[Federal Register Volume 67, Number 84 (Wednesday, May 1, 2002)]
[Proposed Rules]
[Pages 21934-21959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10724]



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Part VI





Department of Agriculture





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9 CFR Part 53



Foot-and-Mouth Disease Payment of Indemnity; Update of Provisions; 
Proposed Rule

  Federal Register / Vol. 67 , No. 84 / Wednesday, May 1, 2002 / 
Proposed Rules  

[[Page 21934]]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Part 53

[Docket No. 01-069-1]
RIN 0579-AB34


Foot-and-Mouth Disease Payment of Indemnity; Update of Provisions

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the regulations pertaining to the 
control and eradication of foot-and-mouth disease and other serious 
diseases, including for both cooperative programs and extraordinary 
emergencies. Specifically, we are proposing changes in indemnity 
provisions primarily related to foot-and-mouth disease. The proposed 
changes are prompted, in part, by a review of the regulations in light 
of the recent series of outbreaks of foot-and-mouth disease in the 
United Kingdom and elsewhere around the world. We believe these changes 
are necessary to ensure the success of a control and eradication 
program in the event of an occurrence of foot-and-mouth disease in the 
United States.

DATES: We will consider all comments we receive that are postmarked, 
delivered, or e-mailed by July 1, 2002.

ADDRESSES: You may submit comments by postal mail/commercial delivery 
or by e-mail. If you use postal mail/commercial delivery, please send 
four copies of your comment (an original and three copies) to: Docket 
No. 01-069-1, Regulatory Analysis and Development, PPD, APHIS, Station 
3C71, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state 
that your comment refers to Docket No. 01-069-1. If you use e-mail, 
address your comment to [email protected]. Your comment must 
be contained in the body of your message; do not send attached files. 
Please include your name and address in your message and ``Docket No. 
01-069-1'' on the subject line.
    You may read any comments that we receive on this docket in our 
reading room. The reading room 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) 690-2817 before coming.
    APHIS documents published in the Federal Register, and related 
information, including the names of organizations and individuals who 
have commented on APHIS dockets, are available on the Internet at 
http://www.aphis.usda.gov/ppd/rad/webrepor.html.

FOR FURTHER INFORMATION CONTACT: Dr. Mark E. Teachman, Senior Staff 
Veterinarian, Emergency Programs, VS, APHIS, 4700 River Road Unit 41, 
Riverdale, MD 20737-1231; (301) 734-8073.

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, exotic Newcastle disease, highly 
pathogenic avian influenza, 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. The regulations authorize 
payments to be based on the fair market value of the animals destroyed, 
as well as payments for their destruction and disposal. The regulations 
also authorize payments for materials that must be cleaned and 
disinfected or destroyed because of being contaminated by or exposed to 
disease.
    We recently reviewed the regulations to determine their adequacy in 
the event of an occurrence of foot-and-mouth disease (FMD). This review 
was prompted, in part, by the recent series of outbreaks of FMD in the 
United Kingdom and elsewhere around the world. An occurrence of FMD in 
the United States could be devastating given the Nation's extensive 
holdings of livestock, poultry, and other animals. Besides the direct 
effects on producers of susceptible animals, the consequences of the 
disease could ripple throughout the economy, causing indirect costs in 
other sectors.
    As a result of this review, we are proposing changes to the 
regulations relating to the valuation of animals and materials and the 
payment of indemnity to claimants that relate primarily to FMD. We do 
not cover in this proposed rule these specific cooperative arrangements 
that the Administrator may enter into with States and other cooperators 
in the control and eradication of disease such as FMD. However, APHIS 
continues to work with States and other cooperators in developing 
appropriate response plans and strategies that entail the cooperative 
efforts of APHIS, other Federal agencies, States, and animal industries 
in the event of an occurrence of FMD or other disease covered by the 
regulations. We recognize cooperative arrangements with States and 
other cooperators are a critical element in the control and eradication 
of diseases such as FMD, and therefore invite your comments on this 
subject.
    We are also proposing other changes to the regulations that involve 
updating certain provisions that would be applicable to FMD.
    The purpose of this proposed rule is to remove possible sources of 
delay in achieving FMD eradication, should an occurrence of that 
disease occur in this country. Under existing compensation regulations, 
delays may occur because of some producers' perceptions on receiving 
full payment, as well as because of current eradication program 
requirements. In the first instance, delays can derive from livestock 
owners' uncertainty of being fully compensated for the fair market 
value of destroyed animals, products, and materials, including 
livestock vaccinated as part of an FMD eradication program (official 
vaccinates). Owners of affected herds may also be uncertain that they 
will receive full compensation for cleaning and disinfection costs. In 
the second instance, delays may be caused by having to rely on 
appraisal for the valuation of livestock when an insufficient number of 
appraisers or other constraints would prevent timely destruction of 
infected and exposed animals. This proposed rule sets forth regulatory 
changes to address these possible sources of delay.

Proposed Changes to 9 CFR Part 53

Definitions

    We are proposing to add to current Sec. 53.1 definitions for the 
terms animals affected by disease, APHIS representative, breeding 
animal, commercial breeding animal, disease outbreak, donor animal, 
endangered or threatened species, exotic animal, Federal veterinarian, 
Livestock Marketing Information Center, market animal, National 
Veterinary Services Laboratories, official vaccinate, rare animal, 
registered animal, seedstock herd or flock, State representative, and 
State veterinarian.

[[Page 21935]]

    The term animals affected by disease would refer to animals 
determined to be infected with, infested with, or exposed to, a disease 
covered by part 53. The term would also cover official vaccinates. The 
regulations currently use the term ``affected by or exposed to 
disease'' in discussing the valuation and destruction of animals 
eligible for indemnification. In other animal health regulations 
promulgated by the Agency, the terms ``affected with'' or ``affected 
by'' apply to animals infected with a disease or exposed to a disease 
agent. Therefore, to avoid confusion, we propose to use the term 
``animals affected by disease'' to cover both animals infected with a 
disease or exposed to a disease agent. The term ``animals affected by 
disease'' would also cover ``infested with'' because part 53 could 
apply to animals affected by screwworm, ticks, or organisms other than 
bacteria, viruses, or other agents typically associated with infection.
    The regulations define APHIS employee as any individual employed by 
APHIS who is authorized by the Administrator to do any work or perform 
any duty in connection with the control and eradication of disease. The 
regulations define inspector in charge as an APHIS employee who is 
designated by the Administrator to take charge of work in connection 
with the control and eradication of diseases. We are proposing to 
remove references to the terms APHIS employee and inspector in charge 
throughout the regulations and replace them with the term APHIS 
representative. An APHIS representative would be defined as any 
individual employed by or acting as an agent on behalf of APHIS who is 
authorized by the Administrator to perform the services required by 
part 53. We would make this change since, depending on the location and 
magnitude of the disease occurrence, it may not always be possible to 
use APHIS employees for all the services authorized under the 
regulations. Therefore, to reflect the possibility that we may have to 
contract for some of the services covered by the regulations, we are 
proposing to use the term ``APHIS representative'' in place of ``APHIS 
employee'' and ``inspector in charge'' throughout the regulations.
    We would define a breeding animal as any animal that is raised for 
the purpose of producing market animals or other breeding animals and 
that, in the case of a female, has donated embryos or been bred, and in 
the case of a male, is sexually intact and has reached the age of 
sexual maturity.
    We would define the term commercial breeding animal to cover any 
breeding animal other than a registered animal, an animal that is part 
of a seedstock herd or flock, or a donor animal.
    The term disease outbreak would refer to the initial occurrence of 
the disease, as determined and reported by the United States Department 
of Agriculture.
    A donor animal would be defined as any animal, other than a 
registered animal or an animal that is part of a seedstock herd or 
flock, that has donated at least two embryos, in the case of females, 
or at least 100 units of semen, in the case of males, for sale to 
another producer or transfer to a separate herd or flock.
    The term endangered or threatened species would refer to those 
species defined as endangered species or threatened species in the 
Endangered Species Act (16 U.S.C. 1531 et seq.) and the regulations 
promulgated thereunder and as they may be subsequently amended.
    We would define an exotic animal as any animal that is native to a 
foreign country or of foreign origin or character or is not native to 
the United States.
    We would define a Federal veterinarian as a veterinarian employed 
and authorized by the Federal Government to perform the services 
required by part 53. A Federal veterinarian could be an APHIS 
veterinarian or a veterinarian employed by another agency of the 
Federal Government.
    The Livestock Marketing Information Center would refer to the 
organization funded cooperatively by the United States Department of 
Agriculture, State land grant universities, and livestock industry 
associations that develops, disseminates and maintains economic and 
market data relating to the livestock industry.
    The term market animal would apply to any animal being raised for 
the primary purpose of slaughter for meat, or, in the case of dairy 
animals, the production of milk, or, in the case of certain sheep, the 
production of wool.
    We would define National Veterinary Services Laboratories as the 
organizational unit within the Animal and Plant Health Inspection 
Service delegated responsibility for providing services for the 
diagnosis of domestic and foreign animal diseases, diagnostic support 
for disease control and eradication programs, import and export testing 
of animals, training, and laboratory certification for selected 
diseases.
    We are proposing to define an official vaccinate as any animal that 
has been: Vaccinated with an official vaccine for FMD under the 
supervision of a State or Federal veterinarian; identified by an eartag 
specifically approved by APHIS for identification of animals officially 
vaccinated for FMD; and reported to the Administrator as an official 
vaccinate for FMD promptly after vaccination by the State or Federal 
veterinarian supervising the vaccination. Because of our current focus 
on FMD, the term official vaccinate would only include those animals 
that have been officially vaccinated for FMD. In the future, we may 
propose to amend the regulations to include animals vaccinated for 
other diseases.
    The term rare animal would mean an animal that is extremely 
uncommon in the United States and that is neither an exotic animal nor 
a member of an endangered or threatened species.
    We would define a registered animal as an animal of a particular 
breed for which individual records of ancestry are maintained, and for 
which individual registration certificates are issued and recorded by a 
recognized breed association whose purpose is the improvement of the 
breed.
    The term seedstock herd or flock would mean, in the case of cattle 
and sheep, a herd or flock in which, during the previous 5 years, at 
least 25 percent of the animals born to the herd or flock have, for 
breeding purposes, been sold to another producer or transferred to a 
separate herd or flock, or, in the case of swine, a herd in which at 
least 50 percent of the gilts produced have, for breeding purposes, 
been sold to another producer or transferred to a separate herd. This 
definition represents our best estimates based on our observations of 
the livestock industry. However, we recognize that a seedstock herd or 
flock is a concept that is evolving as a result of changes in 
technology and marketing, most notably in the swine industry. We 
therefore solicit your comments and suggestions on this definition, 
including alternative approaches for defining this term.
    The term State representative would refer to an individual employed 
by a State or a political subdivision to perform the specified 
functions agreed to by the Department and the State, while State 
veterinarian would refer specifically to a veterinarian employed and 
authorized by a State or its political subdivision to perform the 
services required by part 53.
    We would also amend definitions that already appear in current 
Sec. 53.1 for the terms Animal and Plant Health Inspection Service, 
disease, exotic Newcastle disease, highly pathogenic avian influenza, 
materials, and Secretary.

[[Page 21936]]

    We would make a minor change to the definition of Animal and Plant 
Health Inspection Service so that its recognized abbreviation, 
``APHIS,'' would appear as part of the term defined instead of in the 
text of the definition.
    Current Sec. 53.1 defines disease as FMD, rinderpest, contagious 
pleuropneumonia, exotic Newcastle disease, highly pathogenic avian 
influenza, and infectious salmon anemia, or any other communicable 
disease that in the opinion of the Secretary constitutes an emergency 
and threatens the livestock or poultry of the United States. We are 
proposing to amend the definition of this term to more closely follow 
the various statutory language for the control and eradication of 
diseases. We propose to define the term disease as any communicable 
disease of livestock or poultry for which indemnity is not provided 
elsewhere in 9 CFR chapter I, subchapter B, and contagious or 
infectious diseases of animals, such as FMD, rinderpest, contagious 
pleuropneumonia, exotic Newcastle disease, highly pathogenic avian 
influenza, and infectious salmon anemia, that, in the opinion of the 
Secretary, constitute an emergency or an extraordinary emergency and 
threaten the livestock or poultry of the United States. The revised 
definition would also clarify that diseases covered under part 53 would 
not include those diseases covered by indemnification regulations 
elsewhere in 9 CFR chapter I, subchapter B, such as tuberculosis, 
brucellosis, pseudorabies, and scrapie.
    We would make a minor technical correction to the definition of 
exotic Newcastle disease as it currently appears in Sec. 53.1 by not 
capitalizing the word ``disease.''
    We are also proposing to make a technical correction, for purposes 
of clarification, to the definition of highly pathogenic avian 
influenza. We would add the words ``in the test described in paragraph 
(1) of this definition'' to immediately follow the words ``one to five 
chickens'' in the third paragraph of the definition.
    The regulations currently define the term materials to include 
parts of barns or other structures, straw, hay, and other feed for 
animals, farm products or equipment, clothing, and articles stored in 
or adjacent to barns or other structures. The existing definition 
focuses primarily on articles or objects associated with farms. 
However, it is possible that locations other than farms, such as 
slaughtering facilities and other livestock concentration points, could 
be contaminated by or exposed to a disease agent. Therefore, we would 
broaden the definition of materials to also include ``any other 
article.'' We would change ``farm products'' to ``agricultural products 
or byproducts'' in order to include those products that may be produced 
somewhere other than on a farm. We would add references to ``bedding'' 
and ``conveyances.'' We would also remove the words ``parts of'' that 
precede the words ``barns or other structures'' to make the provision 
easier to understand without changing its substantive meaning. Based on 
these proposed changes, we would define the term materials as barns or 
other structures; straw, hay, and other feed and bedding for animals; 
agricultural products and byproducts; conveyances; equipment; clothing; 
and any other article.
    The term Secretary is defined in current Sec. 53.1 as the Secretary 
of Agriculture of the United States, or any officer or employee of the 
Department to whom authority has been or may be delegated to act in the 
Secretary's stead. We would simplify this term to mean the Secretary of 
Agriculture of the United States or any officer or employee of the 
Department authorized to act for the Secretary.
    We are also proposing to remove from current Sec. 53.1 the 
definitions of APHIS employee, inspector in charge, mortgage, and pet 
bird. As discussed previously, we are proposing to use APHIS 
representative in place of APHIS employee and inspector in charge 
throughout the regulations, and, therefore, no longer require 
definitions of these terms. We do not believe a definition of mortgage 
is necessary because our use of the term in the regulations is in 
keeping with the dictionary meaning. The term pet bird is no longer 
used in the regulations. Disease Control and Eradication, Payments 
Authorized, Determination of Disease
    Current Sec. 53.2 provides that the Administrator is authorized to 
agree to cooperate with a State in the control and eradication of those 
diseases covered by the regulations. Current Sec. 53.2 further provides 
that, upon agreement with the State, the Administrator is authorized to 
pay 50 percent of the expenses of the purchase, destruction, and 
disposition of animals and materials required to be destroyed because 
of being contaminated by or exposed to such disease, except that for 
infectious salmon anemia the Administrator is authorized to pay 60 
percent of those costs, and for exotic Newcastle disease or highly 
pathogenic avian influenza, the Administrator is authorized to pay up 
to 100 percent of those costs. Current Sec. 53.2 also states that, if 
animals are exposed to such disease prior to or during interstate 
movement and are not eligible to receive indemnity from any State, the 
Department may pay up to 100 percent of the costs of the purchase, 
destruction, and disposition of animals or materials required to be 
destroyed. Current Sec. 53.2 further provides that any cooperative 
program for the purchase, destruction, and disposition of birds is 
limited to those birds that are ``identified in documentation pursuant 
to Cooperative Agreements'' as constituting a threat to the U.S. 
poultry industry. In addition, current Sec. 53.2 provides that the 
Secretary of Agriculture may authorize other arrangements for the 
payment of expenses covered in this section upon finding that an 
extraordinary emergency exists.
    We are proposing to make a number of changes to current Sec. 53.2. 
Some of these are minor changes to make the regulations easier to 
understand. We are also proposing changes to Sec. 53.2 that are more 
substantive in nature.
    We would change the section heading ``Determination of existence of 
disease; agreements with States'' to ``Disease control and eradication; 
payments authorized; determination of disease.''
    We are proposing this change so that the section heading better 
reflects the order of topics covered under Sec. 53.2 and its scope of 
coverage. We would also delete some of the language from current 
paragraph (a) and reorganize a revised version of the remainder of 
current Sec. 53.2(a) and (b) into a new paragraph (a).
    We would clarify that the Department may cooperate not only with 
States, but also with political subdivisions of States, farmers' 
associations and similar organizations, and individuals in the control 
and eradication of disease. We would refer to these other potential 
cooperators to be consistent with the statutory language on this 
subject. In the absence of an extraordinary emergency, we would 
continue to provide that the Administrator would pay costs covered 
under Sec. 53.2 upon agreement of the States or others to cooperate in 
the control and eradication of the disease. We would remove the 
specific language requiring that such agreement is subject to the State 
agreeing to enforce quarantine restrictions and directives properly 
issued in the control and eradication of disease, since there may be a 
number of activities relating to the control and eradication of disease 
that States and other cooperators would agree to perform in fulfilling 
their cooperative obligations. We would add that the payment of costs 
provided in proposed Sec. 53.2 by the Administrator

