Horse Welfare: Action Needed to Address Unintended Consequences from Cessation of Domestic Slaughter
Published: 2011-06-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since fiscal year 2006, Congress has annually prohibited the use of federal funds to inspect horses destined for food, effectively prohibiting domestic slaughter. The U.S. Department of Agriculture (USDA) is responsible for overseeing the welfare of horses transported for slaughter. Congress directed GAO to examine horse welfare since cessation of domestic slaughter in 2007. GAO examined (1) the effect on the U.S. horse market, if any, since cessation; (2) any impact of these market changes on horse welfare and on states, local governments, tribes, and animal welfare organizations; and (3) challenges, if any, to USDA's oversight of the transport and welfare of U.S. horses exported for slaughter. GAO analyzed horse price and shipping data, and interviewed officials from USDA, state and local governments, tribes, the livestock industry, and animal welfare organizations, and reviewed documents they provided..
section_title: What GAO Found
paragraphs: Since domestic horse slaughter ceased in 2007, the slaughter horse market has shifted to Canada and Mexico. From 2006 through 2010, U.S. horse exports for slaughter increased by 148 and 660 percent to Canada and Mexico, respectively. As a result, nearly the same number of U.S. horses was transported to Canada and Mexico for slaughter in 2010--nearly 138,000--as was slaughtered before domestic slaughter ceased. Available data show that horse prices declined since 2007, mainly for the lower-priced horses that are more likely to be bought for slaughter. GAO analysis of horse sale data estimates that closing domestic horse slaughtering facilities significantly and negatively affected lower-to-medium priced horses by 8 to 21 percent; higher-priced horses appear not to have lost value for that reason. Also, GAO estimates the economic downturn reduced prices for all horses by 4 to 5 percent. Comprehensive, national data are lacking, but state, local government, and animal welfare organizations report a rise in investigations for horse neglect and more abandoned horses since 2007. For example, Colorado data showed that investigations for horse neglect and abuse increased more than 60 percent from 975 in 2005 to 1,588 in 2009. Also, California, Texas, and Florida reported more horses abandoned on private or state land since 2007. These changes have strained resources, according to state data and officials that GAO interviewed. State, local, tribal, and horse industry officials generally attributed these increases in neglect and abandonments to cessation of domestic slaughter and the economic downturn. Others, including representatives from some animal welfare organizations, questioned the relevance of cessation of slaughter to these problems. USDA faces three broad challenges in overseeing the welfare of horses during transport to slaughter. First, among other management challenges, the current transport regulation only applies to horses transported directly to slaughtering facilities. A 2007 proposed rule would more broadly include horses moved first to stockyards, assembly points, and feedlots before being transported to Canada and Mexico, but delays in issuing a final rule have prevented USDA from protecting horses during much of their transit to slaughtering facilities. In addition, GAO found that many owner/shipper certificates, which document compliance with the regulation, are being returned to USDA without key information, if they are returned at all. Second, annual legislative prohibitions on USDA's use of federal funds for inspecting horses impede USDA's ability to improve compliance with, and enforcement of, the transport regulation. Third, GAO analysis shows that U.S. horses intended for slaughter are now traveling significantly greater distances to reach their final destination, where they are not covered by U.S. humane slaughter protections. With cessation of domestic slaughter, USDA lacks staff and resources at the borders and foreign slaughtering facilities that it once had in domestic facilities to help identify problems with shipping paperwork or the condition of horses before they are slaughtered. GAO suggests that Congress may wish to reconsider restrictions on the use of federal funds to inspect horses for slaughter or, instead, consider a permanent ban on horse slaughter.
section_title: What GAO Recommends
paragraphs: GAO recommends that USDA issue a final rule to protect horses through more of the transportation chain to slaughter and consider ways to better leverage resources for compliance activities. USDA agreed with GAO's recommendations and noted specific actions it will take to implement them.

section_title: Letter
paragraphs: Many countries consider horsemeat an appropriate part of human diets— and horsemeat was consumed in the United States as recently as the mid- 1940s. However, the slaughter of horses for any purpose, especially for  human consumption, is now a very controversial issue in the United  States, stemming largely from differences in how the country’s estimated 9  million horses are viewed. For example, some, including animal rights  advocates, horse enthusiasts, and some state governments, oppose horse  slaughter, citing the horse’s iconic role in helping to settle the American  West; its former importance as a work and transportation animal on farms  and in rural communities; and its continued value as a show, racing, and  recreation animal. Moreover, for many, horses are companion animals,  similar to dogs, cats, or other domestic pets. In contrast, others, including  the livestock and meatpacking industries and other state governments,  support horse slaughter, noting a strong export market for horsemeat; the  economic and employment benefits to local communities of horse  slaughtering facilities; and limited alternative options for dealing with  unwanted horses. Moreover, for many proponents of slaughter, horses are  livestock, similar to cattle, sheep, swine, and other farm animals raised to  produce commodities for human consumption. At present, horses are not  slaughtered in the United States due to an annual prohibition on the use of  federal funds to inspect horses at slaughter. However, horses may be  purchased at auctions or other sales and exported for slaughter to Canada  and Mexico. Horse slaughtering facilities in these countries generally  export the meat to consumer markets in Europe and Asia.
Aside from the question as to whether it is appropriate to slaughter horses  for human consumption, both sides of this issue have raised concerns about  unintended consequences of the cessation of domestic slaughter. For  example, both sides note that horses intended for slaughter must now travel  much farther distances to foreign slaughtering facilities, potentially, during  some part of that trip, in conveyances designed for smaller animals and  without adequate rest, food, and water. This controversy has also attracted  media attention, with reports of the inhumane treatment of horses during  transit or at foreign slaughtering facilities. For those who oppose horse  slaughter, the solution is to ban both domestic horse slaughter and trade in  horsemeat or horses intended for slaughter for human consumption,  effectively ending the export of horses intended for slaughter. Bills were  introduced in the 107th and 108th Congresses to create such a ban, but none  were enacted into law. In contrast, for those who support horse slaughter,  the solution is to reopen domestic slaughtering facilities. Although Congress  has not acted to create an explicit ban on horse slaughter, starting in fiscal  year 2006, it included language in annual appropriations bills that prohibits  the use of federal funds for inspection by the U.S. Department of Agriculture  (USDA) of horses in transit to slaughter and at slaughtering facilities. In  debating this provision in the House of Representatives, opponents argued  that it would not end horse slaughter, but instead would move this slaughter  across the borders, hurting horse welfare by increasing the distances horses  would travel to slaughter. However, proponents of the provision countered  that there was no evidence of decreased horse welfare in states that had  banned slaughter.
As recently as 2007, three domestic horse slaughtering facilities—two in  Texas and one in Illinois—continued to operate despite the prohibition on  using federal funds for inspecting horses at slaughter. These facilities stayed  open by paying for these inspections under a voluntary fee-for-service  program implemented by USDA in February 2006. However, in 2007, all three  facilities closed when courts upheld state laws in Texas and Illinois  prohibiting sale or possession of horsemeat and horse slaughter, respectively.  New horse slaughtering facilities have, in effect, been prohibited from  opening in other states since then because Congress has continued the annual  prohibition on the expenditure of federal funds to inspect horses at slaughter,  and it added a prohibition on the use of federal funds, beginning in fiscal year  2008, for implementation of the fee-for-service program as well. Although the  domestic slaughter of horses for human food has stopped, USDA’s Slaughter  Horse Transport Program (transport program) continues to operate. The  program, established in 2001, is intended to ensure that horses traveling to  slaughter are fit to travel and handled humanely enroute. Among other things,  the program collects and reviews shipping documents and inspects  conveyances used to transport these horses. However, because of the  prohibition on using federal funds for inspecting horses transported to  slaughter, the transport program may not inspect the condition of horses  designated for slaughter during their transport.
The Senate Committee on Appropriations directed that GAO examine the  status of horse welfare in the United States since horse slaughter  operations ceased in 2007. Our objectives to address this issue were to  examine (1) the effect on the U.S. horse market, if any, since domestic  slaughter for food ceased in 2007; (2) the impact, if any, of market changes  on horse welfare and on states, local governments, tribes, and animal  welfare organizations; and (3) challenges, if any, to USDA’s oversight of  the transport and welfare of U.S. horses exported for slaughter.
To address these objectives, we interviewed officials from USDA and other  federal agencies, state and local governments, and tribes and  representatives from the livestock industry and animal welfare  organizations and reviewed the documents that they provided. We also  reviewed published literature addressing issues related to the horse industry  and slaughter. In addition, we visited border crossings, horse auctions, and  tribal lands to observe how horses are handled and processed. More  specifically, to examine the effect on the U.S. horse market since domestic  slaughter ceased in 2007, we collected and analyzed horse trade data for  fiscal years 2005 through 2010—to cover the 2 years before and after  domestic slaughter ceased—from USDA and the Department of Commerce  and horse sales data from three large, geographically dispersed, U.S.  livestock auctions for spring 2004 through spring 2010. Using these data,  along with other data, including economic data from the Department of  Labor, we developed an econometric model to analyze the effect of the  slaughter cessation on horse prices while controlling for other factors, such  as the U.S. recession that began in December 2007. We selected five  academic experts who have published studies of the horse industry to  review our model specifications and results for any fatal flaws; they  generally found the model and results credible. To examine the impact of  horse market changes on horse welfare and states, local governments,  tribes, and animal welfare organizations, we also used semi-structured  interviews to systematically collect the views of the State Veterinarian in  each of a sample of 17 states that generally have the largest horse  populations and economies. In some cases, this official was joined by other  state officials, such as members of the state livestock board, for these  interviews. The results of the interviews are not generalizable to all State  Veterinarians but provide information on the situations faced by these 17  states. We performed a content analysis of the results of these interviews to  identify common themes and the frequency with which certain issues were  raised regarding the impacts of changes in the horse market. Furthermore,  to examine the challenges to USDA’s oversight of the transport of U.S.  horses exported for slaughter, we identified and analyzed a generalizable  sample of about 400 horse shipping forms for fiscal years 2005 through 2009  that are maintained by the transport program. Each form represents one  load or shipment of horses. Using the data from these forms and mapping  software, we estimated distances that horses traveled to slaughter before  and after domestic slaughter ceased. Appendix I provides further detail on  our scope and methodology.
We conducted this performance audit from April 2010 through June 2011,  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Federal Agriculture Improvement and Reform Act of 1996 (1996 Farm  Bill) authorized USDA to issue guidelines for the regulation of the  commercial transportation of horses and other equines for slaughter by  persons regularly engaged in that activity within the United States. The  statute gives USDA authority to regulate the commercial transportation of  equines to slaughtering facilities, which the statute indicates include  assembly points, feedlots, or stockyards. The authority to carry out this  statute was delegated to USDA’s Animal and Plant Health Inspection  Service (APHIS). Pursuant to this authority, APHIS issued a regulation,  “Commercial Transportation of Equines to Slaughter” (transport  regulation), in 2001. In 2001, APHIS also established the transport  program. This program seeks to ensure that horses being shipped for  slaughter are transported safely and humanely. In addition, USDA’s Food  Safety Inspection Service (FSIS) carries out the Humane Methods of  Slaughter Act and related regulations, which require the humane handling  of livestock, including horses, in connection with slaughter.
