Thursday, February 11, 2016

HPAI Update: New HPAI Indemnity Payment Rule becomes Effective

Written by M. Sean High – Staff Attorney

On February 9, 2016, the United States Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) published in the Federal Register an interim rule amending the regulations governing the payment of indemnity claims for highly pathogenic avian influenza (HPAI) (81 FR 6745).  The new regulations became effective upon the interim rule’s February 9, 2016 publication in the Federal Register.

The February 9, 2016 interim rule amends the previous HPAI indemnity regulations in three ways: 1) APHIS is allowed to split indemnity payments between poultry/egg owners and contractors; 2) existing policy is clarified through language providing for indemnity payments for eggs destroyed as a result of HPAI; and 3) poultry/egg owners and contractors of large facilities must each provide statements that prior to the detection of HPAI in their facility, they had in place, and were following, a biosecurity plan.

By way of authority, APHIS administers HPAI indemnity payments under 9 CFR 53.  Prior to the February 9, 2016 interim rule, 9 CFR 53 allowed indemnity payments for the costs of purchase, destruction, and disposal of animals and materials required to be destroyed due to HPAI contamination or exposure, but did not specify that an indemnity payment could be divided between a poultry/egg owner and a contractor.

Relatedly, a similar problem previously existed regarding Low Pathogenic Avian Influenza (LPAI).  In 2002, after an LPAI outbreak in Virginia, 9 CFR 56, which governs APHIS LPAI indemnity payments, was amended to allow indemnity payments to both animal owners and contractors (9 CFR 56.8).

Now, because of the February 9, 2016 interim rule, the formula used in 9 CFR 56.8 for dividing LPAI indemnity payments between animal owners and contractors has been incorporated to apply to HPAI (9 CFR 53.11).  As a result, APHIS may now pay a contractor indemnity for their losses associated with HPAI.  Accordingly, after indemnity is paid to a contractor (based on the 9 CFR 53.11 formula), the poultry/egg owner is then eligible to receive the remaining indemnity balance.

Prior to the February 9, 2016 interim rule, as a matter of policy, APHIS included eggs under the general term “materials” for purposes of indemnity payments.  Seeking to provide clarity on the matter, 9 CFR 53 now specifically makes reference to eggs and provides direction for the appraisal value of eggs destroyed due to HPAI (9 CFR 53.3(e)).

Finally, the February 9, 2016 interim rule now requires that for indemnity payment eligibility, both poultry/egg owners and contractors must provide APHIS with a statement that at the time HPAI was detected in their facility, they had in place, and were following, a biosecurity plan.  As a result, barring an exemption, indemnity claims will be denied without these statements (9 CFR 53.10(g)).

Under 9 CFR 53.10(g), only large poultry operations must comply with the biosecurity requirement.  Accordingly, poultry facilities are exempted from issuing the biosecurity statements if the operation is: 1) a commercial table egg facility with fewer than 75,000 birds; 2) a facility that raises for release upland game birds and has fewer than 25,000 upland game birds annually; 3) a facility that raises for release water fowl and has fewer than 25,000 water fowl birds annually; 4) a broiler facility that raises fewer than 100,000 broilers annually; or 5) a meat turkey facility that raises fewer than 30,000 turkeys annually. 

APHIS has stated that the purpose of the February 9, 2016 interim rule was “to solidify policies surrounding the payment of indemnity and further strengthen biosecurity adherence at poultry operations.” The comment period on the interim rule ends April 11, 2016.  

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