[[Page 21937]]

would be subject to the availability of funding. Throughout proposed 
Sec. 53.2, we would also make a stylistic change by substituting the 
word ``costs'' in place of ``expenses.''
    In describing those costs eligible for indemnification under a 
cooperative program, current Sec. 53.2(b) refers to ``the expenses of 
purchase, destruction and disposition of animals and materials required 
to be destroyed because of being contaminated by or exposed to such 
disease.''
    We would change this characterization by referring to animals 
``affected by disease.'' We would continue to use the term 
``contaminated by or exposed to'' when referring to materials. However, 
we would make a technical change for purposes of clarification by 
referring to materials as contaminated by or exposed to ``a disease 
agent.''
    The subject of sharing cleaning and disinfection costs is currently 
covered by Sec. 53.7 of the regulations. We are proposing that this 
subject be covered in proposed Sec. 53.2 so that Sec. 53.2 would 
reference all costs for which payments are authorized.
    We are proposing that, in the case of a cooperative program for 
FMD, the Administrator will pay 100 percent of the costs for:
     Purchase, destruction, and disposition of animals affected 
by FMD, including official vaccinates; and
     Cleaning and disinfection of materials that are 
contaminated by or exposed to FMD, and the purchase, destruction, and 
disposition of such materials when the cost of cleaning and 
disinfection would exceed the value of the materials or cleaning and 
disinfection would be impracticable.
    In the case of costs for cleaning and disinfection of materials 
because of FMD, we would require that such costs be ``fair and 
reasonable'' based on the plain meaning of that phrase. As discussed 
below, these types of costs would be verified based on receipts or 
other similar documentation submitted by the claimant. The concept of 
``fair and reasonable'' would allow for compensation that takes into 
account that costs incurred for these items or services may vary from 
region to region.
    We are proposing these indemnity changes in the case of FMD to 
provide the Administrator with sufficient resources and flexibility to 
effectively control and eradicate any occurrence of FMD in this 
country. An FMD occurrence in the United States could be devastating, 
given the Nation's extensive livestock holdings. We believe that 
effective disease control strategies at the first sign of an FMD 
occurrence are imperative if losses are to be minimized. Authorizing 
the Administrator to pay 100 percent of the costs for the purchase, 
destruction, and disposition of animals affected by FMD, 100 percent of 
the costs for cleaning and disinfection of materials contaminated by or 
exposed to FMD, and 100 percent of the costs for the purchase, 
destruction, and disposition of such materials when the cost of 
cleaning and disinfection would exceed the value of the materials or 
cleaning and disinfection would be impracticable, would reassure 
livestock industries of the Department's full commitment to 
eradication, thereby helping to bolster the cooperation of affected 
parties.
    We would also expressly provide compensation for official 
vaccinates destroyed because of FMD. Vaccination of animals for FMD may 
be part of our cooperative control and eradication strategy should FMD 
be introduced into the United States. Specifically, susceptible animals 
at a certain distance from an occurrence may be vaccinated to help 
prevent the spread of the disease. Subject to certain exceptions that 
may include exotic or rare animals or endangered or threatened species, 
as discussed below in our proposed changes to Sec. 53.4, vaccinated 
animals would be destroyed as part of an FMD eradication program.
    Because nonvaccinated animals affected with FMD would be destroyed 
first, it may be necessary for vaccinated animals to be held on a 
premises for an indeterminate length of time prior to destruction. 
During this period, producers would be responsible for the care and 
feeding of their vaccinated animals. The regulations currently do not 
provide compensation for care and feeding of animals. However, we are 
seriously considering whether the regulations should authorize 
compensation to cover all or part of the costs of care and feeding of 
official vaccinates awaiting destruction.
    Compensating producers for the care and feeding of official 
vaccinates would help remove any reluctance by producers to have their 
herds vaccinated as part of a cooperative program to control and 
eradicate FMD. Without providing such financial assistance, there could 
be a disincentive on the part of producers to cooperate and participate 
in the program since the costs of care and feeding would, in effect, 
offset the producers' compensation for these animals. Should paying for 
this activity be a responsibility of the producer or of the Federal 
Government through the payment of compensation? We would like your 
comments on this subject.
    We would consider compensable costs relating to care and feeding to 
include those operating costs that are fair and reasonable and are 
directly attributable to maintaining the animals, such as costs for 
veterinary services and medicines, bedding and litter, fuel and 
electricity, repairs, allocated hired labor, and feed. Claims for such 
costs could be based on receipts or other documentation submitted to 
the Administrator that would verify a claimant's costs for care and 
feeding of official vaccinates. Certain livestock and feed assistance 
programs administered by USDA's Farm Services Agency (FSA) provide that 
compensation for feed may also be calculated based upon rates that are 
tied to pre-established energy or nutrient maintenance requirements 
designed to meet the daily maintenance needs of different types and 
weight classes of livestock.
    We solicit your comments that specifically address the 
appropriateness of, and need for, providing compensation to producers 
for costs relating to the care and feeding of official vaccinates in 
the event of FMD. We further invite your comments on the types of costs 
that should be eligible for compensation, and the most suitable means 
for determining such costs (i.e., through receipts or other 
documentation, pre-established animal energy or nutrient maintenance 
requirements, or some other means). We also solicit your comments on 
the amount of expenditures that might be incurred in the care and 
feeding of official vaccinates over a particular time duration, such as 
one or two months.
    We would also make a technical change to current Sec. 53.2 with 
regard to cooperative programs for the purchase, destruction, and 
disposition of birds. We would provide that the birds covered under 
such a program would be ``determined by the Administrator'' as 
constituting a threat to the U.S. poultry industry instead of 
``identified in documentation pursuant to Cooperative Agreements'' as 
constituting such a threat.
    We are also proposing to remove from current Sec. 53.2 the 
reference to the Secretary's authority to make other arrangements for 
the payment of expenses upon finding that an extraordinary emergency 
exists. The specific reference is not necessary because the proposed 
indemnity provisions for the destruction of animals and materials would 
apply both to cooperative compensation programs as well as in the case 
of an extraordinary emergency. The basis for the payments of 
compensation for animals or materials destroyed under a cooperative

[[Page 21938]]

program or in the case of an extraordinary emergency would be the fair 
market value. We would clarify in proposed Sec. 53.2(a)(2) that when 
the Secretary determines that an extraordinary emergency exists, the 
Administrator would pay, subject to the availability of funding, 100 
percent of the costs (i.e., the fair market value) for the purchase, 
destruction, and disposition of animals and materials. Payment of 100 
percent of the costs for animals and materials in the case of an 
extraordinary emergency would apply to all diseases covered by the 
regulations. However, any payment by the Administrator could not exceed 
the difference between the compensation received from a State or other 
source and the fair market value of the animals or materials.
    As discussed previously, current Sec. 53.2(a) and (b), revised as 
described above, would become new Sec. 53.2(a). We would then add a new 
paragraph (b) to Sec. 53.2. Proposed Sec. 53.2(b) would provide the 
basis for determining that animals are affected by disease or that 
materials are contaminated by or exposed to a disease agent. Under 
proposed Sec. 53.2(b)(1), the determination that animals are affected 
by disease would be made by either a Federal veterinarian or a State 
veterinarian who has completed the APHIS course on foreign animal 
disease diagnosis. This particular course is currently offered at 
APHIS' Foreign Animal Disease Diagnostic Laboratory, located at Plum 
Island, NY.
    The determination that animals are affected by disease would be 
based on factors such as clinical evidence of the disease (signs, 
necropsy lesions, and history of the occurrence of the disease), 
diagnostic tests for the disease based on protocols approved by the 
National Veterinary Services Laboratories, or epidemiological evidence. 
By epidemiological evidence, we mean evaluation of the clinical 
evidence and the degree of risk posed by the potential spread of the 
disease based on the disease's virulence, its known means of 
transmission, and the particular species involved. A copy of the 
protocols for diagnostic tests of diseases covered by part 53 would be 
available by writing Emergency Programs, Veterinary Services, Animal 
and Plant Health Inspection Service, USDA, 4700 River Road Unit 41, 
Riverdale, MD 20737-1231.
    Under proposed Sec. 53.2(b)(2), the APHIS representative or State 
representative, with the guidance of a Federal veterinarian or a State 
veterinarian, would be authorized to determine whether materials are 
contaminated by or exposed to a disease agent.

Payments for Animals and Materials, Other Compensation, Request for 
Review

    Current Sec. 53.3 covers the appraisal of animals or materials 
eligible for indemnification. Paragraph (a) of current Sec. 53.3 
provides that animals affected by or exposed to disease, as well as 
materials required to be destroyed because of being contaminated by or 
exposed to disease, shall be appraised jointly by an APHIS employee and 
a State representative, or, if the State authorities approve, by an 
APHIS employee alone.
    Paragraph (b) of current Sec. 53.3 states that the appraisal of 
animals shall be based on the animal's fair market value according to 
its meat, egg production, dairy, or breeding value. Paragraph (b) also 
provides that animals may be appraised in groups, provided the animals 
are of the same species and type. Paragraph (b) states that when 
appraisal is ``by the head,'' each animal in the group will be valued 
at that same value per head and when appraisal is ``by the pound,'' 
each animal in the group will be valued at that same per-pound value.
    Paragraph (c) of current Sec. 53.3 provides that appraisals of 
animals shall be reported on forms furnished by APHIS that show the 
number of animals of each species and the value per head or the weight 
and value per pound. Paragraph (d) of current Sec. 53.3 provides that 
appraisals of materials shall be reported on forms furnished by APHIS 
that show, when practicable, the number, size or quantity, unit price, 
and total value of each kind of material appraised.
    We are proposing to make a number of changes to current Sec. 53.3 
both in terms of organization and content. We would change the section 
heading of current Sec. 53.3 from ``Appraisal of animals or materials'' 
to ``Payments for animals and materials; other compensation; request 
for review.'' We would make this change to be consistent with our 
proposal, as discussed below, of providing means other than appraisal 
for determining the value of animals and materials in the case of FMD.
    Under proposed Sec. 53.3, paragraph (a) would cover the valuation 
of animals, paragraph (b) would cover the valuation of materials, 
paragraph (c) would cover other compensation allowed by the regulations 
(i.e., costs for cleaning and disinfection), and paragraph (d) would 
cover the process for a claimant to request a review of the valuation 
of animals or materials, or the amount of payment relating to costs of 
cleaning and disinfection.
    Proposed Sec. 53.3(a) would include much of the information that 
already appears in the regulations for the valuation of animals, but 
with certain important changes. Instead of referring to animals 
``affected by or exposed to disease,'' we would refer to animals 
``affected by disease'' for the reasons discussed previously. Proposed 
Sec. 53.3(a) would now also apply to the valuation of official 
vaccinates in the case of FMD. Proposed Sec. 53.3(a) would provide that 
the value of animals affected by disease and subject to destruction 
would be the fair market value based on appraisal of the animals, 
subject to an exception related to FMD as explained below. We would 
remove the reference that the fair market value be based on the ``meat, 
egg production, dairy or breeding value of such animals'' since fair 
market value may also reflect other factors as well.
    We are proposing that, in the case of FMD, if the Administrator 
determines that appraisal is impracticable or would otherwise 
compromise efforts to effectively control and eradicate the disease, 
the Administrator may determine the fair market value of animals by a 
fixed-rate method in lieu of appraisal. We would make this change 
because the virulence and potential magnitude of FMD may make appraisal 
impracticable, and actually compromise our ability to control and 
eradicate the disease due to the time, personnel, and other resources 
that would be required to conduct appraisals. In addition, the weighing 
of animals subject to destruction would not likely be an option in the 
case of FMD because of time limitations and movement restrictions. The 
use of a fixed-rate method instead of appraisal would entail less 
contact with affected animals and fewer visits to affected premises by 
APHIS representatives and State representatives, thereby lowering the 
risk in the transmission of FMD. Having in place a mechanism for 
establishing fixed rates without the need for additional rulemaking at 
the time of an FMD occurrence would also facilitate quicker 
compensation to affected claimants, thus bolstering the cooperation of 
affected parties and contributing to the overall effectiveness of the 
eradication program.
    Proposed Sec. 53.3(a)(1) would contain the requirements for 
determining the fair market value of animals based on the appraisal 
method. We would continue to require that the appraisal be conducted 
jointly by an APHIS representative and a State representative, or, if 
the State authorities approve, by an APHIS

[[Page 21939]]

representative alone. We would also continue to provide that animals 
may be appraised in groups, provided that they are of the same species 
and type and provided that, where appraisal is by the head, each animal 
in the group would be the same value per head, or where appraisal is by 
the pound, each animal in the group would be the same value per pound.
    Proposed Sec. 53.3(a)(2) would set forth the basic criteria for 
determining the fair market value of animals under a fixed-rate method, 
if authorized by the Administrator in the case of FMD. Rates would be 
established on a per-head basis for beef and dairy cattle, swine, and 
sheep. This group of animals would likely represent the vast majority 
of animals that would be affected by FMD and subject to depopulation. 
Rates may be established for other animals for which the Administrator 
finds sufficient information publicly available to make a calculation 
of the animal's fair market value in accordance with the procedures 
provided in proposed Sec. 53.3(a)(2). Otherwise, the value of other 
animals affected by disease would be determined by appraisal as 
provided in proposed Sec. 53.3(a)(1). We invite your comments and 
suggestions on the fixed-rate method, including your comments and 
suggestions for setting fixed rates for animals susceptible to FMD 
other than beef and dairy cattle, swine, and sheep. We have not 
proposed fixed rates for goats at this time because we have not 
developed rate criteria that we believe suitably encompasses the 
different market and breeding classifications for goats. Similarly, we 
have not included the means for establishing fixed rates for 
nontraditional animals susceptible to FMD such as llamas, farmed 
cervids (deer and elk), and buffalo. We invite your comments and 
suggestions for establishing fixed rates for these animals.
    In establishing fixed rates, we would set a uniform rate for each 
of the proposed animal classifications. We would do this, in part, 
because we would use price data that generally reflect national rather 
than regional conditions. We are also proposing a system of national 
uniform rates to facilitate implementation of an FMD eradication 
program. In proposing a system of national uniform rates, we realize 
there is a potential of overlooking regional market disparities. We 
invite your comments on the use of a national uniform fixed rate for 
each of the animal classifications, as well as your suggestions on 
alternative approaches to using national uniform fixed rates.
    Proposed Sec. 53.3(a)(2)(i) sets forth how we would classify 
animals for purposes of setting rates. Animals would first be 
classified as either market animals or breeding animals. Market animals 
would include those animals raised for the primary purpose of slaughter 
for meat or, in the case of dairy animals, the production of milk, or, 
in the case of certain sheep, the production of wool. Breeding animals 
would include those animals that are raised for the primary purpose of 
producing market animals or other breeding animals and that, in the 
case of females, have donated embryos or been bred, and in the case of 
males, are sexually intact and have reached the age of sexual maturity. 
For example, a registered dairy bull that is sexually immature would 
not be considered a breeding animal for purposes of compensation.
    We would establish additional classifications for both market 
animals and breeding animals. For each classification, we would 
establish a single per-head rate to be paid to all animals within that 
classification. Market animals would be further classified according to 
their production phase, including whether or not the animals are weaned 
and whether or not the animals are on finishing rations (i.e., at a 
feedlot or finishing barn). We are proposing to establish rates for 
market animals for each of the following classifications:
     Cattle.
    Beef cattle: Preweaned calves; non-feedlot, but weaned (stocker) 
animals; and feedlot animals.
    Dairy cattle: Commercial dairy cows (female dairy cows that are or 
have been in milk), non-bred heifer replacements and sexually immature 
bulls, and bred heifer replacements.
     Swine: Grower-finisher pigs, nursery pigs, and preweaned 
piglets.
     Sheep: Preweaned lambs, weaned feeder lambs, slaughter 
lambs, and wethers raised for wool production.
    Breeding animals would be further classified, based on whether they 
are commercial breeding animals, or are registered animals, part of a 
seedstock herd or flock, or donor animals. We would set up these 
classifications to recognize the generally higher value of registered 
or seedstock animals, as well as animals that have donated embryos or 
semen, in comparison to commercial breeding animals. We are proposing 
to establish rates for breeding animals for each of the following 
classifications:
     Cattle.
    Beef cattle: Beef cows (commercial herds); bred replacement heifers 
(commercial herds); beef bulls (commercial herds); and registered 
animals, animals in a seedstock herd, and donor animals.
    Dairy cattle: Dairy bulls; and registered animals, animals in a 
seedstock herd, and donor animals.
     Swine: Sows and boars (commercial herds) and registered 
animals, animals in a seedstock herd, and donor animals.
     Sheep: Ewes and rams (commercial flocks) and registered 
animals, animals in a seedstock flock, and donor animals.
    We have attempted to select commonly-used animal classifications 
with logical breakpoints that would be easily understandable to the 
livestock industry as well as to APHIS and State representatives. We 
are restricted in providing more extensive classifications based on an 
animal's weight since it is unlikely that we would be able to 
individually weigh animals in the event of an FMD occurrence. We 
believe, however, that use of these proposed classifications will allow 
claimants to receive fair market value for animals destroyed. We invite 
your comments regarding the above classifications for setting fixed 
rates, including your suggestions for alternative approaches to 
classifying animals for purposes of establishing rates.
    Proposed Sec. 53.3(a)(2)(ii) would provide the procedures for 
establishing fixed rates for different classifications of market 
animals. As discussed previously, we are proposing to define a market 
animal as any animal being raised for the primary purpose of slaughter 
for meat, or, in the case of dairy animals, the production of milk, or, 
in the case of certain sheep, the production of wool.
    In proposed Sec. 53.3(a)(2)(ii)(A), we provide that the rates for 
different classifications of beef cattle (preweaned calves; non-
feedlot, but weaned (stocker) animals; and feedlot animals) would be 
based on prices from applicable futures contracts traded on the Chicago 
Mercantile Exchange. The rates for preweaned calves and stocker animals 
would be based on the feeder cattle futures contract, while the rate 
for feedlot animals would be based on the live cattle futures contract. 
The rates for each of these market animal classifications would be 
calculated by multiplying the applicable futures price by the estimated 
weight set by APHIS. It is necessary to multiply the futures price by 
an assigned compensation weight because futures prices are reported as 
a price per hundredweight (cwt) instead of a price per head. A 
hundredweight is a unit of weight equal to 100 pounds. We would use an 
estimated weight for each animal classification instead of the animal's 
actual weight since we do not expect it

