80 (40 hours x $84.62 per hour including 
overhead) to review the request. Thus, the total cost to each country 
to prepare and submit a request to FDA to be considered for this 
designation would be about $8,780. Once the request is received by FDA, 
we estimate that it will take approximately 80 hours to review each 
request, at a cost of approximately $3,700 (80 hours x $45.65 per hour 
for an employee rated as a GS-13 step 7). Thus, as shown in Table 6, 
the total cost of an initial request is approximately $12,480. The 
estimated annual total for 10 requests would be $124,800, with FDA 
incurring about 29 percent of these costs and foreign governments 
incurring the remaining 71 percent.

         Table 6.--Total Cost of the Initial Request and Review
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Collect information, Prepare and Submit the Request to            $8,780
 FDA....................................................
FDA Review per Request..................................           3,700
Cost per Country........................................          12,480
                                                         ---------------
    Total Cost for 10 Countries.........................         124,800
------------------------------------------------------------------------

    Countries that successfully request to be designated as exempt from 
CMPAF restrictions applicable to animal feed will be subject to annual 
review by FDA to ensure that their designation remains appropriate. As 
part of this process, FDA may ask designated countries to confirm that 
both their BSE status and the information submitted by them in support 
of their original application remain unchanged. FDA may revoke a 
country's designation if FDA determines that it is no longer 
appropriate.
    FDA has not yet determined the method by which the agency will 
conduct these annual reviews. One possible method would be for FDA to 
send a letter to designated countries asking whether there has been a 
change in their status or circumstances relative to their BSE history, 
surveillance, import activities, or other relevant criteria, and then 
compare any changed information with the information in the original 
submission. The OIE requires that countries whose BSE status has been 
officially recognized ``should annually confirm during the month of 
November whether their status and the criteria by which their status 
was recognized have remained unchanged.'' In some cases, the FDA 
reviewer might rely on this information, if available, in conducting a 
future review of the country's designation.
    For this analysis, we assume it will take FDA and the designated 
country about one-third the time and effort as the original request for 
country designation. Thus, if the total cost to submit the request and 
have it reviewed by FDA was $12,480, the annual review of the country 
designation by FDA and the submitting country will cost about $4,200 
(see Table 7).

         Table 7.--Cost of Annual Review of Country Designation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Submission of Additional Information by the Designated            $3,000
 Country................................................
FDA Review of Information...............................           1,200
Cost per Designated Country.............................           4,200
                                                         ---------------
    Total Cost for Review (10 Countries)................          42,000
------------------------------------------------------------------------

    It is likely that those countries that currently export to the 
United States a significant amount of cattle-derived material that 
contains CMPAF will be most interested in submitting a request for 
country designation. It is also possible that new markets for cattle-
derived products containing CMPAF could develop, providing an incentive 
for other countries to submit a request to FDA to be designated as 
exempt from CMPAF restrictions in animal feed. For this analysis, we do 
not attempt to forecast either new markets for cattle-derived products 
containing CMPAF or the frequency and costs of future requests for 
country designations.

G. Sensitivity Analysis

    For the proposed rule, we presented alternative ranges of costs 
that could be expected due to the uncertainty in certain cost factors. 
Specifically, we showed that total compliance costs would increase 
substantially (from a range of $14 million to $24 million to a range of 
$20 million to $36 million) if the number of cattle not inspected and 
passed for human consumption that would no longer be rendered as a 
result of this rule (or 3.4 percent of all cattle not inspected and 
passed for human consumption) increased to about 11.6 percent of all 
cattle not inspected and passed for human consumption. This increase 
would be due to the much greater weight of the entire cattle carcass 
that would be disposed of compared with the weight of CMPAF from an

[[Page 22751]]

average cow slaughtered for human consumption or cow not inspected and 
passed for human consumption that had its CMPAF separated at the 
deadstock rendering facility.
    Public comments on the method used by both ERG and FDA have 
previously been presented. The common perception in comments, 
summarized here again, is that the analysis of the proposed rule 
considerably underestimated the number of cattle not inspected and 
passed for human consumption that would no longer be rendered. We have 
also previously shown that additional data, public comments, and 
discussion with industry and association members have led to an updated 
analysis that presents a significantly greater number of those animals 
that would no longer be rendered due to this final rule. The 
sensitivity analysis included in the ERG report on the final rule 
attempts to identify the most influential factors of the analysis, and 
the range of costs associated with varying the key assumptions. ERG 
finds the disposal cost rate for CMPAF to be particularly influential 
because it represents a large fraction of total costs. Specifically, 
its analysis shows that a 33-percent increase or decrease in the 
disposal cost per cwt of CMPAF results in a respective $18.1 million 
increase or decrease in the lower bound of total costs and a $23.7 
million increase or decrease in the upper bound of total costs. The 
price of MBM and tallow does not have much effect on total costs. 
Similarly, the level of renderer capital costs do not appear to be 
significant because the amortization over 10 years results in a small 
annual cost compared to disposal costs. The elasticity estimates appear 
to have a more significant effect on total costs. A reduction in price 
elasticity of 50 percent from the low estimate for each ruminant 
category would reduce the lower bound of total compliance costs by 
about 22 percent, while an increase in elasticity by 50 percent from 
the high estimate for each ruminant category would result in a 15 
percent increase in the upper bound of total compliance costs.

