To: Interested Public

700 Kipling Street, Suite 4000 Lakewood, CO 80215 303-239-4100  Fax 303-239-4125 www.colorado.gov/ag

John R. Stulp, Commissioner Sheldon R. Jones, Deputy Commissioner Bill Ritter, Jr. Governor

From: Jim Miller Director of Policy and Initiatives Colorado Department of Agriculture

Date: May 22, 2008

Re: Regulatory Analysis of Proposed Rule 8 CCR 1208 – 1

Background. The Colorado Department of Agriculture, State Fair Board is proposing a rule that essentially requires participants in certain events and exhibits to obtain premises identification numbers from the U.S. Department of Agriculture prior to bringing livestock onto the State Fairgrounds. The proposed rule has generated some controversy among the livestock industry and has attracted the attention of some news outlets within and beyond Colorado’s borders.

The proposed rule also would clarify certain portions of the existing rule, correct misspellings, define certain terms, impose certain restrictions, delete certain existing restrictions, eliminate outdated references, incorporate by reference certain materials currently fully incorporated, and create a new article that incorporates within the body of the rule the Statements of Basis, Specific Statutory Authority and Purpose of the current rulemaking. Article 9 is the portion of the proposed rule that creates the Basis, Authority and Purpose record, and as such has no effect on persons, nor does it have fiscal or compliance impacts.

This regulatory analysis is prepared at the request of members of the public. The Department of Regulatory Agencies did not judge this rule to have significant impact on the regulated public and therefore did not require a cost-benefit analysis.

I. Persons affected by the proposed rule. The proposed rule will affect carnival game operators, exhibitors, those attending events at the State Fairgrounds, persons who camp on the Fairgrounds, certain competitors in livestock events, and certain others who bring livestock onto the Fairgrounds.

II. Probable impact. The proposed changes to Article 1 are definitions.

The proposed changes to Article 2 of the existing rule will have negligible impact to carnival game operators because most of the proposed changes merely clarify the existing language.

The proposed changes to Article 3 will require some exhibitors to maintain their exhibit through the course of the timeframe specified by the Fair. Proposed changes further prohibit advertising on certain portions of the Fairgrounds. The proposed change to Article 4 brings the rule into conformity with current practices at the fair in which alcohol consumption is now permitted after 9:00 p.m. and at certain open areas on the Fairgrounds. Revisions to Article 3 relieve the contractor from sole responsibility to enforce provisions on alcohol consumption.

Article 5 relates to weapons and dangerous objects. The proposed changes clarify a statutory reference and correct grammar.

Proposed changes to Article 6 codify certain existing restrictions on camping on the Fairgrounds.

The proposed changes prohibit dogs on the Fairgrounds except service animals or dogs entered in competition. There are other grammatical changes proposed.

The proposed change to Article 7 removes the reference to and the text of the 1997 version of the International Association of Fairs and Expositions Code of Show Ring Ethics and replaces it with a reference to the 2008 version. The changes further delete the text of the 1997 version and incorporate the 2008 version by reference.

The proposed rule adds Article 8 which deals with the guidelines for competition in all events at the Colorado State Fair (CSF). The guidelines are published in the CSF premium books. The premium books may define the types of events, entry requirements, housing and care of livestock, duties of judges and competition premium schedules. The proposed Article 8.2 states entry requirements on the Fairgrounds, limitations on admittance, and Article 8.3 requires compliance with certain local, state and federal laws, the impact of which is determined by those laws and not by this rule.

Article 8.4 requires that entrants to certain livestock events obtain a “premises identification number” (PIN) from the U.S. Department of Agriculture that corresponds to the premises where the livestock to be entered was (were) housed and raised. The article further exempts some species of livestock.

