Agricultural Law Weekly Review: February 12, 2016

Written by M. Sean High – Staff Attorney

The following information is an update of recent, local, state, national, and international legal developments relevant to agriculture:

Avian Influenza: New HPAI Indemnity Rules become Effective

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 and amend the previous HPAI indemnity regulations to: 1) allow indemnity payments to be split between poultry/egg owners and contractors; 2) clarify that eggs are eligible for indemnity payments; and 3) require that owners and contractors of large facilities provide statements that prior to the detection of HPAI in their facility, they had in place, and were following, a biosecurity plan.  For more information see previous Penn State Agricultural Law Blog post.

Labeling: House Votes to Make Menu Labeling Less Stringent

On February 12, 2016, the United States House of Representatives voted 266 – 144 to pass the Common Sense Nutrition Disclosure Act of 2015 (H.R. 2017), which would make less stringent the Food and Drug Administration’s (FDA) menu labeling requirements for nutrition information displayed  by certain food establishments (such as restaurants, pizza shops, supermarkets, and convenience stores).  Significantly, on February 10, 2016, the Obama administration issued a press release opposing H.R. 2017, stating that if enacted, the legislation “would reduce consumers' access to nutrition information…likely create consumer confusion…[and] create unnecessary delays in the implementation of menu labeling.”

Avian Influenza: Indiana Animal Health Officials Set Date to Remove HPAI Restrictions

On February 4, 2016, the Indiana State Board of Animal Health issued a press release announcing the lifting of certain restrictions that had been in place since a January outbreak of highly pathogenic avian influenza (HPAI) within the state.  According to the press release, provided that no new HPAI tests are reported, the state “expects to release the 10-km control area and the additional 10-km surveillance zone on Monday, Feb. 22.” The quarantines on infected sites, however, will continue “until final site-cleanup requirements are met.”

Animal Welfare: Judge Blocks Horse Slaughter and Sale of Horsemeat in New Mexico

On February 4, 2016, New Mexico District Judge Francis J. Mathew issued a Stipulated Final Order permanently enjoining Defendants Valley Meat Company, LLC, Dairyland Packing, Inc., Mountain View Packing, LLC, and Richard De Los Santos, non-parties Jose Hernandez, Ryoichi Okubo, and D’Allende Meats, LLC, “from slaughter horses for human consumption, and from manufacturing, selling or distributing horsemeat products for human consumption in New Mexico.”  The case was brought against the Defendants by New Mexico Attorney General Hector H. Balderas. 

Crop Insurance: Kentucky Farmer Sentenced for Crop Insurance Fraud

On February 2, 2016, the United States Attorney’s Office for the Western District of Kentucky issued a press release announcing that Kentucky farmer Tracy E. Dillard “was sentenced by United States District Judge Greg N. Stivers, to serve eight months in prison followed by a three year term of supervised release and ordered to pay restitution in the amount of $711,958.00 for committing crop insurance fraud.”  According to the press release, Dillard had previously admitted in court to “knowingly making false statements and reports on insurance claims submitted to Producers Agriculture Insurance Company, a company insured by the Federal Crop Insurance Corporation (FCIC).”

GMOs: Kenya Approves Limited Release of GM Maize Seeds

On February 9, 2016, Kenya’s National Biosafety Authority “granted a conditional approval only for environmental release for the purpose of conducting National Performance Trials (NPTs) and collecting compositional analysis data but not for cultivation, importation or placing on the market of the Bt Maize.” Bt Maize (MON810) is a Monsanto produced, genetically modified, insect-protected corn hybrid.

Food Safety: Slaughterhouse Owner Sentenced for Selling Condemned and Uninspected Cattle

On February 11, 2016, the United States Attorney’s Office for the Northern District of California issued a press release announcing that “Jesse ‘Babe’ Amaral, Jr., owner of the now-defunct Petaluma slaughterhouse Rancho Feeding Corporation, was sentenced today to 12 months and one day of imprisonment for leading a conspiracy to distribute adulterated, misbranded, and uninspected meat.” In addition to the aforementioned prison time, United States District Judge Charles R Breyer also sentenced Amaral “to two years’ supervised release, one of which will be served in a residential re-entry facility.”

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.  

Vilsack Speaks at Conference on Avian Influenza

On July 28, 2015, at a two day conference called, “Avian Influenza Outbreak…Lessons Learned,” in Des Moines, Iowa, Tom Vilsack, Secretary of Agriculture and Iowa Governor, Terry Branstad, gave speeches concerning the avian influenza outbreak.  The conference is closed to the media and public, other than the speeches, in order to ensure open discussion on how responses to the last outbreak went wrong and how future responses can be improved.

According to the Associated Press, Vilsack in his speech commented it would be beneficial to implement a disaster program for poultry producers that would be similar to what is already in place for livestock producers.  The government expects to spend 191 million through its indemnification program and between 350-400 million on the cleanup and depopulation of infected birds.  Vilsack stated there was a proposed insurance program within the 2014 farm bill but was cut due to budgetary considerations.

Vilsack commented during questioning for reporters that if this moves to the East Coast the impact could be quickly outpace the impact of the last outbreak.  Vilsack remarked the process of handling future outbreaks needs to be updated in multiple areas including the indemnification process, how to dispose of the birds and the depopulation of the birds.

To hear a recording of the question session with reporters,click here.

Written by Katharine Richter - Research Assistant

July 29, 2015