**Regulatory Impact Analysis and**

**Initial Regulatory Flexibility Analysis**

**Interim Rule**

**Viral Hemorrhagic Septicemia**

**(Docket No. APHIS-2007-038)**

**U.S. Department of Agriculture**

**Animal and Plant Health Inspection Service**

**January 2008**

**Summary**

This economic analysis is in support of an interim rule that establishes
regulations to restrict the interstate movement and importation into the
United States of live fish that are susceptible to viral hemorrhagic
septicemia (VHS), a highly contagious disease of certain fish. Expected
benefits and costs are examined in accordance with Executive Order
12866.[^1] Expected economic impacts for small entities are also
considered, as required by the Regulatory Flexibility Act.[^2] The
economic analysis is summarized below. The full economic analysis may be
viewed on the Regulations.gov Web site (see ADDRESSES at the beginning
of this document for instructions for accessing Regulations.gov). You
may request paper copies of the economic analysis by calling or writing
to the person listed under FOR FURTHER INFORMATION CONTACT. Please refer
to Docket No. 07-038-1 when requesting copies. 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).

Based upon available data and expected effects, we believe that the
benefits of the interim rule, in terms of disease prevention, will
justify the costs associated with restricting the movement of live fish.
Costs associated with the interim rule will likely be difficult to
distinguish from those already imposed by the amended Federal Order.
Also, several of the States that will be regulated by the interim rule
have regulations in place that compare closely with the interim rule.
Net impacts of the interim rule therefore may be relatively small.

We first consider potential costs of the rule for producers, allied
industries, and State, Federal, and Tribal authorities. Possible
benefits of the rule in terms of preventing the spread of VHS virus are
then examined. Third, alternatives to the rule are presented. Lastly, we
address expected impacts for small entities.

[Summary of Cost-Benefit Analysis]{.underline}

The interim rule will place restrictions on the importation and
interstate movement of live VHS-regulated fish species from States
within the Great Lakes Region where this disease has been confirmed. The
potential impacts of the interim rule are not known given the lack of
information on aquaculture operations and commercial fisheries in the
regulated areas. Additionally, little is known about the potential
impacts to allied fishing industries and to hatcheries operating under
Federal, State, or Tribal authority.

Benefits of the rule will accrue from preventing the spread of an
emerging strain of VHS virus to aquaculture facilities beyond the
regulated States. Five of these States have comprehensive regulations in
place to curb the spread of the virus. Impacts of the interim rule are
likely to be largely already realized because of the amended Federal
Order, and may be additionally diminished in the five States that have
adopted movement restrictions consistent with the interim rule.

[Expected Costs of the Final Rule]{.underline}

One industry that may be impacted is the wild-caught segment of the
baitfish industry, to the extent that the requirements of the interim
rule are more restrictive than the amended Federal Order and the
regulations of the various States. However, we foresee any incremental
changes to be minimal. A testing and certification protocol by which
movement will be allowed under the rule is unlikely to be feasible for
this segment of the industry. In addition to aquaculture and commercial
fisheries, allied fishing industries such as bait shops and marinas may
also be affected by the interim rule. Bait shops that sell VHS-regulated
species may face tighter supplies on top of the certification
requirement for sales to unregulated States.

State and Federal authorities may also be impacted by the interim rule.
Within the eight regulated States, there are 7 Federal, 69 State, and at
least 13 Tribal hatcheries. These hatcheries produce and stock fish in
streams, rivers, and lakes throughout the eight States and possibly in
surrounding States. The interim rule may limit production and stocking
by the agencies, and therefore the availability of broodstock in the
regulated States and possibly other States, depending on the species
stocked. Affected States may also face a decline in the number of
fishing licenses sold due to reduced stocking and a limited availability
of bait.

Overall, regulated aquaculture facilities and commercial fisheries will
bear the costs of testing, cleaning and disinfection of containers, and
fees associated with inspections and the issuance of permits. However,
given the regulatory response to VHS to date by five of the eight
regulated States, the impact of the interim rule may be muted. Many of
the regulations in place in Michigan, New York, Ohio, Pennsylvania, and
Wisconsin are closely aligned with the requirements in the interim rule
and in some cases may be even more restrictive. In some instances,
effects of the interim rule are already realized because of rules
implemented at the State level. For example, in the case of New York,
the State has restricted movement of baitfish out of a specific
locality, thereby establishing a de facto prohibition on interstate
movement. Additionally, the rule will codify restrictions and procedures
already in place under the amended Federal Order. Net impacts of the
interim rule are expected to be small because of the existing State
regulations and the Federal Order.

[Expected Benefits of the Interim Rule]{.underline}

The interim rule is expected to benefit aquaculture facilities. The rule
is intended to curtail the introduction of the VHS virus into areas
outside of the Great Lakes Region. Mississippi dominates catfish farming
in the United States. Alabama and Arkansas also have fairly large sales
of cultured catfish. Additionally, Arkansas boasts the largest sales of
cultured baitfish, accounting for 53 percent of baitfish aquaculture
according to the 2005 Census of Aquaculture. Preventing VHS from
spreading to these areas will help preserve the catfish and baitfish
industries, valued at almost \$440 million.

[Alternatives to the Interim Rule]{.underline}

APHIS considered three alternatives for the interim rule. The first
alternative considered by the Agency would entail regulations much
broader in scope than the provisions of the May 4, 2007, amended Federal
Order. This alternative would restrict interstate movement of
VHS-regulated species for all States where any VHS virus strain is
detected, and would restrict importation of VHS-regulated species from
all VHS-regulated countries, including countries in Europe and also
would regulate additional commodities. APHIS determined the interim rule
will be less costly and provide the same level of protection as this
alternative, based on current knowledge of the status of the two strains
of VHS virus, VHSV-IV(a) and VHSV-IV(b), in the United States and
Canada. VHSV-IV(a) is not known to exist anywhere other than in marine
environments and, thus, is unlikely to be found in the Great Lakes
Region

A second alternative considered by the Agency would be to regulate areas
based on Hydrologic Unit Code (HUC) level 2, or regional, definitions.
APHIS determined that regulating areas known to have VHSV-IV(b) based on
the HUC 2 definition could pose an undue burden on entities within these
areas far removed from the specific location of the VHSV-IV(b)
confirmation.