Article 8.4 requires entrants to obtain and complete a form supplied by the State of Colorado. The form requests the entrant’s name or business name, mailing address, county, business type and organization, phone number(s), facsimile number, physical address, global positioning system (GPS) coordinates (if available), and the species of livestock at the premises. The form does not request information regarding the number of livestock on the premises. The form also asks for optional information. The form can be folded to post-card size and is postage-paid. The form is pre-addressed to the Division of Central Services for the State of Colorado and will then be delivered to the Colorado Department of Agriculture, Division of Animal Industry where the data will be entered into a database housed on USDA computers. The USDA computer will issue the premises a unique number which will be mailed to the entrant.

Entrants may also obtain a PIN over the Internet via a World Wide Web address at the Colorado Department of Agriculture. Entrants can enter the information outlined above directly to the USDA database and will then obtain the premises identification number immediately.

Most of the data requested on the form is available in a phone book, public record at the Secretary of State’s Office, the clerk and recorder of the county in which the premises is located, or other public agency. The form does not request or require information such as a Social Security Administration number, passport number, or information regarding financial status or records.

2 The rule requires a PIN, but there is no requirement that entrants obtain or share with the Colorado Department of Agriculture or the USDA his or her GPS coordinates. However, in order to obtain a PIN, the entrant must supply either a physical address or GPS coordinates.

There is no economic impact of Article 8.4 because there is no charge to obtain a premises identification number. Some persons may experience discomfort associated with submitting personal information to a database over which they have no control. The discomfort may be due to concern that the personal information may be lost, illegally obtained or misused. Persons who have submitted information to USDA and have received a PIN may request that their premises identification information be expunged from the database.

Impacts resulting from Article 8.5 are similar to those of Article 8.4, and there are no additional impacts as a result of the addition of Article 8.

III. Probable costs. Costs related to the proposed rule changes to Articles 1,2,3,4,5, and 7 are negligible if not non-existent.

Article 8.4 will result in some additional costs to the State Fair and (or) to the Colorado Department of Agriculture. If adopted, the implementation of Article 8.4 will be accomplished when the entry forms are received and reviewed for accuracy and completeness. It is anticipated that State Fair staff will forward the premises registration form included with the entry documents, to staff at CDA, Division of Animal Industry at the time the Fair employee is processing the entry form. CDA Animal Industry staff will verify and validate the premises identification number. Validation of approximately 1,400 entry forms (based on 2007 figures) containing premises identification numbers is expected to take no more than 80 staff hours at a projected staff cost of $1,144. (Assumptions: Staff, Administrative Assistant II, hourly salary of $14.30.)

It is likely there will be a number of forms that do not contain premises identification numbers or which contain numbers that do not validate with the database. CDA staff will then have to mail the entrant a letter with a premises registration request form and instructions on obtaining a number along with an explanation of the consequences if a valid number is not received. It is anticipated that five percent of the entry forms requiring a PID will be inaccurate or incomplete resulting in the mailing of 70 letters at $0.462 each (state postage rate plus the cost of envelope and paper) totaling $32.34. These costs will be paid from funds granted to CDA from USDA.

Anticipated total costs, including postage, materials and staff time are not expected to exceed $1,200.

It is anticipated these costs will continue and likely increase minimally as additional livestock events are added to the premises registration requirement until the requirement becomes established and commonplace, at which time processing costs should drop significantly.

IV. Comparison of probable costs and benefits. Colorado’s gross farm gate sale sales total about $6 billion annually and the livestock sector accounts for about 70 percent of that figure. Not only is animal agriculture a powerful economic driver, it is a highly mobile industry as well. It is estimated that at any given time, there are about 25,000 head of livestock moving on Colorado highways.

Because animal agriculture is so important to our economy, and because cattle, hogs, sheep, dairy stock, goats and poultry are continually moving in, around and out of our state, the threat of an outbreak of livestock disease has become a critical issue. The outbreak of foot and mouth disease in the United

3 Kingdom a number of years ago underscores the dramatic economic and social impacts of widespread animal disease control.

The USDA developed the National Animal Identification System shortly after that outbreak and has been refining and further developing it since. The NAIS system consists of four components: premises registration, individual animal identification, animal relocation reporting, and the rapid trace-back for disease epidemiology. This rule addresses only the premises registration component.