[[Page 21940]]

to be practicable to individually weigh animals in the event of an FMD 
occurrence.
    The advantage of basing rates on futures contract prices, when 
available, is that traditional livestock pricing is disappearing. Most 
buyers and sellers now participate in the futures markets. Therefore, 
futures prices would best represent national market conditions, as well 
as provide the most current price information. Further, there is a 
greater lag factor in obtaining similar price data from other publicly-
available sources. When using futures contracts, we would select 
contracts that most closely parallel the production phase of the animal 
classification for which we are establishing rates. We invite your 
comments as to the appropriateness of using futures prices for 
determining fixed rates, and specifically futures contracts traded on 
the Chicago Mercantile Exchange.
    Proposed Sec. 53.3(a)(2)(ii)(A)(1) provides that, in using futures 
prices as a basis for establishing rates for beef cattle, we would take 
the simple average of the most recently available daily futures prices 
over a 3-month period immediately prior to the date of the disease 
outbreak using the futures contract month that corresponds to the month 
of the disease outbreak, or the next succeeding contract month if there 
is not an applicable futures contract for the month that corresponds to 
the month of the disease outbreak. In taking futures prices over a 3-
month period, we would go back from the time of the disease outbreak. 
So if an outbreak was reported by USDA on August 15, we would go back 
3-months in time from that date. In the case of preweaned calves, 
however, the applicable futures price would be the simple average of 
the most recently available daily future prices for that animal over a 
3-month period using the futures contract month that corresponds to the 
month the claimant has historically weaned their calves, or the next 
succeeding contract month if there is not an applicable futures 
contract for the month that corresponds to the month of planned 
weaning. We would make this one exception in the case of preweaned 
calves since the estimated weight would be based on the average weaning 
weight for these animals.
    Because markets and pricing mechanisms could be seriously disrupted 
as a result of FMD, establishing fixed rates based on market activity 
prior to the disease outbreak would likely be most appropriate. In our 
proposed standards for setting rates, we generally establish 
compensation rates based on price averages over a 3-month time period 
going back from the time of the disease outbreak. By using a 3-month 
time period, we could take into account any possible anomalies, 
distortions, or other unique events that may have occurred in the 
marketplace in the weeks prior to the outbreak of FMD. We invite your 
comments on establishing rates based on a 3-month average of prices.
    Under proposed Sec. 53.3(a)(2)(ii)(A)(2), the estimated weight set 
for different classifications of beef cattle would be the average 
weight of animals in that production phase based on the most recently 
available information from USDA's National Agricultural Statistics 
Service (NASS) and National Animal Health Monitoring System (NAHMS). We 
would also use NASS and NAHMS information in determining the estimated 
weights for other animal classifications, as discussed below. Publicly-
available data compiled by NASS and NAHMS on a national basis would 
provide a sufficient basis for determining representative estimated 
weights for different animal classifications. We invite your comments 
on using NASS and NAHMS data for this purpose, as well as your 
suggestions on the use of other information sources in establishing the 
estimated weights for different animal classifications.
    Proposed Sec. 53.3(a)(2)(ii)(A)(3) provides that, if the estimated 
weight for a particular classification of animal is outside the 
specified weight range of the animals covered by the selected futures 
contract, then an upward or downward adjustment in the average futures 
price would be made to reflect this weight difference and to account 
for the fact that the price per cwt varies with the total weight of the 
animal. The adjustment would be calculated by multiplying the price-
weight adjustment factor, as determined by the Livestock Marketing 
Information Center, by the difference between the average weight of the 
animal covered by the futures contract and the estimated weight set by 
APHIS.
    The formula for calculating the price-weight adjustment, sometimes 
referred to as a slide adjustment, is a common industry practice. 
Price-weight adjustment factors or ``slide factors'' are not published, 
but can be readily determined from a variety of livestock industry 
sources. We are proposing to use price-weight adjustment factors 
determined by the Livestock Marketing Information Center. The Livestock 
Marketing Information Center (LMIC) develops and produces materials for 
the livestock industry, including electronic market updates, 
newsletters, and other economic information. The LMIC also maintains a 
comprehensive database on price, production, consumption, trade, and 
other livestock industry data. The LMIC is funded by State land grant 
universities, USDA, and livestock industry associations whose missions 
include supporting and conducting education and research. We invite 
your comments on the appropriateness of using price-weight adjustment 
factors, as well as using the LMIC as our source for obtaining this 
information. The application of price-weight adjustments in connection 
with the establishment of fixed rates is illustrated further in the 
example provided under the heading ``Appendix--Establishing Fixed 
Rates.''
    Proposed Sec. 53.3(a)(2)(ii)(B) would set forth the criteria for 
establishing rates for dairy cattle under the market animal 
classification. This would include commercial dairy cows, non-bred 
heifer replacements and sexually immature bulls, and bred heifer 
replacements. Bred heifer replacements would be classified as market 
animals on the assumption that they will become milk cows. However, if 
the bred heifer replacements are registered animals, or are part of a 
seedstock herd, or have donated at least two embryos that have been 
sold to another producer or transferred to a separate herd, their rate 
will be determined based on their classification as breeding animals.
    There are no suitable futures contract prices for valuing dairy 
cattle. Therefore, we would look to other sources for price 
information. NASS reports quarterly prices received by producers for 
cows sold for milking purposes. We are proposing to use this price 
series as the basis for determining the value of dairy cattle. Rates 
for commercial dairy cows would be based on the most recent quarterly 
price per head reported by NASS. The rate for non-bred heifer 
replacements and sexually immature bulls would be 70 percent of the 
rate determined for commercial dairy cows. The lower rate for non-bred 
heifer replacements and sexually immature bulls would reflect the fact 
that these are younger animals with lower paid-in costs. The rate for 
bred heifer replacements would be 120 percent of the rate determined 
for commercial dairy cows. The higher rate for bred heifer replacements 
would reflect the value of their milk and breeding potential. We invite 
your comments for establishing rates for dairy cattle, including the 
proposed percentages that would be used in determining the rates for 
non-bred heifer replacements and sexually immature bulls, as well as 
for bred heifer replacements.

[[Page 21941]]

    Proposed Sec. 53.3(a)(2)(ii)(C) would set forth the standards for 
establishing rates for the different market animal classifications 
covering swine. These would include grower-finisher pigs, nursery pigs, 
and preweaned piglets. Proposed Sec. 53.3(a)(2)(ii)(C)(1) would base 
the rate for grower-finisher pigs on the lean hogs futures contract 
that is traded on the Chicago Mercantile Exchange. The rate would be 
calculated by multiplying the applicable futures price by the estimated 
weight set by APHIS for grower-finisher pigs. The applicable futures 
price for grower-finisher pigs would be the simple average of the most 
recently available daily futures prices over a 3-month period 
immediately prior to the date of the disease outbreak using the futures 
contract month that corresponds to the month of the disease outbreak, 
or the next succeeding contract month if there is not an applicable 
futures contract for the month that corresponds to the month of the 
disease outbreak, and multiplying that simple average by 74 percent. We 
would multiply the average futures price by 74 percent because the lean 
hogs futures contract price is based on the slaughter (carcass) price 
and not on live animals. A hog carcass weighs approximately 74 percent 
of a live hog. The weight difference is due to dressing. The estimated 
weight set by APHIS would be the average weight of grower-finisher pigs 
based on the most recently available information from NASS and NAHMS.
    In the case of nursery pigs, we do not believe that existing 
futures contract prices for hogs would provide a suitable means for 
valuing pigs in this early phase of production. Under proposed 
Sec. 53.3(a)(2)(ii)(C)(2), we would instead use the national feeder pig 
(40 lb) price that is reported weekly by USDA's Agricultural Marketing 
Service (AMS). We believe that this AMS price series would provide a 
better measure of the fair market value for young pigs in this 
particular production phase. In establishing the rate for nursery pigs, 
we would take the simple average of the most recently available 
national feeder pig prices reported by AMS over a 3-month period 
immediately prior to the date of the disease outbreak. The AMS price is 
reported on a per-head basis, so it would not be necessary to estimate 
the weight for this classification of swine.
    Similar to nursery pigs, we do not believe that the existing 
futures contracts would be a good means of a fair market value rate for 
preweaned piglets. Under proposed Sec. 53.3(a)(2)(ii)(C)(3), we would 
use the national early weaned pig (10 lb) price reported by AMS on a 
weekly basis. In establishing the rate for preweaned piglets, we would 
take the simple average of the most recently available prices reported 
by AMS over a 3-month period immediately prior to the date of the 
disease outbreak.
    Proposed Sec. 53.3(a)(2)(ii)(D) would set forth the standards for 
setting rates for the different market animal classifications for 
sheep. These would include preweaned lambs, weaned feeder lambs, 
slaughter lambs, and wethers raised for wool production. There are no 
suitable futures contracts to use to set rates for these different 
classifications of sheep. So we would instead use the national lamb 
carcass price that is reported by AMS on a weekly basis to establish 
them. Rates would be determined by multiplying the average AMS price by 
the estimated weight set by APHIS for that classification of animal. 
The average AMS price would be the simple average of the most recently 
available national lamb carcass prices reported by AMS over a 3-month 
period immediately prior to the date of the disease outbreak, 
multiplied by the AMS reported dressing percentage. We would multiply 
the average AMS price by the dressing percentage because this 
particular AMS price is a carcass price and not based on the live 
animal. If AMS does not report a dressing percentage, then 49.5 percent 
would be used. The dressing percentage, when reported, typically 
averages between 49 and 50 percent.
    The estimated weight set by APHIS for preweaned lambs, weaned 
feeder lambs, and slaughter lambs would be the average weight of 
animals in that production phase based on the most recently available 
information from NASS and NAHMS. The estimated weight set by APHIS for 
wethers raised for wool production would be the same as that set by 
APHIS for slaughter lambs. In addition, for preweaned lambs and weaned 
feeder lambs, an upward or downward percentage adjustment in the 
average AMS price would be made to reflect the difference in weight 
between preweaned lambs or weaned feeder lambs and slaughter lambs. The 
price-weight adjustment would be supplied by LMIC. This price-weight 
adjustment will generally be positive, except during periods of high 
feed costs.
    We invite your comments on our proposed standards for the 
establishment of rates for market animals, as just discussed, including 
your suggestions for alternative approaches for the valuation of market 
animals. The process for establishing rates for different 
classifications of market animals is also illustrated in the example 
provided under the heading ``Appendix--Establishing Fixed Rates.''
    Proposed Sec. 53.3(a)(2)(iii) would contain the standards for 
establishing fixed rates for different classifications of breeding 
animals. As discussed previously, we are proposing to define a breeding 
animal as any animal that is raised for the purpose of producing market 
animals or other breeding animals and that, in the case of a female, 
has donated embryos or been bred, and in the case of a male, is 
sexually intact and has reached the age of sexual maturity.
    Proposed Sec. 53.3(a)(2)(iii)(A) would provide that the rates for 
breeding animals would be determined based on the rates of other market 
or breeding animals, and then adjusted to include any premium that 
reflects the animals' breeding value. For example, the rate for 
commercial sows or boars would be determined by taking the rate for a 
grower-finisher pig and then adding a percentage premium to reflect its 
breeding value. To mirror their higher value in the marketplace, 
breeding animals that are registered animals, are part of a seedstock 
herd, or have donated germ plasm that has been sold to another producer 
or transferred to a separate herd or flock, would receive a higher 
premium than commercial breeding animals. Proposed paragraphs 
(a)(2)(iii)(B) through (E) of Sec. 53.3 would provide further 
information on establishing breeding animal rates for different 
classifications of beef and dairy cattle, swine, and sheep. The process 
for establishing rates for different classifications of breeding 
animals is also illustrated in the example provided under the heading 
``Appendix--Establishing Fixed Rates.''
    The valuation of breeding animals, including the assignment of 
certain premiums, is based on our best estimates from available data 
and our observations of the livestock marketplace. In establishing 
rates for breeding animals, we looked at price information from auction 
markets, breed associations, and similar sources, when available. We 
also conferred with agricultural economists and other livestock 
specialists within USDA. However, we recognize that publicly-available 
price information on breeding animals is not as extensive as that on 
market animals. We, therefore, solicit your comments and suggestions on 
this issue, including alternative approaches for the valuation of 
breeding animals.
    We also realize that, particularly in the case of breeding animals, 
there is a greater potential for variations in value within the same 
category or classification of animals in comparison

[[Page 21942]]

to market animals. As discussed below under proposed Sec. 53.3(d), 
claimants who disagree with the valuation of their animals would have 
the opportunity to submit a written request for review to the 
Administrator, explaining why the valuation of their animals should be 
different than the value determined under the fixed-rate method. The 
claimant would have the opportunity to submit any documentation on the 
animals' breeding value that would support a valuation different from 
the one determined through application of the fixed-rate method.
    Proposed Sec. 53.3(a)(2)(iii)(B) would contain the standards for 
setting rates for beef cattle that qualify as breeding animals. This 
includes beef cows (commercial herds); bred replacement heifers 
(commercial herds); beef bulls (commercial herds); and registered 
animals, animals in a seedstock herd, and donor animals.
    The rate established for beef cows would be based on the same 
formula used to calculate the rate for beef cattle that are feedlot 
animals. A comparison of fed beef cattle prices and prices for bred 
young females and middle age cows (Drovers' Journal) found that bred 
cow prices were 83 percent of fed beef cattle prices. Though the 
premium for breeding purposes is not readily known, we note that by 
providing the same compensation rate ($/cwt) for commercial breeding 
beef cows as is used for feedlot beef cattle would provide some measure 
of the value given for breeding purposes. In calculating the rate for 
beef cows, we would use the same average futures price ($/cwt) as used 
for feedlot animals, and multiply the applicable futures price ($/cwt) 
by the estimated weight set by APHIS for beef cows. The estimated 
weight set by APHIS would be the average weight of beef cows based on 
the most recently available information from NASS and NAHMS.
    For bred replacement heifers within the beef cattle category, we 
propose establishing a rate that would be 120 percent of the rate 
established for beef cows. The higher rate for bred heifers in 
comparison to beef cows would reflect the value of their breeding 
potential. We are also proposing that the rate for beef bulls would be 
250 percent of the rate established for beef cows. We invite your 
comments on the proposed percentage premiums for these animals.
    Beef cows or bred replacement heifers that are breeding animals and 
are registered animals, part of a seedstock herd, or donor animals, 
would receive a rate equal to 250 percent of the rate established for 
commercial beef cows. Beef bulls that qualify as breeding animals and 
are registered animals, part of a seedstock herd, or donor animals 
would receive a rate equal to 300 percent of the rate established for 
commercial beef cows. We invite your comments on the proposed 
percentage premiums for these animals. We are proposing higher rates 
for registered animals, animals that are part of a seedstock herd, and 
donor animals to reflect their higher value in the marketplace in 
comparison to commercial breeding animals. Our proposed procedures for 
establishing rates for other breeding animals would also follow this 
same policy.
    Proposed Sec. 53.3(a)(2)(iii)(C) would contain the standards for 
setting rates for dairy cattle that are breeding animals. We would have 
a rate classification for dairy breeding bulls. We are proposing that 
the rate for dairy bulls would be 250 percent of the rate established 
for commercial dairy cows. We would also have a separate rate 
classification for dairy cows and bred replacement heifers that are 
registered animals, part of a seedstock herd, or donor animals. The 
rate for these particular animals would be 250 percent of the rate 
established for commercial dairy cows. In the case of dairy breeding 
bulls that are also registered animals, part of a seedstock herd, or 
donor animals, we would set a rate that is 300 percent of the rate 
established for commercial dairy cows. We invite your comments on the 
proposed percentage premiums for these animals.
    Proposed Sec. 53.3(a)(2)(iii)(D) would contain the standards for 
establishing rates for swine that are considered breeding animals. We 
would have a rate classification for commercial sows and boars. We are 
proposing that the rate for commercial sows and boars would be 200 
percent of the rate established for grower-finisher pigs. We would also 
have a second rate classification for breeding swine that are 
registered animals, part of a seedstock herd, or donor animals. Sows 
and boars in this second rate classification would receive a rate that 
would be 300 percent of the rate established for grower-finisher pigs. 
We invite your comments on the proposed percentage premiums for these 
animals.
    We considered whether a separate rate classification should be 
established for swine breeding animals that are considered foundation 
stock or part of a grandparent or great-grandparent herd. While the 
number of animals that would qualify for this classification would be 
relatively small, such animals could merit a higher valuation in 
comparison to other seedstock animals. However, we could not determine 
a general rate criteria to cover this situation. So owners that believe 
their swine breeding animals merit a higher valuation under these 
circumstance could submit a written request for review to the 
Administrator, as discussed in proposed Sec. 53.3(d). We invite your 
comments on this issue, including your suggestions for alternative 
approaches for the valuation of swine breeding animals.
    Proposed Sec. 53.3(a)(2)(iii)(E) would provide the standards for 
establishing rates for sheep that qualify as breeding animals. This 
would include ewes and rams (commercial flocks), as well as registered 
animals, animals in a seedstock flock, and donor animals.
    We are proposing that rates for commercial ewes and rams would be 
based on the same formula used to calculate the rate for slaughter 
lambs. The slaughter lamb price is greater than the cull ewe slaughter 
price or the cull ram slaughter price. By providing the higher lamb 
slaughter price for breeding ewes and rams and applying the breeding 
animal weight, we recognize a premium that these breeding animals might 
receive. We would take the average AMS price ($/cwt) determined for 
slaughter lambs, as discussed previously in proposed 
Sec. 53.3(a)(2)(ii)(D), and multiply that average price by the 
estimated weight set by APHIS for commercial ewes and rams. The 
estimated weight set by APHIS for commercial breeding ewes and rams 
would be the average weight of those animals based on the most recently 
available information from NASS and NAHMS.
    Breeding ewes that are also registered animals, part of a seedstock 
flock, or donor animals, would receive a rate equal to 200 percent of 
the rate established for commercial breeding ewes. Similarly, breeding 
rams that are also registered animals, part of a seedstock flock, or 
donor animals, would receive a rate equal to 200 percent of the rate 
set for commercial breeding rams. We invite your comments on the 
proposed percentage premiums for these animals.
    We realize that there may be unique situations where the valuation 
of animals by the fixed-rate method would be unsuitable. As provided in 
proposed Sec. 53.3(a)(2)(iv), an owner of animals subject to valuation 
by the fixed-rate method may submit a written request to the 
Administrator asking that the animals affected by disease and subject 
to destruction be valued by appraisal instead of by fixed-rate method. 
The owner would have to include in the request the reasons why 
valuation by the fixed-rate method would be unsuitable. In determining 
whether to

[[Page 21943]]

grant the request, the Administrator would take into account whether 
providing the time and personnel to conduct an appraisal would 
compromise efforts to effectively control and eradicate the disease. 
The decision by the Administrator regarding the owner's request for 
appraisal would be final. A denial of a request for an appraisal under 
proposed Sec. 53.3(a)(2)(iv) would not affect the owner's right to 
request a review of the actual valuation made, as discussed below under 
proposed Sec. 53.3(d).
    We invite your comments on our proposed standards for the 
establishment of rates for breeding animals, as just discussed. We also 
welcome your suggestions for alternative approaches for the valuation 
of breeding animals.
    Proposed Sec. 53.3(b) covers the requirements for the valuation of 
materials to be destroyed because of being contaminated by or exposed 
to a disease agent. The regulations currently do not address the 
valuation of materials except to require that the materials be 
appraised by an APHIS employee and a State representative, or, 
alternatively, by an APHIS employee alone, and that the information on 
the appraised value must be reported on forms furnished by APHIS 
showing, when practicable, the number, size, or quantity, unit price, 
and total value of each kind of material appraised.
    In proposed Sec. 53.3(b), we would clarify that the value of 
materials destroyed because of contamination by or exposure to a 
disease agent would be the material's fair market value based on an 
appraisal. The appraisal of materials would be conducted jointly by an 
APHIS representative and a State representative, or, if the State 
authorities approve, by an APHIS representative alone. However, in the 
case of FMD only, we are proposing that if the Administrator determines 
that appraisal would be impracticable, or would otherwise compromise 
efforts to effectively control and eradicate the disease, the 
Administrator may authorize the value of materials to be determined by 
other means, such as through records or other documentation maintained 
by the claimant indicating the value of the materials destroyed.
    As in the case of animals, requiring the appraisal of contaminated 
materials prior to their destruction could prove to be impracticable, 
and actually compromise our ability to control and eradicate the 
occurrence of FMD. Contaminated materials subject to destruction would 
have to be disposed of promptly. Depending on the number of sites that 
would have to be visited by appraisers, there may not be a sufficient 
number of trained personnel in the area to carry out these activities 
in a timely manner. In such cases, the Administrator would have to 
determine whether requiring appraisal would undermine efforts to 
control and eradicate the disease.
    We would add a new paragraph, to appear at Sec. 53.3(c), that would 
cover other compensation allowed by the regulations (i.e., costs for 
cleaning and disinfection). In proposed Sec. 53.3(c)(1), we would 
provide that compensation for cleaning and disinfection costs would be 
based on receipts or other documentation maintained by the claimant 
that verify the expenditures made for cleaning and disinfection 
activities authorized under part 53. We are proposing that compensation 
be based on proof of expenditures. We realize, however, that there 
would be cases where claimants would wish to carry out any cleaning and 
disinfection activities on their own without hiring others to do the 
work. Our proposal does not currently provide a means for compensating 
such ``sweat equity,'' but we invite your comments and suggestions that 
would address compensating cleaning and disinfection work performed 
directly by the claimant.
    We are also proposing to add a new paragraph, to appear at 
Sec. 53.3(d), that would cover a claimant's right to request a review. 
A claimant who disagrees with the valuation in total of all animals or 
all materials or the amount of other compensation determined under 
Sec. 53.3 may submit a written request for review to the Administrator. 
We are proposing that the request for review take into account all 
animals or materials covered under the valuation since we want to 
consider the totality of circumstances. Particularly in the case of 
animals, the valuation may be based on the entire herd of a particular 
class of animals. For example, in applying a fixed rate to a herd of 
animals, some individual animals in the herd may be worth more than the 
average price paid per animal, others may be worth less. If a producer 
could challenge the per animal payment of only selected animals, the 
compensation claim could be more than the total value of the herd. Our 
goal is to make the producer whole, but not to exceed that. Thus, the 
claimant would have to include in the request the reasons, including 
any supporting documentation, that the total valuation of all animals 
or all materials or the amount of other compensation should be 
different from the valuation or amount determined by appraisal, fixed-
rate method, or other means provided for in proposed Sec. 53.3. The 
decision by the Administrator regarding the valuation of animals or 
materials or the amount of other compensation would be final.
    We would remove without replacement the information that appears in 
paragraphs (c) and (d) of current Sec. 53.3 on the submission of claim 
forms seeking compensation for animals or materials destroyed. This 
subject would be covered under the section on presentation of claims, 
to appear at proposed Sec. 53.7.

