Conditions for Payment of Highly Pathogenic Avian Influenza Indemnity Claims, 6745-6751 [2016-02530]

Agencies

• DEPARTMENT OF AGRICULTURE
• Animal and Plant Health Inspection Service

[Federal Register Volume 81, Number 26 (Tuesday, February 9, 2016)]
[Rules and Regulations]
[Pages 6745-6751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02530]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

========================================================================


Federal Register / Vol. 81, No. 26 / Tuesday, February 9, 2016 / 
Rules and Regulations

[[Page 6745]]



DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Part 53

[Docket No. APHIS-2015-0061]
RIN 0579-AE14


Conditions for Payment of Highly Pathogenic Avian Influenza 
Indemnity Claims

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Interim rule and request for comments.

-----------------------------------------------------------------------

SUMMARY: We are amending the regulations pertaining to certain diseases 
of livestock and poultry to specify conditions for payment of indemnity 
claims for highly pathogenic avian influenza (HPAI). Specifically, we 
are providing a formula that will allow us to split such payments 
between poultry and egg owners and parties with which the owners enter 
into contracts to raise or care for the eggs or poultry based on the 
proportion of the production cycle completed. This action is necessary 
to ensure that all contractors are compensated appropriately. We are 
also providing for the payment of indemnity for eggs required to be 
destroyed due to HPAI, thus clarifying an existing policy. Finally, we 
are requiring owners and contractors, unless specifically exempted, to 
provide a statement that at the time of detection of HPAI in their 
facilities, they had in place and were following a biosecurity plan 
aimed at keeping HPAI from spreading to commercial premises.

DATES: This interim rule is effective February 9, 2016. We will 
consider all comments that we receive on or before April 11, 2016.

ADDRESSES: You may submit comments by either of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov/#!docketDetail;D=APHIS-2015-0061.
     Postal Mail/Commercial Delivery: Send your comment to 
Docket No. APHIS-2015-0061, Regulatory Analysis and Development, PPD, 
APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-
1238.
    Supporting documents and any comments we receive on this docket may 
be viewed at https://www.regulations.gov/#!docketDetail;D=APHIS-2015-
0061 or in our reading room, which is located in room 1141 of the USDA 
South Building, 14th Street and Independence Avenue SW., Washington, 
DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through 
Friday, except holidays. To be sure someone is there to help you, 
please call (202) 799-7039 before coming.

FOR FURTHER INFORMATION CONTACT: Dr. Troy Bigelow, Senior Staff 
Veterinarian, Surveillance, Preparedness and Response Services; VS, 
APHIS, Federal Building, Room 891, 210 Walnut Street, Des Moines, IA 
50309; (515) 284-4121.

SUPPLEMENTARY INFORMATION: 

Background

    The Animal and Plant Health Inspection Service (APHIS) of the 
United States Department of Agriculture (USDA or the Department) 
administers regulations at 9 CFR part 53 (referred to below as the 
regulations) that provide for the payment of indemnity to owners of 
animals that are required to be destroyed because of foot-and-mouth 
disease, pleuropneumonia, rinderpest, Newcastle disease, highly 
pathogenic avian influenza (HPAI), infectious salmon anemia, or any 
other communicable disease of livestock or poultry that, in the opinion 
of the Secretary of Agriculture, constitutes an emergency and threatens 
the U.S. livestock or poultry population. Payment for animals destroyed 
is based on the fair market value of the animals at the time of their 
destruction.
    Section 53.2 of the regulations authorizes the APHIS Administrator 
to cooperate with a State in the control and eradication of disease. 
Paragraph (b) of this section allows for the payment of indemnity to 
cover the costs for purchase, destruction, and disposition of animals 
and materials required to be destroyed because of being contaminated by 
or exposed to such disease.
    Section 53.3 provides for the appraisal of such animals and 
materials. Paragraph (a) of Sec.  53.3 states that the appraisals shall 
be carried out by an APHIS employee and a representative of the State 
jointly, or, if the State authorities approve, by an APHIS employee 
alone. Under Sec.  53.3(b), the appraisal must be based on the fair 
market value and shall be determined by the meat, egg production, 
dairy, or breeding value of such animals.
    Section 53.10 provides conditions under which payments will not be 
made on indemnity claims. Such conditions include, but are not limited 
to, noncompliance by the claimant with all quarantine requirements, as 
well the violation of laws, regulations, or cooperative agreements 
pertaining to movement or handling of animals by the animals' owner or 
employee or agent. Payments will also be disallowed for claims arising 
out of the destruction of animals or materials if those animals and 
materials have not been appraised in accordance with part 53 or if the 
owner has not executed a written agreement to the appraisals.