APHIS’s transport regulation establishes a number of requirements that  owners/shippers (shippers) must meet for horses transported to slaughter.  The regulation states that shippers must (1) provide horses with food,  water, and rest for at least 6 hours prior to loading; (2) provide horses  adequate floor space in whatever conveyance (e.g., a trailer) is being used;  (3) segregate all stallions and other aggressive equines; and (4) ensure that  trailers are free of sharp protrusions, are not double-decked, and have  adequate ventilation. If a trip is longer than 28 hours, horses must be  unloaded and provided at least 6 hours of food, water, and rest before  being reloaded. Horses cannot be shipped to slaughter unless they are  accompanied by an “Owner/Shipper Certificate—Fitness to Travel to a  Slaughter Facility” (owner/shipper certificate) certifying that the horses  are fit for travel. The certificate must state that horses are over 6 months  of age, are not blind in both eyes, can bear weight on all four limbs, are  able to walk unassisted, and are not likely to foal (i.e., give birth) during  transport. Figure 1 provides an example of this certificate. Shippers found  to be in violation of the transport regulation can face penalties of $5,000  per horse, per violation.
As of fall 2007, the last three horse slaughtering facilities in the United  States were closed following unsuccessful challenges to state laws  banning the practice. According to USDA data, those facilities, two in  Texas and one in Illinois, slaughtered almost 105,000 horses in 2006—the  last full year of operations—and exported more than 17,000 metric tons of  horsemeat, which was valued at about $65 million at that time. Regarding  the Texas facilities, in January 2007, the U.S. Court of Appeals for the Fifth  Circuit ruled that a 1949 Texas law banning the sale or possession of  horsemeat applied to them. They ceased operations in May 2007.  Regarding the Illinois facility, the state enacted a law in May 2007 making  it illegal to slaughter horses for human consumption. In September 2007,  the U.S. Court of Appeals for the Seventh Circuit upheld this slaughter  ban, and the Illinois facility ceased operations that month.
Since fiscal year 2006, Congress also has taken annual actions in  appropriations legislation that have effectively prevented the operation of  horse slaughtering facilities in the United States by prohibiting USDA’s use  of federal funds to (1) inspect horses being transported for slaughter and  (2) inspect horses intended for human consumption at slaughtering  facilities. The 1996 Farm Bill authorized the issuance of guidelines for the  regulation of the commercial transportation of equines for slaughter as  well as the conduct of any inspections considered necessary to determine  compliance. The Federal Meat Inspection Act requires inspection of  certain animals, including cattle, sheep, swine, goats, and horses, before  they are slaughtered and processed into products for human food to  ensure that meat and meat products from those animals are unadulterated,  wholesome, and properly labeled. However, Congress prohibited USDA  from using appropriated funds to pay for these inspections, effective 120  days after enactment of the fiscal year 2006 appropriations legislation on  November 10, 2005.
Following the prohibitions, the three domestic slaughtering facilities open  at that time petitioned USDA to create a voluntary fee-for-service  inspection program for horses prior to slaughter, and USDA created such a  program in early 2006, allowing required inspections, and, thus, domestic  slaughtering, to continue. The congressional prohibition on use of  appropriated funds continued in fiscal year 2007, but, as previously  discussed, the plants had already been shut down by state law that year.  In fiscal year 2008, Congress renewed the prohibition on the use of  appropriated funds for inspections on horses being transported to  slaughter and at slaughtering facilities, and it added a new prohibition on  the use of appropriated funds for implementation or enforcement of the  fee-for-service program. These prohibitions were continued in fiscal years  2009 through 2011. These prohibitions notwithstanding, U.S. horses  intended for slaughter are still allowed to be transported within the United  States under the oversight of USDA’s transport program and exported to  slaughtering facilities in Canada and Mexico.
In September 2010, USDA’s Office of Inspector General (OIG) reported, in  part, on the operations of the transport program. The OIG found that  APHIS needs to improve its controls for ensuring that horses being  shipped to foreign facilities for slaughter are treated humanely. For  example, APHIS does not deny authorization to shippers with a record of  inhumanely transporting horses intended for slaughter from shipping  other loads of horses, even if unpaid fines are pending for previous  violations. The OIG also found deficiencies in how APHIS tags horses that  have been inspected and approved for shipment to foreign slaughtering  facilities. For example, the agency requires shippers to mark such horses  with backtags, which are intended to allow APHIS to trace horses back to  their owner and also to verify that horses have passed inspection by an  accredited veterinarian. However, APHIS lacked an appropriate control to  track individual horses by backtag number on approved shipping  documents so that it could perform reconciliations, investigate violations,  and initiate enforcement actions, as appropriate. In addition, the OIG  noted that APHIS needs to obtain the resources necessary to adequately  oversee the transport program and issue in final a proposed rule that  would broaden the scope of the agency’s regulation of horses being  shipped to foreign slaughtering facilities. In its official response to the OIG  report, APHIS concurred with the OIG’s findings and recommendations  related to the transport program, and APHIS proposed specific actions and  time frames for implementing the recommendations. For example, APHIS  agreed to work with USDA’s Office of General Counsel and complete by  May 31, 2011, an evaluation of “the best options to revise regulations  necessary that will establish an agencywide policy that those who have  violated the humane handling regulations and failed to pay the associated  penalties shall not receive endorsement of any subsequently requested  shipping documents.”
section_title: U.S. Slaughter Horse Market Has Changed Since Domestic Slaughter Ceased in 2007
paragraphs: The U.S. slaughter horse market has changed since domestic slaughter for  food ceased in 2007, particularly in terms of increased exports to Canada  and Mexico and lower domestic sales and prices, especially for lower- value horses, according to our analysis of available trade data and horse  auction sales data.
subsections: section_title: Horse Exports to Canada and Mexico Have Increased with the Cessation of Domestic Slaughter
paragraphs: The number of horses slaughtered in the United States decreased from  1990 (345,900 horses) through 2002 (42,312 horses), according to available  data from USDA’s National Agricultural Statistics Service. At the same  time, the reported number of slaughtering facilities dropped from at least  16 U.S. facilities that operated in the 1980s to 7 facilities in 1994 to as few  as 2 in 2002. Beginning in 2003, however, the number of horses slaughtered  began rising through 2006, the last full year of domestic slaughtering  operations, when nearly 105,000 horses were slaughtered in the United  States. According to USDA officials, this increase can be explained, in  part, by the reopening of a horse slaughtering facility in DeKalb, Illinois, in  2004 that increased domestic slaughtering capacity. This facility had been  closed for 2 years following a fire set by anti-slaughter arsonists. Because  all domestic slaughtering facilities closed by September 2007, however, the  number of horses being slaughtered in the United States dropped to zero  by the end of that year. Figure 2 shows the changes in the number of  horses slaughtered in the United States from 1990 through 2007.
Before 2007, horses were slaughtered in domestic slaughtering facilities  only when the horsemeat was destined for consumption by humans or zoo  animals. Currently, pet food and other products, including glue, may still  be obtained from the corpses of horses that are hauled to rendering plants  for disposal. The production of these products is not covered by the  requirements of the Federal Meat Inspection Act and is therefore not  affected by the current ban on the use of appropriated funds for the ante- mortem inspection of horses destined for human consumption. According  to a transport program official, USDA is not aware of any domestic facility  slaughtering horses for any purpose, including for zoos, as of the end of  2010. USDA identified at least three establishments—in Colorado,  Nebraska, and New Jersey—that import horsemeat for repackaging and  distribution to purchasers in the United States who feed the meat to  animals at zoos and circuses.
With the cessation of domestic slaughter, U.S. exports of horses intended  for slaughter increased to Canada and Mexico, the current locations of all  North American horse slaughtering facilities. As of the end of 2010,  Canada had four such facilities, and Mexico three, that were the principal  destinations of U.S. horses exported for slaughter. According to USDA  officials, this increase in exports began, in part, because shippers were  anticipating the closure of the three horse slaughtering facilities in the  United States at that time. From 2006 through 2010, Canadian and Mexican  imports increased by 148 percent and 660 percent, respectively, with the  total number of horses imported from the United States for slaughter  increasing from about 33,000 in 2006 to about 138,000 in 2010. In addition,  the total number of horses exported for all purposes, including breeding  and showing, also increased from 2006 through 2010, as shown in figure 3.  According to USDA officials, some horses exported for purposes other  than slaughter were likely “feeder” horses that were ultimately sent to  slaughtering facilities at a later time. For example, feeder horses may be  sent to a Canadian or Mexican feedlot for fattening before subsequently  being sent to a slaughtering facility in that country. The extent to which  horses are exported as feeder horses is unknown, according to USDA  officials.
The total number of U.S. horses sent to slaughter in 2006, the last full year  of domestic slaughter, was comprised of horses slaughtered domestically  (i.e., 104,899, as shown in fig. 2) and those sent for slaughter in Canada or  Mexico (i.e., 32,789, as shown in fig. 3)—for a total of 137,688 horses.  Taken together, the 137,984 U.S. horses that were sent to slaughter in  Canada or Mexico in 2010 is approximately equal to the total number of  horses slaughtered in 2006.
Additional certification may affect Canadian and Mexican exports of  horsemeat to Europe and, in turn, may affect the future export of horses  intended for slaughter from the United States to these countries. In 2010,  the European Union began prohibiting the importation of horsemeat from  horses treated with certain drugs and requiring countries to document  withdrawal periods for horses treated with other drugs before meat from  such horses could be imported to the European Union. Those regulations  precipitated similar regulations in Canada and Mexico. For example,  Canadian requirements went into effect on July 31, 2010, banning specific  medications, such as phenylbutazone—the most common anti- inflammatory medication given to horses—and requiring a 180-day  withdrawal period for other medications, such as fentanyl, an analgesic.  Also, since November 30, 2009, Mexico has required an affidavit by  transporters that horses have been free from certain medications for 180  days prior to shipment. Furthermore, effective July 31, 2013, the European  Union will require lifetime medication records for all horses slaughtered in  non-European Union countries before accepting imports of horsemeat  from those countries. According to APHIS and horse industry sources,  these requirements could result in shippers certifying that their horses are  free of medication residues without having first-hand knowledge or  documentation of the horses’ status for the previous 180 days.
section_title: Horse Sales and Prices Have Declined Since 2007, Especially for Lower- Valued Horses
paragraphs: With regard to sales, many of the State Veterinarians said that fewer horse  sales have occurred and fewer auctions have operated within their states  since 2007, in part, because of lower horse prices and sale commissions  since the cessation of domestic slaughter. As a result, they said, horse  owners have fewer options for getting rid of horses they no longer want.  There also has been reduction in the number of commercial shippers  doing business since the cessation of slaughter. In reviewing USDA  documentation, we found that more than 110 shippers operated from 2005  through 2006—the 2 years prior to the cessation of domestic slaughter in  2007—and fewer than 50 shippers operated from 2008 through 2009. Some  in the horse industry, as well as the State Veterinarians, generally  attributed this decrease to the closing of horse auctions around the  country, reflecting a smaller market and the lower profit margins resulting  from the increased costs of transporting horses intended for slaughter to  Canada and Mexico.
