This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

40433 

Vol. 83, No. 158 

Wednesday, August 15, 2018 

1To view the interim rule, supporting document, 

and the comments we received, go to http://

www.regulations.gov/#!docketDetail;D=APHIS2015-0061. 

DEPARTMENT OF AGRICULTURE 

Animal and Plant Health Inspection 

Service 

9 CFR Part 53 

[Docket No. APHIS–2015–0061] 

RIN 0579–AE14 

Conditions for Payment of Highly 

Pathogenic Avian Influenza Indemnity 

Claims 

AGENCY: Animal and Plant Health 

Inspection Service, USDA. 

ACTION: Final rule. 

SUMMARY: We are adopting as a final 

rule, with changes, an interim rule that 

amended the regulations pertaining to 

certain diseases of livestock and poultry 

to specify conditions for payment of 

indemnity claims for highly pathogenic 

avian influenza (HPAI). The interim rule 

provided a formula allowing us to split 

such payments between poultry and egg 

owners and parties with which the 

owners enter into contracts to raise or 

care for the eggs or poultry based on the 

proportion of the production cycle 

completed. That action was necessary to 

ensure that all contractors are 

compensated appropriately. The interim 

rule also clarified an existing policy 

regarding the payment of indemnity for 

eggs destroyed due to HPAI and 

required a statement from owners and 

contractors, unless specifically 

exempted, indicating that at the time of 

detection of HPAI in their facilities, they 

had in place and were following a 

biosecurity plan aimed at keeping HPAI 

from spreading to commercial premises. 

DATES: Effective on August 15, 2018, we 

are adopting as a final rule the interim 

rule published at 81 FR 6745–6751, on 

February 9, 2016. The amendments in 

this final rule are effective on September 

14, 2018. 

FOR FURTHER INFORMATION CONTACT: Dr. 

Denise Brinson, Senior Coordinator, 

National Poultry Improvement Plan, VS, 

APHIS, 1506 Klondike Road, Suite 101, 

Conyers, GA 30094–5104; (770) 922– 

3496. 

SUPPLEMENTARY INFORMATION: 

Background 

In an interim rule 1 effective and 

published in the Federal Register on 

February 9, 2016 (81 FR 6745–6751, 

Docket No. APHIS–2015–0061), we 

amended the regulations pertaining to 

certain diseases of livestock and poultry 

to specify conditions for payment of 

indemnity claims for highly pathogenic 

avian influenza (HPAI). The interim rule 

provided a formula allowing us to split 

such payments between poultry and egg 

owners and parties with which the 

owners enter into contracts to raise or 

care for the eggs or poultry based on the 

proportion of the production cycle 

completed. That action was necessary to 

ensure that all contractors are 

compensated appropriately. The interim 

rule also provided for the payment of 

indemnity for eggs required to be 

destroyed due to HPAI, thus clarifying 

an existing policy. Finally, the interim 

rule required owners and contractors, 

unless specifically exempted, to provide 

a statement that at the time of detection 

of HPAI in their facilities, they had in 

place and were following a biosecurity 

plan aimed at keeping HPAI from 

spreading to commercial premises. 

Comments on the interim rule were 

required to be received on or before 

April 11, 2016. We received 18 

comments by that date. They were from 

industry stakeholders, an animal 

welfare organization, and individuals. 

The issues raised by the commenters are 

discussed below. 

Apportionment Formula 

A number of commenters expressed 

concerns about the methodology set out 

by the interim rule for determining how 

to apportion funds between owner and 

contractor. These concerns mostly 

pertained to equitability and 

transparency, with some addressing 

specific sectors of the poultry industry. 

Several commenters stated that the 

formula is flawed because it effectively 

apportions zero value to the preparatory 

work done by the contractor prior to the 

beginning of the production cycle. 

According to the commenters, 

contractors incur costs prior to receiving 

the birds, e.g., for bedding, fuel, and the 

labor required to prepare the facilities. 

An indemnity payment, even if made 

early in the production cycle, may not 

be sufficient for many contractors to 

recover these up-front costs. 

The Animal Health Protection Act (7 

U.S.C. 8301) authorizes the Animal and 

Plant Health Inspection Service (APHIS) 

to make payments for birds destroyed 

due to HPAI based on the fair market 

value of the birds. While owners and 

contractors may have additional costs 

associated with the raising of the birds, 

the determination of fair market value 

accounts for the production practices 

and the inputs necessary to raise the 

species of bird. The Animal Health 

Protection Act does not, however, 

authorize us to cover all losses from 

HPAI, so costs incurred for certain 

supplies and labor performed prior to 

confirmation of disease may not be 

covered. 