Highly Pathogenic Avian Influenza

    There are many strains of avian influenza (AI) virus that can cause 
varying degrees of clinical illness in poultry. AI viruses can infect 
chickens, turkeys, pheasants, quail, ducks, geese, and guinea fowl, as 
well as a wide variety of other birds. AI viruses can be classified as 
highly pathogenic or low pathogenic (LPAI) strains based on the 
severity of the illness they cause. HPAI is an extremely infectious and 
fatal form of the disease that, once established, can spread rapidly 
from flock to flock. Certain strains of AI have the potential to affect 
humans.
    The U.S. poultry industry recently experienced a severe outbreak of 
HPAI. The outbreak was discovered in December 2014 in backyard flocks 
in the Pacific Northwest, and in two commercial turkey and chicken 
flocks in California. As of August 2015, 21 States had had HPAI 
detections in backyard flocks, commercial premises, captive wild birds, 
and/or wild birds. Established U.S. animal health policy is to 
eliminate notifiable AI virus (both HPAI and LPAI strains), when it is

[[Page 6746]]

found, through depopulation (i.e., destruction and disposal) of 
affected poultry. APHIS, State, and local animal health officials 
euthanize poultry, clean and disinfect premises and equipment, and then 
test for elimination of the virus to ensure that farms can be safely 
restocked.

Payment of Indemnity

    During the 2014-2015 outbreak, APHIS has been paying the full 
indemnity amount to the birds' owners--usually the poultry company--
with the understanding that parties that have entered into contracts 
with the owners to grow or care for the animals would then be paid by 
the owner in accordance with contractual agreements. During the course 
of addressing the current 2015 outbreak, we determined that the 
existing regulations in part 53 do not specify that the indemnity be 
split between owners and contractors. Since both owners and contractors 
incur losses when a flock is depopulated, both should be compensated 
appropriately.
    A similar gap in the regulations concerning the payment of 
indemnity for LPAI became an issue for APHIS during an outbreak of LPAI 
in Virginia in 2002. In an interim rule published in the Federal 
Register on November 4, 2002, and effective December 9, 2002 (67 FR 
67089-67096, Docket No. 02-048-1), we amended the regulations to allow 
the Department to pay indemnity to both contract growers and owners for 
poultry destroyed because of LPAI. That interim rule was followed by a 
final rule that provided for LPAI indemnity payments to owners and 
contractors.
    Following approval by delegates during the 2004 National Poultry 
Improvement Plan (NPIP) Conference, APHIS amended the regulations via 
an interim rule \1\ effective and published in the Federal Register on 
September 26, 2006 (71 FR 56302-56333, Docket No. APHIS-2005-0109), to 
establish a voluntary control program for the H5/H7 subtypes of LPAI 
under the auspices of the NPIP. Among other things, that interim rule 
established a new 9 CFR part 56 to provide for the payment of indemnity 
for costs associated with the eradication of H5/H7 LPAI.
---------------------------------------------------------------------------

    \1\ To view the interim rule and the comments we received, go to 
https://www.regulations.gov/#!docketDetail;D=APHIS-2005-0109.
---------------------------------------------------------------------------