Finally, APHIS considered a "no action" alternative. In this instance,
APHIS would not implement regulations covering the interstate movement
of VHSV-regulated species from regulated States or the importation of
VHSV-regulated species from the regulated Provinces of Canada. Under
this alternative, State agencies and Federal agencies other than APHIS
would assume responsibility for preventing the spread of the VHS virus.
Compliance with the various regulations could be burdensome for
aquaculture producers and others who move fish interstate or
internationally.

[Summary of the Initial Regulatory Flexibility Analysis]{.underline}

In accordance with the Regulatory Flexibility Act, we examined the
potential economic effects the interim rule will have on small entities.
The interim rule may affect aquaculture facilities, commercial
harvesters, marinas, and other allied fishing industries in Illinois,
Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania, and
Wisconsin. Although information concerning many of these industries is
sparse, it is likely that most of the entities within these industries
are small as defined by the Small Business Administration (SBA)
guidelines.

It is likely that the majority of firms affected by the interim rule
will be small, but the magnitude of the impacts is unclear given the
lack of data. Aquaculture facilities in States not regulated for VHS
will benefit from the interim rule because the likelihood that fish in
these facilities will be exposed to this disease will be reduced.
Facilities located in Illinois, Indiana, Michigan, Minnesota, New York,
Ohio, Pennsylvania, and Wisconsin will face costs related to testing if
they raise VHS-regulated species for interstate movement. In States that
have enacted their own regulations to prevent the potential spread of
VHS, impacts to aquaculture facilities and commercial fishing operations
as a result of this interim rule are likely to be dampened.

The interim rule will impose some additional reporting, recordkeeping,
and other compliance requirements. Live VHS-regulated species of fish
may be imported and moved live from regulated Provinces and States.
Movement requires testing and certification as described in the interim
rule. Firms wishing to move live fish will be responsible for ensuring
that the fish originate from a facility that has been tested and found
to be free of VHS virus. Additionally, these firms will also be
responsible for obtaining the permits needed to transport fish
interstate, as well as paying the user fees associated with inspection
of shipments.

**Contents**

[I. Introduction 1](#i.-introduction)

[U.S. Fish Production 4](#u.s.-fish-production)

[U.S. Imports of Live Fish 8](#u.s.-imports-of-live-fish)

[Baitfish Production in the United States
9](#baitfish-production-in-the-united-states)

[II. Expected Costs of the Interim Rule
10](#ii.-expected-costs-of-the-interim-rule)

[Wild-caught Baitfish 10](#wild-caught-baitfish)

[State and Federal Hatcheries 11](#state-and-federal-hatcheries)

[State Regulations 11](#state-regulations)

[Estimated Movement Costs 13](#estimated-movement-costs)

[III. Expected Benefits of the Interim Rule
14](#iii.-expected-benefits-of-the-interim-rule)

[IV. Alternatives to the Rule 14](#iv.-alternatives-to-the-rule)

[V. Initial Regulatory Flexibility Analysis
16](#v.-initial-regulatory-flexibility-analysis)

[Reasons for Action 16](#reasons-for-action)

[Objectives and Legal Basis for Rule
16](#objectives-and-legal-basis-for-rule)

[Description and Estimated Number of Small Entities Regulated
16](#description-and-estimated-number-of-small-entities-regulated)

[Description and Estimate of Compliance Requirements
20](#description-and-estimate-of-compliance-requirements)

[Duplication, Overlap, and Conflict with Existing Rules and Regulations
20](#duplication-overlap-and-conflict-with-existing-rules-and-regulations)

[Significant Alternatives to Rule which Accomplish the Stated Objectives
and Minimize Any Significant Economic Impacts on Small Entities
20](#significant-alternatives-to-rule-which-accomplish-the-stated-objectives-and-minimize-any-significant-economic-impacts-on-small-entities)

[VI. Summary 20](#vi.-summary)

**Regulatory and Impact Analysis and**

**Initial Regulatory Flexibility Analysis**

**Interim Rule**

**Viral Hemorrhagic Septicemia**

**(Docket No. APHIS-2007-038)**

**January 2008**

# I. Introduction

APHIS is amending the Code of Federal Regulations (CFR) to control the
spread of viral hemorrhagic septicemia virus (VHSV). Viral hemorrhagic
septicemia (VHS), a systemic infection of various salmonid and
nonsalmonid fishes, is caused by a rhabdovirus. The disease can result
in significant cumulative mortality. Fish that survive may become
carriers. Four genotypes of VHS virus have been identified. Genotypes I,
II, and III are primarily found in Europe and Japan. Genotype IV has
only been isolated from fish in North America, Japan, and Korea (APHIS
2006).

Currently, there are two strains of VHSV that have been isolated in the
United States. VHSV-IV(a), which is found primarily on the coasts, was
first isolated in 1988 in Washington. In 2003, a new strain, IV(b), was
isolated in Lake St. Clair. By 2006, this strain was linked to fish
kills involving a number of species in Lakes Erie, Huron, and Ontario,
as well as Lake St. Clair. To date, the VHSV-IV(b) strain has only been
found in wild fish populations.

This rule restricts the interstate movement and importation of
freshwater species of fish found to be infected by VHS virus under
natural conditions of exposure and from which the VHSV-IV(b) virus has
been isolated and confirmed.[^3] Twenty-eight species of fish will be
regulated under the interim rule (Table 1). Interstate movement of the
regulated species from eight States and their importation from two
Canadian Provinces will be restricted. The States and Provinces that
will be regulated for VHS are Illinois, Indiana, Michigan, Minnesota,
New York, Ohio, Pennsylvania, and Wisconsin, Ontario, and Quebec.
Regulated States are defined as those States in which VHS virus has been
detected in any freshwater species, with or without clinical signs of
disease, or which the Administrator determines may be regulated based on
epidemiological data.

