[Federal Register Volume 69, Number 82 (Wednesday, April 28, 2004)]
[Rules and Regulations]
[Pages 23087-23090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9598]



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  Federal Register / Vol. 69, No. 82 / Wednesday, April 28, 2004 / 
Rules and Regulations  

[[Page 23087]]



DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Part 53

[Docket No. 01-126-2]
RIN 0579-AB37


Infectious Salmon Anemia; Payment of Indemnity

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Affirmation of interim rule as final rule.

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SUMMARY: We are adopting as a final rule, without change, an interim 
rule that established regulations to provide for the payment of 
indemnity to producers in the State of Maine for fish destroyed due to 
infectious salmon anemia. We considered depopulation necessary to 
control infectious salmon anemia in Maine, and indemnification for 
depopulated fish necessary to gain producer support.

DATES: Effective Date: The interim rule became effective on April 5, 
2002.

FOR FURTHER INFORMATION CONTACT: Ms. Jill Rolland, Fishery Biologist, 
Certification and Control Team, VS, APHIS, 4700 River Road Unit 46, 
Riverdale, MD 20737-1231; (301) 734-8069.

SUPPLEMENTARY INFORMATION:

Background

    The regulations at 9 CFR part 53 (referred to below as the 
regulations) provide for the control and eradication of diseases 
including foot-and-mouth disease, rinderpest, contagious 
pleuropneumonia, exotic Newcastle disease, highly pathogenic avian 
influenza, and other communicable diseases of livestock or poultry 
that, in the opinion of the Secretary of Agriculture, constitute an 
emergency and threaten the livestock (farm-raised animals, including 
poultry and fish) of the United States. The regulations authorize 
payments based on the fair market value of the animals destroyed, as 
well as payments for their destruction and disposition. The regulations 
also authorize payments for materials that must be cleaned and 
disinfected or destroyed because of being contaminated by or exposed to 
disease.
    In an interim rule effective April 5, 2002, and published in the 
Federal Register on April 10, 2002 (67 FR 17605-17611, Docket No. 01-
126-1), we amended the regulations to provide for the payment of 
indemnity to producers in the State of Maine whose fish were destroyed 
due to infectious salmon anemia (ISA). The rule amended Sec. Sec.  
53.1, 53.2, 53.4, and 53.10 of the regulations by adding ISA to the 
list of diseases, providing for payments of up to 60 percent of the 
fair market value of the fish destroyed because of ISA, and by setting 
out criteria for qualifying for indemnity. We took that action to 
increase the effectiveness of our efforts to control ISA in Maine and 
prevent further outbreaks of the disease.
    Comments on the interim rule were required to be received on or 
before June 10, 2002. We received two comments. The various issues 
raised in these comments are discussed below by topic.
    Both commenters expressed disappointment in the Federal 
contribution to the farmers who depopulated fish because of ISA. 
Specifically, one commenter questioned how providing a 60 percent level 
of indemnification for ISA was determined when different percentages 
have applied to other programs. The other commenter stated that all 
farmers whose fish were depopulated after the Secretary of 
Agriculture's Declaration of Emergency on December 13, 2001, should be 
fully compensated. This commenter also stated that the interim rule did 
not make clear what level of compensation would be available to farmers 
for the costs of carcass disposal and facility cleaning and 
disinfection, and added that farmers should be fully reimbursed for 
these costs.
    Federal compensation is not intended to reimburse producers for all 
disease-related losses. The Federal Government compensates producers 
for livestock or crops destroyed because they are affected by certain 
diseases and pests primarily to provide an incentive for the producers 
to participate in eradication programs. The ISA situation in Maine 
resulted in a Federal decision to pay compensation at a 60 percent 
level, rather than at the 50 percent level provided by the regulations 
in 9 CFR part 53 for most other animal diseases, in order to gain 
producer cooperation in depopulating affected fish. The Federal 
Government also paid 60 percent of the cost of carcass disposal, 
facility cleaning, and disinfection. The Federal share for depopulation 
and associated disposal, cleaning, and disinfection costs, was reduced 
to 40 percent in the second year of the ISA program.
    One commenter asked what funds would be available for future 
eradication efforts once the current monies were used, and whether 
State, Federal, or Tribal fish rearing facilities in Maine would 
qualify for indemnity should ISA be found at one of those sites.
    The ISA indemnity program described in the interim rule ended 
September 30, 2003. As of yet, no decision has been made about 
indemnification for future ISA outbreaks, including outbreaks in State, 
Federal, and Tribal fish rearing facilities in Maine.
    One commenter stated that ISA is not a disease foreign to the 
United States and should therefore not be addressed in part 53. The 
commenter suggested that ISA be included with other animal diseases 
endemic to the United States and that we indemnify the salmon producers 
under the rules for those diseases.
    We considered ISA a foreign animal disease because this is the 
first time that the disease has been diagnosed in the United States. 
The first case of ISA in the United States was confirmed in Maine on 
February 15, 2001, and the disease has not been diagnosed in other 
parts of the United States.
    One commenter questioned why a claimant must have an accredited 
veterinarian perform certain activities in order to be eligible for 
indemnity. The commenter said that other aquatic animal health 
professionals accredited by the American Fisheries Society could 
perform the services needed.
    To be eligible for Federal indemnity payments, we require that all 
claimants participate in the ISA control program administered by APHIS 
and the State of Maine. Participants in this program