H. Final Regulatory Flexibility Analysis

    The Regulatory Flexibility Act requires an agency to prepare a 
regulatory flexibility analysis if a rule is expected to have a 
significant impact on a substantial number of small entities. The 
discussion in this section of the final rule, as well as data and 
analysis contained in this rule's regulatory impact analysis, and 
section three of the ERG report, constitutes our final regulatory 
impact analysis in compliance with section 604 of the Regulatory 
Flexibility Act.
    The Regulatory Flexibility Act requires that we present a succinct 
statement of a rule's objectives. As stated previously in this analysis 
and unchanged from the proposed rule, the intent of this rule is to 
strengthen the safeguards designed to prevent the spread of BSE in U.S. 
cattle, as well as to reduce further any risk posed to humans from the 
agent that causes BSE.
    Other requirements of the Regulatory Flexibility Act are a 
description of the small entities that would be impacted by the final 
rule, an estimate of the number of small entities to which the rule 
would apply, a description of the projected reporting, recordkeeping 
(see Section VI. Paperwork Reduction Act of 1995) and other compliance 
costs of the rule and the reason why any other significant alternatives 
considered by the agency were rejected.
    The ERG analysis concentrates on the effects of the rule on small 
renderers and small slaughterers, and to a lesser extent on small dairy 
farms. Slaughterers are classified in the North American Industrial 
Classification System (NAICS) under code 311611--Animal (Except 
Poultry) Slaughtering, and renderers are classified under NAICS code 
311613--Rendering and Meat Byproduct Processing (see Table 8). The 
Small Business Administration (SBA) classifies both slaughterers and 
renderers with less than 500 employees as small businesses.

          Table 8.--Total and Number of Affected Establishments, by Size in Slaughtering and Rendering
----------------------------------------------------------------------------------------------------------------
                                         NAICS 311611  (slaughterers and          NAICS 311613  (rendering)
                                                   renderers)              -------------------------------------
                                     --------------------------------------
                                                          Estimated number                       Establishments
        Employment size group                                of cattle       Total number of      affected by
                                       Total number of      slaughtering    establishments in      principal
                                        establishments     establishments      2002 census         deadstock
                                                                \a\                             restrictions \b\
----------------------------------------------------------------------------------------------------------------
1 to 4..............................              1,132              1,132                 30                  0
5 to 9..............................                229                229                 25                  0
10 to 19............................                131                124                 41                 25
20 to 49............................                134                  7                 72                 22
50 to 99............................                 64                 14                 46                 19
100 to 249..........................                 66                  6                 13                  3
250 to 499..........................                 40                 13                  4                  1
500 to 999..........................                 20                  7                  0                  0
More than 1,000.....................                 53                 13                  0                  0
                                     ---------------------------------------------------------------------------
    Total...........................              1,869              1,545                231                 70
----------------------------------------------------------------------------------------------------------------
\a\ Cattle slaughterer distribution derived from federal and state slaughterer establishment count in USDA/NASS
  (2006). Establishments arrayed across size classes assuming that slaughter rates coincide with employment
  sizes. State slaughterers were assumed to be small and were added to the small size categories to match but
  not exceed the Census count of establishments. The distribution should be considered approximate.
\b\ The employment size class of deadstock renderers was estimated by ERG and should be considered to be
  approximate.
Source: ERG Report, Table 3-1, Page 3-2.

    The number of cattle slaughtering and rendering establishments 
expected to be impacted by the CMPAF ban is 1,545 and 231, 
respectively. The majority of the impacts on renderers are expected to 
be incurred by the 70 deadstock renderers. Using both Census and USDA 
data, ERG distributed the slaughtering establishments across the size 
classes of establishments using the same proportions as those presented 
in the total number of establishments. This distribution shows that 
almost 99 percent of slaughtering establishments would qualify as small 
businesses.

[[Page 22752]]

    According to SBA data, over 97 percent of all slaughtering firms 
would be considered small businesses, which would take into account 
multi-establishment firms. The SBA data also reports that 83 percent of 
all rendering firms would be considered small businesses. ERG concluded 
that it is likely that all 70 deadstock renderers have less than 500 
employees and thus are considered small businesses. In summary, the 
number of affected small businesses in both sectors would be 
substantial.
    As in its analysis of the proposed rule, ERG used its Small 
Business Impact Model (SBIM) to predict net income and closure impacts 
on both slaughtering and rendering firms (Appendix A of the ERG report 
contains a technical explanation of the SBIM). The model, which assumes 
a partial cost pass-through of costs for slaughterers (animal producers 
would incur the disposal costs), predicts modest impacts on cattle 
slaughtering due to the small minority of cattle slaughtered for human 
consumption that are 30 months of age or older. The model predicts 
costs for the small slaughterers to range from under $100 for the 
smallest establishments slaughtering less than 1,000 animals per year 
to about $7,100 per establishment for those slaughtering 300,000 to 
500,000 cattle annually. Compliance costs as a percent of net income 
would range from less than 0.1 percent to 2.1 percent for the small 
slaughter businesses. For all slaughterers, regardless of size, costs 
are expected to be significantly below 1 percent of revenues.
    Costs for the deadstock renderers were estimated through the SBIM 
with two separate scenarios: One in which disposal costs are included 
and one in which they are not included. Disposal costs are not included 
under one scenario to reflect the likelihood that increased pick-up 
charges to animal producers will mostly offset the additional disposal 
costs. In this case, compliance costs for the smallest establishment 
ranged from an estimate of $97,000 to $122,000 ($153,000 to $180,000 
including disposal costs). Compliance costs for the larger 
establishments ranged from $2.01 million to $2.57 million ($3.23 
million to $3.79 million including disposal costs). Compliance costs as 
a percent of net income ranged from 41 percent to 81 percent across all 
deadstock renderer sizes (from 65 percent to 100 percent including 
disposal costs). The total number of rendering establishments expected 
to close (assuming only disposal costs are transferred to animal 
producers), using a net income assumption of 5.65 percent, ranged from 
12 to 16 facilities. If these disposal costs are not transferred, the 
model forecasts 23 to 28 closures. Although all renderers contacted by 
ERG that were contemplating investing in capital to remove brain and 
spinal cord expected to charge substantially more in pick-up fees to 
recover these costs, some rendering plant closures are likely to result 
from this rule (Ref. 16, Section 3.3).
    Small farms will incur compliance costs for the disposal of those 
animals that are no longer rendered due to either the increase in 
renderer pick-up fees or the termination of deadstock rendering 
services. ERG prepared a baseline enterprise dairy budget to 
demonstrate the relative size of the impacts of the final rule on a 
small (120-cow) dairy farm with about $300,000 in revenues. The SBA 
defines small dairy and beef cattle producers as those with revenues 
under $750,000, and USDA data shows the average dairy farm has about 
110 dairy cows (Ref. 28). The expected incremental compliance costs 
(from the ERG model) for disposal of the annual number of dead dairy 
cows and calves (assumed to be disposed of off-site at $12/cwt and $4/
cwt, respectively) on an operation of this size is about $700, using 
the individual disposal rates for over 30-month cattle and calves. 
Compliance costs of an operation of this size are estimated at 0.25 
percent of revenues and 2.63 percent of net income.
    The effect of the annual feed substitution costs on small non-
ruminant animal operations is also expected to be minimal. The $2.9 to 
$3.5 million in additional costs would not be significant when spread 
over the thousands of non-ruminant animal producers that currently use 
ruminant protein in animal feeds.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory alternatives that would minimize any significant impact of a 
rule on small entities. For an analysis of the regulatory alternatives 
to this final rule, see section IV.B of this document.