  ---------------------------- ------------------------------------------
  [Table 1. ---List of fish    
  species regulated for VHS    
  IV(b)]{.underline}           

                               

  Common Name                  Scientific Name

  Black crappie                *Pomoxis nigromaculatus*

  Bluegill                     *Lepomis macrochirus*

  Bluntnose minnow             *Pimephales notatus*

  Brown bullhead               *Ictalurus nebulosus*

  Brown trout                  *Salmo trutta*

  Burbot                       *Lota lota*

  Channel catfish              *Ictalurus punctatus*

  Chinook salmon               *Oncorhynchus tshawytscha*

  Emerald shiner               *Notropis atherinoides*

  Freshwater drum              *Aplodinotus grunniens*

  Gizzard shad                 *Dorosoma cepedianum*

  Lake whitefish               *Coregonus clupeaformis*

  Largemouth bass              *Micropterus salmoides*

  Muskellunge                  *Esox masquinongy*

  Northern Pike                *Esox lucius*

  Pumpkinseed                  *Lepomis gibbosus*

  Rainbow trout                *Oncorhynchus mykiss*

  Rock bass                    *Ambloplites rupestris*

  Round goby                   *Neogobius melanostomus*

  Shorthead redhorse           *Moxostoma macrolepidotum*

  Silver redhorse              *Moxostoma anisurum*

  Smallmouth bass              *Micropterus dolomieu*

  Spottail shiner              *Notropis hudsonius*

  Trout-perch                  *Percopsis omiscomaycus*

  Walleye                      *Sander vitreus*

  White bass                   *Morone chrysops*

  White perch                  *Morone americana*

  Yellow perch                 *Perca flavescens*
  ---------------------------- ------------------------------------------

VHS-regulated fish will be allowed to be moved interstate from a
regulated State other than in transit or for purposes other than
immediate slaughter or research, including movement to live markets,
with an Interstate Certificate of Inspection (ICI). The ICI must be
issued by an accredited veterinarian or a Federal, State, or
Tribal-designated competent official, and certify that the fish
originated from a lot or premises that has been tested and found to be
free of VHSV.

Live regulated fish destined for on-premises slaughter or use by a
research facility will be allowed to be moved interstate without
additional health certification or testing if accompanied by a VS Form
1-27. Interstate movement of VHS-regulated fish will be allowed for
catch-and-release fishing. Movement of live fish from areas not
regulated for VHS will not be affected by the interim rule.

Regulated fish approved for interstate movement must be shipped in new
containers or containers that have been cleaned and disinfected to
neutralize any VHS virus to which the shipping containers may have been
exposed. Protocols must be referenced in a cleaning and disinfection
certificate accompanying the shipment.

Regions or countries in which VHS virus has been detected in any
freshwater species, with or without clinical signs of disease, will be
listed as a VHS-regulated region. Additionally, a region may be
regulated upon the determination of the Administrator based on
epidemiologic data. The movement of regulated species of live fish from
two Canadian Provinces, Ontario and Quebec, will be regulated.

Under this rule, importation of VHS-regulated species other than in
transit or for purposes other than immediate slaughter or research or
laboratory use will be allowed subject to testing and certification.
Regulated species imported under U.S. Fish and Wildlife Services (FWS)
regulations are not subject to additional requirements as established in
this interim rule. Live VHS-regulated species may not be moved from the
port of entry until released by an APHIS representative or a U.S. FWS
official. Import permits are required only if regulated species are
brought through certain ports. The interim rule contains a list of the
designated ports requiring no import permit. Live VHS-regulated species
will be allowed to be imported for on-premises slaughter or for research
purposes under a USDA import permit and will not require testing or
health certification.

Regulated fish approved for importation must be shipped in new
containers or containers that have been cleaned and disinfected to
neutralize any VHS virus to which the shipping containers may have been
exposed. Cleaning and disinfection must be done under the supervision of
the veterinarian or certifying official who issues the health
certificate and protocols must be referenced in the health certificate
accompanying the shipment to the U.S. port of entry.

## U.S. Fish Production

Aquaculture production in the United States is on the rise. Between 1998
and 2005, farmed fish sales increased 12 percent (NASS 2006). The
production of food fish accounts for the majority of farm sales, at 62
percent. The production of catfish, which is classified as a food fish,
accounts for 69 percent of food fish sales and 42 percent of total
sales. It is by far the largest aquaculture industry in the United
States. The remainder of farm sales is made up of additional food fish
varieties, as well as sport fish, baitfish,[^4] ornamental fish,
crustaceans, and mollusks. Of the species regulated by the interim rule,
none is categorized as ornamental fish. Additionally, since VHSV-IV(b)
is not known to affect marine species, crustaceans and mollusks are not
regulated.

Based on the 2005 Aquaculture Census, the interim rule may impact farms
with combined food fish sales estimated at \$15.8 million (Table 2).
However, not all food fish are regulated for VHS; we estimate that at
least \$9.1 million of the total \$15.8 million in sales of food fish
reported in 2005 in the eight regulated States is likely to be impacted
by the rule.[^5] Limited disaggregation of the Aquaculture Census data
prevents assessment of the impact of the rule for each of the
VHS-regulated species. Analysts with the National Agricultural
Statistics Service (NASS) are unable to provide more detailed data, so
the estimated sales that may be impacted by this rule may be overstated.

Sport fish farming of regulated species in the eight regulated States
amounted to at least \$3.6 million in sales according to the Aquaculture
Census, all of which could potentially be impacted by the interim rule.
It is interesting to note that these sales totaled more than all sales
reported for the eight States. This is a result of the fact that total
sales were not disclosed for Wisconsin. Baitfish sales in the eight
regulated States totaled at least \$10.1 million in 2005. Of this total,
Minnesota and Wisconsin accounted for 87 percent of all sales. At least
\$3.1 million of these sales are likely to be affected by the rule.[^6]

![](media/image1.wmf){width="5.998611111111111in"
height="6.490277777777778in"}

Data reported in the Aquaculture Census include information on State and
Federal fish hatcheries that raise and grow fish for stocking and other
purposes. There are 4 State hatcheries in Illinois, 8 State hatcheries
in Indiana, 6 State and 3 Federal hatcheries in Michigan, 2 State
hatcheries in Minnesota, 12 State hatcheries in New York, 6 State
hatcheries in Ohio, 16 State and 2 Federal hatcheries in Pennsylvania,
and 15 State and 2 Federal hatcheries in Wisconsin. Federal hatcheries
located in the regulated States produce mainly lake trout, which are
fish not regulated for VHS, and will be at most minimally impacted by
the rule. Fish produced at State fish hatcheries are primarily used for
restocking as either food or sport fish. Impacts of the interim rule
will depend on the species stocked and whether the hatcheries stock
waters outside the regulated VHS area.

