### United States

Department of Agriculture Animal and Plant Health Inspection Service July 2014 Initial Regulatory Flexibility Analysis

Proposed Rule APHIS - 2014 - 0018 Livestock Marketing Facilities

Policy & Program Develop ment Policy Analysis & Developmenti



### Table of Contents

Introduction

................................ ................................ ................................ ......................... 2 Initial Regulatory Flexibility Analysis

................................ ................................ ................ 2 Reasons Action is Being Considered

................................ ................................ .............. 2 Objectives of and Legal Basis for the Rule

................................ ................................ .... 2
Potent ially Affected Small Entities

................................ ................................ ................. 6 Duplication, Overlap, or Conflict with Existing Rules and Regulations

........................ 9 Alternatives to minimize Significant Economic Impacts of the Rule

............................. 9ii



### Introduction
The Regul atory Flexibility Act requires A gencies to assess the possible impacts on small entities

. We are proposing to amend the regulations governing approval of facilities that receive livestock moved in interstate commerce. We are also proposing several amendments to the conditions under which livestock may move to such facilities without official identification or prior issuance of an interstate certificate of veterinary inspection or alternative documentation. These changes are necessary to update the regulations governing livestock marketing facilities, while also helping ensure animal disease traceability of livestock that are move d in interstate

commerce t o such facilities.



### Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act requires agencies to evaluate the potential effects of their proposed and final rules on small businesses, small organizations and small governmental jurisdictions. Section 603 of the Act requires agencies to prepare and make available for public comment an initial regulatory flexibility analysis that describes expected impacts of a proposed rule on small entities. Reasons Action is Being Considered APHIS enacts re gulations to prevent, control, and eradicate diseases of livestock, thereby increasing foreign and domestic confidence in the safety of U.S. farm

- raised animals and their products. APHIS is proposing several ame n dments to the conditions under which livest ock may move to facilities in the course of interstate commerce. The changes are necessary to update the2

regulations governing livestock marketing facilities, while also helping ensure animal disease traceability of livestock that are move d in interstate commerce to such facilities. Objectives of and Legal Basis for the Rule 

### PROPOSED REVISIONS General Requirements f

or Livestock Marketing Facilities APHIS is proposing requirements that apply to all livestock marketing facilities regardless of whether they have sought APHIS approval. All livestock marketing facilities would have to allow APHIS or State representatives to collect blood samples, conduct testing, and carry out operations and measures at the facilities in order to detect, control, and eradicate diseases and pests of livestock. In order to carry out these operations and measures, APHIS or State representatives could request records or receipts retained by the facilities that pertain to these disease and pest detection, control, and eradication e fforts, and the facilities would have to provide any records or receipts so requested. Additionally, all livestock marketing facilities would have to maintain a record of the receipt, distribution, and application of all official identification devices an d USDA

- approved backtags at the facility. Revised Requirements for APHIS Approval Of Livestock Marketing Facilities We would also revise the conditions for APHIS approval of livestock marketing facilities. Currently, facilities have to execu te an agreement with APHIS that is codified in the regulations themselves. We would now require them to execute The Approved Livestock Marketing Facility Agreement. The Approved Livestock Marketing Facility Agreement would be similar in structure and con tent to the existing agreement with a few substantive revisions:3

 We would remove a requirement that an accredited veterinarian, State representative, or APHIS representative must be on the premises at all times on sale days to perform
duties in accordance with State and Federal regulations.

 In its place, we would add a requirement specifying that the facility must allow Federal and State representatives to perform duties at the facility in accordance with Federal and State regulations, as requested, and req uirements specifying that accredited veterinarians must be available (either physically present or on

- call) on sale days in order to provide any inspection of livestock that is required by the regulations before the animals leave the facility and to issue ICVIs, as necessary.

