[Federal Register Volume 69, Number 183 (Wednesday, September 22, 2004)]
[Proposed Rules]
[Pages 56824-56906]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 04-21219]



[[Page 56823]]

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Part II





Department of Health and Human Services





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Food and Drug Administration



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21 CFR Parts 16 and 118



Prevention of Salmonella Enteritidis in Shell Eggs During Production; 
Proposed Rule

Federal Register / Vol. 69, No. 183 / Wednesday, September 22, 2004 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 16 and 118

[Docket Nos. 1996P-0418, 1997P-0197, 1998P-0203, and 2000N-0504]
RIN 0910-AC14


Prevention of Salmonella Enteritidis in Shell Eggs During 
Production

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to require 
shell egg producers to implement measures to prevent Salmonella 
Enteritidis (SE) from contaminating eggs on the farm. We are taking 
this action because of the number of outbreaks of foodborne illnesses 
and deaths caused by SE that are associated with the consumption of 
shell eggs that have not been treated to destroy this pathogen. We 
expect that the requirements that we are proposing in this rule, if 
finalized as proposed, will result in a significant decrease in the 
number of SE-contaminated eggs produced on farms. Ultimately, we expect 
that the proposed requirements in this rule will generate public health 
benefits through a decrease in the numbers of SE-associated illnesses 
and deaths caused by consumption of shell eggs.

DATES: Submit written or electronic comments by December 21, 2004.
    Submit written comments on the information collection provisions by 
October 22, 2004. See sections III.C and VI.C of this document for the 
proposed compliance dates of a final rule based on this document.

ADDRESSES: You may submit comments, identified by [Docket Nos. 1996P-
0418, 1997P-0197, 1998P-0203, and 2000N-0504], by any of the following 
methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web site: http://www.fda.gov/dockets/ecomments. 
Follow the instructions for submitting comments on the agency Web site.
     E-mail: fdadockets@oc.fda.gov. Include [Docket Nos. 1996P-
0418, 1997P-0197, 1998P-0203, and 2000N-0504 and RIN number 0910-AC14] 
in the subject line of your e-mail message.
     FAX: 301-827-6870.
     Mail/Hand delivery/Courier [For paper, disk, or CD-ROM 
submissions]: Division of Dockets Management, 5630 Fishers Lane, rm. 
1061, Rockville, MD 20852.
    Instructions: All submissions received must include the agency name 
and Docket No. or Regulatory Information Number (RIN) for this 
rulemaking. All comments received will be posted without change to 
http://www.fda.gov/dockets/ecomments, including any personal 
information provided. For detailed instructions on submitting comments 
and additional information on the rulemaking process, see the 
``Comments'' heading of the SUPPLEMENTARY INFORMATION section of this 
document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.fda.gov/dockets/ecomments and/or 
the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Rebecca Buckner, Center for Food 
Safety and Applied Nutrition (HFS-306), Food and Drug Administration, 
5100 Paint Branch Pkwy. College Park, MD 20740, 301-436-1486.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Highlights of the Proposed Rule
II. Background
    A. Salmonella and SE Infection
    1. Salmonellosis
    2. SE
    3. SE and Eggs
    4. Mechanism of Salmonella Contamination in Eggs
    5. Infectious Dose
    B. U.S. Egg Industry
    C. Federal Egg Safety Regulatory Agencies and Authorities
    D. Current Federal Egg Safety Measures for Shell Egg Production and 
Retail
    1. Refrigeration of Shell Eggs
    2. Labeling of Shell Eggs
    3. The FDA Food Code
    4. Egg Safety Education Efforts
    E. The SE Risk Assessment
    F. Advanced Notice of Proposed Rulemaking on SE in Eggs
    G. Egg Safety Public Meetings
    H. Current On-Farm Practices
    1. The Layers Study
    2. Voluntary Egg Quality Assurance Programs (QA)
    I. Petitions to the Agency
    1. Center for Science in the Public Interest
    2. Rose Acre Farms, Inc.
    3. United Poultry Concerns, Inc., and the Association of 
Veterinarians for Animal Rights
III. The Proposal to Require SE Prevention Measures for Egg Production
    A. Rationale for Proposal
    B. Shell Egg Producers Covered by Proposed 21 CFR Part 118
    C. Proposed Compliance Dates for Shell Egg Producers of Various 
Sizes
    D. Definitions
    E. The SE Prevention Measures
    1. Chicks and Pullets
    2. Biosecurity
    3. Rodents, Flies, and Other Pest Control
    4. Cleaning and Disinfection
    5. Refrigeration of Shell Eggs Stored More Than 36 Hours
    F. Indication of the Effectiveness of the SE Prevention Measures: 
Testing
    1. Environmental Testing for SE
    2. Egg Testing for SE
    G. Sampling and Testing Methodology for SE
    1. Sampling of the Poultry House Environment
    2. Egg Sampling
    H. Laboratory Methods for Testing for SE
    I. Administration of the SE Prevention Measures
    J. Recordkeeping Requirements for the SE Prevention Measures
    1. Records That Egg Producers Are Required to Maintain
    2. General Requirements for Records Maintained by Egg Producers
    3. Length of Time Records Must Be Retained
    4. Offsite Storage of Records
    5. Official Review of Records
    6. Public Disclosure of Records
    7. Comment Solicitation on Recordkeeping Measures
    K. Enforcement of On-Farm SE Prevention Measures for Shell Eggs
    L. Legal Authority
    M. Response to Comments Related to On-Farm SE Prevention Measures
    N. Transportation of Shell Eggs
IV. Handling and Preparation of Eggs by Retail Establishments
    A. Inappropriate Handling of Raw Shell Eggs by Food Preparers
    B. SE and Highly Susceptible Populations
    C. The FDA Food Code
    D. Request for Comments
    E. Response to Comments Related to Retail Standards
V. Preliminary Regulatory Impact Analysis (PRIA)
    A. Introduction
    B. Need for Regulation
    C. Economic Analysis of Potential Mitigations: Overview
    1. Measuring Benefits
    2. Measuring Costs
    3. Coverage of the Analysis
    D. Summary of Costs and Benefits of Regulatory Options and the