One of the commenters cited above 

further stated that, due to the initial 

costs contractors incur, losses for a 

contractor resulting from an outbreak 

may exceed the value of the flock. In the 

commenter’s view, the distribution 

formula set out in the February 2016 

interim rule does not accurately reflect 

the relative impacts of an HPAI outbreak 

on owner and contractor. The 

commenter recommended that, in 

determining the value of the loss to the 

contractor, APHIS should use a 5-flock 

average for each impacted contractor 

operation, based on the settlement 

sheets provided by the owner to the 

contractor. 

The February 2016 interim rule set 

out a formula whereby the 

apportionment of indemnity payments 

to owners and contractors was based on 

the duration in days of the contract, as 

signed prior to the disease outbreak. The 

interim rule did include a provision, 

however, stating that if determining the 

length of service contract is impractical 

or inappropriate, then APHIS may use 

other methods as deemed appropriate. 

This provision allows APHIS, when 

appropriate, to use previous flock 

averages to assist in determining the 

contractor’s portion of the indemnity 

payment, as the commenter suggested. 

A commenter stated that contractors’ 

loss of income resulting from bird 

disposal and cleanup following 


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depopulation should be factored into 

our formula. Noting that contractors are 

often directly involved with the bird 

disposal, the commenter stated that 

affected growers will lose not only the 

income from the flock affected by and 

destroyed because of HPAI, but also 

income from one or more flocks that 

cannot be raised on the premises due to 

the shutdown time required. While such 

a shutdown will also impact the owners 

somewhat, they can minimize economic 

losses by increasing placement with 

unaffected contractors. The contractor, 

who has no such recourse, therefore 

would bear the greater impact from such 

a shutdown, a difference that should be 

reflected in the apportionment of 

indemnity payments. 

Under the Animal Health Protection 

Act, APHIS can make indemnity 

payments of up to 100 percent of the fair 

market value for live birds that must be 

destroyed because of HPAI. Further, the 

Act also authorizes APHIS to pay for 

certain costs associated with cleanup, 

disinfection, and disposal of birds and 

materials, such as bedding and litter, as 

necessary to eliminate the virus. The 

regulations in 9 CFR 53.2 and 53.7 also 

provide for such payments. While the 

Animal Health Protection Act does not 

allow APHIS to compensate owners and 

contractors directly for loss of income 

due to a shutdown of operations, the 

range of activities for which we do pay 

indemnities will go some way towards 

offsetting such costs. 

Commenters stated that our 

indemnity apportionment formula 

should take the type and age of the birds 

into account. A standard cost division 

for all poultry is not equitable, it was 

suggested, because some birds require 

more of an investment than others. One 

commenter stated that specific 

provisions should be added to the rule 

to address HPAI losses experienced by 

breeder hen and pullet contract growers 

because their flocks are kept for much 

longer durations than broiler flocks. 

These comments appear to be directed 

more toward our methodology for 

determining fair market value of the 

birds rather than the formula we use for 

apportioning indemnity payments 

between owners and contractors. The 

former is beyond the scope of the 

present rulemaking. That said, our 

formulas for determining the fair market 

value of destroyed poultry for the 

purpose of indemnifying owners and 

growers already take into account such 

factors as the type, age, and production 

potential of the birds. These formulas, 

also referred to as appraisal calculators, 

are developed specifically for each 

segment of the industry and species of 

bird. 

Transparency was another issue 

raised by the commenters. A commenter 

suggested that we needed to gather more 

data in order to devise a fair method of 

apportioning indemnity payments 

between owners and contractors. 

Another commenter suggested that we 

should update and make more 

transparent our formulas for calculating 

indemnities. 

We apportion indemnity payments 

between owner and contractor based on 

the terms of the contract between the 

two parties and the duration of the 

period during which the contractor 

possessed the birds or eggs. Thus, the 

amount of the indemnity received by 

the contractor from APHIS will depend 

largely on the terms of the contract. 

APHIS does not play a role in those 

contractual arrangements. Our 

indemnity calculation formulas, referred 

to by the second commenter above, are 

the means by which we determine the 

fair market value of birds and eggs 

destroyed due to HPAI and, thereby, the 

total amount of compensation due the 

indemnified party. As we have already 

noted, addressing these calculators is 

beyond the scope of the current 

rulemaking; however, the calculators are 

subject to continual review to ensure 

that the economic assumptions on 

which they are based are correct and 

that they adequately reflect standard 

industry practices. 

Finally, one commenter stated that 

APHIS should indemnify farms that are 

not infected with HPAI but are 

indirectly affected by an HPAI outbreak. 

The commenter suggested that such 

farms may be affected economically by 

being unable to restock if located in a 

quarantine or control zone. 

The Animal Health Protection Act 

authorizes APHIS to make payments for 

birds or eggs destroyed due to HPAI 

based on their fair market value. APHIS 

recognizes that some owners and 

contractors whose flocks do not have 

HPAI may still have limited ability to 

place birds or eggs due to movement 

control restrictions and, consequently, 

may face financial hardships. However, 

the Animal Health Protection Act only 

authorizes payment of indemnity to 

owners and contract growers of diseased 

birds or eggs that are destroyed and not 

to owners or contractors whose 

premises were only indirectly impacted. 