 We would add a provision specifying that APHIS or the State will inspect each approved facility at least twice yearly.
Documentation Requirements for Livestock Moved to Approved Livestock Marketing Facilities
The regulations currently allow cattle and bison to be moved to an approved livestock marketing facility with an owner

- shipper statement, rather than an ICVI. However, t he information maintained by approved livestock marketing facilities for all livestock that enter the facility o ften includes all categories of information that are required on an owner

- shipper statement. Thus, we are proposing to allow cattle and bison to be moved interstate to an approved livestock marketing facility without an accompanying owner

- shipper statemen t, provided a State animal health official has waived the need for the owner

- shipper statement and all of the information required for an owner

- shipper statement is recorded as soon as the cattle or4

bison are offloaded at the approved livestock marketing f acility and this record is maintained in accordance with the record retention requirements of the traceability regulations. Backtag Placement APHIS is requesting public comment regarding whether we should amend the regulations to specify a location f

or pl acing USDA

- approved backtags on cattle and bison , and, if so, where it should be. We also request public comment whether, instead of a regulatory requirement, preferred placement of the tags should be a guideline or recommendation within the Animal Diseas e Traceability General Standards. 

### ESTIMATED IMPACTS We are proposing to remove the requirement that an accredited veterinarian, State representative, or APHIS representative must be on the premises at all times on sale days to perform duties in accordance with State and Federal regulations because it has presented logistical problems in recent years at some facilities. The Bureau of Labor Statistics (BLS) reported that veterinarians earned a median wage of $40.61 per hour in 2012. This likely overestimate s the median wage s of large animal veterinarians , however BLS statistics do not specify wages by type of veterinar y practice. The proposed rule would relax the requirement to have an accredited veterinarian present. We are proposing to require that the fac ility must allow Federal and State representative to perform their duties as requested and that all approved livestock marketing facilities must have an accredited veterinarian available (either physically present or on

- call) on sale days in order to provi de inspection of livestock before the animals leave the facility and to issue ICVIs, as necessary.

This pro vision provides greater flexibility to the livestock marketing facility. Over all , the amount of time an accredited veterinarian, State representativ e, or APHIS representative will5

need to be on the premise will be reduced, thus lowering the overall costs incurred by the livestock marketing facilities as compared to the current requirements. In the event that Federal or State personnel require access to the facility in order to perform duties at the facility in accordance with Federal and State regulations, the facility would have to provide such access. Similarly, APHIS or the State would inspect approved facilities at least twice a year in order to ensure that the facility continues to operate in accordance with the agreement. We do not anticipate that facilities would incur a measurable economic cost to provide access to a facility or to allow for an inspection done by APHIS or State officials.
APHIS currently requires that approved livestock facilities keep for a minimum of 5 years paper or electronic records of any ICVIs or alternate documentation used in lieu of an ICVI for livestock that enter the facility on or after the effective date of th is rule. Given the current recordkeeping and document requirements, we anticipate that any impact on the recordkeeping requirements on livestock marketing facilities will be small . Our expectation is that incremental costs of maintaining a record of the receipt, distribution, and application of all official identification devices and USDA

- approved backtags will be small for the majority of livestock marketing facilities. We do not have data to estimate the additional cost of recordkeeping for official ID and back tags, and we welcome public comment on any costs. In 2012, there were an estimated 30 million cattle moved interstate each year. In 2012, in

s hipments of cattle directly to slaughter totaled an estimated 19 .8 million head

. T he U.S. cattle and cal f inventory totaled 93 million h ead on January 1, 2012. However, we do not have information on interstate livestock movements specifically to livestock marketing facilities although we expect that this would account for the majority of the 30 million catt le moving interstate.6

APHIS is proposing to allow cattle and bison to be moved interstate to an approved livestock marketing facility without an accompanying owner

- shipper statement, provided a State animal health official has waived the need for the owner

- shipper statement and all of the information required for an owner

- shipper statement is recorded as soon as the cattle or bison are offloaded at the approved livestock marketing facility and this record is maintained in accordance with the record retentio n requirements of the traceability regulations. As this provision reduces documentation and recordkeeping requirements, we anticipate that any economic effect on livestock marketing facilities will be positive. APHIS is also requesting public comment regar ding whether we should amend the regulations to specify a location for placing the backtags and clarifying some definitions within the regulation. We do not anticipate that changes to the placement of the backtag would incur a measurable economic cost. S imilarly, we do not anticipate that clarifying definitions including “Directly ,” “Farm of Origin,” or “No More Than One” in the context of the rule would incur a measurable economic cost.