State hatcheries located in Illinois, Minnesota, Ohio, and Wisconsin may
not be impacted by the interim rule. Based on available information,
fish raised in State hatcheries in these States are only used to stock
waters within their respective State boundaries. State hatcheries in
Indiana, Michigan, New York, and Pennsylvania may be impacted, since it
is not evident that these hatcheries are only stocking waters within
their boundaries.

Commercial fishing in the eight regulated States is also an important
source of fish. The National Marine Fisheries Service (NMFS) of the
National Oceanic and Atmospheric Administration (NOAA) reports
commercial landings by weight and value. The quantity and value of
VHS-regulated species that were commercially fished (wild-harvested) in
six of the eight regulated States, 2000 to 2005, are shown in Table
3.[^7]

![](media/image2.wmf){width="5.990972222222222in" height="8.79375in"}
These statistics fail to capture the harvest of certain VHS-regulated
species of baitfish important to the regulated States, such as the
emerald shiner. Nationally, more than 80 percent of baitfish are
farm-raised (Goodwin, et al. 2004). Yet, the baitfish industry in the
North Central Region (Illinois, Indiana, Iowa, Kansas, Michigan,
Minnesota, Missouri, Nebraska, North Dakota, Ohio, and South Dakota) is
particularly reliant on wild harvest, with approximately two-thirds of
baitfish originating from the wild (Engle and Stone 2007). In Michigan,
wild-caught baitfish account for 70 percent of the industry (Weidenhamer
2007). In New York and Pennsylvania, the wild-caught share is closer to
75 percent (Kebus 2007).

However, the data reported in Table 3 likely overstate the commercial
landings that may be affected by the rule. Although the weight reported
in the commercial landings database is a "live" weight, the fish are not
necessarily alive---and thereby not subject to regulation---when they
are brought to port. We reiterate that movement will be restricted only
for VHS-regulated live fish imported or moved from the regulated States.

## U.S. Imports of Live Fish

The majority of fish imported live by the United States comes from
Canada, as seen in Table 4. Over the last six years, Canada's share of
total U.S. imports of live fish averaged 75 percent by value (GTIS
2007).[^8] While Canada dominates the live fish import market, no one
country has been able to claim the position as second or third largest
exporter to the United States on a consistent basis. The combined share
of U.S. live fish imports from the top three source countries has
averaged 88 percent over the past six years.

![](media/image3.wmf){width="5.919444444444444in"
height="2.7256944444444446in"}

## Baitfish Production in the United States

The baitfish industry varies across the United States. As stated
previously, although 80 percent of all baitfish are cultured, most
baitfish used in the Great Lakes region and in the eight regulated
States are harvested from the wild. Precise data on the number of
harvesters, amount harvested, and value of harvest are not available.
However, several studies as well as expert opinion help in providing
some insight into this segment of the industry.

Although there are no statistics on the wild-caught bait industry, one
expert believes this industry is at least as large as the cultured bait
industry, and likely markedly larger (Goodwin 2007). Emerald and spotfin
shiners have traditionally been harvested on a commercial scale in the
Great Lakes (Engle and Stone 2007), and emerald shiners are the
preferred bait in most of the regulated States, at least in those areas
bordering the Great Lakes (Kebus 2007). The vast majority of freshwater
baitfish is sold live through wholesale or retail outlets (Goodwin, et
al. 2004). Generally, anglers prefer live bait and it is estimated that
more than 90 percent is sold live (Kebus 2007). In fact, "\[t\]here is
almost no commerce in frozen freshwater baitfish" (Goodwin, et al.
2004).

According to Goodwin, et al. (2004), more than 10 billion fish for bait
are shipped across the country per year, both within and between States.
Although it is relatively expensive to move fish due to the equipment
necessary to keep the fish alive, it is also very lucrative (Kebus
2007). The distances baitfish are shipped depend in part on the source
State. As with any commodity, some States are net sellers while others
are net buyers. Some businesses transport baitfish long distances, with
fish sometimes being moved over 1,500 miles. Other businesses transport
baitfish locally. There are very few biological limitations to movement,
and good hauling practices minimize death loss during transport (Kebus
2007).

Farm-raised as opposed to wild-caught baitfish species differ among
regions and depend on local preferences. In the North Central Region,
principal species raised for bait include the fathead minnow, white
sucker, and the golden shiner. Alternative species and candidate species
include goldfish, hornyhead chub, creek chub, central mudminnow, green
sunfish, and dace (Engle and Stone 2007). Noting that none of these
species will be regulated under the interim rule, it is likely that the
cultured bait industry in Michigan and Ohio, at least, will bear no
significant impacts as a result of the rule.

# II. Expected Costs of the Interim Rule

## Wild-caught Baitfish

The wild-caught segment of the baitfish industry, in particular, may be
impacted, to the extent that the requirements of the interim rule are
more restrictive than the amended Federal Order and the regulations of
the various States. However, we foresee any incremental changes to be
minimal. Although movement will be allowed under the rule with testing
and certification, this is unlikely to be feasible for this segment of
the industry. Baitfish are generally sold immediately after being caught
to a wholesaler or retail bait shop. Commercial fishermen do not have
facilities to hold the baitfish while they undergo testing. Furthermore,
the life span of some wild-caught bait species once harvested may be
shorter than the time needed to conduct the testing because wild-caught
baitfish are not as hardy as their cultured counterparts (Gunderson and
Tucker 2000). By all accounts, testing wild-caught baitfish is
impractical.