[[Page 56825]]

Proposed Rule
    1. No New Regulatory Action
    2. Classification of SE-Positive Eggs as Restricted or SE Positive
    3. HAACP
    4. The Proposed Rule
    5. More Extensive On-Farm SE Prevention Measures
    6. Less Extensive On-Farm SE Prevention Measures
    7. Retail SE Prevention Measures
    E. Benefits and Costs of Potential SE Prevention Measures: Detailed 
Analysis
    1. On-Farm SE Prevention Measures
    2. Administrative Measures
    3. Summary of On-Farm SE Prevention and Administrative Measures
    4. Retail Provisions
    F. Summary of Benefits and Costs of the Proposed Rule
    1. Coverage
    2. Provisions in the Proposed Rule
    3. Summary of Costs and Benefits
    4. Analysis of Uncertainty
VI. Initial Regulatory Flexibility Analysis
    A. Introduction
    B. Economic Effects on Small Entities
    1. Number of Small Entities Affected
    2. Costs to Small Entities
    C. Regulatory Options
    1. Exemption for Small Entities
    2. Longer Compliance Periods
    D. Description of Recordkeeping and Recording Requirements
    E. Summary
VII. Unfunded Mandates
VIII. Federalism
IX. Environmental Impact
X. Paperwork Reduction Act of 1995
XI. Comments
XII. References
Appendix to the PRIA A: Costs of Alternative Testing and Diversion 
Scenarios
Appendix to the PRIA B: The Expected Cost of Testing and Diversion
Appendix to the PRIA C: Distributions Used in the Analysis of 
Uncertainty

