Agricultural Law Weekly Review—October 6, 2016

Written by M. Sean High – Staff Attorney

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

GIPSA: Amendment Regarding Electronic Livestock Transactions Sent to President

On October 3, 2016, after unanimous consent by the United States Senate, President Barak Obama was presented with H.R. 5883 which would amend the Packers & Stockyards Act (GIPSA) “to expand the definition of ‘marketing agency’ to include any person engaged in the business of buying or selling livestock in commerce through online, video, or other electronic methods on a commission or other fee basis when handling or providing a means to handle receivables or proceeds from the sale of that livestock.” According to the Bill Summary, H.R. 5883 would also amend GIPSA “to specif[y] that funds for purchasing livestock may be transferred to the account of the seller by electronic funds transfer or any other expeditious method that the Department of Agriculture determines to be appropriate.”

Livestock Trading: AMS to Require Online Cattle Exchange Reporting

On September 29, 2016, the United States Department of Agriculture (USDA) Agricultural Marketing Service (AMS) issued a press release announcing that beginning October 5, 2016, AMS will include “in the National and Regional direct negotiated slaughter cattle reports, cattle purchased through the Fed Cattle Exchange by packers required to report according to the [Livestock Mandatory Reporting] Act and regulation.” According to AMS, the Fed Cattle Exchange was created early in 2016 as an online platform to provide “a web based interface where feedlots can offer pens of market ready cattle for sale, and packers can bid on those offerings in a timed format, similar to an online auction.” AMS stated that the inclusion of the Fed Exchange reports in the National and Regional direct negotiated slaughter cattle reports was at the request of the cattle industry. 

Labeling: FSIS Issues Guidance for Animal Raising Claims

On October 5, 2016, the United States Department of Agriculture (USDA) Food Safety and Inspection Service (FSIS) published notice in the Federal Register “announcing the availability of an updated version of the Agency's compliance guideline on documentation needed to support animal-raising claims on product labels that must be submitted for Agency approval before they can be used on product labels” (81 FR 68933).  Comments on the guidance document must be submitted on or before December 5, 2016.  According to FSIS, although the agency “is requesting comments on this guideline and may update it in response to comments, FSIS encourages establishments that wish to submit request for approvals of animal raising claims on product labels to begin using this guideline.”

Indemnity: APHIS Announces Updated Calculator for Laying Hens

On September 30, 2016, the United States Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) issued a press release announcing an update to the agency’s indemnity calculator formula for laying hens.  According to APHIS, the updated indemnity calculator formula “addresses concerns raised by egg layer producers following the 2014-2015 outbreak of highly pathogenic avian influenza (HPAI)” and is intended to “more closely resemble a fair market transaction.” The new APHIS indemnity calculator formula became effective October 1, 2016.

International: U.S. Senate Ratifies Genetic Resources Treaty

On September 28, 2016, the United States Senate passed a resolution of advice and consent ratifying the International Treaty on Plant Genetic Resources for Food and Agriculture adopted by the Food and Agriculture Organization of the United Nations on November 3, 2001, and signed by the United States on November 1, 2002 (the Treaty).  According to the resolution, “[t]he centerpiece of the Treaty is the establishment of a multilateral system under which a party provides access to other parties…to listed plant genetic resources held in national genebanks…solely for purposes of research, breeding, and training in agriculture.”

Agricultural Law Weekly Review: February 12, 2016

Written by M. Sean High – Staff Attorney

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

Avian Influenza: New HPAI Indemnity Rules become Effective

On February 9, 2016, the United States Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) published in the Federal Register an interim rule amending the regulations governing the payment of indemnity claims for highly pathogenic avian influenza (HPAI) (81 FR 6745).  The new regulations became effective upon the interim rule’s February 9, 2016 publication in the Federal Register and amend the previous HPAI indemnity regulations to: 1) allow indemnity payments to be split between poultry/egg owners and contractors; 2) clarify that eggs are eligible for indemnity payments; and 3) require that owners and contractors of large facilities provide statements that prior to the detection of HPAI in their facility, they had in place, and were following, a biosecurity plan.  For more information see previous Penn State Agricultural Law Blog post.