Emerald shiners are the bait of choice in several of the States that
will be regulated by the interim rule. Anglers from areas bordering the
Great Lakes use this species as their primary bait (Kebus 2007). All
emerald shiners are wild-caught (Goodwin 2007 and Kebus 2007). Attempts
to culture these fish have been unsuccessful. Therefore, some portion of
the wild baitfish harvest in regulated States may be impacted by the
interim rule. However, the importance for the affected businesses of
sales to markets in unregulated States is not known because there is no
available data on the industry, nor is there information regarding the
impact that the amended Federal Order has had on the wild-caught
baitfish industry.

In addition to aquaculture and commercial fisheries, allied fishing
industries such as bait shops and marinas may also be affected by the
interim rule. Bait shops that sell a large number of VHS-regulated
species will likely face tighter supplies and certification requirements
for sales to unregulated States. However, the magnitude of these impacts
is not known. APHIS welcomes public comment on the potential impacts of
the interim rule for allied industries such as bait shops and marinas.

## State and Federal Hatcheries

State and Federal authorities may also be impacted by the interim rule.
Within the eight regulated States, there are 7 Federal, 69 State, and at
least 13 Tribal hatcheries. These hatcheries produce and stock fish in
streams, rivers, and lakes throughout the eight States and possibly in
surrounding States. The interim rule may limit production and stocking
by the agencies, and therefore the availability of broodstock in the
regulated States and possibly other States, depending on the species
stocked. Affected States may also face a decline in the number of
fishing licenses sold due to reduced stocking and a limited availability
of bait. The magnitude of potential impacts to State and Federal
authorities is not known.

## State Regulations

Since the Federal Order was put in place on November 14, 2006, State
authorities in Michigan, New York, Ohio, Pennsylvania, and Wisconsin
have implemented State regulations regarding the movement of live fish.
The interstate movement of live baitfish is prohibited for entities in
Michigan. This State also urges its anglers and boaters not to transport
live fish between bodies of water within the State, especially baitfish
(primarily minnows). Additionally, Michigan urges boaters to disinfect
and clean their boats, bilges, and gear and allow them to dry for four
to six hours in the sun in order to prevent the spread of the VHS virus
(Michigan DNR 2007a). In addition to these guidelines, Michigan has also
implemented a one-year moratorium on the production and stocking of
walleye, northern pike, and muskellunge (Michigan DNR 2007b).

On March 9, 2007, New York implemented a rule on an emergency basis that
limits the movement and use of baitfish within the state. It was adopted
on June 6, 2007, as a permanent regulation. This rulemaking requires
testing and certification before the bait may be sold through retail
locations and has been enacted in order to help prevent further
intrastate spread of the disease, as well as the spread of other fish
pathogens such as the spring viremia of carp virus (New York State DEC
2007).

Ohio fishing regulations stipulate that it is "unlawful to transport and
introduce any aquatic species (fish, invertebrate, plant) from one body
of water into another" (Ohio DNR 2007). Additionally, only live bait
that is already established in Ohio may be used for fishing in Ohio
waters (Ohio DNR 2007).

The Pennsylvania Fish and Boat Commission established a ban on the
movement of live fish out of the Lake Erie watershed on January 30, 2007
(Pennsylvania FBC 2007). The permanent rule became effective January 1,
2008.

Wisconsin also adopted emergency regulations, effective May 2007, in
order to curb the spread of VHS in that State. Although the State had
long required import permits for baitfish, the State has added
regulations that restrict the movement of live fish within the State.
Regulations specifically require that anglers not transport live fish,
including minnows, away from the Great Lakes, Mississippi River, or Lake
Winnebago drainages; drain all water from boats, trailers, bait buckets,
coolers, and other containers before leaving the landing or shore
fishing site location; not use minnows unless purchased from a Wisconsin
bait dealer or legally captured by the angler; and not use dead fish
from other waters as bait (Wisconsin BFM 2007).[^9]

Although Illinois, Indiana, and Minnesota have some requirements
pertaining to VHSV, they are not as extensive as those in the other
regulated States. Minnesota's VHS guidelines require disease
certification, but the testing requirements have not been finalized. For
the most part, Illinois and Indiana are currently relying on the
regulations put in place by the amended Federal Order to prevent the
spread of the disease. However, these States may also be considering
further action.

Overall, regulated aquaculture facilities and commercial fisheries will
bear the costs of testing, cleaning and disinfection of containers, and
fees associated with inspections and the issuance of permits. However,
given the regulatory response to VHS to date by five of the eight
regulated States, the impact of the interim rule may be muted. Many of
the regulations in place in Michigan, New York, Ohio, Pennsylvania, and
Wisconsin are closely aligned with the requirements in the interim rule
and in some cases may be even more restrictive. In some instances,
effects of the interim rule are already largely realized because of
rules implemented at the State level. For example, in the case of New
York, the State has restricted movement of baitfish out of a specific
locality, thereby establishing a de facto prohibition on interstate
movement. Additionally, the rule will codify restrictions and procedures
already in place under the amended Federal Order. Net impacts of the
interim rule are expected to be small because of the existing State
regulations and the amended Federal Order.[^10]

## Estimated Movement Costs

Interstate movement of live, regulated fish species will entail
inspection and testing costs. An accredited veterinarian or a State,
Tribal, or Federal competent authority for aquatic animal health will be
required to perform the inspection under the interim rule. Based on the
average pay for a U.S. veterinarian, it is estimated that inspection
costs will be approximately \$31 per hour. APHIS estimates the average
inspection time to be between 2 and 4 hours; however, it could range
between one hour to more than one day, depending on facility size and
complexity. Testing for VHSV is done in series. Fish will presumably be
tested in lots of 35 to 70 fish (per OIE, AFS, or bilateral VHS
surveillance guidelines), with samples pooled (up to 5 fish per pool,
i.e., 7 to 14 pools per lot) to reduce screening costs. Virus isolation
will be conducted as a screening test on all pools. If we assume an
average lot size of 60 fish, the associated cost of virus isolation
would be \$275, or approximately \$23 per pool.[^11] If the virus
isolation test indicates VHSV, RT-PCR and sequencing will be conducted
to confirm VHSV and determine strain type. RT-PCR and sequencing will
together cost approximately \$100 per confirmatory sample.[^12] If a
positive result is found, other fish from the same source may be tested
to verify the original results. Potential costs associated with moving
live, regulated species are presented in Table 5.

