Vol. 140, No. 46 — November 18, 2006

Regulations Amending the Compensation for Destroyed Animals Regulations

Statutory authority

Health of Animals Act

Sponsoring agency

Canadian Food Inspection Agency

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The compensation program is administered by the Canadian Food Inspection Agency (CFIA) under the authority of the Health of Animals Act as part of the National Animal Health program which prevents or controls animal diseases and thereby protects Canadians and the Canadian animal population from diseases that can be transmitted by animals.

Section 55 of the Health of Animals Act allows the Minister of Agriculture and Agri-Food to make regulations setting out maximum compensation amounts allowable for animals ordered destroyed for disease control purposes under section 48 of the Act. Compensation is paid to encourage the early reporting of disease by animal owners and to encourage owner cooperation and participation during control/eradication efforts to prevent or reduce the spread of disease. The actual compensation award is based upon market value of the animal ordered destroyed but shall not exceed the maximum amount specified in the Regulations.

The current Compensation for Destroyed Animals Regulations were published in 2000. The maximum amounts for each animal listed in the schedule of the Regulations have not been substantively amended since they were published in 2000 and, as a result, the list of animals and their classifications are no longer reflective of the Canadian animal industry profile or current animal market values.

This regulatory initiative follows through on a commitment made by the Government of Canada in its Lessons Learned report published in January 2005 as part of the follow-up to the 2004 Avian Influenza (AI) outbreak in British Columbia. When the report was released, the CFIA also announced that a review of the maximum compensation amounts payable contained in the Compensation for Destroyed Animals Regulations would be undertaken. The commitment was reaffirmed in the Government's response to the recommendations of the Standing Committee on Agriculture and Agri-food in its April 21, 2005 report on the management of the AI outbreak.

The review engaged industry and government stakeholders in an open and transparent process. Numerous consultative meetings have taken place, and a revised schedule of maximum amounts and animal categories has been developed. The review was based on a number of guiding principles, including the following: maximum amounts must be set high enough to encourage early reporting and to encourage owner co-operation; maximum amounts must be based on reliable market information or a sound economic model; and the market value of superior genetics and performance should be recognized in the establishment of maximum amounts.

These regulatory amendments are intended to ensure that the animal categories and the maximum amounts are current. This will enable the awarding of appropriate compensation amounts, thereby contributing to the achievement of the goals of the National Animal Health Program. It is important to note that these amendments are an adjustment to the maximum amounts contained in the schedule to the Regulations only. The amount of compensation shall continue to be based upon the market value that the animal would have had at the time of its evaluation if it had not been required to be destroyed. This value shall not exceed any maximum amount established by or under the Regulations.

The amendments accomplish the following: update the categories of animals to better reflect the current animal industry profile; update maximum amounts based upon verifiable market information or sound economic models; allow more animals to be compensated at their full market value (doubles the maximum cap from $4,000 to $8,000); and significantly increases maximum amounts for animals which have a higher genetic value.

Alternatives

Option 1 — Maintain the current maximum amounts

Maintaining the current maximum amounts would result in compensation for some animal categories remaining well below current market value. This could result in compensation not being effective as a tool to encourage the early reporting of disease by animal owners and to encourage owner cooperation and participation during control/eradication efforts to prevent or reduce the spread of disease.

Option 2 — Implement the new maximum amounts only for the animal categories in the schedule which have market values exceeding the current maximum amount

This option would satisfy the animal industry sectors and owners whose animal market value has increased since last revision; however, the failure to update those animal categories where market value has declined would create an inequity between industry sectors and could result in exaggerated owner expectation and difficulties in settling compensation claims at the time of destruction.

Option 3 — Implement the new maximums for all animal categories in the schedule (preferred option)

This option is recommended, as it appears to be most fair and equitable for all animal industry sectors and animal owners who may face destruction of their animals.

Benefits and costs

Benefits

This amendment will continue to encourage owners to report diseases controlled under the Health of Animals Act by reducing the economic impact that results when an owner reports that his/her animals have a disease which is reportable under the Health of Animals Act.

Early reporting of these diseases to veterinary inspectors is essential to allow early intervention of Agency staff and to minimize the spread of the disease and the impact on human and animal health and the economic viability of Canada's livestock sector.

Costs

Over the last four years, an average of $27 million has been paid annually in compensation under the current Regulations. If the values proposed in these amendments had been in place over that four-year period, the total amount of compensation paid would have increased by approximately $500,000, or 2%.

International trade

This will be seen as a positive action which will aid in our international market access negotiations. It will demonstrate credible control for potential emerging diseases of significance to humans and animals.