Biosecurity 

The February 2016 interim rule 

contained a requirement stating that, in 

order to be eligible to receive indemnity 

payments, both poultry or egg owners 

and contractors had to provide to APHIS 

a statement that at the time of detection 

of HPAI in their facilities, they had in 

place and were following a biosecurity 

plan. A list of recommended biosecurity 

measures was also included, as well as 

exemptions from the biosecurity 

statement requirement for certain 

relatively small facilities. Some 

commenters questioned whether the 

requirements were sufficiently stringent 

overall, while others focused more 

specifically on the exemptions for 

smaller facilities. 

The various issues raised by these 

commenters, along with changes we are 

making in response to some comments, 

are discussed in detail below. One 

change we are making for the sake of 

clarity is to add a definition to § 53.1 of 

poultry biosecurity plan, which we 

define in this final rule as a document 

utilized by an owner and/or contractor 

describing the management practices 

and principles that are used to prevent 

the introduction and spread of 

infectious diseases of poultry at a 

specific facility. 

One commenter stated that selfcertification is not a reliable method for 

ensuring the use of best practices in 

biosecurity on poultry- or egg-producing 

premises because the self-certifying 

owners and growers will have an 

economic interest in ensuring their 

certifications. The commenter 

recommended that APHIS enforce 

biosecurity requirements by conducting 

unannounced spot inspections and, 

when violations are found, subjecting 

the violators to serious financial 

consequences. 

We believe the commenter has raised 

some legitimate concerns about the 

efficacy of self-certification. In this final 

rule, we are adding provisions for 

verifying that the owner and/or 

contractor does have a biosecurity plan 

in place and that the plan is, in fact, 

being implemented. Those provisions 

are discussed in greater detail below. 

Some commenters advocated for more 

rigorous biosecurity requirements. One 

commenter suggested that even if 

APHIS declines to do targeted 

inspections, it should at least require 

that there is a biosecurity plan in place 

prior to any HPAI outbreak or 

destruction of animals. The commenter 

stated that allowing owners and 

contractors to meet the requirement 

after an outbreak would provide a huge 

economic incentive to misrepresent the 

state of biosecurity planning at a facility 

in its attestation. Requiring a biosecurity 

statement prior to an outbreak, on the 

other hand, would motivate owners and 

contractors to address biosecurity 

planning earlier. Another commenter 

suggested that facilities subject to the 

requirement should have had a plan in 

place for 6 months prior to the outbreak, 


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Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Rules and Regulations 40435 

2To view the notices and the Program Standards, 

go to http://www.regulations.gov/#!docketDetail;D=

APHIS-2016-0103. 

3We note that the State of Hawaii does not 

participate in the NPIP or have an OSA as defined 

in §§ 145.1 and 146.1. Audits on facilities in Hawaii 

may be performed by APHIS or an APHIS 

representative. 

have had no lapses during that period, 

have trained their employees in 

biosecurity, and be liable for penalties 

for submitting false claims. 

Since the publication of the February 

2016 interim rule, we have taken steps 

to strengthen our biosecurity 

requirements. In a notice 2 published in 

the Federal Register on May 5, 2017, 

and effective on July 5, 2017 (82 FR 

21187–21188, Docket No. APHIS–2016– 

0103), we advised the public of our 

determination to update the National 

Poultry Improvement Plan (NPIP) 

Program Standards. The NPIP Program 

Standards is a document that provides 

detailed information on how to meet the 

requirements contained in the NPIP 

regulations. The NPIP Standards can be 

amended via notice rather than through 

a lengthy rulemaking process, thereby 

providing us with the flexibility to 

ensure that program requirements 

remain in sync with current industry 

practices. The May 2017 final notice 

followed an earlier notice of availability, 

upon which we did not receive any 

public comments. Among other 

changes, our updates to the NPIP 

Program Standards included the 

addition of a set of 14 biosecurity 

principles addressing such issues as 

training and biosecurity protocols for 

farm personnel; maintaining a line of 

separation between the poultry house(s) 

and the birds inside from any potential 

disease sources; control of birds, 

rodents, and insects; procedures for 

maintaining clean water supplies; and 

procedures for auditing biosecurity 

plans. A facility’s biosecurity plan must 

address all 14 principles in order to 

ensure that it complies with our 

requirements. 

The auditing process that we have 

developed as one of the 14 biosecurity 

principles addresses concerns expressed 

by the commenters regarding the need 

to have a biosecurity plan in place 

before a facility is affected by HPAI. 