  -------------------------- ----------------- ------------- -------------
  [Table 5. ---A                                             
  hypothetical example of                                    
  potential costs associated                                 
  with the movement of live,                                 
  regulated fish species                                     
  under the interim rule,                                    
  assuming a lot size of 35                                  
  to 70 fish (7 to 14 pools)                                 
  and a disease prevalence                                   
  of 2 to 5                                                  
  percent]{.underline}                                       

                                                             

                             Cost              Average Time  Total Cost
                                               or Number     
                                               Required      

  Inspection                 \$31.13 per hour  2-4 hours     \$62 - \$125

  Testing                                                     

  Virus Isolation            \$22.92 per pool  7-14 pools    \$160 - \$321

  RT-PCR and Sequencing^a^   \$100.00 per      1 - 4 fish^a^ \$100 - \$400
                             sampled fish                    

  **Total**                  ** **             ** **         **\$322 -
                                                             \$846**

  ^a^Conducted only if the                                   
  virus isolation test is                                    
  positive for VHSV.                                         

  Note: If the container                                     
  were previously used,                                      
  cleaning and disinfection                                  
  costs would also be                                        
  incurred.                                                  
  -------------------------- ----------------- ------------- -------------

# 

# III. Expected Benefits of the Interim Rule

The interim rule is expected to benefit aquaculture facilities. The rule
is intended to curtail the introduction of the VHS virus into areas
outside of the Great Lakes Region. Mississippi dominates catfish farming
in the United States. Alabama and Arkansas also have fairly large sales
of cultured catfish. Additionally, Arkansas boasts the largest sales of
cultured baitfish, accounting for 53 percent of baitfish aquaculture
according to the 2005 Census of Aquaculture. Preventing VHS from
spreading to these areas will help preserve the catfish and baitfish
industries, valued at almost \$440 million.

# IV. Alternatives to the Rule

APHIS considered three alternatives for the interim rule. The first
alternative considered by the Agency would entail regulations much
broader in scope than the provisions of the May 4, 2007, amended Federal
Order. This alternative would restrict interstate movement of
VHS-regulated species for all States where any VHS virus strain is
detected, and would restrict importation of VHS-regulated species from
all VHS-regulated countries, including countries in Europe. This
alternative would regulate States where VHSV-IV(a) has been detected in
marine species. The regulation also would restrict commodities such as
eggs, gametes, and frozen bait derived from VHS-regulated live fish
species. APHIS determined this alternative will be inferior to the
interim rule, since VHSV-IV(a) is not known to exist anywhere other than
in marine environments and, thus, is not likely to be found in the Great
Lakes Region. The interim rule will be less costly and provide the same
level of protection based on the current status of VHSV-IV(a) and
VHSV-IV(b) in the United States and Canada.

A second alternative considered by the Agency would be to regulate areas
based on a Hydrologic Unit Code (HUC) level 2, or regional, demarcation.
APHIS determined that regulating areas known to have VHSV-IV(b) based on
the HUC 2 definition may pose an undue burden on certain small entities
within these areas. For the contiguous United States, there are 18
regions within the HUC 2 level classification system. The area covered
by each of these regions is very large. All States within a given HUC 2
area would be designated as being regulated for VHSV-IV(b) if a
discovery of an infected fish was made anywhere within that region.
States and entities within States will have no recourse or opportunity
to claim exemption from the movement restrictions based on freedom from
the disease. Regulation by HUC 2 region would be particularly burdensome
for entities in States uninfected and far removed from the specific
location of the VHSV-IV(b) confirmation. APHIS has determined that
defining regulated areas on a HUC level 2 basis would present the
potential for burdensome regulations being imposed on entities within
States not exposed to the virus. Thus, this alternative was rejected.

Finally, APHIS considered a "no action" alternative. In this instance,
APHIS would not implement regulations covering the interstate movement
of VHS-regulated species from regulated States or the importation of
VHS-regulated species from the regulated Provinces of Canada. Under this
alternative, preventing the spread of the VHS virus would depend on the
activities of State agencies and Federal agencies other than APHIS that
have related responsibilities (such as FWS and NMFS for certain fish
species), and perhaps special interest groups with no regulatory
authority for controlling the spread of animal disease. State and
Federal agencies currently regulating for VHS have established varying
movement restrictions, while some affected States have not instituted
any regulations to prevent the spread of VHS. Compliance with the
various regulations could be burdensome for aquaculture producers and
others who move fish interstate or internationally.

# V. Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act requires that agencies consider the
economic impact of rule changes on small businesses, organizations, and
governmental jurisdictions. Section 603 of the Act requires agencies to
prepare and make available for public comment an initial regulatory
flexibility analysis (IRFA) describing the expected impact of proposed
rules on small entities. Sections 603(b) and 603(c) of the Act specify
the content of an IRFA. In this section, we address these IRFA
requirements for this interim rule.

## Reasons for Action

APHIS is taking these actions in order to prevent further introductions
or dissemination of VHSV-IV(b) to U.S. farmed fish populations. The
Agency has concluded that the disease management practices embodied in
the interim rule are closely aligned with the goals of the National
Aquatic Animal Health Plan currently under development by APHIS, FWS,
and NOAA.

## Objectives and Legal Basis for Rule

The objective of the interim rule is to limit the movement of VHS-IV(b)
regulated fish in order to prevent the introduction of VHSV-IV(b) to
farmed fish populations. To date, VHSV-IV(b) has only been isolated from
U.S. and Canadian wild fish populations.

This rule will amend 9 CFR parts 71, 83, and 93 by adding import and
interstate movement restrictions for certain VHS-regulated species. The
legal basis for this rule may be found in the Animal Health Protection
Act of 2002, which authorizes the Secretary of Agriculture to promulgate
regulations to prevent the introduction into the United States or
dissemination of any pest or disease of livestock.

## Description and Estimated Number of Small Entities Regulated

The interim rule may affect aquaculture facilities, commercial
harvesters, marinas, and other allied fishing industries in Illinois,
Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania, and
Wisconsin. Although information concerning many of these industries is
sparse, it is likely that most of the entities within these industries
are small as defined by the Small Business Administration (SBA).