[[Page 23088]]

must have ready access to an APHIS accredited veterinarian. APHIS 
relies on accredited veterinarians in many of its disease control 
programs. These veterinarians are accredited by APHIS after completing 
specialized training in Federal animal health laws, regulations, and 
rules; interstate movement requirements for animals; import and export 
requirements for animals; USDA animal disease and eradication programs; 
laboratory support in confirming disease diagnoses; ethical/
professional responsibilities of an accredited veterinarian; and animal 
health procedures, issues, and information resources relevant to the 
State in which the veterinarian wishes to perform accredited duties. To 
be accredited, a veterinarian must also be able to perform a variety of 
specialized tasks, which include recognizing clinical signs of foreign 
animal diseases, planning a disease control strategy for a unit of 
livestock, and developing appropriate cleaning and disinfection plans 
to control the spread of communicable diseases of livestock. We believe 
that this knowledge and these competencies are essential to the success 
of our disease control and eradication programs. In addition, we 
believe that requiring an accredited veterinarian to perform specific 
activities in the cooperative ISA control program was particularly 
important because the ISA program was our first action to regulate the 
farm-raised fish industry.
    One commenter questioned provisions in Sec.  53.4 that allow 
salvageable fish depopulated because of ISA to be sold for rendering, 
processing, or other purposes. The commenter stated that these 
provisions are inconsistent with the requirements in Sec.  53.4 for 
other species and diseases, which appear to be intended to remove 
animals posing risks to other animals as quickly as possible.
    Allowing salvageable fish to be sold for rendering or processing 
does not delay their removal. Once a disease is detected, the farmer 
may determine if the infected fish have salvage value. However, fish 
will be removed from their pens within a specified time regardless of 
whether they will be sold for rendering and processing or whether they 
will be destroyed by other means.
    Other indemnity programs have allowed producers to seek salvage 
value in the past. One such program was the low pathogenic avian 
influenza indemnity program. Under this program, nearly 976,000 meat 
birds were sent to controlled slaughter. Determining whether an animal 
may have salvage value is based on a number of factors, including the 
effect of the disease on the animal, whether or not the disease poses 
human health risks, and whether there is a risk of spreading the 
disease in transit or after processing. In the case of ISA, we 
determined that these risks did not apply and that it was appropriate 
to allow salmon farmers to be compensated for fish in this manner.
    One commenter questioned why the eligibility requirements for 
receiving indemnity for fish destroyed because of ISA are more 
extensive than the requirements for receiving indemnity for destruction 
of animals because of other diseases covered by the regulations. The 
commenter cited retention of an accredited veterinarian and 
participation in the sea lice control program as examples. The 
commenter added that terrestrial farmers are not required to 
participate in disease control programs for endemic pests in order to 
receive compensation under the regulations.
    We included these requirements after consultation with members of 
the State-Federal Joint Working Group on ISA, whose members believed 
the requirements we have established to be central issues in 
controlling the spread of ISA. With the knowledge that diseases spread 
in aquatic areas are more difficult to control than terrestrial 
diseases, we determined that such measures were necessary to ensure the 
disease was eradicated.
    The commenter is correct in stating that terrestrial 
indemnification programs do not require that farmers participate in 
endemic pest control programs in order to receive indemnity payments 
under the regulations. However, the regulations do describe specific 
requirements for participation in some terrestrial animal disease 
indemnity programs. For example, 9 CFR part 54, subpart A--Scrapie 
Indemnification Program, describes a comprehensive disease control 
program that farmers must participate in to be eligible for indemnity 
payments. In the case of ISA, there is scientific evidence which 
suggests that sea lice contribute to the spread of ISA. For this 
reason, we determined that a sea lice control program was an integral 
part in controlling ISA. All vectors through which a disease can spread 
must be addressed in order to have an effective program.
    Citing the Department's indemnification schedule in the 
``Infectious Salmon Anemia Programs Standards,'' v6.2, April 30, 2002, 
one commenter stated support for the general schedule but objected to 
broodfish being valued on the basis of meat value only. The commenter 
suggested that the value of these fish be calculated based on average 
fecundity (12,000 eggs per female) and the market price of salmon eggs 
($.05 per egg), which the commenter stated would generate a value of 
$300 per broodfish.
    We agree that broodfish should not be valued based on meat value. A 
valuation method for broodfish would be based on eggs, among other 
variables affecting these eggs, but no broodfish were depopulated in 
this program. We did not include a value specifically for broodfish in 
the schedule developed for the interim rule because one was not needed. 
If needed in the future, a standard would be developed for the 
valuation of broodfish.
    Therefore, for the reasons given in the interim rule and in this 
document, we are adopting the interim rule as a final rule without 
change.
    This action also affirms the information contained in the interim 
rule concerning Executive Orders 12372 and 12988.
    Further, this action has been determined to be not significant for 
the purposes of Executive Order 12866 and, therefore, has not been 
reviewed by the Office of Management and Budget.