I. Highlights of the Proposed Rule

    In this proposed rulemaking, FDA is proposing egg safety SE 
prevention measures for egg production. This proposal is significant 
because a farm-to-table risk assessment of Salmonella Enteritidis (SE) 
in eggs identified implementation of on-farm prevention measures as a 
very important step that could be taken to reduce the occurrence of SE 
infections from eggs. Voluntary quality assurance programs for egg 
production have led to meaningful reductions in SE illnesses already. 
However, these programs are not always uniformly administered or 
uniformly comprehensive in their prevention measures.
    Moreover, the most recent data from the Centers for Disease Control 
and Prevention (CDC) show that SE illnesses have essentially remained 
steady for the past several years. In 2001, CDC estimated that 118,000 
illnesses were caused by consumption of SE-contaminated eggs. 
Accordingly, we believe that additional interventions are warranted. 
The proposed on-farm SE prevention measures and a more detailed 
rationale for these measures are found in section III of this document.
    Following are the proposed SE prevention measures: (1) Provisions 
for procurement of chicks and pullets, (2) a biosecurity program, (3) a 
pest and rodent control program, (4) cleaning and disinfection of 
poultry houses that have had an environmental sample or egg test 
positive for SE, and (5) refrigerated storage of eggs at the farm. 
Moreover, a cornerstone of the proposal is a requirement that producers 
test the environment for SE in poultry houses. If the environmental 
test is positive, we are proposing that egg testing for SE be 
undertaken, and that if an egg test is positive, eggs be diverted from 
the table egg market to a technology or process that achieves at least 
a 5-log destruction of SE for shell eggs, or the processing of egg 
products in accordance with the Egg Products Inspection Act. As part of 
the SE prevention measures, we are proposing that producers identify a 
responsible person to administer the prevention measures at each farm. 
We also are proposing recordkeeping requirements for environmental and 
egg sampling and testing and for egg diversion. Finally, we are 
proposing that if a producer has 3,000 or more laying hens and all eggs 
at a farm are to be given a treatment that will achieve at least a 5-
log destruction of SE or processed into egg products, then only the 
proposed refrigeration requirements would apply. The proposed rule 
would not apply to producers who sell all of their eggs directly to 
consumers or producers with fewer than 3,000 laying hens.
    We also are soliciting comment on whether we should include 
additional requirements in the final rule, particularly in two areas. 
First, should we expand the recordkeeping requirements to include a 
written SE prevention plan and records for compliance with the SE 
prevention measures? Second, should the safe egg handling and 
preparation practices in FDA's 2001 Model Food Code (as outlined in 
section IV.D of this document) be federally mandated for retail 
establishments that specifically serve a highly susceptible population 
(e.g., nursing homes, hospitals, day care centers)? These issues are 
discussed in more detail in the following relevant sections of this 
document.

II. Background

A. Salmonella and SE Infection

1. Salmonellosis
    Salmonella microorganisms are ubiquitous and are commonly found in 
the digestive tracts of animals, especially birds and reptiles. Human 
illnesses are usually associated with ingesting food or drink 
contaminated with Salmonella, although infection also may be 
transmitted person to person through the fecal-oral route where 
personal hygiene is poor or by the animal-to-man route (Ref. 1).
    The disease salmonellosis is the result of an intestinal infection 
with Salmonella and is characterized by diarrhea, fever, abdominal 
cramps, headache, nausea, and vomiting. Symptoms of salmonellosis 
usually begin within 6 to 72 hours after consuming a contaminated food 
or liquid and last for 4 to 7 days. Most healthy people recover without 
antibiotic treatment; however, the infection can spread into the 
bloodstream, then to other areas of the body such as the bone marrow or 
the meningeal linings of the brain. This infection can lead to a severe 
and fatal illness (Ref. 2). The complications associated with an 
infection are more likely to occur in children, the elderly, and 
persons with weakened immune systems. In addition, about 2 percent of 
those who recover from salmonellosis may later develop recurring joint 
pains and arthritis (Ref. 3).
    Salmonellosis is a serious health concern. It is a notifiable 
disease, i.e., physicians and health laboratories are required to 
report cases (single occurrences of illness) to local health 
departments in accordance with procedures established by each State. 
These cases are then, in turn, reported to State health departments, 
and the Salmonella isolates\1\ are referred to State Public Health 
laboratories for serotyping. Each case and each serotyped isolate is 
reported to CDC. These reports are made only for diagnosed cases of 
Salmonella infection.
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    \1\ When a physician sees a patient and suspects that the 
patient has a case of salmonellosis, the physician may obtain a 
patient's specimen (e.g. stool) for analysis. The specimen is sent 
to the laboratory to be tested to identify and confirm any 
Salmonella that may be present. Thus, the laboratory obtains the 
actual specimen of Salmonella.
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    A case of illness is confirmed as salmonellosis only if an isolate 
is confirmed by a laboratory as being