Horse industry representatives also stated that the closing of domestic  slaughtering facilities has dramatically affected the prices of horses.  National data on horse prices do not exist, but data from individual auctions  are available. For example, the Billings, Montana, horse auction, one of the  nation’s largest, which also sells horses purchased for slaughter, reported a  large increase in the percentage of lower-priced horses sold—the type of  horse that typically ends up at slaughter—and a general decrease in sale  prices. In May 2005, approximately 25 percent of “loose” horses—less  expensive horses that are run through the auction ring without a rider or  saddle—sold for less than $200 at that auction, whereas in May 2010, about  50 percent of loose horses sold for less than that amount.
The economic downturn in the United States that started in December  2007 also likely affected horse prices, according to the academic experts  and industry representatives we consulted. Since many U.S. horses are  used for recreational purposes, they are generally thought to be luxury  goods, and their ownership is sensitive to upturns and downturns in the  general economy. Furthermore, some horse sellers could no longer afford  to keep their horses, and potential buyers also were not able to offer as  much to buy horses or were not in the market to purchase horses at all,  according to some industry observers. In particular, a considerable  number of horse owners are from lower-to-moderate income households  and are less able to withstand the effects of a recession, according to  academic experts. For example, one study estimated that up to 45 percent  of horse owners have an annual household income of between $25,000 and  $75,000. According to several State Veterinarians, those owners are more  likely to have problems affording the care of their horses during an  economic downturn.
To estimate the impact of the cessation of domestic slaughter on horse  prices, we collected price data on more than 12,000 sale transactions from  spring 2004 through spring 2010 from three large horse auctions located in  the western, southern, and eastern United States. Our analysis of these  data controlled for the economic downturn and other factors that are  auction- and horse-specific, such as a horse’s breed/type, age, and gender,  which may also affect prices. Horse sale prices ranged from a minimum  of $4 to a maximum of $48,500, with most of these sales clustered at the  lower end of the price range. Figure 4 shows the distribution of these sales  prices, including the median and average price per head.
Our analysis also shows a statistically significant reduction in average sale  price across all price categories after the cessation of slaughter in 2007, as  shown in figure 5. For example, the average sale price for horses in the  lowest price category (20th percentile), dropped by about $110 per head  (from $433 to $323), and the average price for the highest price category  (80th percentile) dropped by about $140 per head (from $2,380 to $2,241).
The other variables that we considered included season of year of the auction, auction  location, and percentage of “no sales” (horses that did not receive a bid acceptable to the  seller) for each auction.
The effect on price was not statistically significant for that category.
These estimates suggest that the closing of domestic horse slaughtering  facilities had a significant and negative impact on horse prices at the low- to-mid levels of price at these auctions, while relatively higher-priced  horses appear not to have lost their value due to the cessation of slaughter.  Appendix II provides further details on the results of our analysis.
section_title: Horse Welfare Has Reportedly Declined, Although the Extent Is Unknown, Straining the Resources of State and Local Governments, Tribes, and Animal Welfare Organizations
paragraphs: Horse welfare in the United States has generally declined since 2007, as  evidenced by a reported increase in horse abandonments and an increase  in investigations for horse abuse and neglect. The extent of the decline is  unknown due to a lack of comprehensive, national data, but state officials  attributed the decline in horse welfare to many factors, but primarily to  the cessation of domestic slaughter and the U.S. economic downturn.  Abandoned, abused, and neglected horses present challenges for state and  local governments, tribes, and animal welfare organizations. In response,  some states and tribes have taken several actions to address these  challenges and the demand on their resources.
subsections: section_title: Cases of Horse Abandonments, Abuse, and Neglect Have Reportedly Increased Since 2007
paragraphs: In interviewing the 17 State Veterinarians, we asked whether the states  had data for cases of horse abandonments, abuse, and neglect. Most  veterinarians from these states, including some with the largest horse  populations—California, Florida, and Texas—said they do not routinely  collect such data because, in part, their resources are limited and  jurisdiction of animal welfare is usually a local (e.g., county)  responsibility. Nearly all the State Veterinarians, however, reported  anecdotes indicating that cases of abandonments and abuse or neglect  have increased in recent years. For example, several State Veterinarians,  including those from California, Florida, and Texas, reported an increase  in horses abandoned on private or state park land since 2007, although  specific data quantifying those abandonments were not available.
In addition, states that do collect some data reported increases in  abandonments or investigations of abuse and neglect since the cessation  of domestic slaughter. For example, data from Colorado showed a 50- percent increase in investigations for abuse and neglect from 1,067 in 2005  to 1,588 in 2009. Similarly, data from Indiana indicated that horse abuse  and neglect investigations more than doubled from 20 in 2006 to 55 in  2009. In addition, organizations representing localities, especially counties  and sheriffs, have reported an increasing problem. For example, the  Montana Association of Counties reported that the number of horses being  abandoned by their owners has rapidly increased since horse slaughter for  human consumption was halted in the United States, but the association  did not have specific data. In addition, the National Association of  Counties reported that the increasing abandonment problem is not  exclusive to Montana or the West but is happening nationwide.
section_title: State Veterinarians Attributed Decline in Horse Welfare Primarily to Cessation of Slaughter and Economic Downturn, but Representatives of Animal Welfare Organizations Question Cessation’s Impact
paragraphs: We also asked the 17 State Veterinarians whether horse welfare, in  general, had improved, declined, or remained about the same in their  states over the last 5 years. Without exception, these officials reported that  horse welfare had generally declined, as evidenced by a reported increase  in cases of horse abandonment and neglect. They most frequently cited  two factors that contributed to the decline in horse welfare—the cessation  of domestic slaughter in 2007 and the economic downturn—although they  generally were careful not to pin the decline on any single factor. Other  factors that they generally cited include poor weather conditions (e.g.,  drought in western states); the cost of horse disposal methods (e.g.,  veterinarian-assisted euthanasia); the increasing costs of feeding and  caring for horses; and the lack of auction markets to sell horses.
Among the factors affecting horse owners, the State Veterinarians said a  horse owner’s decision to abandon a horse generally related to (1)  cessation of domestic slaughter, (2) poor economic conditions, and (3)  low horse prices or lack of sale opportunities. They also said the factors  most often related to a horse owner’s neglect of a horse were (1) poor  economic conditions, (2) the cost of horse care and maintenance, and (3)  lower horse prices. Several State Veterinarians pointed out that, in their  professional experience, very few owners directly physically abuse their  horses, which would be a crime. More common, however, were owners  who neglected the feeding and proper care—such as providing farrier  services (i.e., hoof care) and vaccinations—of their horses. Thus, based on  the information these officials provided, the primary drivers for the  increase in abandonment and neglect cases are the cessation of domestic  slaughter, causing lower horse prices and difficulty in selling horses, and  the economic downturn, affecting horse owners’ ability to properly care  for their animals. As discussed, our analysis also showed that the  cessation of slaughter and the economic downturn generally reduced  horse prices at our selected auctions; in particular, the cessation affected  prices for the low-to-mid range priced horses that are more frequently  abandoned and neglected. Furthermore, regarding neglect, some State  Veterinarians, noting that people are more inclined to take care of that  which has value, said that the drop in horse prices affected some owners’  interest in caring for their animals, especially if their financial situation  had declined.
With regard to the entities most affected by the increase in abandoned and  neglected horses, the State Veterinarians generally said that counties,  including sheriffs, bear the responsibility for investigating potential cases  affecting horse welfare. Many State Veterinarians, particularly from  western states, indicated that their offices did not have the resources to  support the counties beyond providing expert veterinary advice regarding  conditions of abandoned and neglected horses, such as opining on a  horse’s nutritional status (known as “body scoring”).
section_title: State and Local Governments, Tribes, and Animal Welfare Organizations Are Affected by Neglected and Abandoned Horses, as Is the Federal Government
paragraphs: State and local governments, tribes, and animal welfare organizations,  especially horse rescues, are facing growing pressures to care for  abandoned and neglected horses at a time of economic recession and tight  budgets. According to the State Veterinarians, counties and animal welfare  organizations bear the costs of collecting and caring for abandoned  horses, while county governments generally bear the costs of investigating  reports of neglect. These officials said horse rescue operations in their  states are at, or near, maximum capacity, with some taking on more  horses than they can properly care for since the cessation of domestic  slaughter. One State Veterinarian added that his office is reluctant to  pressure horse rescues in his state to take on additional animals because  of this problem, even though alternatives are lacking. Some State  Veterinarians also described situations in which counties and sheriff  departments were reluctant to investigate reports of abandoned or  neglected horses because these jurisdictions lacked resources to deal with  the consequences of finding such animals. In some cases, these officials  said local jurisdictions may lack the resources even to initiate such  investigations, let alone to take possession of and care for these animals.  And in cases where an investigation results in horse seizures, local  jurisdictions may have to appeal for the public’s help in caring for the  animals. For example, the Montana State Veterinarian and his staff  described a recent situation in their state involving the seizure of hundreds  of neglected horses, many of which had low body scores and would not  have survived the winter without intervention. These horses were seized  from a ranch owner near Billings, Montana, in January 2011 who was no  longer able to afford their care. Because of the strain placed on state and  county resources to care for so many animals, these jurisdictions had to  seek private donations of hay to feed these horses. Figure 7 shows some of  the horses seized in this case.
Tribes also reported increases in abandonments on their land,  exacerbating the overpopulation of horse herds on tribal lands. According  to 2009 data from the Northwest Tribal Horse Coalition (now the National  Tribal Horse Coalition), the number of horses on its tribal lands exceeded  30,000 horses. When we met with representatives of tribes in the western  United States, they showed us significant degradation of their lands as a  result of the over-grazing by large populations of wild horses, as shown in  figure 8. They explained that the increase in abandoned horses on their  lands has compounded the challenge of restoring native and religiously- significant species of plants to their land—an effort often paid for, in part,  by the federal government. Moreover, domesticated horses abandoned on  public lands generally have poor survival prospects, according to officials  from the Department of the Interior’s Bureau of Land Management (BLM).  These horses are unfamiliar with which wild plants are edible and are  likely to be shunned or hurt by wild horses. These abandoned horses may  also introduce diseases to wild herds.
The effects of the increasing number of abandoned or neglected horses  have been felt by local animal welfare organizations as well—in particular,  the horse rescues and local societies for the prevention of cruelty to  animals that work with local officials to place such horses, according to  the State Veterinarians. The total number of rescues and their capacities is  unknown because there is no national registry or association for horse  rescues. However, both the National Association of Counties and the  Unwanted Horse Coalition estimated that the nationwide capacity of  rescue facilities is about 6,000 horses. They also reported that the vast  majority of these facilities are already full. Some State Veterinarians told  us that some rescue organizations have taken on more horses than they  can properly care for, especially in an economic environment in which  donations have declined; as a result, horses at some of these organizations’  facilities have been seized. For example, it has been reported that horse  rescues in California, Florida, New York, and West Virginia have recently  had their animals seized by local authorities because they were not  properly caring for them, and others in New Hampshire and Pennsylvania  closed due to financial difficulties.