Facilities will be audited at least once 

every 2 years or a sufficient number of 

times during that period to satisfy their 

Official State Agency (OSA),3 a term we 

define in 9 CFR 145.1 and 146.1 as the 

State authority we recognize as a 

cooperator in the administration of NPIP 

requirements, that the facility’s 

biosecurity plan complies with our 14 

biosecurity principles, i.e., with the 

NPIP Standards. The audit will include, 

but may not be limited to, an evaluation 

of the biosecurity plan itself and 

documentation showing that the plan is 

being implemented. 

To be recognized as compliant with 

our biosecurity principles and eligible 

for indemnity, owners and/or 

contractors whose biosecurity plans fail 

the audit described above must have a 

check audit performed by a team 

appointed by the National NPIP Office 

and must demonstrate they have 

implemented applicable biosecurity 

measures. 

The auditing procedures are described 

in a new paragraph (e) that we are 

adding to § 53.11 in this final rule and 

in greater detail in the NPIP Program 

Standards. 

A number of commenters opposed 

exempting smaller facilities from the 

biosecurity certification requirement. It 

was stated that weak biosecurity at a 

facility of any size may result in the 

spread of HPAI and that some facilities 

that the interim rule exempted from the 

biosecurity requirement were, in fact, 

affected during the 2014–2015 HPAI 

outbreak. One commenter stated that the 

flock size thresholds for exempted 

facilities needed to be lowered 

considerably. According to the 

commenter, the bird density on some of 

the exempted facilities was still high 

enough to pose a risk of spreading 

HPAI. 

While it is true that weak biosecurity 

on a farm of any size could lead to 

spread of disease, the farms that were 

affected during the 2014–2015 outbreak 

were overwhelming large commercial 

facilities. There are approximately 

18,900 operations that will be subject to 

the biosecurity statement requirement, 

out of 233,770 poultry producers in the 

United States. Those 18,900 operations, 

however, produce or house 

approximately 99 percent of the poultry 

in the United States. Exempting the 

smaller facilities, therefore, allows us to 

focus our resources on the operations 

that raise or house 99 percent of the 

nation’s poultry supply. While bird 

density on some smaller operations may 

be high enough to pose a risk of 

spreading HPAI due to environmental 

contamination when biosecurity is 

lacking, as noted above, 99 percent of 

the nation’s poultry reside and are 

raised on non-exempt operations. 

Lowering the flock-size threshold would 

increase the regulatory burden on small 

producers, which were not a major 

contributing factor in disease spread 

during the 2014–2015 HPAI outbreak. In 

addition, if the small farms participate 

in the NPIP because they are selling 

poultry, they would have to have a 

biosecurity plan to comply with the 

NPIP Program Standards. 

In the preamble to February 2016 

interim rule, we had stated that an 

additional reason for our focus on large 

facilities is that their operators had 

suffered the most devastating impacts 

during the 2014–2015 outbreak. A 

commenter disputed that rationale, 

stating that because smaller contractors 

may have lost their entire flocks to 

depopulation, they may have been 

affected more adversely than the owners 

with whom they contracted, since the 

latter may have other, unaffected 

contractors with whom to place their 

products. 

While the loss of any size flock 

adversely affects the contractor, all 

flocks that were infected by HPAI 

during the 2014–2015 outbreak were 

completely depopulated, including 

those owned by large-scale producers. 

During the 2014–2015 HPAI outbreak, 

there were 21 infected backyard flocks 

totaling approximately 10,000 birds 

versus 211 commercial flocks totaling 

approximately 50 million birds. In the 

aggregate, then, the impact on large 

commercial producers was much 

greater. 

Furthermore, in some cases, 

depopulation may also have greater 

impacts on individual commercial farms 

than on smaller facilities. Smaller flock 

owners and contractors are more likely 

to be diversified. A small contract 

grower with 500 birds is unlikely to be 

able to make a living on selling the eggs 

or the meat from those birds. For that 

reason, he or she may have other 

occupations or businesses or may raise 

other livestock. Commercial producers, 

on the other hand, focus on raising 

poultry, so depopulation of their flocks 

may leave them without immediate 

alternatives. 

A commenter questioned whether 

removing the exemption for smaller 

facilities would really place an undue 

regulatory burden on the owners and 

contractors operating such facilities. 

The commenter suggested that due to 

the lower bird density on smaller 

facilities, owners and contractors on 

small facilities may have to make fewer 

adaptations to their existing biosecurity 

procedures than would those on larger 

ones. That being the case, the 

commenter suggests, our biosecurity 

requirements may not place a greater 

regulatory burden on smaller facilities 

than on larger ones. 

In our view, the biosecurity 

requirements included in this final rule 

and the NPIP Program Standards would 

likely prove more burdensome for 

smaller facilities than for larger ones. 

Many smaller owners and contractors 


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4MacDonald, J.M. Technology, Organization, and 

Financial Performance in U.S. Broiler Production, 

EIB–126 USDA Economic Research Service. June 

2014. 