Labeling: House Votes to Make Menu Labeling Less Stringent

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

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

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

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

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

Crop Insurance: Kentucky Farmer Sentenced for Crop Insurance Fraud

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

GMOs: Kenya Approves Limited Release of GM Maize Seeds

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

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

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

HPAI Update: New HPAI Indemnity Payment Rule becomes Effective

Written by M. Sean High – Staff Attorney

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

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

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

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

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

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

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

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

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

U.S. Senators Seek HPAI Protections

Written by M. Sean High

On November 5, 2015, ten U.S. senators issued a letter to U.S. Department of Agriculture (USDA) Secretary Tom Vilsack regarding USDA’s development of its Fall 2015 Highly Pathogenic Avian Influenza (HPAI) Preparedness and Response Plan.  The ten senators signing onto the letter were: Thad Cochran (R-MS), Jeff Sessions (R-AL), David Vitter (R-LA), John Boozman (R-AR), Tom Cotton (R-AR), Richard Shelby (R-AL), Johnny Isakson (R-GA), Roger Wicker (R-MS), Bill Cassidy (R-LA), and David Purdue (R-GA).

According to the senators’ letter, three matters are of particular importance and should be addressed in the regulatory development process being conducted by USDA through its Animal and Plant Health Inspection Service (APHIS).

First, the senators stated that current APHIS regulations “do not allow for the splitting of indemnity payments between owners and growers.” As a result, the senators argue that many contract growers are left “vulnerable in the event of [an HPAI] outbreak.” In an effort to provide protection for these contract growers, the senators “request[ed] that [APHIS] allocate any future indemnity equitably so that producers can maintain access to financing in the short-term and the future.”

Second, the senators stated that current APIHS regulations only permit indemnity for losses associated with bird mortality and not for losses associated with disruptions in the supply chain.  Specifically, the senators stated that “[e]ven if the birds in a particular facility do not contract HPAI, that producer could be affected by a hatchery outbreak.” Accordingly, the senators requested that APHIS consider providing producers with “downtime compensation.”  

Third, the senators stated that “it is important for growers to have expanded financial flexibility” to avoid the possibility of HPAI induced foreclosures.  To accomplish this goal, the senators requested that USDA “direct the Farm Service Agency to begin developing guidelines for its direct and guaranteed loan programs that would enable existing loans to be restructured to provide flexibility for borrowers severely affected by HPAI.”   

APHIS Updates HPAI Response Materials

Written by M. Sean High

On August 31, 2015, the United States Department of Agriculture Animal and Plant Health Inspection Service (APHIS) posted an update to the agency’s Highly Pathogenic Avian Influenza (HPAI) response documents.  Titled ContactPremises, this latest document reflects a concerted effort by APHIS to proactively deal with HPAI issues.

According to APHIS, a location is deemed a Contact Premise when that location is determined to “have susceptible poultry that may have been exposed to the highly pathogenic avian influenza (HPAI) virus, either directly or indirectly, including but not limited to exposure to susceptible poultry, poultry products, fomites, or people from Infected Premises.”

According to the Contract Premises document, a Contact Premises is identified through the tracing-back or tracing-forward of all movements (human, vehicle, animal, etc.) from HPAI Infected Premises.  If a Contract Premise is identified, depopulation may be authorized where HPAI is suspected.  A positive HPAI test not required.

Furthermore, APHIS will provide indemnity for the depopulation of Contact Premises poultry flocks that have been properly authorized for depopulated by APHIS and state officials.  The information necessary for indemnity will be collected from barn records after a Contact Premise is identified through movement tracing, and prior to an epidemiological investigation and any subsequent flock depopulation.

APHIS Updates HPAI Documents

Written by M. Sean High

In an effort to more efficiently respond to possible outbreaks of Highly Pathogenic Avian Influenza (HPAI), the United States Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) has recently issued updates to many of the department’s foreign animal disease preparedness and response plan materials (FAD PReP).  Of particular interest to poultry owners will likely be the newly streamlined procedures regarding appraisal and indemnity. 

According to the document titled Appraisal & Indemnity Procedures and dated August 19, 2015, “[t]he best practices to contain and eradicate [HPAI] by ‘stamping-out’ within 24 hours of detection will require rapid depopulation, appraisal, and indemnity procedures.” To accomplish these goals, state animal health officials and APHIS are no longer required to wait for a positive HPAI test result prior to authorizing depopulation.  Instead, these officials may now approve depopulation when HPAI is suspected.
  

Additionally, poultry owners are no longer required to have a signed flock plan prior to receiving indemnity payments.  A flock plan, however, will still be required if a poultry owner will is seeking APHIS disposal assistance or APHIS cleaning and disinfection assistance.

It is important to note that all APHIS FAD PReP materials are subject to change.  As a result, interested individuals should always consult the FAD PReP Materials andReferences webpage for the latest department revisions.

Vilsack Speaks at Conference on Avian Influenza

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

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

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

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

Written by Katharine Richter - Research Assistant

July 29, 2015