In addition, the increase in unwanted domesticated horses available for  sale or being abandoned on public lands is affecting the federal  government’s ability to manage wild horse and burro populations. Most of  these wild animals are found on lands managed by BLM and USDA’s  Forest Service in the western United States. From 1971 through 2007,  BLM removed over 267,000 wild horses and burros from these lands, and  during the same period, approximately 235,700 of these animals were  adopted by the public under a BLM program that promotes these  adoptions. As we reported in 2008, BLM has, however, experienced a  steady decline in adoptions in recent years, which agency officials  attributed, in part, to the large number of domesticated horses flooding the  market. More recently, BLM officials said that annual adoptions had  fallen from about 8,000 in 2005 to about 3,000 in 2010. In an October 2010  Web message, the BLM Director estimated that the number of horses and  burros on lands the agency manages exceeds by about 12,000 the number  that would allow these lands to remain sustainable for other uses and  species. According to BLM officials, in addition to natural reproduction in  wild horse and burro herds, the increasing number of domesticated horses  being abandoned on public lands has contributed to this overpopulation  problem.
Other officials, including those from animal welfare organizations,  questioned the relevance of the cessation of domestic slaughter to the rise  in abandoned and neglected horses, which they attributed more to the  economic downturn. For example, in March 2010, Animal Welfare Institute  representatives said that since a 1998 California ban on dealing in horses  intended for slaughter, their organization has offered a $1,000 reward for  notification of abandoned horses but has never received a tip. In addition,  the Humane Society of the United States and the United Animal Nations  reported that there has been no documented rise in abuse and neglect  cases in California since the 1998 ban. United Animal Nations also  reported there was no documented rise in abuse and neglect cases in  Illinois following the 2-year closure of the horse slaughtering facility in  that state in 2002. Furthermore, Humane Society of the United States  officials said that owners who abandon horses are going to abandon them  regardless of having the option for domestic slaughter, adding that there  were instances of horse abandonment near domestic horse slaughtering  facilities before they closed. These officials acknowledged that there are  no good data on horse abandonments but noted an increase in  abandonments of all kinds of domesticated animals as the economy  worsened.
section_title: States and Tribes Have Taken a Variety of Actions Related to Horse Welfare and Slaughter
paragraphs: Some states took actions related to horse welfare and slaughter even  before the cessation of domestic slaughter in 2007. For example, in 1998,  California made it illegal to export horses for the purpose of having them  slaughtered for human consumption outside the state. Specifically,  California law makes it unlawful for any person to possess; to import into  or export from the state; or to sell, buy, give away, hold, or accept any  horse with the intent of killing or having another kill that horse, if that  person knows or should have known that any part of that horse will be  used for human consumption. Several state officials told us that this ban is  difficult to enforce because it may be difficult to show when an owner  knew or should have known that a buyer intended that animal for  slaughter. For example, if an owner transports a horse to an auction in  another state (e.g., Montana or Texas), it may be difficult to prove that the  owner specifically intended to sell the horse for slaughter or should have  known that the buyer of the horse intended to sell the horse for slaughter.
In addition, since 2007, states and tribes have taken a variety of legislative  or other actions related to horse welfare or slaughter. For example, in  2009 Montana passed a law that allows horse owners to surrender horses  that they cannot afford to maintain to the state at a licensed livestock  market without being charged with animal cruelty. Also, Colorado  authorized the inclusion of a checkbox on state income tax return forms  allowing taxpayers to make a contribution to the Colorado Unwanted  Horse Alliance. In authorizing the program, the Colorado legislature found  that the number of unwanted horses is increasing; most horse rescue  facilities are operating at capacity and have limited ability to care for  additional horses; and incidences of horse abuse and neglect are rising. In  addition, Kentucky passed a law in the spring of 2010 creating the  Kentucky Equine Health and Welfare Council and charged it with  developing regional centers of care for unwanted, abused, neglected, or  confiscated equines; creating a system of voluntary certification of equine  rescue and retirement operations; and suggesting statutory changes  affecting equine health, welfare, abuse, and neglect issues. Also, in 2009,  the National Congress of American Indians and the Northwest Tribal  Horse Coalition passed resolutions supporting domestic slaughter to  manage overpopulated horse herds. A number of the 17 states that we  examined have also enacted laws related to horse welfare and slaughter  since the cessation of domestic slaughter. For example:    Arkansas, Oklahoma, Utah, and Wyoming passed resolutions urging  Congress to facilitate the resumption of horse slaughtering in the  United States and oppose federal legislation that would ban domestic  slaughter. North Dakota and South Dakota passed similar resolutions  urging Congress to reinstate and fund federal inspection programs for  horse slaughter and processing.
Montana passed a law that would make it easier to establish a horse  slaughtering facility by making it harder for those opposing such a  plant to get an injunction against it while challenging various permits  that the plant would need to operate. In his 2009 testimony in support  of the bill, the chair of Montana’s Farm Bureau cited rising numbers of  unwanted horses and associated costs.
Wyoming amended its existing law to provide that strays, livestock, and  feral livestock, including horses, may be sent to slaughter as an  alternative to auction or destruction. The legislative changes also  provided that the state could enter into agreements with meat  processing plants whereby meat from livestock disposed of by  slaughter could be sold to state institutions or nonprofits at cost or to  for-profit entities at market rate.
Several states are seeking to reopen domestic horse slaughter facilities,  under a provision of the Food, Conservation, and Energy Act of 2008,  which authorized USDA to establish a new voluntary cooperative program  under which small state-inspected establishments would be eligible to ship  meat and poultry products in interstate commerce. USDA recently  finalized a rule to implement the program, but USDA officials said that the  rule does not include horsemeat, because recent appropriations legislation  has prohibited the use of federal funds for inspecting horses prior to  slaughter. And although, under the proposed program, the inspections  would be done by state officials, federal law requires USDA to reimburse  the state for at least 60 percent of the associated costs. However, as noted  by USDA officials, the prohibition in appropriations legislation against  using federal funds for inspecting horse at slaughter would preclude these  reimbursements. USDA officials said the same issue would preclude tribal  slaughtering facilities from shipping horsemeat in interstate or  international commerce as well.
section_title: USDA’s Oversight of the Welfare of Horses Transported for Slaughter Is Complicated by Three Challenges
paragraphs: USDA faces three challenges in its oversight of the welfare of horses  during their transport for slaughter. First, APHIS faces several specific  management challenges in implementing the transport program. Second,  legislative prohibitions on using federal funds for inspecting horses prior  to slaughter impede USDA’s ability to ensure horse welfare. Third, the  cessation of domestic slaughter has diminished APHIS’s effectiveness in  overseeing the transport and welfare of horses intended for slaughter.
subsections: section_title: Management Challenges Affect APHIS’s Implementation of the Slaughter Horse Transport Program
paragraphs: Several management challenges are affecting APHIS’s implementation of  the transport program. These challenges include (1) delays in issuing a  final rule to give the agency greater oversight over horses transported for  slaughter to protect their welfare; (2) limited staff and funding that  complicates the agency’s ability to ensure the completion, return, and  evaluation of owner/shipper certificates; and (3) a lack of current, formal  agreements with Canadian, Mexican, and state officials whose cooperation  is needed for program implementation.
subsections: section_title: APHIS Has Not Issued a Final Rule to Better Protect Horses Transported for Slaughter
paragraphs: APHIS’s transport regulation sets minimum care standards to protect  horse welfare, but it applies only when the horses are being moved  directly to slaughtering facilities, at which point shippers designate the  horses as “for slaughter” on an owner/shipper certificate and move the  horses directly to slaughtering facilities. Consequently, the regulation does  not apply to horses that are moved first to an assembly point, feedlot, or  stockyard before going to slaughter. For example, a horse’s journey to  slaughter may have covered several states, from point-of-purchase at an  auction to an assembly point, such as a farm; from the assembly point to a  feedlot or stockyard; and from the feedlot or stockyard to a point near a  slaughtering facility or a border crossing where the slaughter designation  was first made.
In reviewing a generalizable sample of nearly 400 owner/shipper  certificates from before and after cessation of domestic slaughter in 2007,  we found that shippers usually designated horses as “for slaughter” on the  final leg of their journey to a slaughtering facility, as allowed under the  current regulation. For example, prior to cessation in 2007, shippers  sometimes designated horses near the U.S. facility in which they would be  slaughtered. Specifically, we found cases in which horses shipped to the  slaughtering facility in DeKalb, Illinois, were designated for slaughter at a  point just a few miles from the plant. Similarly, since cessation in 2007,  shippers sometimes made this designation near border crossings with  Canada or Mexico. For example, since cessation, we found shipments of  horses being designated for slaughter in Shelby, Montana, about 36 miles  from the border crossing into Canada and in El Paso, Texas, about 10  miles from where they cross the border into Mexico. According to APHIS  officials, in virtually all of these cases, without a “for slaughter”  designation, it is likely that before reaching these designation points, the  horses already had traveled for long distances within the United States  without the protection of the APHIS transport regulation to ensure their  humane treatment. For example, some of the horses may have been  transported in double-deck trailers intended for smaller livestock animals;  as discussed, the APHIS transport regulation prohibits the use of this type  of trailer after the designation for slaughter is made.
To address this issue, APHIS proposed, in November 2007, to amend the  existing transport regulation to extend APHIS’s oversight of horses  transported for slaughter to more of the transportation chain that these  horses pass through. The proposed rule defines equine for slaughter as an  equine transported to intermediate assembly points, feedlots, and  stockyards, as well as directly to slaughtering facilities. The current  regulation does not define equine for slaughter and only applies to those  equines being transported directly to slaughtering facilities. APHIS has  experienced repeated delays in issuing a final rule that would extend  APHIS’s oversight of horses being transported for slaughter. According to  USDA officials, the delay is the result of a number of factors, including,  competing priorities and the need to address substantive, public  comments on the proposed rule that resulted in reclassifying it as  significant under Executive Order 12866. As of June 2011, USDA officials  said they anticipate issuing the final rule by the end of calendar year 2011.