5 2011 USDA Agricultural Resource Management 

Survey, Version 4. 

raise free-range chickens. To mitigate 

the chance of exposure of their flocks to 

HPAI and comply with our biosecurity 

principles, small growers and 

contractors would likely have to 

construct enclosures to prevent 

exposure to wild birds and waterfowl. 

With fewer birds on their premises, 

smaller owners and contractors might 

have to spend more per bird to construct 

such enclosures than would larger ones. 

Miscellaneous 

One commenter questioned our 

justification for publishing an interim 

rule. The commenter stated that we did 

not provide evidence that the 

Administrative Procedure Act’s ‘‘good 

cause’’ exemption from the regular 

notice and comment rulemaking process 

should have applied to the interim rule. 

In the commenter’s view, we did not 

clearly state what public interest was 

served by our issuing an interim rule on 

an emergency basis rather than a 

proposed rule followed by a final rule. 

In our view, emergency action was 

necessary due to the possibility of 

another HPAI outbreak occurring during 

the spring wild bird migration season. 

In order to prevent the spread of the 

disease, we needed to ensure timely and 

equable compensation to both owners 

and contractors for flocks destroyed due 

to HPAI. 

Finally, we are adding a new 

paragraph (f) to § 53.11, describing the 

notice-based procedure we will use to 

update the biosecurity principles and 

other sections of the NPIP Program 

Standards. Proposed updates will be 

announced to the public through a 

Federal Register notice in accordance 

with the NPIP regulations in 9 CFR 

147.53(e). 

Therefore, for the reasons given in the 

interim rule and in this document, we 

are adopting the interim rule as a final 

rule, with the changes discussed in this 

document. 

This final rule also affirms the 

information contained in the interim 

rule concerning Executive Orders 12372 

and 12988. 

Executive Orders 12866, 13563, 13771 

and Regulatory Flexibility Act 

This action has been determined to be 

significant for the purposes of Executive 

Order 12866 and, therefore, has been 

reviewed by the Office of Management 

and Budget. 

We have prepared an economic 

analysis for this rule. The economic 

analysis provides a cost-benefit analysis, 

as required by Executive Orders 12866 

and 13563, which direct agencies to 

assess all costs and benefits of available 

regulatory alternatives and, if regulation 

is necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, and equity). Executive Order 

13563 emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. The 

economic analysis is summarized 

below. Copies of the full analysis are 

available on the Regulations.gov website 

or by contacting the person listed under 

FOR FURTHER INFORMATION CONTACT. 

This final rule is considered an 

Executive Order 13771 regulatory 

action. In accordance with guidance on 

complying with Executive Order 13771, 

the single primary estimate of the cost 

of this rule is $9.3 million, the midpoint estimate annualized in perpetuity 

using a 7 percent discount rate. Details 

on the estimated costs of this final rule 

can be found in the rule’s economic 

analysis. 

Regulatory Flexibility Act 

APHIS is adopting as a final rule, with 

changes, an interim rule that amended 

the regulations pertaining to certain 

diseases of livestock and poultry to 

specify conditions for payment of 

indemnity claims for HPAI. The interim 

rule provided a formula allowing us to 

split such payments between poultry 

and egg owners and parties with which 

the owners enter into contracts to raise 

or care for the eggs or poultry based on 

the proportion of the production cycle 

completed. The interim rule also 

clarified an existing policy regarding the 

payment of indemnity for eggs 

destroyed due to HPAI. The interim rule 

also required a statement from owners 

(including independent growers) and 

contractors (contract growers), unless 

exempt, indicating that at the time of 

detection of HPAI in their facilities, they 

had in place and were following a 

biosecurity plan aimed at keeping HPAI 

from spreading to commercial premises. 

Under this final rule, we are removing 

the self-certification and adding 

provisions for verifying that the owner 

and/or contractor does have a 

biosecurity plan in place and that the 

plan is, in fact, being implemented. 

At the time of the most recent 

outbreak, the regulations in part 53 did 

not specify that the indemnity be split 

between owners and contractors. When 

APHIS pays to compensate owners and 

contractors for losses, that 

compensation should be distributed to 

parties who suffer losses based on the 

terms of the contract. The vast majority 

of contracts are expected to reflect the 

relative level of inputs or investments of 

the parties who suffer losses. 

Inadequate biosecurity measures may 

have led to HPAI introduction or spread 

within and among some commercial 

facilities. Therefore, this final rule also 

requires large owners and contractors to 

have in place, at the time of detection 

of HPAI, and have been following a 

poultry biosecurity plan that is 

compliant with the biosecurity 

standards outlined in the NPIP Program 

Standards, in order to receive 

compensation for claims arising out of 

the destruction of animals or eggs 

destroyed due to an outbreak of HPAI. 