V. The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA)

    SBREFA (Pub. L. 104-121) defines a major rule for the purpose of 
congressional review as having caused or being likely to cause one or 
more of the following: An annual effect on the economy of $100 million 
or more; a major increase in costs or prices; significant adverse 
effects on competition, employment, productivity, or innovation; or 
significant adverse effects on the ability of U.S.-based enterprises to 
compete with foreign-based enterprises in domestic or export markets. 
In accordance with SBREFA, OMB has determined that this final rule is a 
major rule for the purpose of congressional review.

VI. Paperwork Reduction Act of 1995

    This final rule contains information collection provisions that 
were submitted to OMB for review under the Paperwork Reduction Act of 
1995 (the PRA) (44 U.S.C. 3501-3520).
    The title, description, and the respondent description of the 
information collection provisions are shown below with an estimate of 
the annual recordkeeping burden. Included in the estimate is the time 
for reviewing instructions, searching existing data sources, gathering 
and maintaining the data needed, and completing and reviewing each 
collection of information.
    Title: Substances Prohibited From Use in Animal Food or Feed
    Description: This final rule (Sec.  589.2001) prohibits the use of 
certain cattle origin materials in the food or feed of all animals. 
These materials include the following: (1) The entire carcass of BSE-
positive cattle; (2) the brains and spinal cords from cattle 30 months 
of age and older; (3) the entire carcass of cattle not inspected and 
passed for human consumption that are 30 months of age or older from 
which the brains and spinal cords were not effectively removed or 
otherwise effectively excluded from animal feed; (4) mechanically 
separated beef that is derived from cattle materials prohibited by the 
rule; and (5) tallow that is derived from BSE-positive cattle and 
tallow that is derived from certain other materials prohibited by the 
rule unless such tallow contains no more than 0.15 percent insoluble 
impurities. These measures will further strengthen existing safeguards 
designed to help prevent the spread of BSE in U.S. cattle. FDA has 
revised the final rule to include a statement of this purpose (Sec.  
589.2001(1)).
    As discussed in section I of this document, FDA has revised the 
final rule to include a statement of purpose for the rule, 
specifically, to prohibit the use of certain cattle origin materials in 
the food or feed of all animals to help prevent the spread of BSE in 
U.S. cattle. The final rule was also revised to require renderers to 
establish and maintain written procedures on aging animals to ensure 
that such animals are less than 30 months old if they are to be 
rendered for use in animal feed without brain and spinal cord removal.

[[Page 22753]]

Further, in response to concerns about ensuring effective removal of 
brain and spinal cord from animals 30 months of age or older, FDA has 
revised the final rule to require the establishment and maintenance of 
written procedures for ensuring that brain and spinal cord are 
effectively removed or effectively excluded from animal feed. As 
discussed in section I of this document, FDA has determined that it is 
the responsibility of the renderer to ensure that materials rendered 
for use in animal feed do not contain CMPAF. Therefore, the agency has 
explained in the final rule that a renderer's records must either 
include certification or other documentation from the supplier that 
material supplied to the renderer does not include CMPAF, or 
documentation of another method, acceptable to FDA, such as third-party 
certification, for verifying that suppliers have effectively excluded 
CMPAF. Also, FDA is adding a provision to this rule so that it may 
designate a country as not subject to the CMPAF requirements of this 
rule (Sec.  589.2001(b)(1)(vi)). A country seeking such a designation 
must submit a written request and include information about the 
country's BSE case history, risk factors, measures to prevent the 
introduction and transmission of BSE, and any other information 
relevant to determining whether the country should be subject to the 
requirements regarding CMPAF as discussed in greater detail in section 
I of this document. These are new collection of information 
requirements that have been added to the previous burden estimate set 
forth in the proposed rule.
    FDA believes that it has maximized the practical utility of this 
collection of information by not prohibiting certain cattle materials 
in animal food or feed, as long as the agency can be assured, through 
the establishment of written procedures, that brain and spinal cord 
were effectively removed or effectively excluded from animal feed or 
that the material was from cattle less than 30 months of age. FDA 
believes it has minimized the burden to the rendering industry by not 
specifying the procedures to be followed so as to provide the latitude 
to establish procedures that can most efficiently be incorporated into 
rendering operations.
    Description of Recordkeeping for Respondents: Rendering facilities, 
medicated feed manufacturers and distributors, livestock feeders.