APHIS officials noted that this change to the transport regulation could  help address another issue as well. Specifically, the regulation currently  does not apply to shippers transporting horses to Canada as feeder  horses. As discussed, some U.S. horses exported for purposes other than  slaughter (i.e., not designated for slaughter on an owner/shipper  certificate) may be feeder horses that are ultimately sent to slaughtering  facilities at a later time. According to APHIS officials, the number of feeder  horses has likely grown with the increase in total horse exports to Canada  since 2007. Because feeder horses are not designated for slaughter before  crossing the border, they are not covered by the transport regulation at  any point in their journey. If the transport regulation is amended, however,  as APHIS has proposed, the designation “equine for slaughter” would  apply to these animals during the leg of their trip from the U.S. auction  where they were purchased to the border crossing, including any  intermediate stops within the United States at assembly points, feedlots,  and stockyards. Such a designation would place those animals under the  protection afforded by APHIS’s oversight. APHIS officials also noted that  the provision of the 1996 Farm Bill authorizing the transport regulation is  the only federal statute that regulates the transportation of horses, and  they commented on the irony that horses designated for slaughter are  provided greater protection, under current federal law and the transport  regulation, than other horses in commercial transit.
section_title: Limited Staff and Funding Complicates Program Implementation
paragraphs: Over the past 6 fiscal years, the transport program’s annual funding has  varied, generally declining from a high of over $306,000 in fiscal year 2005  to about $204,000 in fiscal year 2010. This funding primarily provides for  the salaries and expenses of two staff, one of whom is the national  compliance officer, who inspects conveyances and owner/shipper  certificates for compliance with the transport regulation, with the  remainder going to travel costs. The two program officials stated that the  program’s limited funding, particularly for travel, has significantly  curtailed their ability to provide coverage at border crossings and to work  with shippers and inspectors in foreign slaughtering facilities to ensure  compliance with the transport regulation. For example, with one  compliance officer, the program cannot adequately cover the numerous  border crossings on the Canadian and Mexican borders through which  shipments of horses intended for slaughter move. In April 2011, transport  program officials said they recently had begun training inspectors in  APHIS’s Western region and Texas area office to assist the program at  southern border crossings by, in part, collecting owner/shipper certificates  and returning them to APHIS headquarters. However, these officials said  they did not have a written plan or other document that describes this  initiative, including the number of staff to be involved, their anticipated  duties to support the transport program, and the time frames for  implementing the initiative. Hence, while this appears to be a positive step,  we were unable to evaluate the potential usefulness of this initiative.  Figure 9 provides information on the transport program’s funding for fiscal  years 2005 through 2010.
According to program officials, the reduction in funds in 2009 was the result  of a cut in travel funds that were allocated to other APHIS programs. The  program officials added that the seesaw nature of the program’s funding, as  well as the fact the program has just two staff, has affected their ability to  ensure compliance with, and enforce, the transport regulation and  contributed to year-to-year variations in the number of violations found. In  addition, because of limited staff and funding, APHIS stopped entering  information from owner/shipper certificates into an automated database in  2005. Agency officials said that the database was used in the early years of  the transport program to document demographic information, such as the  identity of shippers and origin of horses they shipped. However, after  several years, this information was well established, and there was no need  to continue to collect data for this purpose. They also said that the database  did not provide beneficial information for protecting horse welfare that  justified the cost of maintaining the database. Nonetheless, automating the  certificate data would make it easier for the agency to analyze them to, for  example, identify potential problem areas for management attention and  possible enforcement action, such as patterns of violations or other  problems associated with particular shippers, border crossings, or  slaughtering facilities. It would also allow the agency to easily identify  buying trends and common shipping routes. Furthermore, automating data  from the certificates on the number of horses in each shipment could  potentially provide USDA a more accurate count of the number of U.S.  horses exported for slaughter. At present, to estimate the number of horses  exported for this purpose, USDA’s Foreign Agricultural Service pieces  together Canadian and Mexican data on horses imported for slaughter and  makes certain extrapolations to arrive at an approximate number since no  official U.S. trade data exist on horses exported for slaughter.
Federal internal control standards call for agencies to obtain, maintain,  and use relevant, reliable, and timely information for program oversight  and decision making, as well as for measuring progress toward meeting  agency performance goals. Furthermore, the Office of Management and  Budget’s implementing guidance directs agency managers to take timely  and effective action to correct internal control deficiencies. APHIS’s lack  of a reliable means of collecting, tracking, and analyzing owner/shipper  certificates constitutes an internal control weakness and leaves the agency  without key information and an important management tool for  enforcement of the transport regulation.
section_title: Uneven Cooperation with Canadian, Mexican, and State Officials Impedes Oversight
paragraphs: With the cessation of domestic slaughter and the transport program’s  limited staff and funding, APHIS relies on the cooperation of officials from  Canada and Mexico working at border crossings and in their countries’  slaughtering facilities to help the agency implement the transport regulation.  APHIS has sought similar cooperation from officials working for the Texas  Department of Agriculture regarding horses exported through Texas border  crossings. The effectiveness of these cooperative arrangements has been  uneven, in part because APHIS lacks current, formal written agreements  with its foreign and state counterparts to better define the parameters of  this cooperation and ensure continuity over time as the personnel involved  change. We have previously reported that by using informal coordination  mechanisms, agencies may rely on relationships with individual officials to  ensure effective collaboration and that these informal relationships could  end once personnel move to their next assignments.
Regarding Canada, representatives of APHIS and the Canadian Food  Inspection Agency (CFIA) signed a letter of intent in October 2002  outlining their shared responsibilities for enforcement of the transport  regulation. Each country pledged to help the other enforce its regulations.  For example, to assist APHIS, CFIA agreed to ensure, either at points of  entry or slaughtering facilities, the following regarding shipments of U.S.  horses to Canada for slaughter:    health certificates for the horses are endorsed by USDA-accredited  veterinarians within the 30 days prior to export;    horses are clinically healthy, fit for travel, and transported humanely to  the points of entry;    owner/shipper certificates are properly completed, including the date,  time, and location the horses were loaded;    horses are listed correctly on the owner/shipper certificate, so that for  example, the backtags on the horses match the backtags listed on the  certificate;    an ante-mortem inspection of each horse is performed;    date and time the shipment arrived at the facility is noted on the    copies of all relevant documents (e.g., owner/shipper certificates) are  returned to APHIS each month.
APHIS officials said they rely on owner/shipper certificates, properly  completed by shippers and CFIA officials, as appropriate, and returned by  CFIA to APHIS for compliance and enforcement purposes. For example,  APHIS needs information on the timing of the loading and off-loading of a  shipment of horses to assess whether a shipper complied with regulatory  requirements related to the amount of time a shipment is in transit. Figure  10 highlights sections of the owner/shipper certificate that are to be  completed by shippers or Canadian or Mexican officials.
In reviewing a generalizable sample of certificates returned by CFIA from  2005 through 2009, however, we found instances in which certificates  were not properly completed by either the shipper or CFIA officials. Based  on the results of our review, we estimate that about 52 percent of  certificates were missing key information that should have been filled in  by either the shipper (e.g., loading date and time, or certification that the  horses were fit for transport) or CFIA (e.g., arrival date and time, or  slaughtering facility identification). In addition, we estimate that about 29  percent of certificates returned to APHIS were missing some or all of the  information to be provided by CFIA officials at the slaughtering facility.
Moreover, in our review of these certificates we noted that the extent to  which they were returned incomplete from CFIA to APHIS increased over  time. For example, from 2005 through 2006, the 2 years prior to the  cessation of domestic slaughter in the United States, we estimate that  about 48 percent of certificates were missing key information that should  have been completed by either the shippers or CFIA officials. However,  from 2008 through 2009, the 2 years after the cessation, we estimate that  about 60 percent of certificates were missing key information. This  increase suggests that the growth in U.S. horse exports for slaughter since  the cessation has been accompanied by an increase in problems with  owner/shipper certificates needed by APHIS for enforcement purposes.  However, APHIS and CFIA have not revisited this agreement since 2002 to  reflect changes since the cessation of slaughter in 2007, when the volume  of horses exported to Canada increased significantly and APHIS became  more dependent upon cooperation from Canadian border officials and  CFIA inspectors in slaughtering facilities.
Regarding Mexico, APHIS lacks a written agreement with its relevant  counterpart, Mexico’s Secretaría de Agricultura, Ganadería, Desarrollo  Rural, Pesca y Alimentación (SAGARPA), to promote cross-border  cooperation. APHIS officials said that they drafted an agreement in 2002,  similar to the one with CFIA, and that APHIS had contacts with SAGARPA  about finalizing it during 2002 and 2003. However, according to APHIS  officials, the Mexican agency did not provide a response consenting to the  agreement, and APHIS has not renewed the effort to get an agreement  since 2003. Thus, these officials said, enforcing the transport regulation  along the southern border is more difficult than along the northern border  with Canada. Moreover, while shippers on the northern border can drive  their conveyances directly into Canada, U.S. shippers generally are not  insured to travel into Mexico. As a result, shippers unload their horses  before crossing the border, where SAGARPA officials inspect the horses.  The horses are subsequently loaded onto a Mexican conveyance for  transport to a Mexican slaughtering facility.
In the absence of a formal, written agreement between APHIS and  SAGAPRA or the Texas Department of Agriculture, APHIS does not  receive official cooperation from Mexican or Texas officials. As a  consequence, owner/shipper certificates may not be correctly filled out by  the shippers and collected, completed, and returned to APHIS from either  the border crossing or the Mexican slaughtering facility with information  about shipment dates and times and horse conditions. In some cases,  APHIS had an informal understanding with SAGARPA officials at a border  crossing that they would collect and return the certificates to APHIS. In  other cases, at Texas border crossings, employees of the Texas  Department of Agriculture informally cooperated with APHIS by collecting  and returning the certificates to the agency and alerting it to possible  violations of the transport regulation. However, these informal  arrangements have not been sustained over time and have not been  sufficient to ensure the return of certificates to APHIS. For example, as of  March 2011, APHIS transport program officials said they have not received  any owner/shipper certificates from Texas border crossings in more than a  year. Although some U.S. horses intended for slaughter are exported  through a border crossing in New Mexico, the majority of horses bound  for Mexico pass through the Texas crossings. Thus, program officials said  their ability to enforce the transport regulation for shipments of horses  exported through these border crossings has been severely hampered.
In addition to the more recent problem with certificates not being returned  from the Texas border crossings, we reviewed a generalizable sample of  owner/shipper certificates returned from the southern border from 2005  through 2009 to determine the extent to which they were correctly  completed by shippers and SAGARPA officials. Based on the results of our  review, we estimate that about 48 percent of these certificates from 2005  through 2009 were missing key information to be provided by either  shippers or SAGARPA officials. Moreover, about 54 percent of certificates  from 2008 through 2009 were missing such information, suggesting an  increase in problems associated with the recent increase in exports to  Mexico of horses intended for slaughter. In addition, we estimate that  about 39 percent of certificates returned to APHIS were missing some or  all information, including the date and time the horses were unloaded at  the border, to be provided by SAGARPA officials.
section_title: Legislative Prohibitions Impede USDA’s Ability to Ensure Horse Welfare
paragraphs: Legislative prohibitions have impeded USDA’s ability to protect horse  welfare since fiscal year 2006. First, as discussed, appropriations bills for  fiscal years 2006 through 2010 have prohibited APHIS from using federal  funds to inspect horses being transported for slaughter. As a result,  according to agency officials, the transport program’s compliance officer  may only inspect the owner/shipper certificates associated with the  shipment of horses and the conveyance on which the horses are  transported. That is, only while inspecting these items may the officer  also incidentally observe any potential violations of the transport  regulation regarding the physical condition of the horses because of the  annual prohibition on the expenditure of federal funds on inspecting  horses. The compliance officer said this makes it difficult to ensure that  horses are transported humanely to slaughter and to collect information  on potential violations that is needed for APHIS to pursue enforcement  actions. For example, while inspecting a conveyance being used to  transport horses intended for slaughter in 2010, the compliance officer  found that a mare in the shipment had given birth to a foal. Because the  transport regulation requires shippers to verify that horses are not likely  to give birth during shipment, the birth of a foal in transit represented a  potential violation. However, because of the prohibition on using funds  to inspect horses, the officer was unable to inspect the horses to  determine which mare had given birth. Thus, the opportunity was lost to  document a potential violation of the regulation by the shipper.  Moreover, according to the officer, compliance probably has suffered  because shippers are aware that transport program officials cannot  inspect horses in transit to substantiate potential violations. According to  APHIS officials, another impediment to their investigations of potential  violations of the transport regulation is USDA’s lack of subpoena  authority to access the records of alleged violators or to compel persons  to testify in administrative hearings and to produce documentary  evidence for such hearings. Specifically, although USDA has such  authority under several other APHIS-administered statutes (e.g., Animal  Health Protection Act, Horse Protection Act, and Plant Protection Act), it  does not have this authority under the authorizing legislation for the  transport regulation—the 1996 Farm Bill. According to APHIS officials,  the agency would welcome the addition of subpoena authority to  promote enforcement of the slaughter horse transport regulation.