Note that the NPIP is a cooperative 

Federal-State-Industry mechanism for 

controlling certain poultry diseases. 

The entities affected by this rule are 

U.S. facilities primarily engaged in 

breeding, hatching, and raising poultry 

for meat or egg production, and facilities 

primarily engaged in slaughtering 

poultry. There were about 18,900 farms 

that would be subject to the provisions 

of this rule in the 2012 Agricultural 

Census. Almost all commercial 

operations raising broilers are contract 

growers.4 5

The United States is the world’s 

largest poultry producer and the secondlargest egg producer. The combined 

value of production from broilers, eggs, 

and turkeys, and the value of sales from 

chickens in 2016 was $38.7 billion. In 

2016, the United States exported poultry 

meat valued at about $3.3 billion. 

Following the first HPAI findings in 

December 2014, a number of trading 

partners imposed complete or partial 

bans on shipments of U.S. poultry and 

poultry products. All but one of these 

restrictions from the 2014–15 outbreak 

have since been lifted. United States 

poultry and poultry product exports 

declined by about 31 percent from 2014 

through 2016. Exports in 2017 were at 

approximately the same level as 2016. 

Broilers account for nearly all U.S. 

chicken consumption. Broiler 

production and processing primarily 

occurs within highly integrated 

production systems. Owners of the 

processing facilities also own the birds 

that are processed and contract with 

growers (contract growers) to raise those 

birds before processing. Expanded 

broiler production has been made 

possible to a large extent by the 

vertically integrated production system 

and through the use of production 

contracts. 

Under the system of production 

contracts, the contractor normally 


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supplies the grow-out house with all the 

necessary heating, cooling, feeding, and 

watering systems. The contractor also 

supplies the labor needed in growing 

the birds. The owner normally supplies 

the chicks, feed, veterinary medicines, 

and transportation. Contractors have 

exclusive contracts with an owner and 

receive payment for the services that 

they provide, with premiums and 

discounts tied to the efficiency with 

which feed is converted to live-weight 

broilers, the minimization of mortality, 

or the number of eggs produced. 

Specific contract terms and the period 

covered can vary. 

Embedded in the value of a bird at 

any point in time is the value of inputs 

by both owners and contractors. 

Contractors’ costs are more or less fixed 

and are heavily committed early in the 

production cycle. Prior to the 

publication of the interim rule, 

indemnity payments went directly to 

the owner of the birds who, depending 

on the terms of the contractual 

arrangement, might or might not have 

compensated the contractor. It is 

important to finalize these regulations to 

share indemnity payments between 

poultry owners and contractors, both of 

whom have productive assets imbedded 

in the value of the bird. 

APHIS’ determination of the total 

amount of indemnity will remain the 

same under the rule as before. However, 

to determine the appropriate payment 

split between owner and contractor, 

APHIS may have to examine contract 

specifics on a case-by-case basis. This 

rule does not change the total amount of 

compensation paid in a given situation, 

but will ensure equitable distribution of 

that compensation between the owner 

and contractor. This rule benefits 

contractors who otherwise may suffer 

uncompensated economic losses from 

participating in an eradication program. 

This rule also specifies the 

appropriate reference to eggs and a 

description of the appraisal of the value 

of eggs destroyed due to HPAI, simply 

clarifying existing practice for the 

indemnification of destroyed eggs and 

will not change the total amount of any 

compensation paid in a given future 

situation. 

This final rule requires large owners 

and contractors to follow 14 industrystandard biosecurity principles. These 

principles are laid out in the NPIP 

Program Standards. The vast majority of 

contractors have some level of 

biosecurity in place on their operations, 

or were in the process of voluntarily 

adopting biosecurity measures prior to 

the implementation of the interim rule. 

There are approximately 18,900 

poultry operations that will be subject to 

this requirement. There will be one-time 

costs and annual costs for some poultry 

operations associated with this rule. 

One-time costs include the development 

of a biosecurity plan, and equipment 

purchases for those facilities that need 

to implement structural biosecurity 

measures in order to be fully compliant 

with the NPIP biosecurity principles. In 

addition, some producers will incur 

additional recurring biosecurity training 

costs necessary to be compliant with 

these regulations. 

The biosecurity measures needed on a 

given operation are specific to that 

operation. The vast majority of 

operations already have some level of 

biosecurity in place on their operations, 

as a result of contractual obligations, 

participation in existing government/ 

industry programs, compliance with 

existing regulations, or existing 

company policies, thereby reducing the 

need for many poultry operations to 

implement such measures from scratch. 

Most will be able to adhere to the NPIP 

biosecurity principles by making small 

operational changes and identifying and 

enumerating current standard operating 

procedures in their biosecurity plans. 