                                                     Table 9.--Estimated Annual Recordkeeping Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Annual
                     21 CFR section                          Number of     frequency per   Total annual      Hours per      Total hours    Operation and
                                                           recordkeepers   recordkeeper       records      recordkeeper                    maint. costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
589.2001(c)(2)(vi) and (c)(3)(i)........................             175               1             175              20           3,500         $59,500
589.2001(c)(2)(ii)......................................              50               1              50              20           1,000          17,000
589.2001(c)(3)(i)(A)....................................             175               1             175              26           4,550          80,580
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............  ..............           9,050         157,080
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The estimated recordkeeping burden is derived from agency resources 
and discussions with affected industry. As discussed in the Paperwork 
Reduction Act section of the October 2005 proposed rule (70 FR 58570 at 
58598), the recordkeeping requirement in Sec.  589.2001(c)(2)(vi) will 
apply to the limited number of renderers that will handle CMPAF. FDA 
estimates that no more than 50 of the approximately 175 (based on 
current data) total independent rendering firms will be involved in the 
handling of this material. Although the agency may consider the 
distribution records needed to comply with this regulation ``usual and 
customary'' and thus not subject to the PRA, FDA believes there will be 
a burden associated with setting up a system to ensure such records are 
sufficient to address the recordkeeping requirement. Likewise, although 
FDA may consider the records necessary to comply with Sec.  
589.2001(c)(3)(i) as ``usual and customary'' and not subject to PRA 
burden accounting, FDA is including a burden estimate to cover 
establishment of a system to ensure that existing receipt, 
manufacturing, and certification records adequately address this 
requirement. FDA estimates that the recordkeeping burden associated 
with Sec.  589.2001(c)(3)(i) would apply to the balance of the 
rendering firms not handling CMPAF. FDA solicited public comment on the 
estimated recordkeeping burden associated with Sec.  589.2001(b)(2)(iv) 
(Sec.  589.2001(c)(2)(vi) in the final rule) and Sec.  
589.2001(b)(3)(i) (Sec.  589.2001(c)(3)(i) in the final rule) of the 
proposed rule, but no comments were received. It was estimated that the 
operation and maintenance cost per renderer for complying with the 
records requirements of either of these sections would be $340.
    As discussed previously, FDA has revised the final rule to require 
the maintenance of certain written procedures if cattle not inspected 
and passed for human consumption are to be rendered for use in animal 
feed. The recordkeeping burden associated with the requirement to 
maintain written procedures (Sec.  589.2001(c)(2)(ii)) will apply to 
only those renderers that choose to render for use in animal feed 
cattle not inspected and passed for human consumption. Based on the 
expertise of FDA's compliance staff who are knowledgeable about 
industry practices, FDA estimates that no more than 50 of the 
approximately 175 total independent rendering firms will be involved in 
the handling of this material. Furthermore, FDA estimates that the 
recordkeeping burden for this new requirement is similar to the burden 
that was previously estimated for Sec.  589.2001(c)(2)(vi) and Sec.  
589.2001(c)(3)(i). Therefore, FDA estimates that the cost per renderer 
for compliance with the new requirement for establishing and 
maintaining written procedures will be $340 per renderer, hence the new 
figure of $17,000 as shown in Table 9 of this document. Table 9 also 
reflects the estimated 26 hours each renderer will need to satisfy the 
requirement under which renderers must maintain records from their 
supplier, certifying that materials provided were free of CMPAF.
    Description of Respondents for Reporting: As discussed earlier, the 
final rule includes a new provision that exempts CMPAF from designated 
countries from the prohibition on its use in animal feed (Sec.  
589.2001(b)(1)(vi)). A foreign country seeking this designation will 
submit a written request to FDA that includes a variety of information 
about the country's BSE status (Sec.  589.2001(f)). As discussed in 
section IV, FDA estimates that 10 countries could submit a request to 
FDA to be exempted from the CMPAF restrictions. FDA estimates the 
burden for this

[[Page 22754]]

information collection as shown in Table 10:

                        Table 10.--Estimated One-Time and Recurring Reporting Burden \1\
----------------------------------------------------------------------------------------------------------------
                                                    Number of
         21 CFR section             Number of     responses per   Total annual      Hours per       Total hours
                                   respondents     respondent       responses        response
----------------------------------------------------------------------------------------------------------------
Sec.   589.2001(b)(1) \2\......              10               1              10             80               800
Sec.   589.2001(f).............              10               1              10             26.4             264
                                --------------------------------------------------------------------------------
    Total one time burden......  ..............  ..............  ..............  ...............             800
                                --------------------------------------------------------------------------------
    Total recurring burden.....  ..............  ..............  ..............  ...............            264
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating costs associated with the collection of information under this final
  rule.
\2\ One-time burden.

One-Time Reporting Burden
    There will be a one-time burden to countries that apply to FDA 
seeking to be designated as not subject to restrictions applicable to 
CMPAF. We estimate that each country that applies for an exclusion will 
spend 80 hours putting information together to submit to FDA. Table 10 
row 1 of this document presents the one-time burden expected for 
countries that apply for the exclusion.
Recurring Burden
    Countries that successfully petition FDA to be designated as exempt 
from certain BSE-related restrictions applicable to animal feed will be 
subject to future review by FDA to ensure that their designation 
remains appropriate. As part of this process, FDA may ask designated 
countries from time-to-time to confirm that their BSE situation and the 
information submitted by them in support of their original application 
remains unchanged. We assume it will take FDA and the designated 
country undergoing a review in the future about one third the time and 
effort it did when the information was submitted. Table 10 row 2 of 
this document presents the expected recurring burden.
    The information collection provisions of this final rule have been 
submitted to OMB for review. Prior to the effective date of this final 
rule, FDA will publish a notice in the Federal Register, announcing 
OMB's decision to approve, modify, or disapprove the information 
collection provisions in this final rule. An agency may not conduct or 
sponsor, and a person is not required to respond to a collection of 
information, unless that agency displays a currently valid OMB control 
number.