Second, USDA also has been prohibited from using federal funds to  inspect horses prior to slaughter for human consumption at slaughtering  facilities. As discussed, the Federal Meat Inspection Act requires  inspection of all cattle, sheep, swine, goats, and horses before they are  slaughtered and processed into products for human food and to ensure  that meat and meat products from these animals are unadulterated,  wholesome, and properly labeled. Prior to the appropriations prohibition,  and before the cessation of domestic slaughter, FSIS officials in U.S.  slaughtering facilities inspected the condition of horses before slaughter  as well as the horsemeat after slaughter. The prohibition on the use of  funds for required inspections has, in effect, banned the slaughter of  horses for food in the United States, and, as a consequence, moved this  slaughter to other countries where USDA lacks jurisdiction and where the  Humane Methods of Slaughter Act does not apply. Therefore, USDA is less  able to ensure the welfare of horses at slaughter. And, as was the case with  horses in transit to slaughter, APHIS officials speculated that compliance  with the transport regulation has suffered because shippers are aware that  the program can no longer leverage the assistance of USDA personnel in  slaughtering facilities to ensure the completion of shipping paperwork or  note the condition of individual horses in a shipment. This view seems  consistent with our analysis of shipping certificates which found, as  discussed, a statistically significant increase in incomplete certificates  after the cessation of domestic slaughter. In addition, these officials noted  that the loss of FSIS’s assistance in slaughtering facilities, as well as the  prohibition on APHIS’s inspections of horses in transit, has led to a general  decline in investigation cases since 2007. Figure 11 shows the number of  investigation cases and alleged violators for fiscal years 2005 through 2010.
section_title: Cessation of Domestic Slaughter Has Diminished APHIS’s Ability to Implement the Transport Regulation to Protect Horse Welfare
paragraphs: According to APHIS and animal protection officials, horse welfare is likely  to suffer as a consequence of horses traveling significantly farther to  slaughter since the cessation of domestic slaughter, including an increased  possibility of injuries when horses are confined in a conveyance with other  horses over longer transport distances and travel times. As these officials  explained, horses are by nature fight or flight animals, and when grouped  in confinement, they tend to sort out dominance. In the tight quarters of a  conveyance, weaker horses are unable to escape from more dominant and  aggressive animals and, thus, are more prone to sustaining injuries from  kicks, bites, or bumping into other horses or the walls of the conveyance.  Moreover, once a shipment of U.S. horses has crossed the border into  Canada or Mexico, APHIS no longer has authority to oversee their welfare,  and these animals may be in transit for long distances in these countries  before reaching a slaughtering facility. For example, the slaughtering  facilities in Mexico that process U.S. horses are located near Mexico City,  well within the interior of the country. In addition, the conveyances that  horses are transferred to for travel in Mexico are not subject to the  requirements of the transport regulation.
Our analysis of a sample of owner/shipper certificates for 2005 through  2009 showed that, in 2005 and 2006, before domestic slaughter ceased,  horses traveled an average of 550 miles after being designated for  slaughter. In contrast, in 2008 and 2009, after domestic slaughter ceased,  our analysis showed horses intended for slaughter traveled an average of  753 miles—an increase of about 203 miles. (The actual distances that the  horses traveled, on average, before and after the cessation is likely to be  greater than what our analysis showed because some shippers were prone  to designate horses intended for slaughter close to the slaughtering facility  before cessation, or near the border after cessation.) Over the longer  distances horses now travel to Canadian and Mexican slaughtering  facilities, APHIS is less able to effectively implement the transport  regulation to protect horse welfare. Figure 12 provides an example of  contrasting shipping routes and relative travel distances from before and  after domestic slaughter ceased.
In addition, since the cessation of domestic slaughter, USDA has been less  able to help BLM prevent the slaughter of wild horses and burros. Wild  horses and burros may be adopted, but title does not pass to the adopter  until 1 year after the adoption, upon a determination that the adopter has  provided humane conditions, treatment, and care for the animal over that  period. Upon transfer of title, the animals lose their status as wild free- roaming horses and burros. As we reported in 2008, from 2002 through  the end of domestic slaughter in September 2007, about 2,000 former BLM  horses were slaughtered by owners to whom title to the horses had  passed. When horses were slaughtered domestically, FSIS inspectors in  slaughtering facilities watched for horses bearing the BLM freeze mark  indicative of the wild horse and burro program. They would then alert  BLM officials so that the title status of these animals could be checked to  ensure that BLM horses were not slaughtered. As a result of FSIS’s  assistance during the same time period, at least 90 adopted wild horses  that were still owned by the government were retrieved from slaughtering  facilities before they could be slaughtered. However, now that the  slaughter of U.S. horses occurs in Canada and Mexico, FSIS can no longer  provide this assistance. Furthermore, shippers are not required to identify  BLM horses on owner/shipper certificates, but in reviewing nearly 400  owner/shipper certificates, we found indications that six adopted BLM  horses had been shipped across the border for slaughter. Because  inspection officials in foreign slaughtering facilities have no obligation to  check with BLM or other U.S. authorities before slaughtering these  animals, it is unknown whether title for those animals had passed to the  adopter or how many more BLM horses may have been shipped across the  border for slaughter.
section_title: Conclusions
paragraphs: The slaughter of horses for any purpose, especially for human  consumption, is a controversial issue in the United States that stems  largely from how horses are viewed, whether from an historic, work,  show, recreation, or commodity point of view. As a result, there is tension  between federal law mandating the inspection of horses and certain other  animals at slaughter (i.e., the Federal Meat Inspection Act) and annual  appropriations acts prohibiting the use of funds to inspect horses at, or  being transported to, slaughtering facilities.
What may be agreed upon, however, is that the number of U.S. horses that  are purchased for slaughter has not decreased since domestic slaughter  ceased in 2007. Furthermore, an unintended consequence of the cessation  of domestic slaughter is that those horses are traveling farther to meet the  same end in foreign slaughtering facilities where U.S. humane slaughtering  protections do not apply. Their journey from point-of-purchase to  slaughtering facilities in other countries, with multiple potential stops in- between at assembly points, feedlots, and stockyards, includes the  possibility of being shipped in conveyances designed for smaller animals  or confined in these conveyances for excessive time periods. The current  transport regulation, the Commercial Transportation of Equines to  Slaughter regulation, does not apply until a shipment is designated for  slaughter, which can be the last leg of a longer journey. A 2007 proposed  rule to amend the regulation, which would define “equines for slaughter”  and extend APHIS’s oversight and the regulation’s protections to more of  the transportation chain, has not been issued as final as of June 2011.
To adequately implement the transport regulation and oversee the welfare  of horses intended for slaughter, the horse transport program must ensure  that owner/shipper certificates are completed, returned, and evaluated for  enforcement purposes. Many certificates are not now returned, and others  are returned incomplete. Furthermore, because of limited staff and  funding and these missing and incomplete certificates, the program is less  able to identify potential violations of the transport regulation. The  program also stopped automating certificate data. Even with the present  limitations of incomplete and missing certificates, automating these data is  important for management oversight of compliance with the regulation  and to direct scarce program resources to the most serious problem areas.  Moreover, in time, as corrective actions are taken, these data will likely  become even more useful for oversight purposes. If the proposed rule to  extend APHIS’s authority to more of the transportation chain is issued as  final, the program’s credibility will be further challenged unless APHIS  identifies ways to leverage other agency resources to ensure compliance  with the transport regulation.
With U.S. horses now being shipped to Canada and Mexico for slaughter,  APHIS depends upon cooperation with these countries, or state officials at  the borders, to help it implement the transport regulation, but it does not  have effective agreements that make clear each party’s obligations and that  help ensure cooperation will continue as personnel change. APHIS  developed an agreement with Canadian officials in 2002, but recently the  agency has been receiving incomplete owner/shipper certificates from them,  raising questions about the current agreement’s effectiveness and whether  both APHIS and Canadian officials have the same understanding about the  assistance APHIS seeks. Furthermore, APHIS does not have formal  cooperative agreements with its Mexican counterpart and the Texas  Department of Agriculture—the entities that oversee most U.S. horses  exported to Mexico for slaughter. APHIS has not received any  owner/shipper certificates from either of these entities in more than a year.
Recent, annual congressional actions to prohibit the use of federal funds  to inspect horses in transit or at slaughtering facilities have complicated  APHIS’s ability to implement the transport regulation, thus horses now  travel longer distances to foreign slaughtering facilities. APHIS lacks  jurisdiction in these countries, and it can no longer depend on the help it  once received from other USDA officials present in domestic slaughtering  facilities to catch potential violations of the transport regulation. Even  after the recent economic downturn is taken into account, horse  abandonment and neglect cases are reportedly up, and appear to be  straining state, local, tribal, and animal rescue resources. Clearly, the  cessation of domestic slaughter has had unintended consequences, most  importantly, perhaps, the decline in horse welfare in United States.
section_title: Matters for Congressional Consideration
paragraphs: In light of the unintended consequences on horse welfare from the  cessation of domestic horse slaughter, Congress may wish to reconsider  the annual restrictions first instituted in fiscal year 2006 on USDA’s use of  appropriated funds to inspect horses in transit to, and at, domestic  slaughtering facilities. Specifically, to allow USDA to better ensure horse  welfare and identify potential violations of the Commercial Transportation  of Equines to Slaughter regulation, Congress may wish to consider  allowing USDA to again use appropriated funds to inspect U.S. horses  being transported to slaughter. Also, Congress may wish to consider  allowing USDA to again use appropriated funds to inspect horses at  domestic slaughtering facilities, as authorized by the Federal Meat  Inspection Act. Alternatively, Congress may wish to consider instituting an  explicit ban on the domestic slaughter of horses and export of U.S. horses  intended for slaughter in foreign countries.
section_title: Recommendations for Executive Action
paragraphs: To better protect the welfare of horses transported to slaughter, we  recommend that the Secretary of Agriculture direct the Administrator of  APHIS to take the following four actions:  Issue as final a proposed rule to amend the Commercial Transportation  of Equines to Slaughter regulation to define “equines for slaughter” so  that USDA’s oversight and the regulation’s protections extend to more  of the transportation chain.
In light of the transport program’s limited staff and funding, consider  and implement options to leverage other agency resources to assist the  program to better ensure the completion, return, and evaluation of  owner/shipper certificates needed for enforcement purposes, such as  using other APHIS staff to assist with compliance activities and for  automating certificate data to identify potential problems requiring  management attention.