    First established under that interim rule, Sec.  56.8 contains 
conditions for payments to flock owners and parties with which the 
owners contracted to grow and care for poultry and eggs. The section 
provides a formula for the distribution by APHIS of LPAI indemnity 
payments between owners and contractors.
    Due to the absence, noted above, of a provision in part 53 for 
split indemnity payments prior to this interim rule, there was the 
possibility of contractors not being compensated for losses incurred as 
a result of our HPAI control efforts during the 2014-2015 outbreak. 
APHIS believes it is important to ensure that all participants in the 
poultry industry with a stake in the continued health of the U.S. 
poultry stock are compensated for costs associated with eradication of 
HPAI, as well as LPAI. In this interim rule, therefore, we are 
incorporating into the HPAI regulations in part 53 conditions from the 
LPAI regulations in Sec.  56.8 for the splitting of indemnity payments 
between owners and contractors. Only those conditions that are 
applicable to HPAI will be incorporated into part 53. These conditions 
are contained in a new Sec.  53.11, titled ``Highly pathogenic avian 
influenza; conditions for payment.'' Some of the text in the new 
section that has been drawn from Sec.  56.8 has been edited slightly 
for clarity.
    Paragraph (a) of 53.11 provides a formula to enable the 
Administrator to determine the share of the indemnity payment that 
should be disbursed to the contractor. This is a two-step process. The 
dollar value of the contract the owner entered into with the contractor 
will be divided by the duration of the contract in days as it was 
signed prior to the HPAI outbreak. The resulting figure will then be 
multiplied by the time in days between the date the contractor began to 
provide services relating to the destroyed poultry or eggs under the 
contract and the date the poultry or eggs were destroyed.
    Paragraph (b) states that if a contractor has received any payment 
under his or her contract from the owner of the poultry or eggs at the 
time the poultry or eggs are destroyed, the amount of indemnity from 
APHIS for which the contractor will be eligible will be reduced by the 
amount of the payment the contractor has already received from the 
owner. This provision will ensure that contractors will not receive 
indemnity payments that exceed the fair market value of the poultry or 
eggs.
    Under Sec.  53.11(c), if indemnity is paid to a contractor, the 
owner of the poultry or eggs will be eligible to receive the difference 
between the indemnity paid to the contractor and the total amount of 
indemnity that may be paid for the poultry or eggs. This provision 
ensures that the owner will receive a fair share of the indemnity.
    Finally, Sec.  53.11(d) states that if the Administrator determines 
that the method described in Sec.  53.11(a) for determining the amount 
of indemnity to be paid to a contractor, proves to be impractical or 
inappropriate in a particular case, APHIS may use any other method that 
the Administrator deems appropriate to determine the amount of 
indemnity due a contractor. This paragraph provides the Administrator 
with the flexibility to distribute indemnity payments equitably between 
owner and contractor in unusual or especially complex cases.
    The above-listed conditions will allow contractors, as well as 
poultry and egg owners, to be compensated for economic losses suffered 
due to the destruction of poultry and eggs resulting from HPAI 
outbreaks.
    Prior to this interim rule, the regulations in part 53 covered the 
destruction and indemnification of eggs under the general term 
``materials.'' APHIS has covered eggs as being materials. To provide 
greater clarity, we are adding references to eggs to Sec.  53.2(b), 
Sec.  53.3(a), Sec.  53.9, and Sec.  53.10(c) and (d).
    We are also adding a new paragraph (e) to Sec.  53.3, pertaining to 
the appraisal of the value of eggs destroyed due to HPAI. As is the 
case for the animals themselves, under Sec.  53.3(e), indemnity 
payments for eggs required to be destroyed due to HPAI will be based on 
the fair market value of the eggs, as determined by an appraisal. 
Appraisals will be reported on forms furnished by APHIS. The amount of 
indemnity paid, together with the amount for net salvage the owner or 
contractor received, if any, may not exceed the appraised fair market 
value of the eggs. Salvage refers to any payment the owner or 
contractor may receive from a third party, such as a breaker facility 
for the eggs. Such facilities may purchase the eggs and then pasteurize 
them to kill the HPAI virus, so that the eggs can be used in food 
products. APHIS will subtract the amount of any such payments made to 
the owners or contractors from the indemnity amount paid out by APHIS.
    In addition, because Sec.  53.4 has not specifically provided for 
the destruction of eggs pursuant to the eradication of HPAI, we are 
adding a new paragraph (b) (currently reserved) to that section. The 
paragraph states that eggs infected with, exposed to, or contaminated 
by HPAI shall be disposed of pursuant to the regulations in part 53 
under the supervision of an APHIS employee who shall prepare and 
transmit to the Administrator a report identifying all eggs disposed 
thereof.

[[Page 6747]]