VII. Environmental Impact

    In the ``Environmental Impact'' section of the preamble to the 
October 6, 2005, proposed rule (70 FR 58570), FDA stated that it had 
carefully considered the potential environmental impact of this action 
and had determined that the proposed action would not have a 
significant impact on the human environment and that an environmental 
impact statement was not required. FDA's finding of no significant 
impact and the evidence supporting that finding, contained in an 
environmental assessment, were placed on display in the public docket 
(Docket No. 2002N-0273).
    As discussed in section IV of the preamble to this final rule, the 
agency received many comments to the proposed rule that addressed the 
environmental effects of the proposed action, noting that the volume of 
material that would not be allowed in animal feed was much larger than 
originally estimated. As a result, FDA decided to perform a new 
environmental assessment that took into account the new information 
submitted in response to the proposed rule. Following a review of this 
new assessment, FDA again has made a finding of no significant impact. 
The evidence supporting that finding, contained in the new 
environmental assessment, may be seen in the Division of Dockets 
Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, 
rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday 
through Friday. For ease of reference, the ``Summary of Environmental 
Consequences'' is reproduced below:
    ``The EA has examined the environmental consequences of prohibiting 
the use in animal feed of brain and spinal cord from cattle over 30 
months of age, and the carcasses of dead stock cattle that were either 
not age verified or from which brain and spinal cord were not removed. 
Our assessment indicates that, under this final rule, approximately 670 
million pounds of cattle byproducts that would normally be recycled in 
animal feed will be diverted to other forms of disposal. In most areas 
of the country, this change in disposal patterns is not expected to 
have a large impact on the environment. In some areas of the country, 
however, adverse environmental impacts could be expected unless new 
disposal capacity is developed. To allow time for development of new 
methods of disposal, the agency is delaying implementation of this 
regulation for 12 months. We assume that disposal of the materials 
prohibited in animal feed by the final rule will be disposed of in 
accordance with local, State, and Federal laws and regulations.''
    FDA received several comments on the proposed rule that addressed 
environmental concerns surrounding the residual effects of disposal of 
cattle byproducts. The comments and the agency's responses are set 
forth in the following paragraphs.
    (Comment 71) Several comments said that FDA did not conduct an 
adequate environmental impact analysis for the proposed rule and 
improperly made a finding of no significant impact. Another comment 
said that the environmental assessment failed to consider alternative 
methods of disposal other than landfilling and rendering. A number of 
comments said that FDA underestimated the environmental impact 
resulting from improper composting and landfilling.
    (Response) In comments to the proposed rule, FDA received new 
information indicating that some of the assumptions used in the 
economic analysis may have been incorrect, especially those assumptions 
related to disposal of deadstock. The agency modified the assumptions 
based on this new information and considered all other relevant 
comments in completing a re-analysis of both the economic and 
environmental impacts of the proposed rule. After completing a new 
environmental assessment, the agency still concludes that the 
environmental

[[Page 22755]]

impact is not significant, see revised environmental assessment in the 
public docket (Docket No. 2002N-0273).
    (Comment 72) Several comments said that animal and human health 
risks from non-feed disposal of deadstock are greater than the risks 
reduced by the proposed regulation. In contrast, one comment stated 
that, since the majority of cattle mortalities today are disposed of by 
means other than rendering and since this disposal does not appear to 
be causing disease outbreaks, the comment questioned the assertion by 
some that on-farm and alternative disposal will degrade public and 
animal health. Another comment stated that health concerns resulting 
from the proposed rule are being exaggerated for the purpose of 
preventing the rule from being finalized.
    (Response) The agency received no data in support of either 
position on the effects of non-feed disposal of CMPAF on animal or 
human health.
    (Comment 73) Several comments asked why FDA is not concerned about 
environmental exposure to the BSE agent through indiscriminant disposal 
of deadstock if the BSE infectious dose is really 10 mg or less and the 
agent remains infectious in soil.
    (Response) The agency believes that, based on the extremely low 
prevalence of BSE in this country and the absence of evidence that BSE 
is transmitted through soil and water, the risk of BSE transmission 
through exposure to the BSE agent in the environment is very low.
    (Comment 74) Several comments said that landfilling and burial will 
create problems of odor control, ground and surface water 
contamination, and disease caused by conventional pathogens. Other 
comments stated that the soil and geologic conditions in certain states 
are particularly unsuitable for carcass burial.
    (Response) FDA believes that odors and pathogens should not be 
significant problems when carcasses are properly buried, and in 
particular, when carcasses are landfilled. The agency acknowledges, 
however, that soil or geologic conditions in some parts of the country 
may not permit carcasses to be properly buried. In such areas, 
alternative disposal methods should be identified. The agency intends 
to allow sufficient time before the rule becomes effective to allow for 
the arrangement of disposal methods that are appropriate for local 
conditions.

VIII. Federalism

    FDA has analyzed this final rule in accordance with the principles 
in Executive Order 13132. FDA has determined that the final rule does 
not contain policies that have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Accordingly, the agency has concluded 
that the rule does not contain policies that have federalism 
implications as defined in the Executive Order and, consequently, a 
federalism summary impact statement is not required.

IX. References

    The following references have been placed on display in the 
Division of Dockets Management (HFA-305), Food and Drug Administration, 
5630 Fishers Lane, rm. 1061, Rockville, MD 20852, and may be seen by 
interested persons between 9 a.m. and 4 p.m., Monday through Friday. 
(FDA has verified the Web site addresses, but FDA is not responsible 
for any subsequent changes to the Web site addresses after this 
document publishes in the Federal Register.)