Most U.S. finfish producers are likely small, based on 2005 Census of
Aquaculture data and SBA standards for entities in the category finfish
fish farms (NAICS 112511). The SBA classifies producers in this category
with total annual sales of not more than \$750,000 as small entities.
According to the 2005 Census of Aquaculture, there were a total of 425
farms involved in aquaculture production in the regulated States: 47 in
Illinois, 18 in Indiana, 34 in Michigan, 77 in Minnesota, 54 in New
York, 55 in Ohio, 56 in Pennsylvania, and 84 in Wisconsin.[^13] Of
these, 272 farms were involved in the culture of food fish, 130 in sport
fish culture, and 110 in rearing baitfish species.[^14] The Aquaculture
Census reports total sales for all farms, but it does not report the
number of farms with sales at specific levels. Thus, APHIS is unable to
say what percentage of finfish producers may be small. Although we
expect the majority of these producers to be small, we welcome public
comment on this issue.

Commercial finfish harvesters in Illinois, Indiana, Michigan, Minnesota,
New York, Ohio, Pennsylvania, and Wisconsin, are also likely to be
affected by the rule. SBA classifies entities in the category finfish
fisheries (NAICS 114111) with not more than \$4.0 million in annual
sales as small. According to data obtained from the Michigan Department
of Natural Resources, there are 96 licensed bait harvesters in Michigan.
Similar numbers are not available from the other regulated States. Thus,
as with fish farms, we have no data on the number or distribution by
value of sales of commercial fish harvesters. Therefore, the percentage
of commercial fishing operations that may be impacted by the interim
rule and are considered small is unknown. APHIS welcomes any information
the public may provide regarding the size of these entities.

In addition to fish producers and harvesters in the regulated States,
allied industries may be affected by the interim rule, including fishing
equipment and supplies (except commercial) merchant wholesalers (NAICS
423910) and fish (except canned, packaged frozen) merchant wholesalers
(NAICS 424460). Firms in these industry classifications with no more
than 100 employees are considered small by SBA standards. The Economic
Census does not report on the distribution of these establishments by
number of employees. However, based on the number of establishments and
their total number of employees, it is likely that many of the firms
engaged in fishing equipment and supplies merchant wholesaling and fish
merchant wholesaling are small by SBA standards (Table 6).

In the case of fish markets (NAICS 445220), fishing supply stores (e.g.
bait) (NAICS 451110), fishing boat charter operations (NAICS 487210),
recreational fishing clubs, fishing guide services, and fishing piers
(all categorized under NAICS 713990), and fishing camps with
accommodation facilities (NAICS 721214), firms with not more than \$6.5
million in sales are considered small. Although the Economic Census does
not categorize the establishments by size of sales, the average sales
per establishment as reported for the eight regulated states, as shown
in Table 6, indicate that a majority of the firms in these industries
are likely to be small.

Overall, we expect the majority of firms affected by the interim rule to
be small. Although these entities may be impacted by the rule, the
magnitude of these impacts is unclear given the lack of data.
Aquaculture facilities in States not regulated for VHS will benefit from
the interim rule because the likelihood that fish in these facilities
will be exposed to this disease will be reduced. Facilities located in
Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania,
and Wisconsin may face costs related to testing if they raise
VHS-regulated species for interstate movement. In States that have
enacted their own regulations to prevent the potential spread of VHSV,
impacts to aquaculture facilities and commercial fishing operations as a
result of this interim rule are likely to be dampened.

![](media/image4.wmf){width="4.185416666666667in"
height="8.996527777777779in"}

## Description and Estimate of Compliance Requirements

Live VHS-regulated species of fish may be imported and moved live from
regulated provinces and States. Movement requires testing and
certification as set forth in the interim rule. Firms wishing to move
live fish will be responsible for ensuring that the fish originate from
a facility that has been tested and found to be free of VHSV.
Additionally, these firms will also be responsible for obtaining the
permits needed to transport fish interstate, as well as paying the user
fees associated with inspection of shipments.

## Duplication, Overlap, and Conflict with Existing Rules and Regulations

A portion of this rule overlaps with regulations administered by U.S.
Fish and Wildlife Services. Where applicable, the interim rule defers to
FWS regulations.

## Significant Alternatives to Rule which Accomplish the Stated Objectives and Minimize Any Significant Economic Impacts on Small Entities

There are no significant alternatives to this rule that would accomplish
the stated objectives.

[]{.mark}

# VI. Summary

The interim rule will place restrictions on the importation and
interstate movement of live VHS-regulated fish species from States
within the Great Lakes Region where this disease has been confirmed. The
potential impacts of the interim rule are not known given the lack of
information on aquaculture operations and commercial fisheries in the
regulated areas. Additionally, little is known about the potential
impacts to allied fishing industries and to hatcheries operating under
Federal, State, or Tribal authority. It is likely that the majority of
aquaculture facilities and establishments in allied industries that may
be affected are small, based on SBA standards, but the percentage of
such firms that are small is not known with any degree of certainty. No
information is available on the number or size of commercial fisheries
that may be affected by the interim rule.

The intent of the interim rule is to prevent the spread of the VHS-IV(b)
virus from Illinois, Indiana, Michigan, Minnesota, New York, Ohio,
Pennsylvania, and Wisconsin. Impacts of the interim rule are likely to
be largely already realized, since the regulations will codify movement
restrictions included in the Federal Order, as amended May 4, 2007. In
addition, five of the States (Michigan, New York, Ohio, Pennsylvania,
and Wisconsin) have established regulations to curb the spread of the
virus that include movement restrictions consistent with the interim
rule.

[REFERENCES]{.underline}

Engle, Carole and Nathan Stone. "Industry Profile: The Aquaculture of
Baitfish." *Review developed for the National Risk Management
Feasibility Program for Aquaculture*. Department of Agricultural
Economics, Mississippi State University, Mississippi State, MS. March
2007
\<<http://www.agecon.msstate.edu/Aquaculture/pubs/Baitfish_Profile.pdf>\>.

*Global Trade Atlas*. Global Trade Information Services. March 2007
\<<http://www.gtis.com/gta/>\>.