Biosecurity

    In some instances during the 2014-2015 outbreak, poor biosecurity 
practices may have led to HPAI introduction or spread within and among 
some commercial poultry facilities. More specifically, as discussed in 
our July 2015 report on HPAI-infected flocks (https://www.aphis.usda.gov/animal_health/animal_dis_spec/poultry/downloads/Epidemiologic-Analysis-June-15-2015.pdf), the existing level of 
biosecurity appears to have failed to protect layer and turkey 
facilities in the upper Midwest from HPAI. In our view, the biosecurity 
of layer, turkey, and broiler facilities needs to be enhanced to avoid 
future catastrophic outbreaks of HPAI.
    As a step toward achieving the goal of enhancing biosecurity, this 
interim rule requires both owners of poultry or eggs and contractors to 
provide to APHIS a statement that at the time of detection of HPAI in 
their facilities, they had in place and were following a biosecurity 
plan. Indemnity claims will be denied if the owner or contractor, 
unless exempted, does not provide such a statement. This requirement 
will be placed in a new paragraph (g) to be added to Sec.  53.10, the 
section in part 53 that covers claims not allowed
    Paragraph (g)(1) contains a list of several measures that a 
biosecurity plan should include in order to be effective at preventing 
the introduction of HPAI to a poultry facility. First, personnel 
working at such a facility should be given appropriate biosecurity 
training and should be subject to certain biosecurity requirements, 
e.g., showering and changing upon, or prior to arriving at, the 
facility. The biosecurity plan should also include measures to prevent 
HPAI introduction via vehicles and equipment. A ``line of separation'' 
should be maintained, beyond which nothing should cross that could 
introduce the virus to poultry houses. Measures to control wild birds, 
rodents, and insects should be implemented, and the facility should 
have a source of clean water. More detailed information regarding these 
biosecurity measures for poultry facilities can be found at https://iastate.app.box.com/Biosec-Officer-Info-Manual. Educational and 
training materials for poultry-industry personnel are available at 
https://www.poultrybiosecurity.org/.
    The inclusion of the measures discussed above in an HPAI 
biosecurity plan is supported by the findings of our September 2015 
report on HPAI-infected flocks (https://www.aphis.usda.gov/animal_health/animal_dis_spec/poultry/downloads/Epidemiologic-Analysis-September2015.pdf). For example, in that report, statistical evidence 
was found that having visitors follow biosecurity protocols, such as 
changing clothes before entering a barn, and having premises personnel 
disinfect barn entry areas were both associated with a lowered risk of 
introducing HPAI to the premises.
    Under paragraph (g)(2), owners and contractors will be exempted 
from the requirement to submit a biosecurity statement if their 
facilities fall under one of the following categories: Premises covered 
under the NPIP regulations in 9 CFR 146.22(b) (commercial table-egg 
laying premises with fewer than 75,000 birds) or Sec.  146.52(b) 
(raised for release upland game bird and waterfowl premises that raise 
fewer than 25,000 birds annually) and premises where fewer than 100,000 
broilers or 30,000 turkeys are raised for meat annually. Exempting such 
facilities will allow APHIS to concentrate on helping large commercial 
facilities with their biosecurity activities. These larger operations 
were hardest hit by the 2015 outbreak, and are in the best position to 
address biosecurity issues. More than 99 percent of broilers are raised 
on farms with more than 100,000 birds, and 97 percent of turkeys are 
raised on farms with more than 30,000 birds. In addition, the smaller 
facilities that we are exempting from the requirement are less likely 
to have HPAI outbreaks than are the non-exempt ones. On smaller 
facilities, birds density tends to be less which minimizes overall 
viral load. Additionally, if a smaller facility was identified with 
HPAI the disease is less likely to spread outward to other premises 
because there are fewer birds, vehicles, pieces of equipment, and 
employees moving onto and off of the smaller, exempted facilities when 
compared to the larger, non-exempted ones.
    To facilitate owners' and contractors' biosecurity planning, APHIS 
has created and distributed biosecurity training materials, which 
include specific examples of approaches to developing and implementing 
biosecurity protocols for the various types of commercial poultry 
operations. Further, we are increasing outreach to all producers--
large, small and backyard--to educate them about biosecurity plans and 
how they can be implemented at the local level.
    APHIS is phasing in implementation and documentation of enhanced 
biosecurity through a biosecurity self-assessment. Initially, 
commercial poultry owners and contractors will be asked to voluntarily 
self-assess, whether their operations have implemented the measures in 
a general biosecurity checklist developed by APHIS (https://www.uspoultry.org/animal_husbandry/assessment.cfm). Next, each owner 
and/or contractor should develop a risk-based, site-specific 
biosecurity plan that includes standard operating procedures and a 
site-specific checklist. This step will be followed by the development 
of a plan for Federal, State, or industry-led oversight of the 
biosecurity plan and a mechanism for verification. We welcome comments 
from the public regarding the development of procedures for the 
oversight and verification of the biosecurity plan.

Miscellaneous

    In addition to adding the references to eggs to Sec.  53.2(b), we 
are making a couple of minor edits to the paragraph for the sake of 
clarity. We are incorporating footnote 1 into the text and editing one 
clause of the paragraph that, as written, could be interpreted as 
referring to the ineligibility of the animals covered by the paragraph, 
rather than their owners, to receive indemnity payments. The clause has 
been revised for accuracy, and we have also added a reference to 
contractors, in keeping with the other changes we are making to part 
53.

Emergency Action

    This rulemaking is necessary on an emergency basis to provide 
timely and equitable compensation to owners and contractors for flocks 
destroyed due to the disease, which may reoccur in 2016. Under these 
circumstances, the Administrator has determined that prior notice and 
opportunity for public comment are contrary to the public interest and 
that there is good cause under 5 U.S.C. 553 for making this rule 
effective less than 30 days after publication in the Federal Register.
    We will consider comments we receive during the comment period for 
this interim rule (see DATES above). After the comment period closes, 
we will publish another document in the Federal Register. The document 
will include a discussion of any comments we receive and any amendments 
we are making to the rule.