Some poultry operations will have to 

implement new operational or structural 

biosecurity measures in order to be fully 

compliant with the NPIP biosecurity 

principles. Based on discussions with 

industry, the measures that are most 

likely to involve changes for poultry 

operations concern the biosecurity 

categories of training, cleaning and 

disinfection of equipment, and the 

treatment of water. For the few poultry 

operations that need additional vehicle 

cleaning and disinfection, we estimate 

that the total one-time costs for 

equipment will be from about $48,000 

to $439,000. 

The vast majority of affected poultry 

operations have access to municipal 

water or a sufficiently deep well to meet 

the standards laid out in the biosecurity 

principles. For poultry operations that 

need to treat water we estimate that total 

one-time costs for equipment will range 

from about $570,000 to $1.1 million. 

Many operations affected by this rule 

will need to review their existing 

biosecurity plans and some will need to 

develop new plans. We estimate that if 

5 percent of affected poultry operations 

need to develop new biosecurity plans 

and 95 percent need to review existing 

biosecurity plans, the total one-time cost 

could be between $1.8 million and $2 

million. 

We estimate that the total additional 

annual biosecurity training will cost 

from about $5.3 million to $9.3 million. 

In addition, annual costs of sanitizers 

used in vehicle cleaning and 

disinfection could range from about 

$2,550 to $10,200 in total for those few 

operations needing additional cleaning 

and disinfection. Annual costs of 

chemicals for water treatment could 

range from about $164,000 to $328,500 

in total for those few operations needing 

water treatment. We estimate that the 

total cost of performing audits of the 

biosecurity plans at all affected facilities 

will be between $2.8 million and $3.3 

million. Because these audits will be 

performed every 2 years, we assume that 

one half of this cost is incurred each 

year. 

This rule directly benefits poultry 

operations who otherwise may suffer 

uncompensated economic losses from 

participating in an HPAI eradication 

program. In addition, the development 

or revision of biosecurity requirements 

may help to avert future HPAI outbreaks 

or prevent the spread of disease during 

an outbreak. To the extent that the rule 

contributes to the elimination of HPAI, 

entities at all levels of the poultry 

industry as well as consumers will 

benefit over the long term. 

The 2015 HPAI outbreak had a 

substantial impact on the U.S. poultry 

sector. The birds lost during the 

outbreak accounted for about 12 percent 

of the U.S. table-egg laying population 

and 8 percent of the estimated inventory 

of turkeys grown for meat. Losses in the 

egg sector, including layers and eggs, 

were estimated at nearly $1.04 billion. 

Layers accounted for a large majority of 

the birds lost due to the outbreak with 

those losses compounded by extensive 

losses of layer pullets, young birds that 

mature into replacement layers. Turkey 

losses were magnified by the relatively 

large size of the birds and smaller 

inventory. Almost 600,000 breeding 

turkeys were lost. Market and breeding 

turkey losses due to the 2015 outbreak 

were estimated at $530 million. 

Many destination markets for U.S. 

poultry commodities levied trade 

restrictions on U.S. poultry exports, 

distorting markets and exacerbating 

economic losses for all poultry sectors. 

Although very few broilers were 

affected by the outbreak, trade 

restrictions decreased overseas demand 

for broiler products and contributed to 

much lower 2015 and 2016 broiler 

prices compared to pre-outbreak levels. 

APHIS paid indemnities for 

euthanized poultry and destroyed eggs 

as well as paying for the euthanasia, 

cleaning and disinfection of poultry 

premises and equipment, and testing for 

the HPAI virus to ensure poultry farms 

can be safely repopulated. In total, the 

U.S. Department of Agriculture spent 

about $850 million on these activities 

related to the 2015 outbreak. 


daltland on DSKBBV9HB2PROD with RULES
40438 Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Rules and Regulations 

Executive Order 13175 

This rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, ‘‘Consultation 

and Coordination with Indian Tribal 

Governments.’’ Executive Order 13175 

requires Federal agencies to consult and 

coordinate with Tribes on a 

government-to-government basis on 

policies that have Tribal implications, 

including regulations, legislative 

comments or proposed legislation, and 

other policy statements or actions that 

have substantial direct effects on one or 

more Indian Tribes, on the relationship 

between the Federal Government and 

Indian Tribes or on the distribution of 

power and responsibilities between the 

Federal Government and Indian Tribes. 

APHIS has assessed the impact of this 

rule on Indian Tribes and determined 

that this rule does not, to our 

knowledge, have Tribal implications 

that require Tribal consultation under 

Executive Order 13175. If a Tribe 

requests consultation, APHIS will work 

with the Office of Tribal Relations to 

ensure meaningful consultation is 

provided where changes, additions and 

modifications identified herein are not 

expressly mandated by Congress. 

Paperwork Reduction Act 

In accordance with section 3507(d) of 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the burden 

requirements included in this final rule 

will be approved by the Office of 

Management and Budget under control 

number 0579–0440. 