The concept behind premises registration is to speed the process of locating exposed animals after a potential positive index case is discovered. Given the highly mobile nature of the livestock industry, a disease outbreak in one state can rapidly spread to other states before the problem is discovered. For example, the North Carolina Department of Agriculture conducted an exercise that assumed an intentional introduction of foot and mouth disease into hog facilities at five locations in one day. On the fifth day when clinical symptoms could be observed, based on actual animal movements, twenty-three states would have livestock facilities exposed to foot and mouth disease. This example clearly demonstrates why rapid disease epidemiology is desirable. However, recordkeeping on animal movements is done today in the same fashion as in 1950; paper records of health certificates and brand inspections do not lend themselves to rapid disease trace-back. Trace-back of exposed animals could take weeks or even months of poring through boxes of certificates of veterinary inspection and brand inspection documents, compared to a matter of hours or days if records are kept in a searchable database. The anticipated cost of implementing this rule compared to the enormous cost of disease tracing by relying on paper records is obviously a sound cost-to-benefit ratio.

Critics of premises identification frequently cite the existence of brand inspection as negating any benefit afforded by premises identification numbers. However, brand laws do not exist in many states, and in others, brand inspection may not be mandatory or may be mandatory on a county-by-county basis. Brand laws do not substitute for broad-based premises registration.

One of the most important aspects of livestock competition at the CSF centers on the Junior Livestock Sale. At the sale, dozens of entered livestock are sold at auction, and the proceeds of the sale go to the 4- H or FFA student to defray college or post-secondary education costs. In order to attract potential bidders, a floor plan buyer plays the important role of purchasing the animal from the Fair and winning bidder at current commercial livestock prices, and the bidder then pays only the differential between his or her high bid and the actual market value of the animal. Without floor plan buyers, successful bidders would have to pay the full sale prices, thus discouraging handsome prices for prize animals. Successful bidders would also have to take actual ownership of the animal, and many bidders at the Junior Livestock Sale are urban citizens. This would have the effect of discouraging bidding. CDA has been informed that several important floor plan buyers will not purchase animals without a premises identification number. This rule will assure the continued participation of floor plan buyers in the livestock sale.

Participants in the Fair’s hog, lamb, and goat competitions may also take advantage of buy-back plans in which the entrant sells the animal to packers at the market rate (or above in some instances). Buy-back plans purchase 450 to 750 animals each year at the State Fair. One buy-back purchaser is now requiring PINs, and the other is strongly encouraging entrants to obtain a PIN. This rule will assure the continued participation of buy-back purchasers.

All hogs entered into competition at the Fair must go directly to slaughter following judging. The hog buyer for the floor plan and buy-back programs is requiring premises identification numbers for each animal purchased.

V. Analysis of less costly and less intrusive methods.

4 The current system of obtaining health and brand inspection reports will continue regardless of whether this proposed rule is adopted, so there is no less costly method to achieve the same result. However, the current system of paper brand and health inspection documents does not lend itself to rapid disease trace- back.

There is dispute among the livestock industry as to whether collecting premises registration is intrusive. The limited amount of information collected to obtain premises registration does not constitute a highly intrusive process. Furthermore, participation in the CSF livestock events is voluntary, as is obtaining a premises identification number. As stated earlier, persons can remove premises registration information from the database making it possible to obtain a number and to then remove the data from the database after the event.

VI. Analysis of alternative methods for achieving the purpose of the proposed rule. The purpose of the proposed rule is two-fold. First, it is designed to obtain information to speed the process of disease epidemiology in the event of a disease outbreak. Secondly, the rule is designed to educate young livestock owners in the importance of disease prevention and the process of disease management if detected.

The alternative method of collecting information for disease epidemiology is discussed above as the methods currently used (health and brand inspection certificates). The proposed rule will supplement those methods and make rapid trace-back possible.