Executive Orders 12866 and 13563 and Regulatory Flexibility Act

    This interim rule has been determined to be significant for the 
purposes of Executive Order 12866 and, therefore, has been reviewed by 
the Office of Management and Budget.
    We have prepared an economic analysis for this interim rule. The

[[Page 6748]]

economic analysis provides a cost-benefit analysis, as required by 
Executive Orders 12866 and 13563, which direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. The 
economic analysis also provides an initial regulatory flexibility 
analysis that examines the potential economic effects of this rule on 
small entities, as required by the Regulatory Flexibility Act. The 
economic analysis is summarized below. The full analysis may be viewed 
on the Regulations.gov Web site (see ADDRESSES above for instructions 
for accessing Regulations.gov) or obtained from the person listed under 
FOR FURTHER INFORMATION CONTACT.
    APHIS is amending the regulations to include conditions for the 
splitting of HPAI indemnity payments when multiple parties are involved 
in order to ensure that all parties who suffer losses resulting from 
the destruction of poultry or eggs due to HPAI are compensated and 
compensation is distributed to parties who suffer losses based on the 
terms of the contract. The vast majority of contracts are expected to 
reflect the relative level of inputs or investments of the parties who 
suffer losses. This interim rule also clarifies that APHIS will pay 
indemnity for eggs destroyed due to HPAI and requires owners and 
contractors, unless exempted because their facilities are small, to 
provide a statement that at the time of detection of HPAI in their 
facilities, they had in place and were following a written biosecurity 
plan to address the potential spread of HPAI.
    The entities affected by this interim rule will be U.S. facilities 
primarily engaged in breeding, hatching, and raising poultry for meat 
or egg production, and facilities primarily engaged in slaughtering 
poultry. There were about 25,000 farms categorized as breeding, 
hatching, or raising poultry for meat production, about 28,000 farms 
categorized as egg producers, and 517 poultry processors in the 2012 
Agricultural Census. In particular, this rule will affect poultry 
owners and contractors who produce poultry under production contracts. 
It is estimated that 97 percent of broilers were raised on production 
contract operations in 2011.\2\ Of the farms producing broilers and 
other meat-type chickens, about 15,350 accounted for more than 99 
percent of the total number of broilers sold in 2012 according to the 
Agricultural Census.
---------------------------------------------------------------------------

    \2\ 2011 USDA Agricultural Resource Management Survey, Version 
4.
---------------------------------------------------------------------------

    The United States is the world's largest poultry producer and the 
second-largest egg producer. The combined value of production from 
broilers, eggs, turkeys, and the value of sales from chickens in 2014 
was $48.3 billion, up 9 percent from $44.4 billion in 2013. Of the 
combined total, 68 percent was from broilers, 21 percent from eggs, 11 
percent from turkeys, and less than 1 percent from chickens.\3\ Broiler 
production, valued at over 50 billion pounds per year, is concentrated 
in a group of States stretching from Delaware, south along the Atlantic 
coast to Georgia, then westward through Alabama, Mississippi, and 
Arkansas. The U.S. turkey industry produces over one-quarter of a 
billion birds annually. Production of turkeys is somewhat more 
scattered geographically than broiler production, with Minnesota, North 
Carolina, Missouri, Arkansas and Virginia the top five turkey-producing 
States. U.S. laying hen operations produce over 90 billion eggs 
annually. The top five egg-producing States are Iowa, Ohio, 
Pennsylvania, Indiana, and Texas.
---------------------------------------------------------------------------

    \3\ USDA, NASS. Poultry Production and Value, 2014 Summary. 
April 2015.
---------------------------------------------------------------------------

    In 2014, the United States exported nearly 4 million metric tons 
(MT) of poultry meat valued at about $5 billion. The vast majority of 
exports consisted of chicken meat. Export demand for U.S. broiler 
products has fluctuated over the last several years because of changing 
economic conditions and currency exchange rates. Since the first HPAI 
findings in December 2014, a number of trading partners have imposed 
complete or partial bans on shipments of U.S. poultry and products.
    Broilers account for nearly all U.S. chicken consumption. Broiler 
production and processing occurs within highly integrated production 
systems. Owners of the processing facilities own, as well, the birds 
that are processed and contract with growers (contractors) to raise 
those birds before processing. The top 20 owners together accounted for 
94 percent of all broilers produced in the United States in 2012, and 
the top 3 accounted for 49 percent.
    Expanded broiler production has been made possible to a large 
extent by the vertically integrated production system and through the 
use of production contracts. Almost all commercial operations raising 
broilers are contract growers.\4\
---------------------------------------------------------------------------

    \4\ MacDonald, J.M. Technology, Organization, and Financial 
Performance in U.S. Broiler Production, EIB-126 USDA Economic 
Research Service. June 2014.
---------------------------------------------------------------------------