1. Scientific Steering Committee, European Commission, ``Opinion of 
the Scientific Steering Committee on the Human Exposure Risk (HER) 
via Food With Respect to BSE,'' adopted on 10 December 1999, http://europa.eu.int/comm/food/fs/sc/ssc/out67_en.pdf.
2. U.S. Food and Drug Administration, Center for Veterinary 
Medicine, Summary of FDA Inspectional Findings and Recalls Involving 
the Ruminant Feed Ban Regulation (21 CFR 589.2000) Conducted in 
Fiscal Years 2004-2007, April 2008.
3. ``An Estimate of the Prevalence of BSE in the United States,'' 
U.S. Department of Agriculture, July 20, 2006, APHIS/USDA Internet 
page http://www.aphis.usda.gov/peer_review/content/printable_version/BSE_Prevalence_scientific_doc_after.pdf.
4. GAO Report No. 05-101, ``Mad Cow Disease: FDA's Management of the 
Feed Ban Has Improved, but Oversight Weaknesses Continue to Limit 
Program Effectiveness,'' February 2005.
5. ``Bovine Spongiform Encephalopathy (BSE) Ongoing Surveillance 
Plan,'' U.S. Department of Agriculture, Animal and Plant Health 
Inspection Service, July 20, 2006, http://www.aphis.usda.gov/newsroom/hot_issues/bse/downloads/BSE_ongoing_surv_plan_final_71406%20.pdf.
6. Hunter, N., J. Foster, A. Chong, et al., ``Transmission of prion 
diseases by blood transfusion,'' Journal of General Virology, 83: 
2897-2905, 2002.
7. Brown, P., L. Cervenakova, L.M. McShane, et al., ``Further 
studies of blood infectivity in an experimental model of 
transmissible spongiform encephalopathy, with an explanation of why 
blood components do not transmit Creutzfeldt-Jakob disease in 
humans,'' Transfusion, 39:1169-1178, November/December, 1999.
8. Scientific Steering Committee, European Commission, ``The 
Implications of the Recent Papers on Transmission of BSE by Blood 
Transfusion in Sheep (Houston, et al., 2000; Hunter, et al., 
2002),'' adopted by the scientific steering committee at its meeting 
of September 12 and 13, 2002, http://europa.eu.int/comm/food/fs/sc/ssc/out280_en.pdf.
9. Scientific Steering Committee, European Commission, ``Opinion on 
the Safety of Ruminant Blood With Respect to TSE Risks,'' adopted on 
April 13 and 14, 2000, http://ec.europa.eu/food/fs/sc/ssc/out74_en.pdf.
10. Buschmann, A., and M. Groschup, ``Highly Bovine Spongiform 
Encephalopathy-Sensitive Transgenic Mice Confirm the Essential 
Restriction of Infectivity to the Nervous System in Clinically 
Diseased Cattle,'' The Journal of Infectious Diseases, 192:934-42, 
September 1, 2005.
11. Bradley, R., ``Bovine Spongiform Encephalopathy (BSE)--the 
Current Situation and Research,'' European Journal of Epidemiology, 
7:532-544, 1991. Anderson, R.M., et al., ``Transmission Dynamics and 
Epidemiology of BSE in British Cattle,'' Nature, 382:779-788, 1996.
12. Comer, P.J., and P.J. Huntly, ``Exposure of the Human Population 
to BSE Infectivity Over the Course of the BSE Epidemic in Great 
Britain and the Impact of Changes to the Over Thirty Month Rule,'' 
Over Thirty Month Rule (OTMR) Review Paper, June 2003.
13. Scientific Steering Committee, European Commission, report of 
March 26 and 27, 1998, updated June 24 and 25, 2001, ``Safety of 
Tallow Derived from Ruminant Tissues.''
14. OIG Report No. 50601-10-KC [Bovine Spongiform Encephalopathy 
(BSE) Surveillance Program (Phase II) and Controls Over BSE 
Sampling, Specified Risk Materials, and Advanced Meat Recovery 
Products (Phase III)], January 2006.
15. World Organization for Animal Health, Manual of Diagnostic Tests 
and Vaccines for Terrestrial Animals 2004 (updated 2006). Accessed 
online at http://www.oie.int/eng/normes/mmanual/A_summry.htm.
16. ``Economic Impacts of FDA Regulatory Changes Due to Risk of 
Bovine Spongiform Encephalopathy'' (Final Report), Contract No. 223-
03-8500, Task Order Number 8, Eastern Research Group, Inc., 
Lexington, MA, March 15, 2007.
17. European Union Scientific Steering Committee, Opinion of 
December 10, 1999, of the Scientific Steering Committee on ``The 
Human Exposure Risk (HER) via Food With Respect to BSE,'' p. 11, 
2001.
18. Scientific Steering Committee, European Commission, ``Update of 
the Opinion on TSE Infectivity Distribution in Ruminant Tissues 
(initially adopted by the

[[Page 22756]]

Scientific Steering Committee at its meeting of 10-11 January 2002 
and amended at its meeting of 7-8 November 2002),'' http://ec.europa.eu/food/fs/sc/ssc/out296_en.pdf.
19. United Kingdom, Department for Environment, Food and Rural 
Affairs, 2007, http://www.defra.gov.uk/animalh/bse/statistics/bse/yrbirth.html.
20. United Kingdom, Department of Health, Monthly Creutzfeldt Jakob 
Disease Statistics, August 7, 2006, http://www.gnn.gov.uk/environment/fulldetail.asp?releaseID=219257&newsareaID=2.
21. ``Preliminary Analysis of Final Rules and an Interpretive Rule 
to Prevent the BSE Agent from Entering the U.S. Food Supply,'' U.S. 
Department of Agriculture, April 7, 2004, http://www.fsis.usda.gov/Frame/FrameRedirect.asp?main=http://www.fsis.usda.gov/OA/news/2004/bseregs040704.htm.
22. USDA, Foreign Agricultural Service, U.S. Trade Internet System, 
FAS Agricultural Export Commodity Aggregations, Jan-Dec Annual Value 
and Quantities for the Total World Export of Beef & Veal (FR/CH/FZ 
and PREP/PRES), and Beef Variety Meats. Query generated March 27, 
2008. Data source: Dept of Commerce, U.S. Census Bureau, Foreign 
Trade Statistics. (http://www.fas.usda.gov/ustrade/USTExFAS.asp?QI=).
23. Mathews, Kenneth H., Jr., Monte Vandemeer, and Ronald Gustafson, 
``An Economic Chronology of Bovine Spongiform Encephalopathy in 
North America,'' Economic Research Service, USDA, June 2006 (http://www.ers.usda.gov/Publications/LDP/2006/06Jun/LDPM14301/).
24. Economic Research Service, USDA, ``Beef--United States 
Elasticities,'' (http://www.ers.usda.gov/Data/Elasticities/).
25. Economic Research Service, USDA, ``U.S. Beef and Cattle 
Industry: Background Statistics and Information; U.S. Cattle and 
Beef Industry, 2002-2007,'' (http://www.ers.usda.gov/news/BSECoverage.htm).
26. ``Economic Impacts of Proposed Changes to Livestock Feed 
Regulations,'' Informa Economics, December 2005.
27. ``Carcass Disposal: A Comprehensive Review,'' National 
Agricultural Biosecurity Center Consortium Carcass Disposal Working 
Group for the U.S. Department of Agriculture, Animal and Plant 
Health Inspection Service, Chapter 9--Economic and Cost 
Considerations, p. 18, August 2004.
28. National Agricultural Statistics Service, U.S. Department of 
Agriculture, Agricultural Statistics 2006, p. VIII-3.

