03-2682. Importation of Used Farm Equipment From Regions Affected With Foot-and-Mouth Disease

AGENCY:

Animal and Plant Health Inspection Service, USDA.

ACTION:

Affirmation of interim rule as final rule.

SUMMARY:

We are adopting as a final rule, without change, an interim rule that amended the regulations concerning foot-and-mouth disease to prohibit the importation of used farm equipment from regions affected with foot-and-mouth disease unless the equipment has been steam-cleaned prior to export to the United States so that it is free of exposed dirt and other particulate matter. The interim rule also provided that cleaned equipment that arrives at the port of arrival with a minimal amount of exposed dirt may, under certain conditions, be cleaned at the port of arrival. The interim rule was necessary to help prevent the introduction of foot-and-mouth disease into the United States.

EFFECTIVE DATE:

The interim rule became effective on March 31, 2001.

FOR FURTHER INFORMATION CONTACT:

Dr. Karen James-Preston, Assistant Director, Technical Trade Services Team, National Center for Import and Export, VS, APHIS, 4700 River Road Unit 40, Riverdale, MD 20737-1231; [phone].

SUPPLEMENTARY INFORMATION:

Background

The regulations in 9 CFR part 94 (referred to below as the regulations) govern the importation of specified animals and animal products into the United States in order to prevent the introduction of various animal diseases, including foot-and-mouth disease (FMD). Because of the highly communicable nature of FMD, it is necessary to protect livestock that are free of the disease from any animals, animal products, or other articles that might be contaminated with the FMD virus.

In an interim rule effective March 31, 2001, and published in the Federal Register on May 13, 2002 (67 FR 31935-31938, Docket No. 01-037-1), we amended the regulations to prohibit the importation of used farm equipment from regions affected with FMD unless the equipment was steam-cleaned prior to export to the United States so that it is free of exposed dirt and other particulate matter. Such equipment must also be accompanied by an original certificate signed by an authorized official of the national animal health service of the country of origin stating that such cleaning was done. We also provided that cleaned equipment that arrives at a U.S. port with the required certification from the exporting region but is found upon Animal and Plant Health Inspection Service (APHIS) inspection to contain a minimal amount of exposed dirt or other particulate matter may be cleaned at the port of arrival should the APHIS inspector determine that there are adequate facilities and personnel at the port to conduct such cleaning without the risk of disease contamination.

Comments on the interim rule were required to be received on or before July 12, 2002. We received two comments by that date, from a farmer and a representative of a dairy industry organization. Both commenters supported the interim rule but requested that additional steps be taken to prevent the introduction of FMD into the United States. One commenter asked APHIS to ensure that dirt or other particulate matter trapped in large tires on farm equipment would be adequately cleaned. We believe that the cleaning and inspection requirements established by the interim rule will be adequate to ensure that any such residue will be eliminated.

The second commenter supported the requirement for pre-export steam cleaning, but suggested that if an APHIS inspector notes exposed dirt on the equipment at the port of arrival and determines that the equipment can be cleaned, APHIS should require not only that the equipment be steam-cleaned but disinfected as well, using an approved disinfectant. The interim rule provides that all used farm equipment imported into the United States must be steam-cleaned free of all exposed dirt and other particulate matter. If such equipment were to arrive at the port of entry with more than a minimal amount of exposed soil present, it would be clear to an inspector that the required cleaning was not properly conducted and the equipment would be denied entry. The inspector may only allow cleaning at the port of entry if the amount of exposed soil is minimal enough to allow cleaning and there are adequate facilities and personnel at the port to accomplish the cleaning. Thus any cleaning that might take place at a port of entry would be necessary to address the presence of only minimal amounts of exposed soil. Steam-cleaning, whether conducted in the equipment's country of origin or at a U.S. port, is sufficient to disinfect the equipment. Therefore, we do not believe that it is necessary to prescribe the use of a disinfectant in addition to the cleaning that would be conducted.

Therefore, for the reasons given in the interim rule and in this document, we are adopting the interim rule as a final rule without change.

This action also affirms the information contained in the interim rule concerning Executive Orders 12866 and 12988 and the Paperwork Reduction Act.

Further, this action has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

Regulatory Flexibility Act

This rule affirms an interim rule that amended the regulations by prohibiting the importation of used farm equipment from regions affected with FMD unless the equipment is steam-cleaned prior to export to the United States so that it is free of exposed dirt and other particulate matter and the equipment is accompanied by an original certificate from an authorized official of the national animal health service of the region of origin stating that such cleaning was done. The interim rule also provided that cleaned equipment that arrives at the port of arrival with a minimal amount of exposed dirt may, under certain conditions, be cleaned at the port of arrival.

The following analysis addresses the economic effect of the interim rule on small entities, as required by the Regulatory Flexibility Act.

While the term “farm equipment,” as defined in § 94.0 of the regulations, refers to a variety of vehicles and machinery used in agriculture, tractors are the one category of farm equipment for which trade data are maintained on previously used items.^[1] Between 1996 and 2001, U.S. imports of used tractors were valued at about $62 million annually, and comprised about 4 percent of the value of all U.S. agricultural tractor imports (table 1). U.S. exports of used tractors were worth a little more than half that amount, about $34 million per year. Net imports of used tractors were thus worth about $28 million per year, about 10 percent of the value of net imports of tractors.^[2]

Table 1.—Value of U.S. Imports and Exports of Tractors and Used Tractors Suitable for Agricultural Use, 6-Year Averages (1996-2001)

[Tractor values are in millions of dollars]

	New and used tractors 1	Used tractors 2	Percent used tractors, by value
Imports	$1,483.12	$62.01	4.2
Exports	1,190.79	33.79	2.8
Net imports	292.33	28.22	9.7
Source: U.S. Department of Commerce, Bureau of the Census, as reported by the World Trade Atlas.
1 Harmonized tariff code 870190: Tractors, not elsewhere specified or included.
2 Harmonized tariff code 8701901090: Tractors, suitable for agricultural use, used, except track-laying type.