Goodwin, Andrew E. Associate Director of the Aquaculture/Fisheries
Center, University of Arkansas at Pine Bluff. Personal communication. 27
March 2007.

Goodwin, Andrew E., James E. Peterson, Theodore R. Meyers, and David J.
Money. "Transmission of Exotic Fish Viruses: The Relative Risks of Wild
and Cultured Bait," *Fisheries*, May 2004.

Gunderson, Jeffrey L. and Paul Tucker. "A White Paper on the Status and
Needs of Baitfish Aquaculture in the North Central Region." *Review
prepared for the North Central Regional Aquaculture Center*. University
of Minnesota Duluth, Duluth, MN. March 2000
\<<http://govdocs.aquake.org/cgi/reprint/2003/528/5280130.pdf>\>.

Kebus, Myron. State Fish Health Veterinarian, Division of Animal Health,
Wisconsin Department of Agriculture. Personal communication. 27 March
2007.

Michigan Department of Natural Resources. *Anglers and Boaters: You are
an important partner in preventing the spread of fish diseases and other
aquatic nuisance species*. April 2007a
\<<http://www.michigan.gov/dnr/0,1607,7-153-10364-160949--,00.html>\>.

Michigan DNR. *Moratorium on Coolwater Fish Production for Walleye,
Northern Pike, and Muskellunge -- 2007*. 3 April 2007b
\<<http://www.michigan.gov/documents/dnr/2007_Coolwater_Production_Briefing_Paper4-03-2007_192218_7.pdf>\>.

New York State Department of Environmental Conservation. *Sportfishing
Regulations, Licenses, and Fish Health Inspection Requirements:
Emergency Adoption and Proposed Rule Making*. 9 March 2007. April 2007
\<<http://www.dec.state.ny.us/website/dfwmr/propregs/#10e>\>.

Ohio Department of Natural Resources. *2007 -- 2008 Ohio Fishing
Regulations*. April 2007
\<<http://www.dnr.state.oh.us/wildlife/Fishing/fishregs/main.htm>\>.

Pennsylvania Fish and Boat Commission. *Notice: VHS-Susceptible Species
of Fish*. 26 November 2007. January 2008
\<<http://www.fish.state.pa.us/rulemakings/notices/2007_11_26vhs.pdf>\>.

United States Dept. of Agriculture Animal and Plant Health Inspection
Service. *Viral Hemorrhagic Septicemia in the Great Lakes*. Center for
Emerging Issues. July 2006. November 2006
\<<http://www.aphis.usda.gov/vs/ceah/cei/taf/emergingdiseasenotice_files/vhsgreatlakes.htm>\>.

United States Dept. of Agriculture National Agricultural Statistics
Service. *2005 Census of Aquaculture*. 2 October 2006. March 2007
\<<http://www.nass.usda.gov/Census_of_Agriculture/2002/Aquaculture/index.asp>\>.

Weidenhamer, Richard. President Michigan Bait Dealers Association.
Written statement submitted to APHIS. 10 January 2007.

Wisconsin Bureau of Fisheries Management. *Minnows as Bait: What
Wisconsin anglers need to know to prevent spreading the VHS fish virus*.
June 2007 \<<http://dnr.wi.gov/fish/documents/vhs_baitanglersweb.pdf>\>.

[^1]: <http://www.whitehouse.gov/omb/inforeg/eo12866.pdf>

[^2]: <http://www.sba.gov/advo/laws/regflex.html>

[^3]: APHIS will list as a VHS-regulated fish any fish species found in
    freshwater to be susceptible to the North American (type IV) strain
    of VHS virus under natural (i.e., non-controlled) conditions of
    exposure and from which VHS virus has been isolated in cell culture
    or other assay determined by the Administrator to be adequate to
    detect VHS virus, with confirmation of strain identity through
    genetic sequencing. Anadromous fish that have migrated into
    freshwater and from which VHS strain type IV(a) has been isolated
    will not be considered VHS-regulated fish under this rule.

[^4]: Industry experts indicate that some of the baitfish reported in
    the Aquaculture Census are wild caught rather than cultured (Goodwin
    2007, Kebus 2007). The definition of "farmed" and "farm raised"
    differ between states. In the spring, minnow producers in some
    states catch minnows from the wild, transfer them to another lake or
    pond, and return in the fall or early winter to harvest the
    baitfish. Since these producers use natural ponds that rely on
    available surface water and have no biosecurity practices in place,
    many would not consider the fish to be "farm raised". Generally,
    those in aquaculture define "farm raised" as those fish that are
    spawned and raised entirely in captivity (Goodwin 2007).

[^5]: As shown in the top section of Table 2, food fish sales of
    catfish, yellow perch, and trout that summed to at least \$9.1
    million in 2005 are expected to be affected by the interim rule.
    More accurate data are not available because sales information for
    some individual farms is withheld for proprietary reasons. Similar
    information on sport fish and baitfish sales expected to be affected
    is presented in the middle and lower sections of Table 2.

[^6]: It should be noted that the numbers presented here for sales of
    food fish, sport fish, and baitfish are likely understated since
    much of the data for these categories for the eight regulated states
    was not reported so as to protect individual data.

[^7]: Data are not reported for Illinois and Indiana because no data
    concerning the regulated species were found for those states.

[^8]: Information on quantities was not available.

[^9]: Information in this section was taken directly from the
    publication issued by the Bureau of Fisheries Management in June
    2007.

[^10]: While the interim rule does establish a tiered testing approach,
    it does not provide a process for regulated States or other
    jurisdictions to be removed from the list of regulated regions.
    Entities such as aquaculture facilities in regulated States that
    have a secure water source and a history of testing negative for VHS
    will not be exempted from the restrictions of the interim rule.

[^11]: Testing costs are estimates from an APHIS-contract laboratory in
    Maine.

[^12]: Ibid.

[^13]: The 2005 Census of Aquaculture is available online at
    <http://www.nass.usda.gov/Census_of_Agriculture/2002/Aquaculture/index.asp>.

[^14]: Note the number of farms involved in food, sport, and baitfish
    culture is larger than the total number of farms because some farms
    raise multiple types of fish and, thus, are counted in multiple
    categories.