Destruction of Animals

    Current Sec. 53.4 covers the destruction of animals affected by or 
exposed to disease, as well as the manner of their disposition. 
Paragraph (a) of current Sec. 53.4 provides that animals affected by or 
exposed to disease shall be killed promptly after appraisal and 
disposed of by burial or burning, unless otherwise specifically 
provided by the Administrator, at his or her discretion. Section 53.4, 
paragraph (a), also provides that in the case of animals depopulated 
due to infectious salmon anemia, salvageable fish may be sold for 
rendering, processing, or any other purpose approved by the 
Administrator. If fish retain salvage value, the proceeds gained from 
the sale of the fish will be subtracted from any indemnity payment from 
APHIS for which the producer is eligible under Sec. 53.2(b).
    We are proposing to make several changes to current Sec. 53.4(a). 
First, we would amend the term ``animals affected by or exposed to 
disease'' to read ``animals affected by disease'' for purposes of 
consistency, as discussed previously. We would use the word 
``valuation'' in place of ``appraisal'' since the valuation of animals 
in the case of FMD may not always be based on appraisal. The word 
``destroyed'' would be used in place of ``killed'' to be consistent 
with similar references in other sections of the regulations. We would 
also clarify that the requirement that animals affected by disease be 
destroyed promptly following valuation would not apply to official 
vaccinates. We would also strike the language that provides for the 
disposition of animals by means other than burial or burning if 
``specifically provided by the Administrator, at his or her 
discretion.'' We would instead provide that the animals would be 
``disposed of by burial, burning, or other manner approved by the 
Administrator as not contributing to the spread of the disease.''
    Paragraph (b) of current Sec. 53.4 provides that the killing of 
animals and

[[Page 21944]]

the burial, burning, or other disposition of carcasses shall be 
supervised by an APHIS employee who shall prepare and transmit to the 
Administrator a report identifying the animals and showing their 
disposition. We would substitute ``APHIS representative'' for ``APHIS 
employee'' based on our previously-discussed proposal of using the term 
``APHIS representative'' in place of ``APHIS employee'' throughout the 
regulations. Similarly, we would substitute the word ``destroyed'' for 
``killed'' for purposes of consistency, as discussed above. We would 
also amend current Sec. 53.4(b) to provide that the destruction and 
disposition of animals could also take place under the supervision of a 
State representative. This change would allow us greater flexibility in 
deploying personnel without compromising our ability to ensure that 
animal depopulation is carried out under qualified supervision. We 
would substitute the word ``must'' in place of ``shall'' in the phrase 
``shall be supervised'' for stylistic reasons. Finally, we would make a 
minor change in sentence construction by amending the statement ``who 
shall prepare and transmit to the Administrator a report identifying 
the animals and showing the disposition thereof'' to instead state 
``who will prepare and transmit to the Administrator a report 
identifying the animals destroyed and the manner of their 
disposition.''
    Subject to certain exceptions that may include exotic or rare 
animals or endangered or threatened species, as discussed below, 
vaccinated animals would be destroyed as part of an FMD eradication 
program. However, nonvaccinated animals affected with FMD would be 
destroyed first. Thus, it may be necessary for vaccinated animals to be 
held on a premises for an indeterminate length of time prior to 
destruction. To clarify the different treatment that may be afforded 
official vaccinates compared to other animals affected by disease, we 
would provide in proposed Sec. 53.4(c) that official vaccinates would 
be destroyed or otherwise handled in a manner as directed by the 
Administrator to prevent the dissemination of the disease. We would 
further add that official vaccinates not subject to destruction may 
include, at the discretion of the Administrator, exotic animals, rare 
animals, or animals belonging to an endangered or threatened species. 
This policy of protecting from destruction certain exotic or rare 
animals, or animals belonging to an endangered or threatened species 
might arise, for example, in the case of official vaccinates housed in 
a zoo.
    We would also provide in proposed Sec. 53.4(c) that if official 
vaccinates are allowed to move to a slaughtering or rendering facility 
in lieu of destruction or disposition by other means, then any proceeds 
gained from the sale of the animals to the slaughtering or rendering 
facility will be subtracted from any indemnity payment from APHIS for 
which the producer is eligible under proposed Sec. 53.2(a)(2). Allowing 
animals to move to a slaughtering or rendering facility in lieu of 
destruction and disposition by other means would apply only to those 
animals officially vaccinated for FMD. Our policy for the control and 
eradication of disease calls for all other animals affected by disease 
to be destroyed and disposed of by burial, burning, other manner 
approved by the Administrator.
    The information regarding salvageable fish being sold for 
rendering, processing, or other purpose, which now appears in 
Sec. 53.4(a), would be moved without change to proposed Sec. 53.4(d).

Disinfection and Destruction of Materials

    Current Sec. 53.5 provides for the disinfection or destruction of 
materials contaminated by or exposed to disease. Paragraph (a) of 
current Sec. 53.5 states that such materials shall be disinfected and, 
if the cost of disinfection exceeds the value of the materials or 
disinfection would be impracticable, the materials shall be destroyed 
after appraisal as provided in Sec. 53.3. Paragraph (b) of current 
Sec. 53.5 provides that the disinfection or destruction of materials 
under Sec. 53.5 shall take place under the supervision of an APHIS 
employee who shall prepare and transmit to the Administrator a 
certificate identifying all materials that are destroyed, showing the 
disposition thereof.
    Current Sec. 53.7 covers the disinfection of premises, conveyances, 
and materials, providing that all premises, including barns, corrals, 
stockyards and pens, and all cars, vessels, aircraft, and other 
conveyances, and the materials thereon, shall be cleaned and 
disinfected under the supervision of an APHIS employee whenever 
necessary for the control and eradication of disease. Expenses incurred 
in connection with such cleaning and disinfection shall be shared 
according to the agreement reached with the State.
    The information contained in current Secs. 53.5 and 53.7 overlap in 
certain respects. To eliminate this redundancy, we are proposing to 
include the information that appears in both these sections under 
Sec. 53.5 alone. In making these changes, we would refer to materials 
that have been ``contaminated by or exposed to a disease agent'' 
instead of materials that have been contaminated by or exposed to 
disease for purposes of consistency with similar proposed references 
elsewhere in part 53. We would substitute the term ``value'' for 
``appraisal'' since the valuation of materials may not always be based 
on appraisal, as discussed previously in our proposed changes to 
Sec. 53.3. We would also use ``APHIS representative'' in place of 
``APHIS employee'' for the reasons discussed previously. We would also 
provide that the disinfection or destruction of materials could also 
take place under the supervision of a ``State representative'' to allow 
us greater flexibility in deploying personnel without compromising our 
ability to ensure that the disinfection or destruction of materials is 
carried out under qualified supervision. We would substitute the word 
``must'' in place of ``shall'' in the phrase ``shall be supervised'' 
for stylistic reasons. We would use the word ``report'' in place of 
``certificate'' in describing the document that the APHIS 
representative or State representative would submit to the 
Administrator listing all materials destroyed. We would also strike out 
the last sentence in current Sec. 53.7 that provides that cleaning and 
disinfection expenses shall be shared according to the agreement 
reached under Sec. 53.2. As explained earlier, this topic would be 
covered in proposed Sec. 53.2.
    As revised, proposed Sec. 53.5 would provide that all materials 
that have been contaminated by or exposed to a disease agent would have 
to be cleaned and disinfected under the supervision of an APHIS 
representative or a State representative. However, if the cost of 
cleaning and disinfection of materials would exceed the materials' 
value or if the cleaning and disinfection of materials would be 
impracticable, the materials will be destroyed under the supervision of 
an APHIS representative or State representative, upon determination of 
their value as provided in proposed Sec. 53.3. The APHIS representative 
or State representative would prepare and transmit to the Administrator 
a report identifying all materials destroyed and the manner of their 
disposition.
    As part of these proposed changes to combine Secs. 53.5 and 53.7, 
current Sec. 53.7 would be removed in its entirety and current 
Sec. 53.8 would be redesignated as Sec. 53.7.

[[Page 21945]]

Cleaning and Disinfection of Animals

    Current Sec. 53.6 provides that animals of species not susceptible 
to the disease for which a quarantine has been established, but which 
have been exposed to the disease, shall be disinfected when necessary 
by such methods as the Administrator shall prescribe from time to time. 
We would amend Sec. 53.6 to instead provide that such animals must be 
cleaned and disinfected, as directed by, and under the supervision of, 
an APHIS representative or a State representative. We would insert a 
reference to the APHIS or State representative in place of the 
Administrator since the oversight of this activity would be performed 
by an APHIS or State representative. We would also make a change in the 
section heading and text by referring to this activity as ``cleaning 
and disinfection'' instead of ``disinfection'' to be consistent with 
other such references in the regulations.
    The regulations currently do not provide for the compensation of 
costs relating to the cleaning and disinfection of nonsusceptible 
animals as is done for materials that are contaminated by or exposed to 
a disease agent. However, we are seriously considering whether these 
costs should be eligible for compensation in the case of FMD to further 
ensure the willingness of affected parties to take part in an FMD 
eradication campaign. Should paying for this activity be a 
responsibility of the producer or of the Federal Government through the 
payment of compensation?
    Typically, the first mitigation strategy involving nonsusceptible 
animals is to restrict their movement from the affected area, farm, or 
other premises. However, another mitigation measure is to clean and 
disinfect such animals. This may simply entail applying a bleach or 
similar solution to the hooves or paws of the animals. We believe the 
cleaning and disinfection of nonsusceptible animals, when necessary, 
will be vital in the case of FMD, since nonsusceptible animals could 
spread FMD even though they themselves would not become infected. 
Therefore, we seek your comments on whether the regulations should 
authorize compensation for costs relating to the cleaning and 
disinfection of nonsusceptible animals to further ensure that all means 
of spreading the virus are eliminated. We also invite your comments on 
the types of costs and the amount of expenditures that might be 
incurred in the cleaning and disinfection of nonsusceptible animals.
    We would consider nonsusceptible animals to include animals that 
are not susceptible to the disease for which a quarantine has been 
established but that are capable of transmitting the disease agent as a 
mechanical vector if exposed to it. By ``mechanical vector,'' we mean 
an animal or inanimate object that carries a microorganism with no 
replication occurring.
    In addition to providing compensation for costs of cleaning and 
disinfection of nonsusceptible animals in the event of FMD, we are also 
considering whether the Administrator should be authorized to provide 
compensation for the destruction of nonsusceptible animals in the event 
the costs of cleaning and disinfection would exceed the animals' value, 
or, alternatively, if cleaning and disinfection of the animals would be 
impracticable. This situation could arise if both the nonsusceptible 
animals and the structure they are housed in have to be cleaned and 
disinfected as a result of their proximity to infected animals. In the 
case of certain nonsusceptible animals such as poultry, it may not be 
economically feasible to adequately clean and disinfect the poultry 
given their market value, or it may be otherwise impracticable to clean 
and disinfect the animals. Animals subject to destruction under such 
circumstances would be valued, for purposes of indemnification, in 
accordance with proposed Sec. 53.3 and destroyed and disposed of in 
accordance with proposed Sec. 53.4. We expect that this situation would 
arise only in limited situations. Under most circumstances, animal 
confinement during the disease occurrence, or cleaning and 
disinfection, or some combination of these measures, should obviate any 
need to destroy nonsusceptible animals exposed to FMD. However, we 
still seek your comments on whether the regulations should provide the 
Administrator with the authority to compensate the owners of 
nonsusceptible animals under this limited situation in the case of FMD.

Presentation of Claims

    Current Sec. 53.8 provides that claims for compensation for the 
value of animals, the cost of burial, burning or other disposition of 
animals, the value of material destroyed, and the expenses of 
destruction, shall each be presented, through the inspector in charge, 
to APHIS on separate vouchers.
    With the proposed removal of current Sec. 53.7, current Sec. 53.8 
covering presentation of claims would become Sec. 53.7. We are 
proposing to revise this provision without changing its substantive 
meaning by simply providing in new paragraph (a) that claims for 
compensation under this part must each be presented by the claimant to 
an APHIS representative on forms approved by APHIS. The basis for 
seeking compensation in part 53 would be covered in proposed Sec. 53.2. 
We would add that claims for animals or materials destroyed must be 
presented by the owner or the owner's designated representative. We 
would also add that the claimant shall provide any available supporting 
documents that will assist the Administrator, or that are requested by 
the Administrator, in verifying the quantity and value of animals or 
materials destroyed and the costs of their disposition, the costs of 
cleaning and disinfection, and any other costs incurred under this part 
for which compensation is sought. Examples of supporting documentation 
could include production records, purchase and sales records, breeding 
records, registration papers, and receipts.
    We are also proposing to move the information on mortgages against 
animals or materials that is currently covered under Sec. 53.9 to 
proposed Sec. 53.7(b). Current Sec. 53.9 provides that any claim for 
indemnity for animals or materials destroyed pursuant to the 
regulations shall be presented by the owner of the animals or materials 
on forms furnished by APHIS. The owner shall indicate on the forms 
whether or not the applicable animals or materials are subject to a 
mortgage. If the animals or materials are subject to a mortgage, then 
the owner and each person holding a mortgage on the applicable animals 
or materials shall sign the forms to indicate their consent to the 
payment of any indemnity to the person specified on the form.
    We would make certain changes to the provision on mortgages that 
would appear in proposed Sec. 53.7(b). We would substitute the phrase 
``on forms approved by APHIS'' in place of ``on forms furnished by 
APHIS'' to allow for the possibility that someone other than APHIS may 
distribute the forms. We would also amend the second sentence which 
begins, ``If the owner states there is a mortgage * * *'' to instead 
read ``If there is a mortgage * * *'' to clarify that the applicability 
of this provision would be triggered by the existence of a mortgage, 
regardless of whether the owner asserts its existence. We would make 
several other modifications in sentence construction and eliminate the 
use of the words ``thereby'' and ``thereon'' to make the provision 
easier to understand. We are also proposing to remove, for reasons of 
redundancy, the word ``allowed'' that appears in the phrase 
``consenting to the payment of any indemnity allowed,'' as well as

[[Page 21946]]

change the phrase ``pursuant to the requirements contained in this 
part'' to read ``pursuant to this part.'' As amended, proposed 
Sec. 53(b) would provide that when animals or materials have been 
destroyed pursuant to part 53, the owner of the animals or materials 
would have to certify on the claim for compensation whether or not the 
applicable animals or materials are subject to any mortgage. If there 
is a mortgage, the owner and each person holding a mortgage on the 
animals or materials would have to sign forms approved by APHIS 
indicating they consent to the payment of any indemnity to the person 
specified on the forms.
    In covering mortgages against animals or materials in proposed 
Sec. 53.7(b), we would remove current Sec. 53.9 in its entirety from 
the regulations.

Claims Not Allowed

    Current Sec. 53.10 lists certain situations where claims for 
compensation will not be allowed. With the removal of current 
Secs. 53.7 and 53.9, current Sec. 53.10 would become Sec. 53.8. We 
would also make certain other changes to this section.
    Paragraph (a) of current Sec. 53.10 provides that the Department 
will not allow claims arising under part 53 if the payee has not 
complied ``with all quarantine requirements.'' Under proposed 
Sec. 53.8(a), we would elaborate on this requirement by providing that 
the payee must comply ``with all Federal quarantine requirements or 
State quarantine requirements consistent with Federal law or 
regulations in effect for the control and eradication of disease.''
    In current Sec. 53.10(b), we provide that expenses for the care and 
feeding of animals held for destruction will not be paid by the 
Department unless the payment of such expenses is specifically 
authorized or approved by the Administrator. In proposed Sec. 53.8(b), 
we would make a stylistic change by substituting the words ``costs'' 
and ``cost'' in place of ``expenses'' and ``expense.''
    Paragraph (c) of current Sec. 53.10 states that we will not allow 
claims arising out of the destruction of animals or materials unless 
the animals or materials have been ``appraised'' as prescribed in the 
regulations and the owners have executed a written agreement to the 
appraisals. Since we are proposing that animals or materials could be 
valued by means other than appraisal in certain circumstances, we would 
instead provide that the Department will not allow claims arising out 
of the destruction of animals or materials unless the animals or 
materials have been ``valued'' as prescribed in the regulations. Under 
proposed Sec. 53.8(c), we would also not include the condition that 
owners must execute a written agreement to the appraisals. We do not 
believe such a provision is necessary since we are would provide 
claimants the option of requesting a review by the Administrator if 
they believe the valuation of animals or materials is inadequate. (See 
previous discussion under ``Payments for Animals and Materials, Other 
Compensation, Request for Review.'')
    In current Sec. 53.10(d), we provide that the Department will not 
allow claims arising out of the destruction of animals or materials 
which have been moved or handled by ``the owner * * * or its officer, 
employee, or agent acting within the scope of his or its office, 
employment or agency, in violation of a law or regulation administered 
by the Secretary for the prevention of the introduction into or the 
dissemination within the United States of any communicable disease of 
livestock or poultry for which the animal or material was destroyed, or 
in violation of a law or regulation for the enforcement of which the 
Secretary enters or has entered into a cooperative agreement for the 
control and eradication of such disease.''
    Under proposed Sec. 53.8(d), we would provide that the Department 
will not allow claims arising out of the destruction of animals or 
materials in violation of any ``Federal law or regulation, or any State 
law or regulation consistent with a Federal law or regulation,'' that 
is administered to prevent the introduction or dissemination of any 
``contagious or infectious animal disease or any communicable livestock 
or poultry disease'' for which the animal or material was destroyed. A 
cooperative program for the control and eradication of disease may be 
carried out largely under State laws and regulations. By not allowing 
claims for violations of either Federal laws or regulations, or State 
laws or regulations that are consistent with Federal laws or 
regulations, we would encourage public compliance and thereby enhance 
the effectiveness of the cooperative program to control and eradicate 
disease. We would amend the reference to ``communicable livestock or 
poultry disease'' to state ``any contagious or infectious animal 
disease or any communicable livestock or poultry disease'' to be 
consistent with our earlier proposed change to the definition of 
disease. We would also delete the specific reference to not allowing 
claims on the basis of ``violation of any related cooperative 
agreement,'' and just rely on the violation of the applicable law or 
regulation as the basis for not allowing a claim.
    A key element in the successful eradication of a disease that 
spreads as quickly as FMD is the earliest possible detection and 
reporting of potentially diseased animals. A primary purpose for this 
rulemaking is to remove possible sources of delay so that any outbreak 
of FMD can be eradicated quickly. Prompt reporting could save the 
economy billions of dollars, as well as prevent significant disruptions 
to the economy. Prompt detection and reporting require knowledge and 
vigilance on the part of producers, industry, and State, local, and 
Federal governments, working cooperatively. Although the subject of 
reporting of animal diseases is not specifically addressed in this 
proposal, we invite public comment on ways to encourage timely 
reporting of potentially diseased animals, including, but not limited 
to, adjustments to compensation.
    We would make certain other changes to proposed Sec. 53.8(d) to 
make it easier to understand without changing its substantive meaning. 
We would remove the reference to an ``officer, employee, or agent 
acting within the scope of his or her office, employment, or agency'' 
and instead use the phrase ``the owner's representative acting on 
behalf of the owner.'' We would also remove the word ``thereof'' and 
the phrase ``within the United States,'' as well as make several other 
minor changes in sentence construction and word usage to make the 
provision easier to understand.