    Under the system of production contracts, the contractor normally 
supplies the grow-out house with all the necessary heating, cooling, 
feeding, and watering systems. The contractor also supplies the labor 
needed in growing the birds. The owner normally supplies the chicks, 
feed, veterinary medicines and transportation. Contractors have 
exclusive contracts with an owner and receive payment for the services 
that they provide, with premiums and discounts tied to the efficiency 
with which feed is converted to live-weight broilers, the minimization 
of mortality, or the number of eggs produced. Specific contract terms 
and the period covered can vary.
    Embedded in the value of a bird at any point in time is the value 
of inputs by both parties. Contractors' costs are more or less fixed 
and are heavily committed early in the production cycle. Investments in 
poultry housing cannot be shifted readily to other farming activities.
    Currently, indemnity payments go directly to the owner of the birds 
who, depending on the terms of the contractual arrangement, might or 
might not compensate the contractor. It is important to formalize 
provisions to share indemnity payments between poultry owners and 
contractors, both of whom have productive assets imbedded in the value 
of the bird. When USDA pays to compensate owners and contractors for 
losses, that compensation should be distributed to parties who suffer 
losses based on the terms of the contract.
    APHIS' determination of the total amount of indemnity will remain 
the same under the interim rule as at present, based on the appraised 
value of the bird or eggs, the number of birds depopulated or eggs 
destroyed, and the age of the birds when depopulated. However, to 
determine the appropriate payment split between owner and contractor, 
APHIS may have to examine contract specifics on a case-by-case basis. 
This interim rule will not change the total amount of compensation paid 
in a given situation, but will ensure timely distribution of that 
compensation between the owner and contractor. This interim rule will 
benefit contractors who otherwise may suffer uncompensated economic 
losses from participating in an eradication program.

[[Page 6749]]

    To date, the generic term ``materials'' within the existing 
regulations in part 53 has been used to provide for indemnification for 
eggs required to be destroyed pursuant to HPAI eradication efforts. 
This rule will specify appropriate references to eggs, and a 
description of the appraisal of the value of eggs destroyed due to HPAI 
to the regulations. The rule will therefore simply clarify existing 
practice for the indemnification of destroyed eggs and will not change 
the total amount of any compensation paid in a given future situation.
    The vast majority of contractors have some level of biosecurity in 
place on their operations. This rule will require large owners and 
contractors to provide a statement that a written biosecurity plan was 
in place and was followed if HPAI is detected at their facilities. 
There are approximately 18,900 poultry operations that will be subject 
to this requirement. Many operations will need to review their existing 
biosecurity plans, and some will need to newly develop plans. We 
estimate that the development of a biosecurity plan could cost between 
about $525 and $700, while the review of an existing plan could cost 
about $70. If 5 percent of producers need to newly develop biosecurity 
plans and 95 percent need to review existing biosecurity plans, the 
total one-time cost for all producers could be between $1.7 million and 
$1.9 million.
    Most producers should be readily able to affirm that they were 
following a biosecurity plan in the case of an HPAI incident. We 
estimate that an owner or contractor will need at most about 0.25 to 
0.50 hours to comply with this affirmation requirement, at a cost of 
$8.73 to $17.45 per occurrence. The total cost of this affirmation 
requirement will depend on the number of producers affected by a given 
HPAI outbreak who submit paperwork to receive indemnity. If a given 
outbreak were to affect 100 flocks, the total cost of this affirmation 
requirement would be from about $900 to $1,800 and if a given outbreak 
were to affect 500 flocks, the total cost would be from about $4,400 to 
$8,800 when rounded up to the nearest hundred.\5\
---------------------------------------------------------------------------

    \5\ One hundred flocks * $8.73 = $873, 100 flocks * $17.45 = 
$1,745, 500 flocks * $8.73 = $4,365 and 500 flocks * $17.45 = 
$8,725.
---------------------------------------------------------------------------

    It should be noted that these total cost estimates are limited to 
the cost of developing or reviewing biosecurity plans and providing a 
statement attesting that a biosecurity plan was in place and followed. 
Because this rule does not require the implementation of specific 
biosecurity measures, the costs associated with implementing new 
biosecurity measures are not included in these totals. We expect that 
most producers already have or will voluntarily adopt new biosecurity 
measures prior to the interim rule becoming effective.
    APHIS is distributing biosecurity training materials that include 
specific examples of approaches to developing and implementing 
biosecurity protocols for various types of commercial poultry 
operations. APHIS is phasing in enhanced biosecurity initially through 
voluntary self-assessments. Results of self-assessments in the fall of 
2015 show that a significant majority of poultry producers have in 
place or are in the process of implementing a variety of recommended 
biosecurity practices. Development, following public input, of Federal, 
State or industry-led oversight and verification will follow.

Executive Order 12372

    This program/activity is listed in the Catalog of Federal Domestic 
Assistance under No. 10.025 and is subject to Executive Order 12372, 
which requires intergovernmental consultation with State and local 
officials. (See 2 CFR chapter IV.)

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule: (1) Preempts all State and local laws and 
regulations that are in conflict with this rule; (2) has no retroactive 
effect; and (3) does not require administrative proceedings before 
parties may file suit in court challenging this rule.