The United Kingdom is the largest supplier of used tractors to the United States, followed by Japan and Germany (table 2). These three countries have, on average, supplied nearly three-fourths of annual used tractor imports by the United States over the past 6 years. Canada, Netherlands, France, and Belgium supplied about 20 percent of imports combined.

Table 2.—Value of Used Tractor Imports¹ From the Leading Sources, 6-Year Averages (1996-2001)

[Tractor values are in millions of dollars]

Country	Average value	Percentage of total
United Kingdom	$18.766	30.3
Japan	13.875	22.4
Germany	13.524	21.8
Canada	5.481	8.8
Netherlands	3.411	5.5
France	1.960	3.2
Belgium	1.509	2.4
Total from above sources	58.526	94.3
Total from all sources	62.014	-
Source: U.S. Department of Commerce, Bureau of the Census, as reported by the World Trade Atlas.
1 Harmonized tariff code 8701901090: Tractors, suitable for agricultural use, used, except track-laying type.

Imports of used farm equipment from several of these countries have already been restricted by the interim rule because of FMD outbreaks in those countries after the rule became effective on March 31, 2001. However, import levels suggest that the interim rule has had little impact on trade volumes. For example, the value of used tractor imports from the United Kingdom (Great Britain and Northern Ireland) during 2001—throughout which its FMD-free status was revoked, except for the first 14 days of January—totaled $18.025 million. This amount compares closely with its 1996-2001 annual average of $18.766 million. Used tractor imports in the same year from Netherlands and France, both of which had their FMD-free status revoked at different times during 2001, were valued at $2.977 million and $1.800 million, respectively, amounts not very different from their 1996-2001 annual averages of $3.411 million and $1.960 million. Finally, used tractor imports from Japan in 2001, which had its FMD-free status revoked throughout the year, were valued at $15.071 million, an amount larger than its 1996-2001 annual average of $13.875 million.

Used tractors entering the United States from regions affected with FMD must be certified by the national animal health service of their region of origin as having been steam-cleaned before being exported. APHIS does not have information on steam-cleaning costs overseas, but costs at U.S. ports provide a basis for assessing the impact of the interim rule. The cost for steam-cleaning all the tractors shipped in a 40-foot container holding approximately 16 tractors with rotary tillers is roughly $2,000.^[3] We expect the cost of certification would likely be less than $50. The average price of imported used tractors is about $4,940 each.^[4] Thus, the value of the tractors in a container would total about $79,040, of which the $2,050 cost of cleaning and certification represents about 2.6 percent.

The principal cost component in both cleaning and certification is labor. It is expected, therefore, that cleaning and certification costs would not be any higher overseas, and could well be lower, depending on relative labor costs. The 2.6 percent may represent an upper bound of the additional import expenses that would be attributable to the interim rule.

The two groups that can be expected to incur some costs as a result of the interim rule are importers of used farm equipment and farmers; if passed along by the exporter, importers and farmers will likely split the additional cost of the required cleaning and certification depending on the demand elasticity in the market for used farm equipment. Most importers likely employ fewer than 100 people, the threshold the Small Business Administration has set for such firms to be called small entities. Most farms earn $750,000 or less in annual receipts, the corresponding threshold for agricultural operations to be called small entities. Therefore, most businesses likely to be affected by the interim rule are small entities. However, the data on used tractors, currently the only data available on used farm equipment, indicate that the effects will not be large; cleaning and certification expenses will add less than 3 percent to the cost of imported used tractors.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this rule will not have a significant economic impact on a substantial number of small entities.

List of Subjects in 9 CFR Part 94

• Animal diseases
• Imports
• Livestock
• Meat and meat products
• Milk
• Poultry and poultry products
• Reporting and recordkeeping requirements

PART 94—RINDERPEST, FOOT-AND-MOUTH DISEASE, FOWL PEST (FOWL PLAGUE), EXOTIC NEWCASTLE DISEASE, AFRICAN SWINE FEVER, HOG CHOLERA, AND BOVINE SPONGIFORM ENCEPHALOPATHY: PROHIBITED AND RESTRICTED IMPORTATIONS

Accordingly, we are adopting as a final rule, without change, the interim rule that amended 9 CFR part 94 and that was published at 67 FR 31935-31938 on May 13, 2002.

Authority: 7 U.S.C. 450, 7711-7714, 7751, 7754, 8303, 8306, 8308, 8310, 8311, and 8315; 21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 42 U.S.C. 4331 and 4332; 7 CFR 2.22, 2.80, and 371.4.

Done in Washington, DC, this 30th day of January 2003.

Kevin Shea,

Acting Administrator, Animal and Plant Health Inspection Service.

Footnotes

1.  Harmonized tariff code 8701901090: Tractors, suitable for agricultural use, used, except track-laying type.

2.  The term “net imports” refers to the total value of tractor imports minus the total value of tractor exports.

3.  APHIS cost estimates for the port of Long Beach, CA.

4.  Six-year average, 1996-2001. U.S. Department of Commerce, Bureau of the Census, as reported by the World Trade Atlas.