Miscellaneous

    The regulations, immediately below the table of contents and the 
authority citation, provide a cross reference that states, ``For non-
applicability of part 53 with respect to certain claims for indemnity, 
see Sec. 51.10 of this chapter.'' Section 51.10 appears in the 
regulations in 9 CFR part 51 for animals destroyed because of 
brucellosis. Section 51.10 provides that no claim for indemnity for 
animals destroyed under 9 CFR part 51 shall be paid under the 
regulations in part 53. The regulations covering animals destroyed 
because of tuberculosis in 9 CFR part 50 also contain a provision at 
Sec. 50.15 that provides that no claim for indemnity for cattle or 
bison destroyed because of tuberculosis shall be paid pursuant to the 
regulations in part 53. We are proposing to amend the cross reference 
that appears below the table of contents and authority citation in part 
53 by inserting a reference to Sec. 50.15. We

[[Page 21947]]

would also make a technical correction to the authority citation 
immediately below the table of contents by adding a reference to 21 
U.S.C. 134a-134h.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been reviewed under Executive Order 12866. 
The 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 proposed rule. It 
provides a cost-benefit analysis as required by Executive Order 12866, 
as well as an initial regulatory flexibility analysis, which considers 
the potential economic effects of this proposed rule on small entities, 
as required by the Regulatory Flexibility Act. The economic analysis is 
summarized below. Copies of the full analysis are available by 
contacting the person listed under FOR FURTHER INFORMATION CONTACT. 
Please refer to Docket No. 
01-069-1 when requesting copies. The full analysis is also available on 
the Internet at http://www.aphis.usda.gov/ppd/rad/fmdanalysis.pdf. The 
economic analysis is also available for review in our reading room 
(information on the location and hours of the reading room is listed 
under the heading ADDRESSES at the beginning of this document).
    We do not currently have all of the data necessary for a 
comprehensive analysis of the effects of this proposed rule on small 
entities. Therefore, we are inviting comments on potential effects. In 
particular, we are interested in determining the numbers and kinds of 
small entities that may incur benefits or costs from the implementation 
of this proposed rule.
    In accordance with 21 U.S.C. 111, 114, 114a, and 134a-134h, the 
Secretary of Agriculture has the authority to promulgate regulations 
and take measures to prevent the introduction into the United States 
and the interstate dissemination within the United States of any 
communicable diseases of livestock and poultry, as well as any 
contagious or infectious diseases of animals that in the opinion of the 
Secretary constitute an emergency and threaten the livestock or poultry 
of the United States, and to pay claims growing out of the destruction 
of animals and materials. Animal health regulations promulgated by the 
Department under this authority include those regarding payment of 
claims in 9 CFR part 53.

Summary of the Cost-Benefit Analysis

    Our analysis examines the potential economic effects of proposed 
changes affecting indemnification and other compensation paid for 
losses due to the occurrence of FMD in the United States. Recent 
occurrences of FMD in a number of formerly FMD-free regions have 
demonstrated both the speed with which an FMD outbreak can spread and 
the magnitude of its consequences.
    An FMD occurrence in the United States could be devastating, given 
the Nation's extensive livestock holdings. Besides the direct economic 
effects on ruminant and swine producers, consequences of the disease 
would ripple through the economy, causing indirect costs in sectors 
beyond agriculture. International movement of many commodities would be 
disrupted by restrictions imposed by trading partners. Costs of an FMD 
occurrence to the Nation's economy could reach to billions of dollars, 
if not quickly controlled. The Department is engaged in a number of 
planning and operational activities expected to reduce the likelihood 
of an FMD occurrence and, if FMD is introduced, to prevent impacts from 
reaching catastrophic levels. Nonetheless, the risk of an FMD 
introduction into the United States is ever present, given today's 
highly mobile environment and global agricultural economy.
    The regulations currently provide that upon agreement of the State, 
the Administrator is authorized to pay 50 percent (and in the case of 
infectious salmon anemia up to 60 percent, and in the case of exotic 
Newcastle disease or highly avian influenza up to 100 percent) of the 
expenses of the purchase, destruction, and disposition of animals and 
materials required to be destroyed because of being contaminated by or 
exposed to disease. The Administrator is also authorized to pay up to 
100 percent of the purchase, destruction, and disposition of animals 
exposed to such disease prior to or during interstate movement that are 
not eligible to receive indemnity from any State. The Secretary of 
Agriculture may authorize other arrangements in the case of an 
extraordinary emergency.
    Under the current regulations, animals and materials subject to 
destruction are valued based on an appraisal. The regulations currently 
do not expressly provide for compensation for official vaccinates. In 
addition to compensation for destroyed property, the Administrator is 
authorized to indemnify for cleaning and disinfection costs in 
accordance with the cost sharing agreement with the State.
    A rapid, coordinated response by the public and private sectors in 
the early stages of an FMD occurrence is imperative, if devastating 
losses are to be prevented. The purpose of this proposed rule is to 
remove possible sources of delay in achieving FMD eradication. Under 
the existing regulations, delays may occur because of certain 
producers' perceptions, as well as eradication program requirements. In 
the first instance, delays can derive from livestock owners' 
uncertainty of being fully compensated for the fair market value of 
destroyed animals, products, and materials, including livestock 
vaccinated as part of an eradication program (official vaccinates). 
Owners of affected herds may also be uncertain that they will receive 
full compensation for cleaning and disinfection costs. In the second 
instance, delays may be caused by having to rely on appraisal for the 
valuation of livestock when an insufficient number of appraisers or 
other constraints would prevent timely destruction of infected and 
exposed animals.
    The proposed rule sets forth regulatory changes to address these 
possible sources of delay in the event of an outbreak of FMD. First, 
the Department would pay 100 percent of the costs for the purchase, 
destruction, and disposition of animals affected by FMD, including 
official vaccinates. The Department would also pay 100 percent of the 
costs for cleaning and disinfection of materials that are contaminated 
by or exposed to FMD. If the costs of cleaning and disinfection exceed 
the value of the materials, or cleaning and disinfection would be 
impracticable, then the Department would pay 100 percent of the 
purchase, destruction, and disposition of such materials. These changes 
are intended to allay any concerns on the part of affected entities 
that States would be unable to fund their shares of compensation 
payments.
    Second, livestock valuation based on a set of fixed rates would be 
made available as an alternative to appraisal. Fixed compensation rates 
would potentially enable FMD-affected herds to be compensated more 
quickly with less risk of disease spread.
    A third change would provide that in the case of FMD only, if an 
appraisal of materials to be destroyed is found to be impracticable, or 
would otherwise compromise efforts to effectively control and eradicate 
the disease, the Department may authorize the material's fair market 
value to be determined by other means, such as through records or other 
documentation maintained by the claimant indicating

[[Page 21948]]

the value of the materials destroyed. This option could eliminate 
another potential source of delay in determining the value of materials 
subject to destruction.
    The Department would respond to an FMD occurrence by entering into 
a cooperative control and eradication program with States or others, or 
alternatively, in the case of an extraordinary emergency, take action 
upon determination that the State is not taking adequate measures in 
regard to the control and eradication of disease. In the full analysis, 
we use a cooperative program under the auspices of the current 
regulations and an extraordinary emergency determination as baselines 
for measuring the effects of the proposed rule, if implemented.
    The regulations currently authorize the Department to pay 50 
percent of the cost of purchase, destruction, and disposition of 
animals and materials required to be destroyed under a cooperative 
program for most diseases, including FMD. Affected States would be 
expected to fund the remaining 50 percent of compensation. Compensation 
for costs of cleaning and disinfection of products or materials that 
have been contaminated by or exposed to FMD would be shared by the 
Department and State, in accordance with the agreement reached by the 
two parties. The regulations currently do not expressly provide for 
owners of official vaccinates to be compensated for their destruction. 
In the case of an FMD emergency, a rule would probably be quickly 
promulgated that would allow compensation for official vaccinates.
    In the case of an extraordinary emergency, the Department would be 
authorized to seize, quarantine, and dispose of any affected or exposed 
animals, carcasses, products, or articles. Under an extraordinary 
emergency, the Department is statutorily required to pay compensation 
for any animal or material destroyed based on its fair market value, 
and such compensation cannot exceed the difference between any 
compensation received from a State or other source and such fair market 
value. The Department's compensation responsibilities and costs and 
eradication program costs in general are likely to be larger in the 
case of an extraordinary emergency than they would be under a 
cooperative program, and States' responsibilities and costs will be 
correspondingly smaller.
    Comparing the proposed rule to the existing regulations in the 
context of a cooperative program, the major impacts for the Department 
would be a significantly larger budgetary obligation and an eradication 
program less subject to possible sources of delay. Assumption of 
States' 50 percent share of compensation payments under the proposed 
rule would reduce livestock owners' uncertainty about being fully 
compensated for losses. Less uncertainty is expected to lead to 
improved levels of participation and cooperation in the eradication 
effort. Provision of fixed rates as an alternative to appraisal for 
valuing compensated livestock will also remove possible eradication 
delays. Other potential benefits of using fixed rates will be a reduced 
risk of mechanical transmission of FMD, and lower operational costs.
    For States, the budgetary impact of the proposed rule in the case 
of an extraordinary emergency will be just the opposite. Department 
funding of all compensation payments will provide significant financial 
savings to States in the event of an FMD occurrence. However, States 
may still face numerous direct and indirect FMD costs and some share of 
eradication program costs in the event of a serious FMD outbreak.
    For affected industries and livestock owners, the main impact of 
the proposed rule as applied in a cooperative program will be increased 
confidence that affected parties will receive full fair market value 
when compensated for destroyed animals and materials. This reassurance 
will encourage the private sector's participation and cooperation in 
the eradication program. In the end, fewer livestock operations may be 
directly affected because the higher level of cooperation will lessen 
the possibility of eradication program delays. In addition, the more 
quickly eradication is accomplished, the smaller will be industry 
losses due to quarantines and international trade restrictions.
    Affected entities will still bear uncompensated costs, from lost 
income because of downtime, to restocking difficulties and market 
restrictions. Trade losses and other industry-wide impacts will also 
still occur.
    In comparing the proposed rule versus the current regulations in 
the case of an extraordinary emergency, the total amount of 
compensation paid by the Department would be much the same in both 
cases.
    While affected industries and livestock owners would be fully 
compensated by the Department for destroyed livestock and materials 
both in an extraordinary emergency and under the proposed rule, they 
would still face uncompensated costs such as lost income and fixed 
costs.
    Compensation costs incurred by the Department in the event of an 
FMD occurrence would depend on the characteristics of the outbreak and 
mitigation strategy. Two hypothetical examples of FMD occurrences and 
resulting livestock compensation are presented, to demonstrate the main 
compensation funding impacts of the proposed rule for the Department 
and affected States, in comparison to cooperative conditions. (A 
comparison of compensation funding with the proposed rule to funding 
under extraordinary emergency conditions is pointless, since the 
Department would pay 100 percent of compensation in both instances.)
    The first example assumes a 7 percent loss of U.S. livestock, which 
was the percentage of the United Kingdom's livestock destroyed in 2001 
because of FMD. After adjusting for differences in the relative 
percentages of cattle, swine, and sheep in the United States compared 
to those in the United Kingdom, and applying a set of fixed rates 
calculated using procedures set forth in the analysis, payments for 
destroyed animals were found to total $7.3 billion. Related analyses, 
given assumed numbers of FMD-affected premises, yield compensation 
payments for cleaning and disinfection of premises that total $279 
million.
    Under this first example, and based on the compensation provisions 
in the current regulations, we estimate the Department and affected 
States would each bear compensation payments of about $3.8 billion in a 
cooperative program. Under the proposed rule, the Department's 
compensation payments would increase to about $7.6 billion. The impact 
would be for Department compensation payments to increase by $3.8 
billion (the States' 50 percent share of compensation for destroyed 
animals and cleaning and disinfection costs). Most likely, total 
Department compensation payments would be some lesser amount if 
eradication delays that would otherwise occur (because of producers' 
uncertainties about State funding or reliance solely on appraisal for 
the valuation of livestock and materials) were avoided. While affected 
States would not be obliged to pay compensation, they would still bear 
other costs of the disease and its eradication.
    The second hypothetical example assumes a smaller FMD occurrence, 
and shows the same pattern of compensation payments with and without 
the proposed rule. Without the rule, the Department and affected States 
would each pay about $216 million, that is, one-half of compensation 
for destroyed animals and cleaning and disinfection costs. Under the 
proposed rule, the Department's compensation in a

[[Page 21949]]

cooperative program with States and other cooperators would increase to 
$432 million, that is, 100 percent of compensation. The overall impact 
would be for the Department's compensation burden to increase by $216 
million (the States' 50 percent share of compensation for destroyed 
animals and cleaning and disinfection costs). Again, these costs may be 
overstated, since there could be savings through the avoidance of 
eradication delays. Also, States would not pay compensation under the 
proposed rule, but would face other costs relating to the control and 
eradication of disease.
    The two examples illustrate the proposed rule's shift in 
compensation payments from affected States to the Department in the 
case of a cooperative program. However, as noted above, States and the 
private sector would face other costs including a portion of FMD 
eradication program costs, income losses and fixed costs for livestock 
and related industries, and economy-wide indirect impacts. Because 
these other costs remain uncompensated under the proposed rule, States 
and livestock owners will still have strong incentives to remain 
vigilant for the first signs of disease, and to cooperate fully with 
the Department if there is an FMD occurrence.
    FMD eradication and compensation costs will depend on the scale of 
the occurrence of the disease, which in turn will depend on how quickly 
and effectively the Department, States, and private entities can 
respond. States and the private sector will be positively affected by 
eradication efforts less prone to delay: Fewer livestock and wildlife 
populations will be directly affected, producers and exporters will be 
able to reestablish their operations sooner, and business losses for 
input suppliers, transporters, and other indirectly affected businesses 
will be smaller. Conversely, a protracted eradication effort will mean 
heightened losses and larger eradication costs.
    The benefits of this proposed rule are several. Payment of 100 
percent compensation for animals and materials destroyed in the event 
of FMD, as well as related cleaning and disinfection costs, should 
eliminate uncertainty on the part of livestock owners about States' 
ability to fund their share of FMD compensation. It should encourage 
fully committed participation by affected parties. Otherwise, such 
uncertainty could cause delays in an FMD eradication campaign.
    The option of using fixed rates in place of appraisal in valuing 
livestock should also remove possible eradication delays in those 
situations where appraisal is impracticable or would otherwise 
compromise eradication efforts. The use of fixed rates should result in 
program savings, since their application would require fewer resources 
than appraisal. Fixed rates should also lower risks of mechanical 
disease transmission, since there would be less human contact with 
infected animals.
    In sum, the changes in this proposed rule would strengthen programs 
for the control and eradication of FMD by broadening the Departmental's 
options. The changes would be particularly important in lessening the 
chances that FMD's eradication will be delayed.
    As alternatives to the proposed rule, the current regulations as 
applied to cooperative programs and extraordinary emergencies have 
shortcomings. The current regulations under a cooperative program 
contain possible sources of eradication program delay.
    Under an extraordinary emergency, USDA compensation for animals and 
materials destroyed would be the same under the current regulations and 
proposed rule. However, under the current regulations appraisal would 
be the only method of valuation, and costs to USDA of conducting an FMD 
eradication campaign would be higher (and costs to States 
correspondingly lower). Policy changes would need to be planned and 
implemented immediately.

Summary of Initial Regulatory Flexibility Analysis

    Agencies are required under the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.) to evaluate the potential economic effects of 
proposed rules on small entities. We do not have enough information to 
fully evaluate the potential effect of this proposed rule on small 
entities. As such, we are inviting comments addressing this issue. In 
particular, we are interested in determining the number and kinds of 
small entities that may incur benefits or costs from implementation of 
this proposed rule, and if there are any special issues relating to the 
business practices of these small entities that would make them 
particularly different from larger firms in their ability to comply 
with this proposed rule. However, we have made some initial 
conclusions.
    The changes in this proposed rule would directly affect ruminant or 
swine operations whose herds or flocks are affected by FMD. Other 
businesses that sell or deal with animal products and byproducts could 
also be affected by the proposed rule if their commodities were 
destroyed as part of an eradication program. For purposes of 
illustration, our analysis focuses on an occurrence of FMD. Therefore, 
entities directly affected by the proposed rule in the case of an FMD 
occurrence would be ruminant and swine operations whose herds or flocks 
are affected by the disease, as well as other businesses that sell or 
deal with susceptible animal products and byproducts that would have to 
be destroyed as part of an eradication program. Our analysis focuses on 
livestock producers, while recognizing that similar economic effects 
could be expected for other types of establishments eligible for 
compensation.
    The Small Business Administration (SBA) has established guidelines 
for determining which types of firms are to be considered small under 
the Regulatory Flexibility Act. An establishment engaged in dairy 
animal and milk production, cattle ranching and farming, hog and pig 
farming, sheep farming, or goat farming is considered small if it has 
annual sales of less than $750,000. In 1997, at least 92 percent 
(79,155 of 86,022) of dairy farms, 99 percent (651,542 of 656,181) of 
cattle farms, 87 percent (40,185 of 46,353) of hog and pig farms, and 
99 percent (29,790 of 29,938) of sheep and goat farms were considered 
small.
    Cattle feedlots are considered small if their annual sales are $1.5 
million or less. Over 97 percent of feedlots (95,000 of 97,091) have 
capacities of less than 1,000 head, and average annual sales of about 
420 head. Assuming each head sold for $1,000, these less-than-1,000 
head capacity feedlots would generate, on average, $420,000 in sales. 
Clearly, most feedlots and other livestock operations are small 
entities.
    Benefits for small entities will be the same as those described in 
the cost benefit analysis, which are that small entities essentially 
will have greater confidence that they will receive full fair market 
value when compensated for destroyed animals and materials. This 
reassurance will encourage small entities to participate fully in FMD's 
eradication. In the end, fewer small entities will be directly affected 
because the higher levels of cooperation will reduce the delays in 
eradicating FMD.
    Small entities that own livestock selected for vaccination as part 
of the eradication process will also be more willing to cooperate, with 
the knowledge that they will be compensated for the fair market value 
of their animals. They will be encouraged to feed and care for the 
official vaccinates humanely, confident that these expenses will be 
compensated as well.