E-Government Act Compliance 

The Animal and Plant Health 

Inspection Service is committed to 

compliance with the E-Government Act 

to promote the use of the internet and 

other information technologies, to 

provide increased opportunities for 

citizen access to Government 

information and services, and for other 

purposes. For information pertinent to 

E-Government Act compliance related 

to this rule, please contact Ms. Kimberly 

Hardy, APHIS’ Information Collection 

Coordinator, at (301) 851–2483. 

List of Subjects in 9 CFR Part 53 

Animal diseases, Indemnity 

payments, Livestock, Poultry and 

poultry products. 

Accordingly, the interim rule 

amending 9 CFR part 53 that was 

published at 81 FR 6745–6751, on 

February 9, 2016, is adopted as a final 

rule with the following changes: 

PART 53—FOOT-AND-MOUTH 

DISEASE, PLEUROPNEUMONIA, 

RINDERPEST, AND CERTAIN OTHER 

COMMUNICABLE DISEASES OF 

LIVESTOCK OR POULTRY 

■ 1. The authority citation for part 53 

continues to read as follows: 

Authority: 7 U.S.C. 8301–8317; 7 CFR 2.22, 

2.80, and 371.4. 

■ 2. Section 53.1 is amended by adding 

a definition of Poultry biosecurity plan 

in alphabetical order to read as follows: 

§ 53.1 Definitions. 

* * * * * 

Poultry biosecurity plan. A document 

utilized by an owner and/or contractor 

describing the management practices 

and principles that are used to prevent 

the introduction and spread of 

infectious diseases of poultry at a 

specific facility. 

* * * * * 

■ 3. Section 53.10 is amended as 

follows: 

■ a. By removing paragraph (g) 

introductory text; 

■ b. By revising paragraph (g)(1); and 

■ c. By adding an OMB citation at the 

end of the section. 

The revision and addition read as 

follows: 

§ 53.10 Claims not allowed. 

* * * * * 

(g)(1) Except as provided in paragraph 

(g)(2) of this section, the Department 

will not allow claims arising out of the 

destruction of animals or eggs destroyed 

due to an outbreak of highly pathogenic 

avian influenza unless the owner of the 

animals or eggs and, if applicable, any 

party that enters into a contract with the 

owner to grow or care for the poultry or 

eggs, had in place, at the time of 

detection of highly pathogenic avian 

influenza, and was following a poultry 

biosecurity plan that meets the 

requirements of § 53.11(e). 

* * * * * 

(Approved by the Office of Management and 

Budget under control number 0579–0440) 

■ 4. Section 53.11 is amended as 

follows: 

■ a. By adding paragraphs (e) and (f); 

and 

■ b. By adding an OMB citation at the 

end of the section. 

The additions read as follows: 

§ 53.11 Highly pathogenic avian influenza; 

conditions for payment. 

* * * * * 

(e)(1) The owner and, if applicable, 

the contractor, unless exempted under 

§ 53.10(g)(2), must have a poultry 

biosecurity plan that is approved by the 

Administrator. Approved biosecurity 

principles are listed in the NPIP 

Program Standards, as defined in 

§ 147.51 of this chapter. Alternative 

biosecurity principles may also be 

approved by the Administrator in 

accordance with § 147.53(d)(2) of this 

chapter. 

(2)(i) The biosecurity plan shall be 

audited at least once every 2 years or a 

sufficient number of times during that 

period to satisfy the owner and/or 

contractor’s Official State Agency that 

the plan is in compliance with the 

biosecurity principles contained in the 

NPIP Program Standards. The audit will 

include, but may not be limited to, a 

review of the biosecurity plan, as well 

as documentation that it is being 

implemented. 

(ii) To be recognized as being in 

compliance with the biosecurity 

principles and eligible for indemnity, 

owners and contractors who fail the 

initial audit conducted by the NPIP 

Official State Agency must have a check 

audit performed by a team appointed by 

National NPIP Office and must 

demonstrate that they have 

implemented applicable biosecurity 

measures. The team will consist of an 

APHIS poultry subject matter expert, the 

Official State Agency, and a licensed, 

accredited, industry poultry 

veterinarian. 

(f) Proposed updates to the NPIP 

Program Standards will be announced 

to the public through a Federal Register 

notice, as described in § 147.53(e) of this 

chapter. 

(Approved by the Office of Management and 

Budget under control number 0579–0440) 

Done in Washington, DC, this 8th day of 

August 2018. 

Greg Ibach, 

Under Secretary for Marketing and Regulatory 

Programs. 

[FR Doc. 2018–17554 Filed 8–14–18; 8:45 am] 

BILLING CODE 3410–34–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2018–0709; Product 

Identifier 2018–NM–100–AD; Amendment 

39–19359; AD 2018–17–05] 

RIN 2120–AA64 

Airworthiness Directives; Airbus SAS 

Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 


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