Potentially Affected Small Entities The Regulatory Flexibility Act (RFA) requires that agencies consider the economic impact of rule changes on small entities, i.e., small businesses, organizations, and governmental jurisdictions. The Small Business Administration (SBA) sets small

- entity standard s for firms primarily

e ngaged in livestock production and marketing. APHIS expects the cattle industry will be the livestock sector principally affected by this rule. Livestock marketing facilities will be directly affected and c attle production enterprises that move cattle int erstate may also be affected.7

Existing animal identification requirements for the interstate movement of farm

- raised animals largely satisfy the official animal identification and ICVI requirements. Cattle moving interstate are often required to be accomp anied by a health certificate under current regulations. In addition, nearly all States require a certificate of veterinary inspection for breeder and feeder cattle entering from another State. The table below shows cattle industries that will be affe cted by the rule, as categorized by the North American Industry Classification System (NAICS) , and sales and employment information that underscores the prevalence of small entities among establishments that comprise these industries. We note that numbers of establishments shown include ones that may not be directly affected by the rule, in particular, those that do not move cattle interstate.

Small

- entity representation in industries that may be affected by the rule Industry (NAICS code) Number of

Establishments SBA Small

Entity Size Standard Average Value of

Establishments’ Annual Sales Average

Number of Employees Beef cattle ranching and farming (112111) 740,978 < $750,000 annual receipts $43,197
Dairy cattle and milk production (112120) 5 0,556 < $750,000 annual receipts $611,773

Cattle feedlots (112112) 13,734 < $ 7 ,500,0000 annual receipts $977,048

Animal slaughtering and processing (3116) 3,773 < 500 employees 133.5
Rendering and meat byproduct processing (311613) 232 < 500 employee s 238

Livestock Merchant Wholesalers 1,012 < 500 employees 7.1
Sources: USDA NASS, 2012 Census of Agriculture , 2007 Economic Census Indus t ry Snapshots

. The Census of Agriculture allows further examination of small entities that could be affected by the rule, namely, small family cattle enterprises and cattle enterprises for which one or more of the principal operators belong to a socially disadvantaged group. Small family farms are defined by USDA as family farms with gross sales of less than $250,0 00 (USDA ERS 2010). (Any farm where the operator and persons related to the operator own a majority of the business is considered a family farm.) In 20 12 , nearly 88 percent of farms with cattle and calf inventories were small family farms. Small family f

arms are further divided into retirement farms (operators reporting they are retired), residential/ lifestyle farms (operators reporting a major occupation other than farming), and farming

- occupation farms (operators reporting farming as their major occupa tion). Farming

occupation farms are classified as low

- sales small family farms (sales less than $100,000) and high

- sales small family farms (sales between $100,000 and $249,999). A fifth category of small family farms are limited resource farms, which ha ve sales of not more than $100,000 and a total household income at or below the national poverty level for a family of four, or less than 50 percent of county median household income. The Census of Agriculture indicates that in 20 12 , 40 percent of small fa mily cattle operations were residential/lifestyle farms. With regard to the other categories of small family cattle enterprises, over one

- fourth of the owners reported that they had already retired, limited9

resource farms and the low

- sales farming

- occupat ion farms each comprised about 15 percent of the operations, and about 6 percent were high

- sales farming

- occupation farms. Socially disadvantaged groups are ones that historically have been subjected to bias and prejudice. They include women, persons of Hispanic origin, American Indians or Alaska Natives, Asians, African Americans, and Native Hawaiians or other Pacific Islanders . These farm operators, themselves, may not have experienced bias or prejudice, but they identify with one or more of these gen der, ethnic, and racial groups. For more than 8 percent of cattle operations in 20 12 , the principal operator was a woman. About 5 percent of cattle operations had a person of Hispanic heritage and/or an American Indian or Alaskan native as one of their to p - three operators. Fewer than 2 percent of cattle operations have an African

- American as a top

- three operator. Most livestock marketing facilities qualify as small according to SBA guideline s . Most cattle enterprises are small family farms. As is true fo r other cattle operations, incremental costs of the rule for these facilities will depend on current routine management practices, and whether the enterprise is already receiving cattle interstate

.

Duplication, Overlap , or Conflict with Existing Rules an d Regulations APHIS has not identified any duplication, overlap, or conflict of the proposed rule with other Federal rules.

Alternatives to minimize Significant Economic Impacts of the Rule Based on our review of available information, APH IS does not expe ct the proposed rule to have a significant economic impact on small entities. In the absence of significant economic impacts, we have not identified alternatives that would minimize such impacts.