List of Subjects in 21 CFR Part 589

    Animal feeds, Animal foods, Food additives, Incorporation by 
reference.


0
Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, the Food and 
Drug Administration, 21 CFR part 589 is amended to read as follows:

PART 589--SUBSTANCES PROHIBITED FROM USE IN ANIMAL FOOD OR FEED

0
1. The authority citation for 21 CFR part 589 continues to read as 
follows:


    Authority: 21 U.S.C. 321, 342, 343, 348, 371.

0
2. Section 589.2000 is amended by revising paragraph (a)(1) and by 
adding paragraphs (c)(4) and (e)(3) to read as follows:


Sec.  589.2000  Animal proteins prohibited in ruminant feed.

    (a) * * *
    (1) Protein derived from mammalian tissues means any protein-
containing portion of mammalian animals, excluding: Blood and blood 
products; gelatin; tallow containing no more than 0.15 percent 
insoluble impurities and tallow derivatives as specified in Sec.  
589.2001; inspected meat products which have been cooked and offered 
for human food and further heat processed for feed (such as plate waste 
and used cellulosic food casings); milk products (milk and milk 
proteins); and any product whose only mammalian protein consists 
entirely of porcine or equine protein.
* * * * *
    (c) * * *
    (4) Renderers shall comply with all applicable requirements under 
Sec.  589.2001.
* * * * *
    (e) * * *
    (3) Renderers shall comply with all applicable requirements under 
Sec.  589.2001.
* * * * *

0
3. Section 589.2001 is added to read as follows:


Sec.  589.2001  Cattle materials prohibited in animal food or feed to 
prevent the transmission of bovine spongiform encephalopathy.

    (a) Purpose--The purpose of this section is to prohibit the use of 
certain cattle origin materials in the food or feed of all animals to 
further reduce the risk of the spread of bovine spongiform 
encephalopathy (BSE) within the United States.
    (b) Definitions--(1) Cattle materials prohibited in animal feed 
include:
    (i) The entire carcass of BSE-positive cattle;
    (ii) The brains and spinal cords of cattle 30 months of age and 
older;
    (iii) The entire carcass of cattle not inspected and passed for 
human consumption as defined in paragraph (b)(2) of this section that 
are 30 months of age or older from which brains and spinal cords were 
not effectively removed or otherwise effectively excluded from animal 
feed;
    (iv) Mechanically separated beef as defined in paragraph (b)(3) of 
this section that is derived from materials specified in paragraphs 
(b)(1)(i), (b)(1)(ii), and (b)(1)(iii) of this section; and
    (v) Tallow as defined in paragraph (b)(5) of this section that is 
derived from materials specified in paragraphs (b)(1)(i), (b)(1)(ii), 
and (b)(1)(iii) of this section.
    (vi) Cattle materials prohibited in animal feed do not include:
    (A) Tallow derivatives as defined in paragraph (b)(6) of this 
section;
    (B) Tallow as defined in paragraph (b)(5) of this section that is 
derived from materials specified in paragraphs (b)(1)(ii) and 
(b)(1)(iii) of this section and that contains no more than 0.15 percent 
insoluble impurities. Insoluble impurities must be measured by the 
method entitled ``Insoluble Impurities'' (AOCS Method Ca 3a-46), 
American Oil Chemists' Society (AOCS), 5th Edition, 1997, incorporated 
by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51, or 
another method equivalent in accuracy, precision, and sensitivity to 
AOCS Official Method Ca 3a-46. You may obtain copies of the method from 
the AOCS (http://www.aocs.org), 2211 W. Bradley Ave., Champaign, IL 
61821. Copies may be examined at the Center for Food Safety and Applied 
Nutrition's Library, 5100 Paint Branch Pkwy., College Park, MD 20740, 
or at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (C) Materials as defined in paragraphs (b)(1)(ii), (b)(1)(iii), 
(b)(1)(iv) (other than mechanically separated beef from the carcass of 
a BSE-positive cattle), and (b)(1)(v) of this section from cattle from 
a country that has been designated under paragraph (f) of this section.
    (2) Cattle not inspected and passed for human consumption means 
cattle that did not pass antemortem inspection by the appropriate 
regulatory authority. This term includes nonambulatory disabled cattle. 
Nonambulatory disabled cattle are cattle that cannot rise from a 
recumbent position or that cannot walk, including, but not limited to, 
those with broken appendages, severed tendons or ligaments, nerve 
paralysis, fractured