[[Page 21950]]

    Full compensation by the Department for cleaning and disinfection 
of affected products and materials, will likewise enhance small 
entities' willingness to take part in an FMD eradication campaign.
    Even with the changes in the proposed rule are implemented, 
affected small entities will still bear uncompensated costs, from lost 
income because of downtime, to high restocking prices and market 
restrictions. If FMD does occur, small entities can be expected to 
benefit directly and indirectly from the of elimination of possible 
sources of eradication delay.
    In sum, the vast majority of livestock operations are small 
entities. While the course an occurrence of FMD would take cannot be 
predicted, it is reasonable to expect that small entities would be 
among the beneficiaries of the proposed rule directly as compensated 
parties and indirectly through rule changes that would lessen the 
chances that FMD's eradication will be delayed.
    This proposed rule would entail information collection 
requirements. These requirements are described in this document under 
the heading ``Paperwork Reduction Act.''

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 7 CFR part 3015, subpart V.)

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. If this proposed rule is adopted: (1) All State 
and local laws and regulations that are in conflict with this rule will 
be preempted; (2) no retroactive effect will be given to this rule; and 
(3) administrative proceedings will not be required before parties may 
file suit in court challenging this rule.

Paperwork Reduction Act

    This proposed rule would require the submission of claims for 
compensation in the event of a future occurrence of FMD. In accordance 
with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), the information collection or recordkeeping requirements 
included in this proposed rule have been submitted for approval to the 
Office of Management and Budget (OMB). Please send written comments to 
the Office of Information and Regulatory Affairs, OMB, Attention: Desk 
Officer for APHIS, Washington, DC 20503. Please state that your 
comments refer to Docket No. 01-069-1. Please send a copy of your 
comments to: (1) Docket No. 01-069-1, Regulatory Analysis and 
Development, PPD, APHIS, Station 3C71, 4700 River Road Unit 118, 
Riverdale, MD 20737-1238, and (2) Clearance Officer, OCIO, USDA, room 
404-W, 14th Street and Independence Avenue SW., Washington, DC 20250. A 
comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication of this proposed rule.
    Providing affected herd owners and other claimants with appropriate 
compensation would entail the use of VS Form 1-23, also known as an 
Appraisal and & Indemnity Claim Form. Affected herd owners and other 
claimants would also be expected to provide any supporting 
documentation that will assist the Administrator, or that is requested 
by the Administrator, to verify the quantity and value of animals or 
materials destroyed and the costs of their disposition, and the costs 
of cleaning and disinfection. We are therefore asking OMB to approve, 
for 3 years, our use of this information collection.
    We are soliciting comments from the public (as well as affected 
agencies) concerning our proposed information collection and 
recordkeeping requirements. These comments will help us:
    (1) Evaluate whether the proposed 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 
proposed 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).

    Note: Our estimate below shows a minimal burden of 1 hour total 
because we believe an FMD outbreak is unlikely. Therefore, we 
currently are not collecting information and do not plan to collect 
information unless an outbreak does occur. In the event of an FMD 
outbreak, we will revise the estimated number of respondents and 
estimated burden accordingly at that time based on the number of 
expected respondents.

    Estimate of burden: Public reporting burden for this collection of 
information is estimated to average 1.0 hour per response.
    Respondents: Owners of animals and materials destroyed, other 
claimants incurring costs under this part for which compensation is 
sought, as well as program support personnel including accredited 
veterinarians, State animal health employees, and local authorities who 
would be providing assistance in the event of a national animal disease 
emergency.
    Estimated annual number of respondents: 1.
    Estimated annual number of responses per respondent: 1.
    Estimated annual number of responses: 1.
    Estimated total annual burden on respondents: 1 hour.
    Copies of this information collection can be obtained from Mrs. 
Celeste Sickles, APHIS' Information Collection Coordinator, at (301) 
734-7477.

Appendix--Establishing Fixed Rates

    To illustrate how we would establish rates for certain animal 
species under a fixed-rate method, as discussed previously in our 
proposed changes to Sec. 53.3, we have provided an example based on a 
hypothetical outbreak of FMD in early April of 2001. In this example, 
we would establish fixed rates for cattle (beef and dairy animals), 
swine, and sheep. This group of animals would represent the vast 
majority of animals that would be affected by FMD.
    Representative ``slide factors'' for calculating the price-weight 
adjustment for different animal categories throughout this example were 
based on information provided by the LMIC.
    The valuation of breeding animals, including the assignment of 
certain premiums, is based on our best estimates from available data 
and our observations of the livestock market. We realize that 
particularly in the case of breeding animals, there is a greater 
potential for variations in value within the same category or 
classification of animals in comparison to market animals. However, as 
discussed previously, owners would have the right to request an 
appraisal of their animals if they believed the fixed-rate method would 
be unsuitable in their particular situation. In addition, claimants who 
disagree with the valuation of their animals under the fixed-rate 
method would have the opportunity to submit a written request for 
review to the Administrator, explaining why the valuation of their 
animals should be different than the value determined by using fixed 
rates.
    In terms of organization, we first provide a summary of the fixed 
rates

[[Page 21951]]

that would be paid in this example based on a hypothetical outbreak of 
FMD in early April of 2001. We then provide a more expanded discussion 
of how these rates would be determined.
    The summary of rates that would be paid for beef and dairy cattle, 
swine, and sheep are as follows. Estimated weights used to calculate 
the payment per head are noted in parenthesis where applicable.

------------------------------------------------------------------------
                                                               Payment
                                                               per head
------------------------------------------------------------------------
Market animals:
    Beef Cattle:
        Preweaned calves (500 lb)..........................      $496.25
        Non-feedlot, but weaned (stocker) animals (650 lb).       601.51
        Feedlot animals (1,100 lb).........................       814.11
    Dairy Cattle:
        Commercial dairy cows (female dairy cows that           1,320.00
         are\have been in milk)............................
        Non-bred heifer replacements and sexually immature        924.00
         bulls.............................................
        Bred heifer replacements...........................     1,584.00
    Swine:
        Grower-finisher pigs (200 lb)......................        98.04
        Nursery pigs.......................................        51.70
        Preweaned piglets..................................        32.72
    Sheep:
        Slaughter lambs and wethers raised for wool                99.76
         production (130 lb)...............................
        Preweaned lambs (70 lb)............................        57.48
        Weaned feeder lambs (85 lb)........................        69.13
Breeding animals:
    Beef Cattle:
        Beef cows (commercial herds) (1,000 lb)............       740.10
        Bred replacement heifers (commercial herds)........       888.12
        Beef bulls (commercial herds)......................     1,850.25
        Registered animals, animals in a seedstock herd,
         and donor animals:
            Cows and bred replacement heifers..............     1,850.25
            Bulls..........................................     2,220.30
    Dairy Cattle:
        Dairy bulls........................................     3,300.00
        Registered animals, animals in a seedstock herd,
         and donor animals:
            Cows and bred replacement heifers..............     3,300.00
            Dairy bulls....................................     3,960.00
    Swine:
        Sows and boars (commercial herds)..................       196.08
        Registered animals, animals in a seedstock herd,          294.12
         and donor animals.................................
    Sheep:
        Commercial ewes (160 lb)...........................       122.78
        Commercial rams (200 lb)...........................       153.48
        Registered animals, animals in a seedstock flock,
         and donor animals:
            Ewes...........................................       245.56
            Rams...........................................       306.96
------------------------------------------------------------------------

    A more expanded discussion of how these rates were determined for 
each of the animal categories follows:

Market Animals

Beef Cattle

Preweaned Calves

    Estimated weight: 500 lb.
    Average futures price (adjusted): 99.25 per cwt.
    Compensation rate: $496.25 per head.
    We determined the compensation rate for preweaned calves by taking 
the simple average of the most recently available daily futures prices 
over a 
3-month period immediately prior to the date of the disease outbreak, 
and multiplying it by the estimated weight. For preweaned calves, we 
looked to the feeder cattle futures contract traded on the Chicago 
Mercantile Exchange, using the contract month that corresponded to the 
month of planned weaning. We used the planned weaning month instead of 
the month of the FMD outbreak since the estimated weight would be based 
on the average weaning weight for these animals.
    We determined that the estimated weight for preweaned calves was 
500 lb, which is the average weaning weight according to data from 
NAHMS. Since the estimated weight for preweaned calves was less than 
the specified weight range of the feeder cattle futures contract (700-
849 lb), we adjusted the average futures price upwards. We calculated 
the price-weight adjustment by taking the slide factor determined by 
LMIC (in this case $4/cwt), and multiplying this factor by the 
difference between the futures contract weight and the estimated weight 
(775 lb - 500 lb = 275 lb).
    Assuming an early April 2001 disease outbreak and a weaning month 
of October, the average futures price was $88.25 per cwt. It is 
important to note that per/cwt prices are generally higher for smaller 
animals than for larger animals. We then adjusted the average futures 
price upwards based on a price-weight adjustment of $11 per cwt. We 
calculated the $11 per-cwt adjustment by selecting a slide factor of $4 
per cwt and multiplying it by 275 lb. So the average futures price for 
determining the compensation rate for preweaned calves was adjusted 
upward to $99.25 per cwt ($88.25/cwt + $11/cwt). We then determined the 
compensation rate of $496.25 per head by multiplying the adjusted 
average futures price of $99.25 per cwt by the estimated weight of 500 
lb ($99.25/cwt  x  5.0 cwt = $496.25 per head).

[[Page 21952]]

Non-Feedlot, but Weaned (Stocker) Animals

    Estimated weight: 650 lb.
    Average futures price (adjusted): $92.54 per cwt.
    Compensation rate: $601.51 per head.
    We determined the compensation rate for stocker animals by taking 
the simple average of the most recently available daily futures prices 
over a 3-month period immediately prior to the date of the outbreak for 
the feeder cattle contract traded on the Chicago Mercantile Exchange, 
and by then multiplying the simple average by the estimated weight for 
stocker animals. In taking a 3-month average, we used the contract 
month that corresponded to the month of the FMD outbreak. Based on an 
early April 2001 outbreak, the average futures price was $87.54 per 
cwt.
    We set an estimated weight of 650 lb for stocker animals based on 
the following set of assumptions. The average feedlot placement weight 
of stocker animals was 700 lb according to NASS statistics. Since 
calves are weaned at 500 lb, this meant a 200 lb non-feedlot gain for 
stocker cattle. We took into account a set portion of this non-feedlot 
weight gain by adding 150 lb to the weaned weight of 500 lb to arrive 
at the estimated total weight of 650 lb for stocker animals.
    Since the estimated weight for stocker animals was less than the 
specified weight range of the feeder cattle futures contract (700-849 
lb), we adjusted the average futures price upwards by $5.00 per cwt by 
taking the slide factor determined by LMIC (in this case $4.00/cwt) and 
multiplying this factor by the difference between the futures contract 
weight and the estimated weight (775 lb - 650 lb = 125 lb or 1.25 cwt). 
So the adjusted average futures price equaled $92.54 per cwt ($87.54/
cwt + $5.00/cwt). We then arrived at a compensation weight of $601.51 
per head by multiplying the adjusted average futures price of $92.54 
per cwt by the estimated weight of 650 lb ($92.54/cwt  x  6.50 cwt = 
$601.51 per head).

Feedlot Animals

    Estimated weight: 1,100 lb.
    Average futures price: $74.01 per cwt.
    Compensation rate: $814.11 per head.
    We determined the compensation rate for feedlot animals by taking 
the simple average of the most recently available daily futures prices 
over a 3-month period immediately prior to the disease outbreak and 
multiplying it by the estimated weight for feedlot animals. We looked 
to the live cattle futures contract traded on the Chicago Mercantile 
Exchange, using the contract month that corresponded to the month of 
the FMD outbreak.
    The estimated weight for feedlot beef cattle was set at 1,100 lb, 
based on the following assumptions. The average slaughter weight of 
steers and heifers in 1999 and 2000 was 1,262 lb according to NASS 
statistics. With an average placement weight in 2000 of 700 lb, we 
determined that the average weight gain while in feedlot was 562 lb. We 
took into account a set portion of this feedlot weight gain by adding 
400 lb to the average placement weight of 700 lb to arrive at the 
estimated total weight of 1,100 lb for feedlot cattle. There is no need 
for a price-weight adjustment for feedlot beef cattle.
    Based on an early April 2001 outbreak, we determined the 
compensation rate for feedlot beef cattle to be $814.11 per head based 
on an average futures price of $74.01 per cwt and an estimated weight 
of 1,100 lb ($74.01/cwt  x  11.0 cwt = $814.11 per head).

Dairy Cattle

Commercial Dairy Cows (Female Cows That Are In Milk or Have Been in 
Milk)

    Compensation rate: $1,320 per head.
    In its publication Agricultural Prices, NASS reports quarterly 
prices received by producers for cows sold for milking purposes in the 
top dairy States and a national price average. In theory, a female 
dairy cow reaches maximum value when she first starts to produce milk. 
The dairy cow price reported by NASS covers animals already in milk 
production and thus below their maximum value. Cows ready to be culled 
(nearing the end of their last lactation) are greatly discounted as the 
value of culled cows is much lower than that of cows that are milked 
another lactation. We believe the NASS price reasonably reflects the 
value of the milking string. Prices are reported by NASS for the months 
of January, April, July, and October and are available at the end of 
the following month. January's price would be used if the FMD outbreak 
occurred in the months of April, May, or June; April's price would be 
used if the outbreak occurred in the months of July, August, or 
September; July's price would be used if the outbreak occurred in the 
months of October, November, and December; and October's price would be 
used if the outbreak occurred in the months of January, February, or 
March.
    Based on an early April 2001 outbreak, we determined the 
compensation rate for commercial dairy cows was $1,320 per head. This 
rate came from the most recently reported quarterly price per head for 
commercial dairy cows from NASS.

Non-Bred Heifer Replacements and Sexually Immature Bulls

    Compensation rate: $924 per head.
    The rate for non-bred heifer replacements and sexually immature 
bulls equals 70 percent of the rate determined for commercial dairy 
cows. The lower percentage rate for non-bred replacements and sexually 
immature bulls reflects that these are younger animals with lower paid-
in costs. For an early April 2001 outbreak, we determined the 
compensation rate was $924 per head ($1,320  x  70 percent).

Bred Heifer Replacements

    Compensation rate: $1,584 per head.
    The rate for bred heifer replacements equals 120 percent of the 
rate determined for commercial dairy cows. We provide this higher value 
over commercial dairy cows to reflect that bred heifers are at the 
start of their productive life. For an early April 2001 outbreak, we 
determined that the rate bred heifer replacements was $1,584 per head 
($1,320  x  120 percent).

Swine

Grower-Finisher Pigs

    Estimated weight: 200 lb.
    Average futures price (adjusted): $49.02 per cwt.
    Compensation rate: $98.04 per head.
    We calculated the compensation rate for grower-finisher pigs by 
taking the simple average of the most recently available daily futures 
prices over a 3-month period immediately prior to the disease outbreak, 
and multiplying it by the estimated weight for grower-finisher pigs. We 
relied on the lean hogs contract traded on the Chicago Mercantile 
Exchange, using the contract month that corresponded to the month of 
the FMD outbreak.
    We determined that the estimated weight of grower-finisher pigs was 
200 lb based on the following assumptions. We assumed that pigs were 50 
lb when entering the grower-finisher phase and were slaughtered at 255 
lb, which was the average slaughter weight for 1999 and 2000 according 
to NASS data (Livestock Slaughter, January 2001). This represented an 
average weight gain of 205 lb. We took into account a set portion of 
this weight gain by adding 150 lb to the average weight of 50 lb for 
pigs entering the grower-finisher phase to arrive at the estimated 
total weight of 200 lb for grower-finisher pigs.
    It was necessary to adjust the average futures price since the 
futures contract

[[Page 21953]]

price is based on the slaughter (carcass) price and not on live 
animals. A hog carcass weighs approximately 74 percent of a live hog. 
The weight difference represents dressing. We arrived at an adjusted 
average futures price of $49.02/cwt, which we then multiplied by the 
estimated weight of 200 lb to get a compensation rate of $98.04 per 
head ($49.02/cwt  x  2.00 cwt).

Nursery Pigs

    Compensation rate: $51.70 per head.
    We determined the rate for nursery pigs by taking the simple 
average of the most recently available national feeder pig (40 lb) 
prices reported by AMS. These prices are reported on a weekly basis. We 
took the simple average over a 3-month period immediately prior to the 
date of the disease outbreak. The AMS prices for these animals are 
reported on a per-head basis, so it is not necessary to determine the 
compensation weight. The average feeder pig price over this 3-month 
period was $51.70 per head.

Preweaned Piglets

    Compensation rate: $32.72 per head.
    We determined the rate for preweaned piglets by taking the simple 
average of the most recently available national early weaned pig (10 
lb) prices, as reported by AMS. These prices are reported on a weekly 
basis. We took the simple average over a 3-month period immediately 
prior to the date of the disease outbreak. The AMS prices for these 
animals are also reported on a per-head basis, so it is not necessary 
to determine the compensation weight. The average national early weaned 
pig price over this 3-month period was $32.72 per head.

Sheep

Slaughter Lambs and Wethers Raised for Wool Production

    Estimated weight: 130 lb.
    Price: $76.74 per cwt.
    Compensation rate: $99.76 per head.
    We determined the compensation rate for slaughter lambs by 
multiplying the calculated price for slaughter lambs by the estimated 
weight for this classification of animal.
    We calculated the price for slaughter lambs by taking the simple 
average of the most recently available national lamb carcass prices, as 
reported by AMS. These prices are reported on a weekly basis. We 
normally take the simple average over a 3-month period immediately 
prior to the date of the disease outbreak, which we would then multiply 
by a dressing percentage of 49.5 percent. However, this is a new AMS 
price series, and there was less than 3 months of available price data.
    Based on NAHMS data, the average slaughter weight of lambs is 145 
lb and the average feedlot placement weight is 85 lb. Therefore, we 
determined the average weight gain of lambs during the feedlot or 
finishing phase to be 60 lb. We took into account a set portion of this 
weight gain by adding 45 lb to the average placement weight of 85 lb to 
arrive at the estimated total weight of 130 lb for slaughter lambs. We 
then calculated the compensation rate to be $99.76 per head by 
multiplying the average AMS lamb carcass price by the dressing 
percentage by the compensation weight ($155.03/cwt  x  49.5 percent  x  
1.30 cwt = $99.76 per head). The compensation rate determined for 
slaughter lambs would also apply to wethers raised for wool production.

Preweaned Lambs

    Estimated weight: 70 lb.
    Adjusted price: $82.11 per cwt.
    Compensation rate: $57.48 per head.
    We determined the compensation rate for preweaned lambs by taking 
the price calculated for slaughter lambs ($76.74/cwt) and adding a 
price-weight adjustment of 7 percent or $5.37/cwt based on the weight 
differential between slaughter lambs and preweaned lambs. We then 
multiplied the adjusted price of $82.11/cwt by the assigned estimated 
weight of 70 lb, which is the average weaning weight of these animals 
according to 2001 NAHMS data, to get a compensation rate of $57.48 per 
head (($76.74/cwt + $5.37/cwt)  x  .70 cwt).

Weaned Feeder Lambs

    Estimated weight: 85 lb.
    Adjusted price: $81.34 per cwt.
    Compensation rate: $69.13 per head.
    We used 85 lb as the estimated weight for weaned feeder lambs, 
which corresponds to the average weight of lambs entering a feedlot or 
finishing stage prior to slaughter. We then calculated the compensation 
rate for weaned feeder lambs by taking the price calculated for 
slaughter lambs ($76.74/cwt) and adding a price-weight adjustment of 6 
percent or $4.60/cwt based on the weight differential between slaughter 
lambs and weaned feeder lambs. This price-weight adjustment is 
generally positive, except during periods of high feed costs. We then 
multiplied the adjusted average price of $81.34/cwt by the assigned 
estimated weight of 85 lb for weaned feeder lambs to get a compensation 
rate of $69.13 per head (($76.74/cwt + $4.60/cwt)  x  .85 cwt).