Consultation

These amendments are the result of extensive consultation with industry, other government departments and other stakeholders. Animal industry groups and animal owners have generally supported the updating of the maximum amounts listed in the Regulations; however, some industry groups have questioned the establishment of maximum amounts based upon current market values which are depressed due to disease (e.g. Bovine Spongiform Encephalopathy) and related export trade restrictions. The short-term effect of these factors was considered in the establishment of maximum amounts by allowing a reasonable margin for market recovery.

The need to review the maximum amounts more regularly at shorter intervals has been emphasized throughout the consultative process.

Some animal industry sectors have asked that consideration be given to including other losses such as loss of income (profit), loss of marketable product and business disruption in the animal health compensation program. This is not authorized under the Health of Animals Act.

A national poultry industry working group on compensation has stated disagreement with market value being established at replacement bird value. The working group requests a component for fixed costs incurred during a period of business disruption to be added to bird replacement value in determining market value for compensation payment. In response to this industry concern, Agriculture and Agri-Food Canada (AAFC) is conducting a review of current government and industry financial assistance programs to identify whether there are gaps in animal production business risk. In light of the review, the Government will consider whether additional measures are needed to mitigate risk for farms that meet high biosecurity standards. The chicken agencies have requested that the amendment of the regulated maximum amount for chickens be delayed until the results of the AAFC review are known.

Some animal industry sectors have asked that maximum values be regulated that would allow elite animal market value to be fully compensated. In response, categories which will have higher maximum amounts have been proposed for registered animals, grandparent poultry breeder flocks and mature male cervids and bison. This will allow recognition of the genetic value of these animals.

An interdepartmental (Treasury Board, Department of Finance, Privy Council Office and AAFC) consultation meeting was held in February 2006. Once it was confirmed that the proposed maximum did not provide compensation for income loss, no further concerns were expressed.

In May 2006, a consultation letter and a schedule of proposed maximum amounts were sent to an industry consultative group and other federal government partners. Since that time, a number of bilateral and multi-lateral discussions have been held with all stakeholders, and consensus, to the extent possible, on the proposed maximum amounts was achieved.

Compliance and enforcement

The authority for the Minister to prescribe regulations establishing maximum amounts of compensation for animals ordered destroyed is contained in paragraph 55(b) of the Health of Animals Act.

All compensation paid under the Regulations is recommended by a veterinary inspector designated under the Health of Animals Act. The veterinarian is advised by two experts: one identified by the owner and the other by the Agency. A mechanism for appeal of compensation awards exists under the Health of Animals Act.

Contact

Wayne Outhwaite, Senior Project Manager — Animal Products Directorate, Canadian Food Inspection Agency, 59 Camelot Drive, Ottawa, Ontario K1A 0Y9, 613-221-4664 (telephone), 613-228-6683 (fax), outhwaitew@inspection.gc.ca (email).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Minister of Agriculture and Agri-Food, pursuant to paragraph 55(b) (see footnote a) of the Health of Animals Act (see footnote b), proposes to make the annexed Regulations Amending the Compensation for Destroyed Animals Regulations.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice and be sent to Wayne Outhwaite, Senior Project Manager — Animal Products Directorate, Canadian Food Inspection Agency, 59 Camelot Drive, Ottawa, Ontario K1A 0Y9 (tel.: 613-221-4664; fax.: 613-228-6683; e-mail: outhwaitew@inspection.gc.ca).

Ottawa, November 6, 2006

CHUCK STRAHL
Minister of Agriculture and Agri-Food

REGULATIONS AMENDING THE COMPENSATION FOR DESTROYED ANIMALS REGULATIONS

AMENDMENTS

1. The heading before section 1 of the French version of the Compensation for Destroyed Animals Regulations (see footnote 1) is replaced by the following:

DÉFINITIONS

2. Section 1 of the Regulations is replaced by the following:

1. The following definitions apply in these Regulations.

"Act" means the Health of Animals Act. (Loi)

"grandparent breeder" means a bird belonging to a flock of pureline poultry, comprising one or more generations of poultry, that is being maintained for the purpose of establishing, continuing or improving parent lines and from which parent lines are produced. (reproducteur grand-parent)

"parent breeder" means a bird belonging to a flock of poultry, comprising one or more generations of poultry, that is being maintained for the purpose of multiplying the parent flock or to produce commercial birds. (reproducteur parent)

3. The schedule to the Regulations is replaced by the schedule set out in the schedule to these Regulations.

COMING INTO FORCE

4. These Regulations come into force on the day on which they are registered.

SCHEDULE
(Section 3)

SCHEDULE
(Section 2)

[46-1-o]

Footnote a

S.C. 1997, c. 6, s. 71

Footnote b

S.C. 1990, c. 21

Footnote 1

SOR/2000-233

NOTICE:
The format of the electronic version of this issue of the Canada Gazette was modified in order to be compatible with hypertext language (HTML). Its content is very similar except for the footnotes, the symbols and the tables.

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