Regulatory Flexibility Act

    This rule affirms an interim rule that amended the regulations by 
establishing regulations to provide for the payment of indemnity to 
producers in the State of Maine for fish destroyed due to ISA.
    In accordance with 5 U.S.C. 603, we performed an initial regulatory 
flexibility analysis for the interim rule, which was included in the 
interim rule and which invited submission of comments and data to 
assist in a comprehensive analysis of the economic effects of the 
interim rule on small entities. More specifically, we requested 
information on the number and kind of small entities that might incur 
benefits or costs from the implementation of the interim rule. No such 
information was submitted in the comments that we received.
    The following final regulatory flexibility analysis addresses the 
economic effects of the interim rule on small entities as required by 
the Regulatory Flexibility Act (5 U.S.C. 604).

Program Description and Benefits

    ISA is recognized to cause considerable economic losses. In 2002, 
the Secretary of Agriculture authorized the transfer from the Commodity 
Credit Corporation of $8.29 million as one part of a 2-year ISA 
indemnity and control program. The money was earmarked for indemnity 
costs, disposal, cleanup,

[[Page 23089]]

epidemiology, and surveillance. Under the interim rule, APHIS paid up 
to 60 percent of the fair market value of the fish destroyed.
    At the time the interim rule was published, the farmed Atlantic 
salmon industry in Maine was estimated to be producing over 15,000 tons 
(or 30 million lbs.) of fish per year. In 2000, production value was 
estimated to have surpassed $100 million in Maine. Maine's farmed 
Atlantic salmon industry directly employed approximately 1,000 people, 
primarily in Washington and Hancock Counties, and it was estimated that 
an additional 2,500 people had jobs that directly depended on Maine's 
farmed Atlantic salmon industry. There were approximately 28 to 33 
employees per every million pounds of product output. The amount of 
fish stock per farm varied; as of December 2003, there were 26 active 
pen sites and 45 permitted pen sites, and, on average, 350,000 fish per 
site.