[[Page 22757]]

vertebral column, or metabolic conditions.
    (3) Mechanically separated beef means a finely comminuted meat food 
product, resulting from the mechanical separation and removal of most 
of the bone from attached skeletal muscle of cattle carcasses and parts 
of carcasses.
    (4) Renderer means any firm or individual that processes slaughter 
byproducts, animals unfit for human consumption, or meat scraps. The 
term includes persons who collect such materials and subject them to 
minimal processing, or distribute them to firms other than renderers 
(as defined in this paragraph) whose intended use for the products may 
include animal feed, industrial use, or other uses. The term includes 
renderers that also blend animal protein products.
    (5) Tallow means the rendered fat of cattle obtained by pressing or 
by applying any other extraction process to tissues derived directly 
from discrete adipose tissue masses or to other carcass parts and 
tissues.
    (6) Tallow derivative means any product obtained through initial 
hydrolysis, saponification, or trans-esterification of tallow; chemical 
conversion of material obtained by hydrolysis, saponification, or 
trans-esterification may be applied to obtain the desired product.
    (c) Requirements. (1) No animal feed or feed ingredient shall be 
manufactured from, processed with, or otherwise contain, cattle 
materials prohibited in animal feed as defined in paragraph (b)(1) of 
this section.
    (2) Renderers that receive, manufacture, process, blend, or 
distribute cattle materials prohibited in animal feed as defined in 
paragraph (b)(1) of this section, or products that contain or may 
contain cattle materials prohibited in animal feed, shall take the 
following measures to ensure that materials prohibited as defined in 
paragraph (b)(1) of this section are not introduced into animal feed:
    (i) Exclude from use in animal feed the entire carcass of cattle 
not inspected and passed for human consumption as defined in paragraph 
(b)(2) of this section if:
    (A) The brain and spinal cord are not effectively removed from such 
cattle or the brain and spinal cord from such cattle are not otherwise 
effectively excluded from animal feed; and
    (B) Such cattle are 30 months of age or older.
    (ii) If renderers remove brain and spinal cord from cattle not 
inspected and passed for human consumption, or separate such animals 
based on whether or not they are 30 months of age or older, renderers 
must maintain adequate written procedures specifying how these 
processes are carried out.
    (iii) Once cattle materials prohibited in animal feed have been 
separated from other cattle materials, provide for measures to avoid 
cross-contamination;
    (A) Use separate equipment while handling cattle materials 
prohibited in animal feed; or
    (B) Use separate containers that adequately prevent contact with 
animal feed, animal feed ingredients, or equipment surfaces;
    (iv) Label the cattle materials prohibited in animal feed and 
products that contain or may contain cattle materials prohibited in 
animal feed in a conspicuous manner as follows: ``Do not feed to 
animals'';
    (v) Mark the cattle materials prohibited in animal feed and 
products that contain or may contain cattle materials prohibited in 
animal feed with an agent that can be readily detected on visual 
inspection; and
    (vi) Establish and maintain records sufficient to track cattle 
materials prohibited in animal feed to ensure such material is not 
introduced into animal feed, and make the records available for 
inspection and copying by the Food and Drug Administration.
    (3) Renderers that receive, manufacture, process, blend, or 
distribute any cattle materials shall take the following measures to 
ensure that materials prohibited as defined in paragraph (b)(1) of this 
section are not used in animal feed:
    (i) Establish and maintain records sufficient to demonstrate that 
material rendered for use in animal feed was not manufactured from, 
processed with, or does not otherwise contain, cattle materials 
prohibited in animal feed and make copies of all records available for 
inspection and copying by the Food and Drug Administration. With 
respect to cattle materials obtained from establishments which have 
segregated cattle materials prohibited in animal feed, such records 
must demonstrate that establishments supplying cattle materials to the 
renderers have adequate procedures in place to effectively exclude 
cattle materials prohibited in animal feed; and these records shall be 
considered sufficient to meet this requirement if they include either:
    (A) Certification or other documentation from the supplier that 
material supplied to the renderer does not include cattle materials 
prohibited in animal feed; such certification or documentation is 
acceptable, provided that it includes a description of the segregation 
procedures used, documentation that the supplier confirms that its 
segregation procedures are in place prior to supplying any cattle 
material to the renderer, and records of the renderer's periodic review 
of the suppliers' certification or other documentation; or
    (B) Documentation of another method acceptable to FDA, such as 
third-party certification, for verifying that suppliers have 
effectively excluded cattle materials prohibited in animal feed.
    (ii) Comply with all applicable requirements under Sec.  589.2000 
regarding animal proteins prohibited in ruminant feed.
    (d) Adulteration and misbranding. (1) Failure of a renderer to 
comply with the requirements in paragraphs (c)(2)(i) through 
(c)(2)(iii), (c)(2)(v) and (c)(2)(vi), or (c)(3)(i) of this section 
will render the animal feed or feed ingredients adulterated under 
section 402(a)(4) of the Federal Food, Drug, and Cosmetic Act (the 
act).
    (2) Animal feed or feed ingredients that are not in compliance with 
paragraph (c)(1) of this section are adulterated under section 
402(a)(2), 402(a)(3), or 402(a)(5) of the act.
    (3) Animal feed or feed ingredients that are not in compliance with 
the labeling requirements of paragraph (c)(2)(iv) of this section are 
misbranded under section 403(a)(1) or 403(f) of the act.
    (4) Failure of a renderer to comply with the requirements in 
paragraph (e) of this section will render the animal feed or feed 
ingredients adulterated under section 402(a)(4) of the act.
    (e) Inspection; records retention. Records required to be made 
available for inspection and copying by the Food and Drug 
Administration, as required by this section, shall be kept for a 
minimum of 1 year.

[[Page 22758]]

    (f) Process for designating countries. A country seeking 
designation must send a written request to the Director, Office of the 
Center Director, Center for Veterinary Medicine, at the address 
designated in Sec.  5.1100 of this chapter. The request shall include 
information about that country's BSE case history, risk factors, 
measures to prevent the introduction and transmission of BSE, and any 
other information relevant to determining whether the cattle materials 
from the requesting country do or do not meet the definitions set forth 
in paragraph (b)(1) of this section. FDA shall respond in writing to 
any such request and may impose conditions in granting any such 
request. Any grant by FDA of such a request under this paragraph will 
be subject to future review by FDA and may be revoked if FDA determines 
that the granted request is no longer appropriate.

    Dated: April 18, 2008.
Jeffrey Shuren,
Associate Commissioner for Policy and Planning.
[FR Doc. 08-1180 Filed 4-23-08; 8:45 am]
BILLING CODE 4160-01-P