Breeding Animals

Beef Cattle

Beef Cows (Commercial Herds)

    Estimated weight: 1,000 lb.
    Price: $74.01 per cwt (same price per cwt paid for feedlot beef 
cattle).
    Compensation rate: $740.10 per head.
    The average weight of a beef cow is 1,016 lb according to NAHMS 
data (Beef, 1997). Therefore, we used 1,000 lb as the estimated weight 
for commercial beef cows. A comparison of fed beef cattle prices and 
prices for bred young females and middle age cows (Drovers' Journal) 
found that bred cow prices were 83 percent of fed beef cattle prices. 
Though the premium for breeding purposes is not readily known, we note 
that by providing the same compensation rate ($/cwt) for commercial 
breeding beef cows as is used for feedlot beef cattle would provide 
some measure of the value given for breeding purposes. Therefore, we 
calculated the compensation rate for beef cows by taking the applicable 
futures price ($/cwt) calculated for feedlot beef cattle ($74.01/cwt), 
and multiplying that average price by the estimated weight of 1,000 lb 
for beef cows. For an early April 2001 outbreak, we determined the 
compensation rate for beef cows (commercial herds) was $740.10 per head 
($74.01  x  10.0 cwt = $740.01 per head).

Bred Replacement Heifers (Commercial Herds)

    Compensation rate: $888.12 per head.
    To reflect that bred heifers are at the start of their productive 
life, these animals were valued at 120 percent of the compensation rate 
for beef cows (commercial herds). For an early April 2001 outbreak, we 
determined the rate for bred replacement heifers to be $888.12 per head 
($740.10 per head  x  120 percent).

Beef Bulls (Commercial Herds)

    Compensation rate: $1,850.25 per head.
    The rate for beef bulls (commercial herds) equals 250 percent of 
the rate established for beef cows (commercial herds). For an early 
April 2001 outbreak, we determined that the rate for beef bulls was 
$1,850.25 per head ($740.10  x  250 percent).

Registered animals, animals in a seedstock herd, and donor animals:

Beef Cows and Bred Replacement Heifers

    Compensation rate: $1,850.25 per head.
    Beef cows and bred replacement heifers that are breeding animals 
and are

[[Page 21954]]

also registered animals, part of a seedstock herd, or donor animals 
receive 250 percent of the compensation rate established for beef cows 
(commercial herds). For an early April 2001 outbreak, we determined the 
rate was $1,850.25 per head ($740.10  x  250 percent).

Beef Bulls

    Compensation rate: $2,220.30 per head.
    Beef bulls that are breeding animals and are also registered 
animals, part of a seedstock herd, or donor animals receive 300 percent 
of the compensation rate established for beef cows (commercial herds). 
For an early April 2001 outbreak, we determined the rate for these 
animals was $2,220.30 per head ($740.10  x  300 percent).

Dairy Cattle

Dairy Bulls

    Compensation rate: $3,300 per head.
    Using the same bull-cow relationship as with beef animals, the rate 
for breeding dairy bulls equals 250 percent of the rate determined for 
commercial dairy cows. For an early April 2001 outbreak, we determined 
the rate was $3,300 per head ($1,320 250 percent).

Registered animals, animals in a seedstock herd, and donor animals:

Dairy Cows and Bred Replacement Heifers

    Compensation rate: $3,300 per head.
    The rate for dairy cows and bred replacement heifers that are 
breeding animals and are also registered animals, part of a seedstock 
herd, or donor animals equals 250 percent of the rate established for 
commercial dairy cows. For an early April 2001 outbreak, we determined 
the rate for cows and bred replacement heifers was $3,300 per head 
($1,320  x  250 percent).

Dairy Bulls

    Compensation rate: $3,960 per head.
    The rate for dairy bulls that are breeding animals and are also 
registered animals, part of a seedstock herd, or donor animals equals 
300 percent of the rate established for commercial dairy cows. For an 
early April 2001 outbreak, we determined the compensation rate for 
bulls was $3,960 per head ($1,320  x  300 percent).

Swine

Sows and Boars (Commercial Herds)

    Compensation rate: $196.08 per head.
    The rate for commercial sows and boars equals 200 percent of the 
rate established for grower-finisher pigs. For an early April 2001 
outbreak, we determined the rate was $196.08 per head ($98.04 per head 
(grower-finisher rate)  x  200 percent).

Registered animals, animals in a seedstock herd, and donor animals:

    Compensation rate: $294.12 per head.
    The rate for pigs that are breeding animals and are also registered 
animals, part of a seedstock herd, or donor animals equals 300 percent 
of the rate established for grower-finisher pigs. The value of 
seedstock boars would be the same as seedstock sows. For an early April 
2001 outbreak, we determined the rate for seedstock sows and boars to 
be $294.12 per head ($98.04 per head (grower-finisher rate)  x  300 
percent).

Sheep

Commercial Ewes

    Estimated weight: 160 lb.
    Price: $76.74 per cwt (same adjusted price per cwt used for 
slaughter lambs).
    Compensation rate: $122.78 per head.
    In determining the compensation rate for commercial ewes, we would 
use the average AMS price ($76.74/cwt) calculated for slaughter lambs, 
and multiply this average price by the estimated weight for commercial 
ewes. The slaughter lamb price is greater than the cull ewe slaughter 
price. By providing the higher slaughter lamb price for breeding ewes 
and applying the breeding animal weight, we recognize a premium that 
these breeding animals might receive. We also determined the estimated 
weight of commercial ewes to be 160 lb. Therefore, for an early April 
2001 outbreak, we determined the rate for commercial ewes was $122.78 
per head ($76.74/cwt  x  160 lb).

Commercial Rams

    Estimated weight: 200 lb.
    Price: $76.74 per cwt.
    Compensation rate: $153.48 per head.
    In determining the compensation rate for commercial rams, we would 
use the average AMS price ($76.74/cwt) calculated for slaughter lambs, 
and multiply this average price by the estimated weight for commercial 
rams. The slaughter lamb price is greater than the cull ram slaughter 
price. By providing the higher lamb slaughter price for breeding rams 
and applying the breeding animal weight, we recognize a premium that 
these breeding animals might receive. We also determined the estimated 
weight of commercial rams to be 200 lb. Therefore, for an early April 
2001 outbreak, we determined the rate for commercial breeding rams was 
$153.48 per head ($76.74/cwt  x  200 lb).

Registered animals, animals in a seedstock flock, and donor animals:

    Compensation rate for breeding ewes: $245.56 per head.
    Compensation rate for breeding rams: $306.96 per head.
    The rate for ewes or rams that are breeding animals and are also 
registered animals, part of a seedstock flock, or donor animals equals 
200 percent of the rate established for commercial breeding ewes and 
rams. For an early April 2001 outbreak, we determined the rate for ewes 
was $245.56 per head ($122.78 per head  x  200 percent) and the rate 
for rams was $306.96 per head ($153.48 per head  x  200 percent).

List of Subjects in 9 CFR Part 53

    Animal diseases, Indemnity payments, Livestock, Poultry and poultry 
products.
    Accordingly, we propose to revise 9 CFR part 53 to read as follows:

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

Sec.
53.1   Definitions.
53.2   Disease control and eradication; payments authorized; 
determination of disease.
53.3   Payments for animals and materials; other compensation; 
request for review.
53.4   Destruction of animals.
53.5   Disinfection or destruction of materials.
53.6   Cleaning and disinfection of animals.
53.7   Presentation of claims.
53.8   Claims not allowed.

    Authority: 21 U.S.C. 111, 114, 114a, and 134a-134h; 7 CFR 2.22, 
2.80, and 371.4.

    Cross Reference: For nonapplicability of part 53 with respect to 
certain claims for indemnity, see Secs. 50.15 and 51.10 of this 
chapter.


Sec. 53.1  Definitions.

    Accredited veterinarian. A veterinarian approved by the 
Administrator in accordance with part 161 of this chapter to perform 
functions specified in parts 1, 2, 3, and 11 of subchapter A of this 
chapter and subchapters B, C, and D of this chapter, and to perform 
functions required by cooperative State-Federal disease control and 
eradication programs.
    Administrator. The Administrator, Animal and Plant Health 
Inspection Service, or any person authorized to act for the 
Administrator.
    Animal and Plant Health Inspection Service (APHIS). The Animal and 
Plant Health Inspection Service of the United States Department of 
Agriculture.

[[Page 21955]]

    Animals. Livestock, poultry, and all other members of the animal 
kingdom, including birds whether domesticated or wild, but not 
including man.
    Animals affected by disease. Animals determined to be infected 
with, infested with, or exposed to, a disease covered by this part, 
including official vaccinates.
    APHIS representative. Any individual employed by or acting as an 
agent on behalf of the Animal and Plant Health Inspection Service who 
is authorized by the Administrator to perform the services required by 
this part.
    Bird. Any member of the class aves other than poultry.
    Breeding animal. Any animal being raised for the purpose of 
producing market animals or other breeding animals and, in the case of 
a female, has donated embryos or been bred, and in the case of a male, 
is sexually intact and has reached the age of sexual maturity.
    Commercial breeding animal. Any breeding animal other than a 
registered animal, an animal that is part of a seedstock herd or flock, 
or a donor animal.
    Department. The United States Department of Agriculture.
    Disease. Any communicable disease of livestock or poultry for which 
indemnity is not provided elsewhere in this subchapter, and contagious 
or infectious animal diseases, such as foot-and-mouth disease, 
rinderpest, contagious pleuropneumonia, exotic Newcastle disease, 
highly pathogenic avian influenza, and infectious salmon anemia that, 
in the opinion of the Secretary, constitute an emergency or an 
extraordinary emergency and threaten the livestock or poultry of the 
United States.
    Disease outbreak. The initial occurrence of the disease, as 
determined and reported by the United States Department of Agriculture.
    Donor animal. Any animal, other than a registered animal or an 
animal that is part of a seedstock herd, that has donated at least two 
embryos, in the case of females, or at least 100 units of semen, in the 
case of males, for sale to another producer or transfer to a separate 
herd or flock.
    Endangered or threatened species. Those species defined as 
endangered species or threatened species in the Endangered Species Act 
(16 U.S.C. 1531 et seq.) and regulations promulgated thereunder and as 
they may be subsequently amended.
    Exotic animal. Any animal that is native to a foreign country or of 
foreign origin or character, or is not native to the United States.
    Exotic Newcastle disease (END). Any velogenic Newcastle disease. 
Exotic Newcastle disease is an acute, rapidly spreading, and usually 
fatal viral disease of birds and poultry.
    Federal veterinarian. A veterinarian employed and authorized by the 
Federal Government to perform the services required by this part.
    Highly pathogenic avian influenza.
    (1) Any influenza virus that kills at least 75 percent of eight 4- 
to 6-week-old susceptible chickens within 10 days following intravenous 
inoculation with 0.2 ml of a 1:10 dilution of a bacteria-free, 
infectious allantoic fluid;
    (2) Any H5 or H7 virus that does not meet the criteria in paragraph 
(1) of this definition, but has an amino acid sequence at the 
hemagglutinin cleavage site that is compatible with highly pathogenic 
avian influenza viruses; or
    (3) Any influenza virus that is not an H5 or H7 subtype and that 
kills one to five chickens in the test described in paragraph (1) of 
this definition and grows in cell culture in the absence of trypsin.
    ISA Program Veterinarian. The APHIS veterinarian assigned to manage 
the infectious salmon anemia program for APHIS in the State of Maine 
and who reports to the area veterinarian in charge.
    Livestock Marketing Information Center. The organization, funded 
cooperatively by the United States Department of Agriculture, State 
land grant universities, and livestock industry associations, that 
develops, disseminates, and maintains economic and market data relating 
to the livestock industry.
    Market animal. Any animal being raised for the primary purpose of 
slaughter for meat, or, in the case of dairy animals, the production of 
milk, or, in the case of certain sheep, the production of wool.
    Materials. Barns or other structures; straw, hay, and other feed 
and bedding for animals; agricultural products and byproducts; 
conveyances; equipment; clothing; and any other article.
    National Veterinary Services Laboratories. The organizational unit 
within the Animal and Plant Health Inspection Service delegated 
responsibility for providing services for the diagnosis of domestic and 
foreign animal diseases, diagnostic support for disease control and 
eradication programs, import and export testing of animals, training, 
and laboratory certification for selected diseases.
    Official vaccinate. Any animal that has been:
    (1) Vaccinated with an official vaccine for foot-and-mouth disease 
under the supervision of a State or Federal veterinarian;
    (2) Identified by an eartag specifically approved by APHIS for 
identification of animals officially vaccinated for foot-and-mouth 
disease; and
    (3) Reported to the Administrator as an official vaccinate for 
foot-and-mouth disease promptly after vaccination by the State or 
Federal veterinarian supervising the vaccination.
    Person. Any individual, corporation, company, association, firm, 
partnership, society, joint stock company, or other legal entity.
    Poultry. Chickens, ducks, geese, swans, turkeys, pigeons, doves, 
pheasants, grouse, partridges, quail, guinea fowl, and pea fowl.
    Rare animal. An animal that is extremely uncommon in the United 
States and that is neither an exotic animal nor a member of an 
endangered or threatened species.
    Registered animal. An animal of a particular breed for which 
individual records of ancestry are maintained, and for which individual 
registration certificates are issued and recorded by a recognized breed 
association whose purpose is the improvement of the breed.
    Secretary. The Secretary of Agriculture of the United States or any 
officer or employee of the Department authorized to act for the 
Secretary.
    Seedstock herd or flock. In the case of cattle and sheep, a herd or 
flock in which, during the previous 5 years, at least 25 percent of the 
animals born to the herd or flock have, for breeding purposes, been 
sold to another producer or transferred to a separate herd or flock, 
or, in the case of swine, a herd in which at least 50 percent of the 
gilts produced have, for breeding purposes, been sold to another 
producer or transferred to a separate herd.
    State. Each of the States of the United States, the District of 
Columbia, Puerto Rico, the Northern Mariana Islands, Guam, the Virgin 
Islands of the United States, or any other territory or possession of 
the United States.
    State representative. An individual employed by a State or a 
political subdivision to perform the specified functions agreed to by 
the Department and the State.
    State veterinarian. A veterinarian employed and authorized by a 
State or its political subdivision to perform the services required by 
this part.


Sec. 53.2  Disease control and eradication; payments authorized; 
determination of disease.

    (a) Disease control and eradication. (1) The Administrator may 
cooperate

[[Page 21956]]

with States, political subdivisions, farmers' associations and similar 
organizations, and individuals to control and eradicate disease. Upon 
agreement of the States, political subdivisions, farmers' associations 
and similar organizations, or individuals to cooperate with the 
Administrator in the control and eradication of disease, the 
Administrator may pay, subject to the availability of funding, the 
costs of activities listed in paragraphs (a)(1)(i) through (a)(1)(iii) 
of this section, as provided in paragraphs (a)(2), (a)(3), and (a)(4) 
of this section:
    (i) Purchase, destruction, and disposition of animals affected by 
disease;
    (ii) Purchase, destruction, and disposition of materials 
contaminated by or exposed to a disease agent when the cost of cleaning 
and disinfection would exceed the value of the materials or cleaning 
and disinfection would be impracticable; and
    (iii) Cleaning and disinfection of materials that are contaminated 
by or exposed to a disease agent.
    (2) The Administrator is authorized to pay 50 percent of the costs 
under paragraphs (a)(1)(i) and (a)(1)(ii) of this section; except that 
for infectious salmon anemia the Administrator may pay up to 60 percent 
of the costs under paragraphs (a)(1)(i) and (a)(1)(ii) of this section; 
and except that for exotic Newcastle disease or highly pathogenic avian 
influenza, or any other case where the animals were affected by a 
disease prior to or during interstate movement and are not eligible to 
receive indemnity from any State, the Administrator may pay up to 100 
percent of the costs under paragraphs (a)(1)(i) and (a)(1)(ii) of this 
section; and except that for foot-and-mouth disease, the Administrator 
will pay 100 percent of the costs under paragraphs (a)(1)(i) and 
(a)(1)(ii) of this section: Provided, however, That when the Secretary 
determines an extraordinary emergency exists, the Administrator will 
pay 100 percent of the costs (i.e., the fair market value) under 
paragraphs (a)(1)(i) and (a)(1)(ii) of this section, subject to the 
availability of funding: Provided, further, That any compensation paid 
will not exceed the difference between the compensation received from a 
State or other source and the fair market value of the animals or 
materials.
    (3) Costs incurred under paragraph (a)(1)(iii) of this section will 
be shared by the Department and the State as agreed to by the 
Department and the State in which the work is done: Provided, however, 
That in the case of foot-and-mouth disease, the Administrator will pay 
100 percent of the fair and reasonable costs incurred under paragraph 
(a)(1)(iii) of this section.
    (4) A cooperative program for the purchase, destruction, and 
disposition of birds will be limited to birds determined by the 
Administrator to constitute a threat to the poultry industry of the 
United States.
    (b) Determination of disease.
    (1) The determination that animals are affected by disease will be 
made by either a Federal veterinarian or a State veterinarian who has 
completed the APHIS course on foreign animal disease diagnosis.\1\ The 
determination that animals are affected by disease will be based on 
such factors as clinical evidence of the disease (signs, necropsy 
lesions, and history of the occurrence of the disease), diagnostic 
tests for the disease based on National Veterinary Services 
Laboratories-approved protocols,\2\ or epidemiological evidence 
(evaluation of clinical evidence and the degree of risk posed by the 
potential spread of the disease based on the virulence of the disease, 
its known means of transmission, and the particular species involved).
---------------------------------------------------------------------------

    \1\ The locations of qualified Federal veterinarians and State 
veterinarians may be obtained by writing to Emergency Programs, 
Veterinary Services, Animal and Plant Health Inspection Service, 
USDA, 4700 River Road, Unit 41, Riverdale, MD 20737-1231, or by 
referring to the local telephone book.
    \2\ A copy of the protocols for diagnostic tests of diseases 
covered by this part may be obtained by writing to Emergency 
Programs, Veterinary Services, Animal and Plant Health Inspection 
Service, USDA, 4700 River Road Unit 41, Riverdale, MD 20737-1231.
---------------------------------------------------------------------------

    (2) The determination that materials are contaminated by or exposed 
to a disease agent shall be made by an APHIS representative or a State 
representative, based on the guidance of a Federal veterinarian or a 
State veterinarian.


Sec. 53.3  Payments for animals and materials; other compensation; 
request for review.