Revisit, as appropriate, the formal cooperative agreement between  APHIS and CFIA to better ensure that the agencies have a mutual  understanding of the assistance APHIS seeks from CFIA on the  inspection of U.S. horses intended for slaughter at Canadian  slaughtering facilities, including the completion and return of  owner/shipper certificates from these facilities.
Seek a formal cooperative agreement with SAGARPA that describes  the agencies’ mutual understanding of the assistance APHIS seeks from  SAGARPA on the inspection of U.S. horses intended for slaughter at  Mexican border crossings and slaughtering facilities and the  completion and return of owner/shipper certificates from these  facilities. In the event that SAGARPA declines to enter into a formal  cooperative agreement, seek such an agreement with the Texas  Department of Agriculture to ensure that this agency will cooperate  with the completion, collection, and return of owner/shipper  certificates from Texas border crossings through which most  shipments of U.S. horses intended for slaughter in Mexico pass.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to USDA for review and comment. In  written comments, which are included in appendix III, USDA agreed with  the report’s recommendations. Regarding the first recommendation, USDA  said it will move as quickly as possible to issue a final rule, but first it must  formally consult with the Tribal Nations that are experiencing particularly  serious impacts from abandoned horses. USDA said that if it can  successfully conclude these negotiations in the next 2 months, it would  publish the final rule by the end of calendar year 2011. However, USDA  also said that it needs time to thoughtfully consider those consultations in  regards to the regulation’s implementation. Regarding the second  recommendation, USDA noted it is training additional APHIS port  personnel in Slaughter Horse Transport Program enforcement activities at  Texas ports of embarkation and plans to expand this effort in fiscal year  2012 within the allocated budget. USDA also stated it is training  administrative personnel to evaluate owner/shipper certificates for  enforcement purposes, and it will explore whether new technologies have  made the process of entering information from those certificates into a  database less costly in order to do so within existing funding. Regarding  the third recommendation, USDA said it would consult with CFIA and  propose revisions to the current cooperative agreement. Regarding the  fourth recommendation, USDA indicated it will consult with SAGARPA  and the Texas Department of Agriculture and propose the development of  formal agreements with one or both.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Agriculture, and other interested parties. In  addition, the report will be available at no charge on GAO’s Web site at  http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or shamesl@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report. GAO staff who made major contributions to this  report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our report objectives were to examine (1) the effect on the U.S. horse  market, if any, since domestic slaughter of horses for food ceased in 2007;  (2) the impact, if any, of these changes on horse welfare and on states,  local governments, tribes, and animal welfare organizations; and (3)  challenges, if any, to the U.S. Department of Agriculture’s (USDA)  oversight of the transport and welfare of U.S. horses exported for  slaughter.
In general, to address these objectives, we reviewed documents and/or  interviewed officials from    USDA, including the Animal and Plant Health Inspection Service  (APHIS), Food Safety Inspection Service, Foreign Agricultural Service,  National Agricultural Statistics Service, and the Office of Inspector  General;    other federal agencies such as the Department of the Interior’s Bureau  of Land Management, Department of Commerce, Department of  Labor’s Bureau of Labor Statistics, and Congressional Research  Service;    state and local governments, including the National Association of  State Departments of Agriculture, Montana Association of Counties,  National Association of Counties, National Sheriffs Association, and  Western State Sheriffs Association; and    Native American tribes, including several Great Plains Tribes, the  Northwest Tribal Horse Coalition, and several Southwestern Tribes.
We also reviewed documents and/or interviewed representatives from  livestock industry organizations, including the American Association of  Equine Practitioners, American Horse Council, American Veterinary  Medical Association, Florida Animal Industry Technical Council,  Maryland Horse Industry Board, Livestock Marketing Association,  United Horsemen’s Front, United Organizations of the Horse,  Unwanted Horse Coalition, and commercial horse auctions located in  various states, including Alabama, Arkansas, Montana, Oklahoma,  Pennsylvania, and Virginia; and    animal welfare organizations, including the American Society for the  Prevention of Cruelty to Animals, Animal Law Coalition, Animal  Welfare Institute, Equine Welfare Alliance, and Humane Society of the  United States.
In addition, we reviewed published literature related to the horse industry  and livestock slaughter, and we interviewed academic experts who have  researched and written about these issues. Furthermore, we reviewed  relevant federal and state legislation regarding horse inspection, slaughter,  transport, and/or welfare, including bills proposed but not enacted in the  111th U.S. Congress and by state legislatures, and related federal  regulations, including USDA’s Commercial Transportation of Equines to  Slaughter regulation and related guidance. To determine the extent to  which slaughter for non-food purposes occurs in the United States, we  identified facilities that had been reported to slaughter horses for other  purposes (e.g., food for animals at zoos and circuses) and interviewed the  Slaughter Horse Transport Program’s compliance officer about the  officer’s examinations into these facilities’ operations. We also visited  border crossings in New Mexico and Texas, horse auctions in Montana  and Pennsylvania, and tribal lands in the northwest United States to  observe the handling of horse shipments at the border, horse sale  procedures, and wild and abandoned horse management challenges,  respectively.
To further examine the effect on the U.S. horse market, if any, since the  cessation of domestic slaughter, we used an econometric analysis and  regression methods to estimate the effect of the cessation on horse prices,  while considering the effects of the U.S. economic downturn (i.e.,  recession) and horse- and auction-specific variables. We did this analysis  because we found few current studies addressing the effect of the  cessation on horse prices in the economic literature. In undertaking this  work, we collaborated with Dr. Mykel Taylor, Assistant Professor and  Extension Economist in the School of Economic Sciences at Washington  State University, who was studying this issue at the time we began our  work and previously had modeled and written about the determinants of  horse prices.
We obtained data for our analysis from multiple sources. Regarding horse  prices, we obtained sale price and horse characteristic data on 12,003 sale  transactions from spring 2004 through spring 2010 at three large horse  auctions located in Montana, Oklahoma, and Virginia. Specifically, we  extracted data from price sheets and catalogue information published or  otherwise provided by the owners of these auctions. We chose these  auctions because they were located in geographically diverse parts of the  country. In addition, these auctions regularly sell lower-value horses, as  well as more expensive horses valued for leisure, work, or show purposes.  Some, but not all, of the lower-valued horses in the data are bought for  slaughter, including some referred to as “grade” or “loose” horses. We  assumed that if there was an effect from the cessation of domestic horse  slaughter, prices for lower-valued horses would be most impacted.  Consequently, we did not include data in our analysis from auctions  catering to very high-priced racing and show horses. We also obtained  data from the Department of Labor’s Bureau of Labor Statistics on  changes in unemployment in each of the regions in which the horse  auctions we selected are located. We used these unemployment data as a  proxy for the economic downturn experienced in recent years. We  performed quality tests and interviewed knowledgeable agency officials  and auction representatives about the sources of the data and the controls  in place to maintain the data’s integrity, and we found the data to be  sufficiently reliable for the purposes of this report.
Using these data, we analyzed whether there was a significant reduction in  average sale price per head after the cessation of domestic slaughter. For  purposes of our analysis, the period prior to cessation included spring  2004 through 2006, and the period after cessation included 2007 through  spring 2010 (because most domestic slaughtering facilities were closed by  early 2007). To evaluate the potential reasons for this reduction in price,  we also developed a hedonic model, which allows one to describe the  price of a good (e.g., a horse) as a function of the value of intrinsic  characteristics of that good (e.g., a horse’s breed, age, and gender). Thus,  we specified a horse’s sale price as a function of variables that describe its  physical attributes, such as breed, age, and gender; auction-specific  variables, such as region of the country and season of the year; and other  variables, such as the cessation of domestic slaughter and economic  downturn. We used the quantile regression technique to derive coefficients  to explain the impact on horse prices for each variable in the model.  Quantile regression is a statistical method that provides information about  the relationship between an outcome variable (e.g., horse prices) and  explanatory variables (e.g., cessation of slaughter) at different points in  the distribution of the outcome variable. This type of regression is more  appropriate than standard linear regression for several reasons. For  example, we wanted to determine the estimated effects of the cessation at  various points across the entire distribution of sales prices in our data,  instead of on just the average value (i.e., mean), as in linear regression.  Also, the approach is more appropriate when using data from separate  sources, such as the three auctions in different parts of the country. In  addition, because our price data were highly skewed (i.e., included mostly  lower- and mid-priced horses), we transformed prices to a natural  logarithmic scale in the regression in order to obtain a better statistical fit  for our model.
There are several potential limitations to this type of modeling. For  example, all of the variables influencing an outcome may not be known,  and there are likely to be limitations in the data available for the analysis.  For example, the price of a horse may also be related to other attributes  such as quality of pedigree and performance characteristics (e.g.,  championships or titles won), but information on these variables was not  available for all horses in our analysis. In addition, other characteristics of  a horse, such as health, demeanor, and general appearance may also affect  the price buyers are willing to pay, but those characteristics are difficult to  measure and, therefore, were not available for our analysis. Nevertheless,  despite these limitations, this type of regression is useful for developing  estimates of the impacts from, and an indication of the relative importance  of, various variables to an outcome.
In our analysis, we estimated the impact of the cessation on horse prices,  while considering other relevant variables, on horse sale price for five  price quantiles (20th, 40th, 50th, 60th, and 80th percentiles). As discussed,  the other variables in our analysis included a horse’s physical  characteristics, such as breed/type, age, and gender. Regarding breed, the  data contained a total of 27 horse breeds, but for purposes of our analysis,  we categorized horses into one of seven variables—Quarter horses, Paint  horses, Appaloosas, ponies and miniature horses, Thoroughbreds,  combined “other,” and “grade.” Grade horses are sold without breed  designation, are often sold in groups, and are usually the lowest-priced  horses available at an auction. Regarding age, horses in our data ranged  from 1 to 32 years old, and we included age as a continuous variable in our  analysis. We also used a related variable, the square of a horse’s age, to  account for changes in a buyer’s willingness to purchase a horse as its age  increases. Regarding gender, we used “indicator” variables for mare,  stallion, and gelding (a neutered male horse). In addition, we used two  interactive variables to explain how the gender and age of a horse could  interact to affect its sale price—(1) interacting mare with age and (2)  interacting gelding with age. For example, the price of a mare may  increase early in her life as she is able to produce foals but may decline  when she becomes too old to breed consistently.
To capture information that was auction-specific, we included several  additional variables in our analysis. First, we measured the percentage of  “no-sale” horses at each auction. In general, these horses were not sold by  their owners because they did not receive high enough final bids for these  horses at auction. We also included a variable denoting whether an  auction was in the western, southern, or eastern region of the United  States. In addition, we included variables to delineate whether an auction  was held in the spring or fall seasons. Industry experts we contacted said  spring auctions generally are larger and bring higher prices than fall  auctions, when owners may be more anxious to sell their horses rather  than have to feed them through the winter.
We included the cessation of slaughter as an indicator variable in our  analysis, with “0” indicating the period prior to the cessation of domestic  slaughter in 2007, and “1” for the period after. For purposes of our  analysis, the period prior to cessation included spring 2004 through 2006,  and the period after cessation included 2007 through spring 2010 (because  most domestic slaughtering facilities were closed by early 2007).