Paperwork Reduction Act

    In accordance with section 3507(j) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the information collection and 
recordkeeping requirements included in this interim rule have been 
submitted for emergency approval to the Office of Management and Budget 
(OMB). When OMB notifies us of its decision, we will publish a document 
in the Federal Register providing notice of the assigned OMB control 
number.
    Please send written comments on the information collection and 
recordkeeping requirements included in this interim rule to the 
following addresses: (1) Office of Information and Regulatory Affairs, 
OMB, Attention: Desk Officer for APHIS, Washington, DC 20503; and (2) 
Docket No. APHIS-2015-0061, Regulatory Analysis and Development, PPD, 
APHIS, Station 3A-03.8, 4700 River Road, Unit 118, Riverdale, MD 20737-
1238. Please state that your comments refer to Docket No. APHIS-2015-
0061 and send your comments within 60 days of publication of this rule.
    This interim rule establishes regulations to provide for the 
equitable distribution of indemnity payment to owners and contractors 
by the Department for the depopulation of poultry and destruction of 
eggs known to be infected with HPAI and to require that, in order to 
receive indemnity payments, owners and contractors, unless specifically 
exempted, must submit a statement indicating that they had in place and 
were following a biosecurity plan at the time of HPAI detection in 
their facilities. In addition to submitting the biosecurity statement, 
owners and contractors must sign a payment, appraisal and agreement 
form and must certify as to whether any other parties hold mortgages on 
the flock. This interim rule also clarifies that eggs are a commodity 
eligible for indemnity.
    We are soliciting comments from the public (as well as affected 
agencies) concerning our information collection and recordkeeping 
requirements. These comments will help us:
    (1) Evaluate whether the information collection is necessary for 
the proper performance of our agency's functions, including whether the 
information will have practical utility;
    (2) Evaluate the accuracy of our estimate of the burden of the 
information collection, including the validity of the methodology and 
assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the information collection on those who 
are to respond (such as through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology; e.g., permitting electronic 
submission of responses).
    Estimate of burden: Public reporting burden for this collection of 
information is estimated to average 1.626 hours per response.
    Respondents: States; Poultry and egg owners and contractors.
    Estimated annual number of respondents: 35,925.
    Estimated annual number of responses per respondent: 1.9336.
    Estimated annual number of responses: 69,456.
    Estimated total annual burden on respondents: 112,950 hours. (Due 
to averaging, the total annual burden hours may not equal the product 
of the annual number of responses multiplied by the reporting burden 
per response.)

[[Page 6750]]

    Copies of this information collection can be obtained from Ms. 
Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 
851-2727.

E-Government Act Compliance

    The Animal and Plant Health Inspection Service is committed to 
compliance with the E-Government Act to promote the use of the Internet 
and other information technologies, to provide increased opportunities 
for citizen access to Government information and services, and for 
other purposes. For information pertinent to E-Government Act 
compliance related to this interim rule, please contact Ms. Kimberly 
Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.

List of Subjects in 9 CFR Part 53

    Animal diseases, Indemnity payments, Livestock, Poultry and poultry 
products.

    Accordingly, we are amending 9 CFR part 53 as follows:

PART 53--FOOT-AND-MOUTH DISEASE, PLEUROPNEUMONIA, RINDERPEST, AND 
CERTAIN OTHER COMMUNICABLE DISEASES OF LIVESTOCK OR POULTRY

0
1. The authority citation for part 53 continues to read as follows:

    Authority:  7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4.


0
2. In Sec.  53.2, paragraph (b) is revised to read as follows:


Sec.  53.2  Determination of existence of disease; agreements with 
States.

* * * * *
    (b) Upon agreement of the authorities of the State to enforce 
quarantine restrictions and orders and directives properly issued in 
the control and eradication of such a disease, the Administrator is 
hereby authorized to agree, on the part of the Department, to cooperate 
with the State in the control and eradication of the disease, and to 
pay 50 percent (and in the case of Newcastle disease or highly 
pathogenic avian influenza, up to 100 percent, and in the case of 
infectious salmon anemia, up to 60 percent) of the expenses of 
purchase, destruction and disposition of animals, eggs, and materials 
required to be destroyed because of being contaminated by or exposed to 
such disease: Provided, however, that if the animals or eggs were 
exposed to such disease prior to or during interstate movement and the 
owners or parties contracting with the owners to raise or care for the 
animals or eggs are not eligible to receive indemnity from any State, 
the Department may pay up to 100 percent of the purchase, destruction, 
and disposition of animals, eggs, and materials required to be 
destroyed; Provided further, that the cooperative program for the 
purchase, destruction, and disposition of birds shall be limited to 
birds which are identified in documentation pursuant to Agreements 
between the Department and the particular State involved relating to 
cooperative animal (including poultry) disease prevention, control, and 
eradication, as constituting a threat to the poultry industry of the 
United States; And provided further, that the Secretary may authorize 
other arrangements for the payment of such expenses upon finding that 
an extraordinary emergency exists.

0
3. Section Sec.  53.3 is amended as follows:
0
a. By revising the section heading.
0
b. In paragraph (a), by adding the words ``or eggs'' after the word 
``Animals''.
0
c. By adding paragraph (e).
    The addition and revision read as follows:


Sec.  53.3  Appraisal of animals, eggs, or materials.