    (a) Valuation of animals. The value of animals affected by disease 
and subject to destruction will be the fair market value based on an 
appraisal of the animals: Provided, that, In the case of foot-and-mouth 
disease only, if the Administrator determines that appraisal of animals 
affected by disease would be impracticable, or would otherwise 
compromise efforts to effectively control and eradicate the disease, 
the Administrator may determine the fair market value of certain 
animals by a fixed-rate method, as provided in paragraph (a)(2) of this 
section.
    (1) Appraisal. Appraisals will be conducted jointly by an APHIS 
representative and a State representative, or, if the State authorities 
approve, by an APHIS representative alone. Animals may be appraised in 
groups provided they are the same species and type and provided that, 
where appraisal is by the head, each animal in the group is the same 
value per head, or where appraisal is by the pound, each animal in the 
group is the same value per pound.
    (2) Fixed-rate method. The Administrator will establish rates based 
on the value per head for cattle (beef and dairy cattle), swine, and 
sheep as provided in paragraphs (a)(2)(i) through (a)(2)(iii) of this 
section. Rates may be established for other animals for which the 
Administrator finds sufficient information publicly available to make a 
calculation of the animal's fair market value in accordance with the 
procedures provided in paragraph (a)(2) of this section.
    (i) Classification.
    (A) Animals within each species will be classified as market 
animals or breeding animals.
    (B) Market animals will be further classified according to their 
production phase, including whether or not the animals are weaned and 
whether or not the animals are on finishing rations (i.e., at a feedlot 
or finishing barn) as follows:
    (1) Beef cattle. Preweaned calves; non-feedlot, but weaned 
(stocker) animals; and feedlot animals.
    (2) Dairy cattle. Commercial dairy cows (female dairy cows that 
are/have been in milk), non-bred heifer replacements and sexually 
immature bulls, and bred heifer replacements.
    (3) Swine. Grower-finisher pigs, nursery pigs, and preweaned 
piglets.
    (4) Sheep. Preweaned lambs, weaned feeder lambs, slaughter lambs, 
and wethers raised for wool production.
    (C) Breeding animals will be further classified based on whether 
they are commercial breeding animals, or are registered animals, part 
of a seedstock herd or flock, or donor animals as follows:
    (1) Beef cattle. Beef cows (commercial herds); bred replacement 
heifers (commercial herds); beef bulls (commercial herds); and 
registered animals, animals in a seedstock herd, and donor animals.
    (2) Dairy cattle. Dairy bulls; and registered animals, animals in a 
seedstock herd, and donor animals.
    (3) Swine. Sows and boars (commercial herds); and registered 
animals, animals in a seedstock herd, and donor animals.
    (4) Sheep. Ewes and rams (commercial flocks); and registered

[[Page 21957]]

animals, animals in a seedstock flock, and donor animals.
    (ii) Rates for market animals.--(A) Beef cattle. The rates 
established for different classifications of beef cattle will be based 
on prices from applicable futures contracts traded on the Chicago 
Mercantile Exchange. The rates for preweaned calves and stocker animals 
will be based on the feeder cattle futures contract. The rate for 
feedlot animals will be based on the live cattle futures contract. The 
rate will be determined by multiplying the applicable futures price ($/
cwt) by the estimated weight set by APHIS for that classification of 
animal.
    (1) The applicable futures price ($/cwt) will be the simple average 
of the most recently available daily futures prices over a 3-month 
period immediately prior to the date of the disease outbreak using the 
futures contract month that corresponds to the month of the disease 
outbreak, or the next succeeding contract month if there is not an 
applicable futures contract for the month that corresponds to the month 
of the disease outbreak: Provided, however, In the case of preweaned 
beef calves, the applicable futures price will be the simple average of 
the most recently available daily futures prices for that animal over a 
3-month period using the futures contract month that corresponds to the 
month the claimant has historically weaned their calves, or the next 
succeeding contract month if there is not an applicable futures 
contract for the month that corresponds to the month of planned 
weaning.
    (2) The estimated weight set by APHIS for different classifications 
of beef cattle will be the average weight of animals in that production 
phase based on the most recently available information from the 
Department's National Agricultural Statistics Service (NASS) and 
National Animal Health Monitoring System (NAHMS).
    (3) If the estimated weight for a particular classification of 
animal does not fall within the weight range of the animal covered by 
the futures contract, an upward or downward adjustment in the average 
futures price will be made to reflect this difference in weight and to 
account for the fact that the price per cwt varies with the total 
weight of the animal. The adjustment will be calculated by multiplying 
the price-weight adjustment factor, as determined by the Livestock 
Marketing Information Center, by the difference between the average 
weight of the animal covered by the futures contract and the estimated 
weight set by APHIS for that classification of animal.
    (B) Dairy cattle. The rate established for commercial dairy cows 
will be based on the most recent quarterly price per head reported by 
NASS. The rate for non-bred heifer replacements and sexually immature 
bulls will be 70 percent of the rate determined for commercial dairy 
cows. The rate for bred heifer replacements will be 120 percent of the 
rate determined for commercial dairy cows.
    (C) Swine.--(1) Grower-finisher pigs. The rate established for 
grower-finisher pigs will be based on the lean hogs futures contract 
traded on the Chicago Mercantile Exchange. The rate will be determined 
by multiplying the applicable futures price ($/cwt) by the estimated 
weight set by APHIS for grower-finisher pigs.
    (i) The applicable futures price ($/cwt) for grower-finisher pigs 
will be the simple average of the most recently available daily futures 
prices over a 3-month period immediately prior to the date of the 
disease outbreak using the futures contract month that corresponds to 
the month of the disease outbreak, or the next succeeding contract 
month if there is not an applicable futures contract for the month that 
corresponds to the month of the disease outbreak, multiplied by 74 
percent.

    (ii) The estimated weight set by APHIS for grower-finisher pigs 
will be the average weight of grower-finisher pigs based on the most 
recently available information from NASS and NAHMS.
    (2) Nursery pigs. The rate established for nursery pigs will be 
based on the simple average of the most recently available national 
feeder pig (40 lb) prices reported by the Department's Agricultural 
Marketing Service (AMS) over a 3-month period immediately prior to the 
date of the disease outbreak.
    (3) Preweaned piglets. The rate established for preweaned piglets 
will be based on the simple average of the most recently available 
national early weaned pig (10 lb) prices reported by AMS over a 3-month 
period immediately prior to the date of the disease outbreak.
    (D) Sheep. The rate established for preweaned lambs, weaned feeder 
lambs, slaughter lambs, and wethers raised for wool production will be 
based on the national lamb carcass price, as reported by AMS. The rate 
will be determined by multiplying the average AMS price ($/cwt) by the 
estimated weight set by APHIS for that classification of animal.
    (1) The average AMS price ($/cwt) will be the simple average of the 
most recently available national lamb carcass prices reported by AMS 
over a 3-month period immediately prior to the date of the disease 
outbreak, multiplied by the AMS reported dressing percentage, or 49.5 
percent if the dressing percentage is not reported.
    (2) The estimated weight set by APHIS for preweaned lambs, weaned 
feeder lambs, slaughter lambs, and wethers raised for wool production 
will be the average weight of animals in that production phase based on 
the most recently available information from NASS and NAHMS.
    (3) For preweaned lambs and weaned feeder lambs, an upward or 
downward percentage adjustment in the average AMS price will be made to 
reflect the difference in weight between preweaned lambs or weaned 
feeder lambs and slaughter lambs. The price-weight percentage 
adjustment will be supplied by the Livestock Marketing Information 
Center.
    (iii) Rates for breeding animals.--(A) Generally. The rates for 
breeding animals will be determined based on the rates of other market 
or breeding animals, and then adjusted to include any premium that 
reflects the animals' breeding value. Breeding animals that are 
registered animals, animals in a seedstock herd or flock, or animals 
that have donated germ plasm that has been sold to other producers or 
transferred to separate herds or flocks, will receive a higher premium 
than commercial breeding animals.
    (B) Beef cattle.--(1) Beef cows (commercial herds). (i) The rate 
established for beef cows (commercial herds) that are breeding animals 
will be determined by multiplying the applicable futures price ($/cwt) 
for feedlot animals, as described in paragraph (a)(2)(ii)(A)(1) of this 
section, by the estimated weight set by APHIS for beef cows.
    (ii) The estimated weight set by APHIS for beef cows will be the 
average weight of beef cows based on the most recently available 
information from NASS and NAHMS.
    (2) Bred replacement heifers (commercial herds). The rate 
established for bred replacement heifers (commercial herds) that are 
breeding animals will be 120 percent of the rate established for beef 
cows (commercial herds).
    (3) Beef bulls (commercial herds). The rate established for beef 
bulls (commercial herds) that are breeding animals will be 250 percent 
of the rate established for beef cows (commercial herds).
    (4) Registered animals, animals in a seedstock herd, and donor 
animals.-- (i) The rate established for beef cows and bred replacement 
heifers that are breeding animals and are registered

[[Page 21958]]

animals, part of a seedstock herd, or donor animals, will be 250 
percent of the rate established for beef cows (commercial herds).
    (ii) The rate established for beef bulls that are breeding animals 
and are registered animals, part of a seedstock herd, or donor animals, 
will be 300 percent of the rate established for beef cows (commercial 
herds).
    (C) Dairy cattle.--(1) Dairy bulls. The rate established for dairy 
bulls that are breeding animals will be 250 percent of the rate 
established for commercial dairy cows.
    (2) Registered animals, animals in a seedstock herd, and donor 
animals.
    (i) The rate established for dairy cows and bred replacement 
heifers that are breeding animals and are registered animals, part of a 
seedstock herd, or donor animals, will be 250 percent of the rate 
established for commercial dairy cows.
    (ii) The rate established for dairy bulls that are breeding animals 
and are registered animals, part of a seedstock herd, or donor animals, 
will be 300 percent of the rate established for commercial dairy cows.
    (D) Swine.--(1) Sows and boars (commercial herds). The rate 
established for commercial sows and boars that are breeding animals 
will be 200 percent of the rate established for grower-finisher pigs.
    (2) Registered animals, animals in a seedstock herd, and donor 
animals.
    (i) The rate established for sows that are breeding animals and are 
registered animals, part of a seedstock herd, or donor animals, will be 
300 percent of the rate established for grower-finisher pigs.
    (ii) The rate established for boars that are breeding animals and 
are registered animals, part of a seedstock herd, or donor animals, 
will be 300 percent of the rate established for grower-finisher pigs.
    (E) Sheep.--(1) Ewes and rams (commercial flocks).
    (i) The rate established for commercial ewes and rams that are 
breeding animals will be determined by multiplying the average AMS 
price ($/cwt) for slaughter lambs, as described in paragraph 
(a)(2)(ii)(D)(1) of this section, by the estimated weight set by APHIS 
for commercial ewes and rams.
    (ii) The estimated weight set by APHIS for commercial ewes and rams 
will be the average weight of those animals based on the most recently 
available information from NASS and NAHMS.
    (2) Registered animals, animals in a seedstock flock, and donor 
animals.
    (i) The rate established for ewes that are breeding animals and are 
registered animals, part of a seedstock flock, or donor animals, will 
be 200 percent of the rate established for commercial breeding ewes.
    (ii) The rate established for rams that are breeding animals and 
are registered animals, part of a seedstock flock, or donor animals, 
will be 200 percent of the rate established for commercial breeding 
rams.
    (iv) Request for appraisal. An owner of animals subject to 
valuation by the fixed-rate method may submit a written request to the 
Administrator asking that the animals affected by disease be valued by 
appraisal instead of by fixed-rate method. The owner must include in 
the request the reasons why valuation by the fixed-rate method would be 
unsuitable. In determining whether to grant the request, the 
Administrator will take into account whether allowing the appraisal 
would compromise efforts to effectively control and eradicate the 
disease. The decision by the Administrator regarding the owner's 
request for appraisal is final. A denial of a request for appraisal 
under this paragraph does not affect the owner's right to request a 
review of the valuation under paragraph (d) of this section.
    (b) Valuation of materials. The value of materials destroyed 
because of contamination or exposure to a disease agent will be the 
material's fair market value based on an appraisal: Provided, that, In 
the case of foot-and-mouth disease only, if an appraisal is found to be 
impracticable, or would otherwise compromise efforts to effectively 
control and eradicate the disease, the Administrator may authorize the 
value to be determined by other means, such as through records or other 
documentation maintained by the claimant indicating the value of the 
materials destroyed. The appraisal of materials will be conducted 
jointly by an APHIS representative and a State representative, or, if 
the State authorities approve, by an APHIS representative alone.
    (c) Other compensation.--(1) Costs for cleaning and disinfection. 
Compensation for cleaning and disinfection will be based on receipts or 
other documentation maintained by the claimant verifying expenditures 
for cleaning and disinfection activities authorized by this part.
    (2) [Reserved]
    (d) Request for review. A claimant who disagrees with the valuation 
in total of all animals or all materials or the amount of other 
compensation, as determined in this section, may submit a written 
request for review to the Administrator. The claimant must include in 
the request the reasons, including any supporting documentation, that 
the valuation in total of all animals or all materials or the amount of 
other compensation should be different from the valuation or amount 
determined by appraisal, fixed-rate method, or other means provided for 
in this section. The decision by the Administrator regarding the 
valuation of animals or materials or the amount of other compensation 
is final.


Sec. 53.4  Destruction of animals.

    (a) With the exception of official vaccinates, animals affected by 
disease must be destroyed promptly after valuation and disposed of by 
burial, burning, or other manner approved by the Administrator as not 
contributing to the spread of the disease.
    (b) The destruction of animals and the burial, burning, or other 
disposal of carcasses of animals under this part must be under the 
supervision of an APHIS representative or a State representative who 
will prepare and transmit to the Administrator a report identifying the 
animals destroyed and the manner of their disposition.
    (c) Official vaccinates will be destroyed or otherwise handled in a 
manner as directed by the Administrator to prevent the dissemination of 
the disease. Official vaccinates not subject to destruction may 
include, at the discretion of the Administrator, exotic animals, rare 
animals, or animals belonging to an endangered or threatened species. 
If official vaccinates are allowed to move to a slaughtering or 
rendering facility in lieu of destruction or disposition by other 
means, then any proceeds gained from the sale of the animals to the 
slaughtering or rendering facility will be subtracted from any 
indemnity payment from APHIS for which the producer is eligible under 
Sec. 53.2(a)(2) of this part.
    (d) In the case of animals depopulated due to infectious salmon 
anemia, salvageable fish may be sold for rendering, processing, or any 
other purpose approved by the Administrator. If fish retail salvage 
value, the proceeds gained from the sale of the fish will be subtracted 
from any indemnity payment from APHIS for which the producer is 
eligible under Sec. 53.2(a)(2).


Sec. 53.5  Disinfection or destruction of materials.

    All materials that have been contaminated by or exposed to a 
disease agent must be cleaned and disinfected under the supervision of 
an APHIS representative or a State representative: Provided, however, 
That in cases in

[[Page 21959]]

which the cost of cleaning and disinfecting materials would exceed the 
materials' value or cleaning and disinfecting the materials would be 
impracticable, the materials shall be destroyed under the supervision 
of an APHIS representative or a State representative, upon 
determination of their value as provided in Sec. 53.3. The APHIS 
representative or State representative will prepare and transmit to the 
Administrator a report identifying all materials destroyed and the 
manner of their disposition.


Sec. 53.6  Cleaning and disinfection of animals.

    Animals of species not susceptible to the disease for which a 
quarantine has been established, but which have been exposed to the 
disease, must be cleaned and disinfected, as directed by, and under the 
supervision of, an APHIS representative or a State representative.


Sec. 53.7  Presentation of claims.

    (a) Claims for compensation under this part must each be presented 
by the claimant to an APHIS representative on forms approved by APHIS. 
Claims for animals or materials destroyed must be presented by the 
owner or the owner's designated representative. The claimant shall 
provide any available supporting documents that will assist the 
Administrator, or that are requested by the Administrator, in verifying 
the quantity and value of animals or materials destroyed and the costs 
of their disposition, the costs of cleaning and disinfection, and any 
other costs incurred under this part for which compensation is sought. 
Examples of supporting documentation include, but are not limited to 
production records, purchase and sales records, breeding records, 
registration papers, and receipts.
    (b) When animals or materials have been destroyed pursuant to this 
part, the owner of the animals or materials must certify on the claim 
whether or not the applicable animals or materials are subject to any 
mortgage. If there is a mortgage, the owner and each person holding a 
mortgage on the animals or materials must sign forms approved by APHIS 
indicating they consent to the payment of any indemnity to the person 
specified on the forms.


Sec. 53.8  Claims not allowed.

    (a) The Department will not allow claims arising under this part if 
the payee has not complied with all Federal quarantine requirements or 
State quarantine requirements consistent with Federal law or 
regulations in effect for the control and eradication of the disease.
    (b) Costs for the care and feeding of animals held for destruction 
will not be paid by the Department, unless the payment of such cost is 
specifically authorized or approved by the Administrator.
    (c) The Department will not allow claims arising out of the 
destruction of animals or materials unless the animals or materials 
have been valued as prescribed in this part.
    (d) The Department will not allow claims arising out of the 
destruction of animals or materials that have been moved or handled by 
the owner, or by the owner's representative acting on behalf of the 
owner, in violation of any Federal law or regulation, or any State law 
or regulation consistent with a Federal law or regulation, administered 
to prevent the introduction or dissemination of any contagious or 
infectious animal disease or any communicable livestock or poultry 
disease for which the animal or material was destroyed.
    (e) The Department will not allow claims arising out of the 
destruction of fish due to infectious salmon anemia (ISA) unless the 
claimants have agreed in writing to participate fully in the 
cooperative ISA control program administered by APHIS and the State of 
Maine.
    Participants in the ISA control program must:
    (1) Establish and maintain a veterinary client-patient relationship 
with an APHIS accredited veterinarian and inform the ISA Program 
Veterinarian in writing of the name of their accredited veterinarian at 
the time the participant enrolls in the ISA program and within 15 days 
of any change in accredited veterinarians.
    (2) Cooperate with and assist in periodic on-site disease 
surveillance, testing, and reporting activities for ISA, which will be 
conducted by their APHIS accredited veterinarian or a State or Federal 
official as directed by the ISA Program Veterinarian.
    (3) Develop and implement biosecurity protocols for use at all 
participant-leased finfish sites and participant-operated vessels 
engaged in aquaculture operations throughout Maine. A copy of these 
protocols shall be submitted to the ISA Program Veterinarian at the 
time the participant enrolls in the ISA program and within 15 days of 
any change in the protocols.
    (4) Develop, with the involvement of the participant's accredited 
veterinarian and the fish site health manager, a site-specific ISA 
action plan for the control and management of ISA. A copy of the action 
plan shall be submitted to APHIS for review at the time the participant 
enrolls in the ISA program and within 15 days of any change in the 
action plan.
    (5) Participate in the State of Maine's integrated pest management 
(IPM) program for the control of sea lice on salmonids. A copy of the 
management plan developed by the participant for the State IPM program 
shall be submitted to APHIS for review at the time the participant 
enrolls in the ISA program and within 15 days of any change in the 
management plan.
    (6) Submit to the ISA Program Veterinarian at the time the 
participant enrolls in the ISA program a complete and current fish 
inventory information for each participant-leased finfish site with 
site and cage identifiers. Fish inventory information must include the 
numbers, age, date of saltwater transfer, vaccination status, and 
previous therapeutant history for all fish in each participant-leased 
finfish site.
    (7) Maintain, and make available to the ISA Program Veterinarian 
upon request, mortality data for each participant-leased finfish site 
and pen in production.
    (8) Cooperate with and assist APHIS in the completion of 
biosecurity audits at all participant-leased finfish sites and 
participant-operated vessels involved in salmonid aquaculture.

(Approved by the Office of Management and Budget under control 
number 0579-0192)

    Done in Washington, DC, this 26th day of April 2002.
Bill Hawks,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 02-10724 Filed 4-30-02; 8:45 am]
BILLING CODE 3410-34-P