To measure the effect of the economic downturn, we used a variable  based on average monthly unemployment rates from the Bureau of Labor  Statistics for the 12-month period prior to the date of each auction. These  data are compiled by Census Divisions or by geographic region; we used  the data for those Census Divisions or regions that correspond to the  locations of the three auctions. More specifically, we averaged the  unemployment rate data for the 12-month period prior to the date of each  auction because we assumed that buyers and sellers would make  transaction decisions based on economic conditions for a period before  the date of the auction, not just on conditions at the time of the auction.
In order to review the soundness of our methodology and results, we  asked five academic experts in agricultural economics to review a draft of  our model specifications and discussion of results for fatal flaws. We  chose these experts because they have published articles related to the  horse industry and livestock slaughter issues. These experts generally  found the model specifications and results credible. Several offered  specific technical comments related to the presentation of the model  results, which we incorporated, as appropriate. Additional information  about the results of our analysis is in appendix II.
To further examine the impact, if any, of horse market changes on horse  welfare and states, local governments, tribes, and animal welfare  organizations, we used semi-structured interviews to systematically collect  the views of the State Veterinarian (an appointed position) in 17 states.
These states included the 10 with the largest horse populations, and the 10  with the largest horse economies—a total of 14 states. In addition, we  added Montana, New Mexico, and Wyoming at the suggestion of  representatives of the horse industry and animal welfare organizations,  who indicated that these states had unique perspectives on border or tribal  issues related to horses. In some cases, the State Veterinarian was joined  by other state officials, such as members of the state livestock board, for  these interviews. The results of the interviews are not generalizable to all  State Veterinarians but provide information about the situations faced by  these 17 states.
Semi-structured interviews follow a standard structure to systematically  gather information from the target audience. In our case, we wanted to  systematically collect information from these 17 states on (1) horse sales  and prices; (2) export, trade, and transport of horses; (3) abandoned and  adopted horses; (4) horse abuse and neglect cases; (5) legislation related  to horse slaughter and welfare; and (6) other factors generally affecting  horse welfare. Using software called NVivo, we then performed a  qualitative content analysis of the results of these interviews to identify  common themes and the frequency with which certain issues were raised.
Content analysis is a methodology for structuring and analyzing written  material. Specifically, we developed a coding and analysis scheme to  capture information on factors that may explain changes in the horse  industry in these states. Such factors included the cessation of domestic  slaughter; economic conditions; restrictions on the use of certain drugs in  horses slaughtered for human consumption; and changes in horse  breeding, disposal, care and maintenance, prices, sales, and such inputs as  the cost of feed. We also developed a coding and analysis scheme to  capture information on factors related to horse owners’ potential  responses to those changes, including abandoning, neglecting, abusing,  and hoarding horses, as well as factors related to horse welfare such as  being harmed by unfamiliar herds and traveling farther to slaughter. In  addition, we developed a coding and analysis scheme to identify state and  local responses to changes in the horse industry, including impacts on  resources, costs, investigations, and legislation. The content analysis was  conducted by two GAO analysts with the assistance of a GAO  methodologist. Discrepancies in coding were generally discussed and  resolved between the analysts; on occasion, the methodologist weighed in  to resolve a discrepancy.
To further examine challenges, if any, to USDA’s oversight of the transport  and welfare of U.S. horses exported for slaughter, we identified and  analyzed a generalizable sample of about 400 horse shipping forms, known  as owner/shipper certificates, for the period 2005 through 2009, to  determine whether (1) the certificates were properly completed and (2)  horses were traveling farther to slaughter since the cessation of domestic  slaughter in 2007 than they were traveling prior to the cessation. Each  owner/shipper certificate represents one load or shipment of horses.  APHIS maintains these forms at its headquarters offices in Riverdale,  Maryland, in hardcopy, sorted by year and shipper.
As there were no electronic records of the sample frame (i.e., the universe  of certificates) from which we could randomly sample and we initially did  not know the total number of certificates on file, we selected a stratified,  systematic random sample from the hardcopy certificates for the period.  We chose to stratify the sample frame into three strata (i.e., time periods)  so we would be able to compare estimates of certificate completeness and  the distances horses traveled before and after 2007. Specifically, we  systematically selected 396 certificates, including 192 for 2005 through  2006, the 2 years prior to the cessation of domestic slaughter; 84 for 2007;  and 120 for 2008 through 2009, the 2 years after the cessation. In the  course of selecting this sample, we determined that there were nearly  16,000 certificates on file for these years, including 7,671 certificates for  2005 through 2006, 3,378 certificates for 2007, and 4,787 certificates for  2008 through 2009.
Because we followed a probability procedure based on random selections  of our starting points (e.g., first select the 25th certificate in the 2005  through 2006 strata and every 40th certificate thereafter), our sample is  only one of a large number of samples that we might have drawn. Since  each sample could have provided different estimates, we expressed our  confidence in the precision of our particular sample’s results as a 95  percent confidence interval. This is the interval that would contain the  actual population value for 95 percent of the samples we could have  drawn.
To estimate the degree to which owner/shipper certificates were properly  completed by the shipper and by Canadian and Mexican officials, we  extracted information from the certificates that APHIS uses to help  determine compliance with the Commercial Transportation of Equines to  Slaughter regulation, such as the loading date, time, and location;  certification that the horses were fit for transport; the identity of the  receiving slaughtering facility; and the date and time the shipment arrived.  Using our sample of certificates, we calculated estimates of the degree of  completeness of all certificates returned to APHIS from slaughtering  facilities or border crossings from 2005 through 2009 and tested the  change over time for statistical significance.
In order to estimate the distance that horses traveled, on average, we  extracted information on each shipment’s origination (i.e., loading) point  and destination (i.e., off-loading) point from the certificates. Regarding  shipments that went to former U.S. slaughtering facilities, we used the  Transportation Routing Analysis Geographic Information System  (TRAGIS) model developed by the Department of Energy to estimate  driving miles between the origination point, such as an auction, farm,  feedlot, or stockyard, and the slaughtering facility. Because TRAGIS  includes only U.S. roads, we used a different approach for calculating  distances beyond the U.S. border to foreign slaughtering facilities. First,  based on USDA information on the border crossings most often used to  export shipments of horses intended for slaughter, we used TRAGIS to  calculate the distance from an origination point to several border  crossings. Then, for each border crossing, we used commercial software  available on the Web to estimate the distance from these crossings to a  foreign slaughtering facility. We then combined the results and selected  the combination that resulted in the shortest potential distance traveled  from the origination point to the slaughtering facility. As a result, our  estimates of the total distance traveled to foreign slaughtering facilities are  likely to be underestimates.
We conducted this performance audit from April 2010 through June 2011,  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Results of the Econometric Analysis of Horse Sale Prices
paragraphs: For our econometric analysis of horse sale prices from three large  geographically-dispersed horses auctions, we conducted a hedonic  quantile regression to estimate the impact of a number of explanatory  variables, including the cessation of domestic horse slaughter; the  economic downturn (i.e., recession); horse attributes such as breed, age,  and gender; and the location and timing of horse auctions, on the full  range of values of the outcome variable—horse sale prices. We were  particularly interested in the impact of the cessation and economic  downturn, as these factors have been cited as reasons for recent changes  in the horse industry. Appendix I includes a detailed explanation of our  methodology for this analysis.
A discussion of the results for the separate variables in the model follows:    Age of horse. The results show that age is an important variable in  explaining horse prices in these auctions. The positive sign for a  horse’s age and negative sign for the age squared, indicate that young  horses will increase in price as they age, but older horses will start to  decline in price as they age. Moreover, the positive effect of age  becomes zero for mares and geldings between 11 and 12 years of age,  while stallions continue to increase in price for approximately 5 more  years.
Gender of horse. The results indicate that the value of horses varies  both by their gender and the interaction of their gender and age.  Specifically, the results show that the price of geldings is initially  higher than both stallions and mares. This premium holds until  approximately age 12, when the premium relative to stallions has gone  to zero. Mares do not sell at a premium relative to stallions at any point  in the age distribution.
Location and timing of auction. The results indicate that a horse sold  at either the eastern or southern auctions would fetch a higher price  than an identical horse sold at the western auction. The premium for  horses sold at the eastern auction is greater than the premium for  horses sold at the southern auction. The timing of an auction—spring  versus fall—was also statistically significant and suggests that horses  sold in the fall tend to sell at a discount, although this effect diminishes  for the higher price categories. This may be because owners may be  more anxious to sell their horses in the fall rather than feed them  through the winter.
Auction no-sales percentage. The results suggest that for every 1  percent increase in an auction’s “no-sales” percentage, price decreased  by about 2 percent across quantiles. That result was highly statistically  significant and consistent across all horse price quantiles. This  phenomenon may result from sellers having certain expectations of  acceptable bid prices, and, if those expectations are not met, they may  be willing to wait for a later auction date to try selling the horse again.  Horse buyers may have expectations, as well, that prices will be falling  even lower and wait until the next auction. This may be especially true  during a period of economic slowdown, according to experts.
Horse breed/type. The results suggest that Quarter horses sold at a  premium, relative to grade horses, which do not have a declared breed  registry. Ponies also tend to sell at a premium relative to grade horses,  for those ponies sold in the higher categories (i.e., quantiles). An  unexpected result was that other breed types, Paint horses,  Appaloosas, and Thoroughbred horses sold at either a discount or did  not show statistically significant difference in price, relative to grade  horses. This could have been due to the small number of observations  compared to other breeds and that for certain breeds, such as  Appaloosas, there could be a lack of buyers for these types of horses.
Economic downturn. The results show that the recession or downturn  in the general economy caused a consistently negative effect on horse  prices across the range of price categories. This effect was greater, in  dollar terms, for the higher price categories. Across the five price  categories, we estimate that for each percentage point increase in  average unemployment in the relevant regions, horse prices decreased  by 5.2, 5.2, 4.8, 4.7, and 4.8 percentage points, respectively.
Cessation of domestic slaughter. The results show that the cessation  was related to declines in prices for lower- to middle-value horses but  diminished for higher-value horses (i.e., horses in the higher price  categories in the table). For example, in the first three price categories,  horse prices declined by 21, 10, and 8 percentage points, respectively.
Table 2 lists the results, expressed as semi-log coefficients, of the hedonic  quantile regression for five categories of horse sale prices—the 20th, 40th,  50th (median), 60th, and 80th percentiles.
From the table, we see that most of the regression estimates for the model  have the expected directional signs and are statistically significant. The  retransformed results, from the semi-log form back to dollar and percentage  changes, are presented for our two variables of interest—cessation of  domestic slaughter and economic downturn—in table 1 of this report.
section_title: Appendix III: Comments from the U.S. Department of Agriculture
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, James R. Jones, Jr., Assistant  Director; Jim Ashley; Mark Braza; Antoinette Capaccio; Barbara El Osta;  Emily Gunn; Terrance N. Horner, Jr.; Armetha Liles; Kimberly Lloyd; Jeff  Malcolm; John Mingus; Kim Raheb; and Carol Herrnstadt Shulman made  key contributions to this report.
section_title: Related GAO Products
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