* * * * *
    (e) Indemnity for eggs required to be destroyed due to an outbreak 
of highly pathogenic avian influenza will be based on the fair market 
value of the eggs, as determined by an appraisal. Appraisals of eggs 
shall be reported on forms furnished by APHIS. The amount of indemnity 
paid, together with the amount for net salvage the owner or contractor 
received, if any, shall not exceed the appraised fair market value of 
the eggs.

0
4. Section 53.4 is amended as follows:
0
a. By revising the section heading.
0
b. By adding paragraph (b).
    The addition and revision read as follows:


Sec.  53.4  Destruction of animals or eggs.

* * * * *
    (b) Eggs infected with, exposed to, or contaminated by highly 
pathogenic avian influenza shall be disposed of pursuant to the 
regulations in this part under the supervision of an APHIS employee who 
shall prepare and transmit to the Administrator a report identifying 
all eggs disposed thereof.
* * * * *

0
5. Section 53.9 is amended as follows:
0
a. The section heading is revised.
0
b. By adding the word ``, eggs,'' after the word ``animals'' each time 
it appears.
    The revision reads as follows:


Sec.  53.9  Mortgage against animals, eggs, or materials.

* * * * *

0
6. Section 53.10 is amended as follows:
0
a. In paragraphs (c) and (d), by adding the word ``, eggs,'' after the 
word ``animals'' each time it appears.
0
b. By adding paragraph (g).
    The addition reads as follows:


Sec.  53.10  Claims not allowed.

* * * * *
    (g) The Department will not allow claims arising out of the 
destruction of animals or eggs destroyed due to an outbreak of highly 
pathogenic avian influenza unless the owner of the animals or eggs and 
any party that enters into a contract with the owners to grow or care 
for the poultry or eggs, unless exempted under paragraph (g)(2) of this 
section, provide to APHIS a statement that at the time of detection of 
highly pathogenic avian influenza in the facility, the owner and 
contractor (if applicable), had in place and was following a 
biosecurity plan.
    (1) The biosecurity plan should include the following:
    (i) A biosecurity training program for premises/farm personnel;
    (ii) Biosecurity protocols for personnel;
    (iii) Procedures to control wild birds, rodents, and insects to 
reduce the risk of introduction or spread of HPAI;
    (iv) Measures taken to prevent HPAI introduction via vehicles and 
equipment;
    (v) Maintenance of a line of separation; and
    (vi) A clean water source for the facility.
    (2) Owners and contractors are exempted from the requirements of 
paragraph (g)(1) of this section if the facilities where the animals or 
eggs are raised or cared for falls under one of the following 
categories:
    (i) Premises meeting the criteria of the National Poultry 
Improvement Plan regulations in Sec. Sec.  146.22(b) or 146.52(c) of 
this chapter;
    (ii) Premises on which fewer than 100,000 broilers are raised 
annually; and
    (iii) Premises on which fewer than 30,000 meat turkeys are raised 
annually.
* * * * *
0
7. Section 53.11 is added to read as follows:


Sec.  53.11  Highly pathogenic avian influenza; conditions for payment.

    (a) When poultry or eggs have been destroyed pursuant to this part, 
the Administrator may pay claims to any party with whom the owner of 
the

[[Page 6751]]

poultry or eggs has entered into a contract for the growing or care of 
the poultry or eggs. The indemnity the Administrator may pay to such a 
party or parties shall be determined as by the following method:
    (1) Divide the value in dollars of the contract the owner entered 
into with the contractor by the duration in days of the contract as it 
was signed prior to the highly pathogenic avian influenza outbreak;
    (2) Multiply this figure by the time in days between the date the 
contractor began to provide services relating to the destroyed poultry 
or eggs under the contract and the date the poultry or eggs were 
destroyed due to highly pathogenic avian influenza.
    (b) If a contractor receiving indemnity under this section has 
received any payment under his or her contract from the owner of the 
poultry or eggs at the time the poultry or eggs are destroyed, the 
amount of indemnity for which the contractor is eligible will be 
reduced by the amount of the payment the contractor has already 
received.
    (c) If indemnity is paid to a contractor under this section, the 
owner of the poultry or eggs will be eligible to receive the difference 
between the indemnity paid to the contractors and the total amount of 
indemnity that may be paid for the poultry or eggs.
    (d) In the event that determination of indemnity due a contractor 
using the method described in paragraph (a) of this section is 
determined to be impractical or inappropriate, APHIS may use any other 
method that the Administrator deems appropriate to make that 
determination.

    Done in Washington, DC, this 3rd day of February 2016.
Gary Woodward,
Deputy Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 2016-02530 Filed 2-8-16; 8:45 am]
 BILLING CODE 3410-34-P