Value Determination for Non-Marketable Animals

    Under the interim rule, an appraiser determined the fair market 
value of fish to be destroyed. Value was based on age; as salmon 
mature, their value increases significantly. Initially, salmon smolts 
are raised in freshwater pens for approximately 14 or 15 months. On 
average, these smolts weigh about 0.25 lbs. and carry no market value. 
On or about May 1 of each year, operators move salmon into saltwater 
pens, where they grow at a rapid pace. Therefore, salmon that are 16 
months old have actually only been in a saltwater pen for approximately 
1 month. Salmon grow approximately 0.5 to 1 lb. each month, except 
during the coldest winter months. During that first winter (December to 
March), when salmon are between 21 to 24 months, their weight stagnates 
at approximately 3 lbs. This weight stagnation process occurs each 
year, and in the spring, salmon resume growing at their previous pace. 
Prior to the ISA program a producer typically strived to harvest fish 
when they were the ideal market age of 38 to 42 months old (about 24 to 
28 months in a saltwater pen, or about the time they reach 10 to 14 
lbs.). Following implementation of the ISA program, the ideal market 
age dropped to 30 to 38 months (about 16 to 22 months in the saltwater 
pen, or about 9 to 14 lbs.). The final indemnity schedule is available 
through the person listed under FOR FURTHER INFORMATION CONTACT.
    Between December 2001 and September 2003, APHIS, with the 
cooperation of the State of Maine and affected producers, depopulated 
just over 1.66 million exposed or infected salmon in Maine. At the 60 
percent rate provided for by the interim rule, we provided indemnity 
payments of about $4.5 million to salmon producers in fiscal year 2002. 
We spent an additional $1.1 million on facility cleaning and 
disinfection, disposal, and operating costs, bringing the total cost 
for the first year to $5.6 million. The remaining $2.6 million was 
rolled over for the program in fiscal year 2003. We provided about 
$84,000 in indemnity to producers at the 40 percent rate in the 
program's second year. The remainder of the $2.6 million went to costs 
associated with facility cleaning and disinfection, disposal, and 
operating costs for fiscal years 2003 and 2004. The following paragraph 
discusses how the indemnity payments were distributed over the 2-year 
program.
    In fiscal year 2002, 1.61 million exposed or infected salmon from 8 
sites were depopulated. Three sites contained about 718,000 10-month-
old salmon. These sites received a little more than $2.33 million in 
indemnity. About 711,500 9-month-old salmon from 4 sites were 
depopulated. These four sites received around $2.16 million in 
indemnity. In fiscal year 2003, 23,391 14-month-old fish from one site 
were depopulated. The site received a total of $77,284 in indemnity.

Salvage Value--Value Determination for Marketable Animals

    Under the interim rule, salmon producers had the option of selling 
stock for rendering or other processing. The prices offered for salmon 
sold for rendering or processing were based on a number of criteria, 
but primarily considered the weight of the salvageable portion of the 
fish. These prices are offered by the processors; the prices for fish 
sold for salvage were reported to APHIS. We subtract any salvage value 
gained at slaughter from the indemnity payment.
    In fiscal year 2002, a salmon producer from one site in the 
Passamaquoddy Bay received at least 60 percent of the market value in 
salvage value for 131,295 14-month-old salmon. Thus, APHIS paid no 
indemnity for the fish harvested from that site. In fiscal year 2003, a 
salmon producer from one site received $80,139 in salvage value for 
28,516 fish that were worth $86,917. In this case, APHIS paid the 
difference of $6,778 to the producer.

Cost Benefit Analysis

    ISA put the entire farmed Atlantic salmon industry in Maine at 
risk. The benefits of keeping this $100 million dollar per year 
industry viable outweighed the cost of this program. Additionally, the 
interim rule provided salmon owners with a financial incentive to 
identify and destroy their ISA infected and/or exposed fish, thus 
arresting the spread of the disease and accelerating eradication 
efforts. Several benefits flowed from the interim rule. First, it 
reduced costs to the Maine salmon industry from animal mortality, costs 
from possible State regulatory actions, and trade restrictions on U.S. 
salmon product exports. Second, an aggressive program early on, while 
the number of known affected pens was reasonably small, obviated the 
need for higher future Federal costs to contain a more widespread 
outbreak. As a result of the ISA program, one-half of Maine's salmon 
industry (along the West Coast of Cobscook Bay) avoided exposure to 
ISA.
    The interim rule also produced third-party trade benefits by 
demonstrating to trading partners the intent and ability of the United 
States to protect its animal industries, thus enhancing our ability to 
negotiate access to foreign markets. In addition, the interim rule 
encouraged salmon farmers in New Brunswick, Canada, to upgrade the 
province's program, thereby reducing the risk of future outbreaks in 
Maine.
    The action taken in the interim rule can also be expected to reduce 
potential future eradication program costs. Canada has been battling 
ISA for several years; from 1998 to 2000, fish farmers in that country 
lost approximately $70 million (in U.S. dollars). Canada's Provincial 
and Federal Governments have contributed over $29.5 million (in U.S. 
dollars) to compensate salmon farmers. As a result of early 
intervention, based on a compensation program with enough financial 
incentive to encourage active participation among salmon farmers, 
Canada reduced the incidence of ISA from 18 infected sites in 1998 to 4 
infected sites in 2001. However, this number jumped to 18 infected 
sites in 2003. This led to the destruction of 2.7 million fish with 
projected losses of more than $76 million (in U.S. dollars).

Options Considered

    In assessing the need for the interim rule, we identified three 
alternatives. The first was to maintain the status quo, where State 
efforts are supported by Federal technical assistance but not by 
Federal compensation programs or interstate movement restrictions. We 
rejected this option because it did not fully address the risks 
associated with a more widespread ISA epidemic. While Maine has the 
authority to quarantine a

[[Page 23090]]

pen site once it is known to be infected with ISA, the State lacked the 
resources to conduct the comprehensive testing and traceback activities 
that were necessary to identify newly infected sites. States also lack 
authority to directly regulate interstate commerce in salmon. Finally, 
while State quarantines are an important tool, quarantining a pen site 
does not eliminate the risk, since people may accidentally or 
deliberately violate the quarantine. Making Federal indemnity funds 
available served as a powerful incentive for producers to participate 
in the ISA control program and for owners of infected sites to 
depopulate, which greatly reduced the risk of further spread of ISA.
    The second option would have been to provide financial and 
technical assistance to Maine's farmed salmon industry for continuation 
and expansion of a variety of pen site management practices to reduce 
or eliminate ISA. Although this option may have been less costly than 
the option we chose, option three below, we did not select it because 
it did not allow us to advance the ISA control program as quickly or 
effectively as the chosen option. However, APHIS will continue to work 
with industry and the State of Maine to further develop ISA management 
practices to preserve the reduction in ISA levels that the indemnity 
program achieved.
    The third option, to provide indemnity payments to depopulate ISA 
infected and/or exposed fish, was the one we chose. Depopulation of 
infected animals, which clears the way for a disinfection program, is 
currently the single most effective way to eliminate ISA. Under this 
alternative, producers gained partial compensation for ISA infected and 
or/exposed fish.

Potential Impact on Small Entities

    The interim rule established a voluntary program that allowed 
salmon producers in Maine to be paid indemnity for fish destroyed 
because of ISA. Many producers, as well as a number of processors who 
render salmon into food and non-food byproducts, may be small 
businesses. To the extent that the interim rule contributed to the 
elimination of ISA in Maine, all salmon producers were expected to 
benefit over the long term. In the short term, the economic impact on 
producers was expected to vary.
    The U.S. Small Business Administration (SBA) defines a small fin 
fish and/or fish hatchery operation as one that has per-farm gross 
receipts of less that $750,000. In 2000, there were 26 Atlantic salmon 
farms in the State of Maine. Collectively, they employed approximately 
1,200 workers; also, another 2,500 jobs, primarily in processing, 
rendering, or transport directly depended on these operations. The 
gross receipts of the affected salmon producers is unknown. However, it 
is reasonable to assume that most exceeded the SBA small entity 
threshold because, collectively, these 26 farms produced gross receipts 
in excess of $100 million in 2000.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. 
3501 et seq.), the information collection and recordkeeping 
requirements in the interim rule have been approved by the Office of 
Management and Budget (OMB). The assigned OMB control number is 0579-
0192.

Government Paperwork Elimination Act Compliance

    The Animal and Plant Health Inspection Service is committed to 
compliance with the Government Paperwork Elimination Act (GPEA), which 
requires Government agencies in general to provide the public the 
option of submitting information or transacting business electronically 
to the maximum extent possible. For information pertinent to GPEA 
compliance related to this rule, please contact Mrs. Celeste Sickles, 
APHIS' Information Collection Coordinator, at (301) 734-7477.

List of Subjects in 9 CFR Part 53

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

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

0
Accordingly, we are adopting as a final rule, without change, the 
interim rule that amended 9 CFR part 53 and that was published at 67 FR 
17605-17611 on April 10, 2002.

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

    Done in Washington, DC, this 23rd day of April 2004 .
Peter Fernandez,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 04-9598 Filed 4-27-04; 8:45 am]
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