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Salmonella. Although all cases may not be confirmed, all confirmed 
cases are associated with isolates of Salmonella. Reported cases are 
likely to represent only a small portion of the actual number of 
illnesses that occurred because of the following reasons: (1) Ill 
individuals do not always seek care by medical professionals, 
especially if the symptoms are not severe; (2) medical professionals 
may not establish the cause of the illness but may simply treat the 
symptoms; and (3) medical professionals do not always report Salmonella 
cases to public health officials. CDC used updated information and data 
from a FoodNet population study to estimate that there are 38 cases of 
salmonellosis for every one that is reported (Ref. 4). This estimate 
was central to updating an estimate of the burden of salmonellosis. The 
overall burden of salmonellosis in 2001 was estimated to be 1,203,650 
cases, including 14,000 hospitalizations, and 494 deaths (Refs. 4 and 
5).
    CDC surveillance data list close to 600 different Salmonella 
serotypes (a group of related microorganisms distinguished by their 
antigens) that have caused illness in the United States. Following are 
the four serotypes most frequently reported as causing illness: (1) 
Salmonella enterica serotype Typhimurium, (2) Salmonella enterica 
serotype Enteritidis (Salmonella Enteritidis or SE), (3) Salmonella 
enterica serotype Newport, and (4) Salmonella enterica serotype 
Heidelberg (Ref. 6). These microorganisms are found in poultry, eggs, 
and other foods.
2. SE
    Currently, SE is one of the most commonly reported serotypes of 
Salmonella. SE accounted for only about 5 percent of the number of all 
reported Salmonella isolates in 1976. However, in 1985, 1990, 1994, and 
1999, SE constituted 9.8 percent, 20.6 percent, 26.3 percent, and 16.3 
percent, respectively, of all Salmonella isolates (Ref. 6). The rate of 
SE isolates reported to CDC increased from 0.6 per 100,000 population 
in 1976 to 3.6 per 100,000 in 1996 (Ref. 7). In 2001, the isolation 
rate of SE was 2.0 per 100,000 population and the contribution of SE 
(corrected for underreporting) to total salmonellosis was estimated to 
have been 213,046 illnesses, including 2,478 hospitalizations, and 87 
deaths (Refs. 4 and 5).
    In 1985, the States reported 26 SE-related outbreaks (i.e., 
occurrences of 2 or more cases of a disease related to a common source) 
to CDC; by 1990 the number of SE-related outbreaks reported to CDC had 
increased to 85. In 1995 there were 56 confirmed outbreaks of SE 
infection, in 2000 there were 50 and in 2002 there were 32 (Ref. 8).
3. SE and Eggs
    In the mid-1980s, CDC made an epidemiological and laboratory 
association between eggs and Salmonella outbreaks. Shell eggs are now 
the predominant source of SE-related cases of salmonellosis in the 
United States where a food vehicle is identified. A food vehicle is 
identified in approximately half of the outbreaks of illness associated 
with SE. Between 1990 and 2001, an average of 78 percent of vehicle-
confirmed SE outbreaks were egg associated (Ref. 9). These eggs were 
typically raw or undercooked. Although CDC can estimate the number of 
egg-associated SE illnesses as a percentage of all SE illnesses, the 
proportion of domestically acquired salmonellosis that is attributable 
to SE in eggs is difficult to estimate. The estimates have a broad 
range of uncertainty around them because of the variable nature of both 
foodborne disease outbreaks and investigations. However, the basic 
surveillance information on the number of reported SE cases and 
outbreaks is readily available and does not require further estimation. 
Although there are other sources of SE, actions to improve egg safety 
are the single most effective way to reduce the overall number of SE 
infections and outbreaks.
    CDC has described several SE outbreaks that occurred between 1996 
and 1998 and were associated with raw or undercooked eggs (Ref. 7).
     In November 1997, 91 persons who consumed broccoli with 
Hollandaise sauce at a Las Vegas restaurant became ill. Investigation 
showed that the Hollandaise sauce was prepared with pooled shell eggs, 
cooked to a temperature inadequate to kill SE, and then held at room 
temperature for several hours prior to service.
     In August 1997, 12 persons developed culture-confirmed 
cases of SE after consuming cheesecake prepared in a private residence 
in Los Angeles, CA. The cheesecake contained raw egg whites and egg 
yolks that were heated in a double boiler until slightly thickened. The 
California Department of Health Services and Department of Food and 
Agriculture investigated the farm that supplied the eggs and isolated 
SE from manure samples and from pooled egg samples.
     In October 1997, 75 persons at 7 different events in the 
District of Columbia developed salmonellosis after consuming lasagna 
supplied by the same commercial manufacturer. Cultures of leftover 
lasagna yielded SE. Investigation revealed that all of the lasagnas 
consumed at the different events were prepared from the same egg-cheese 
mixture. A traceback investigation led to farms at which 5 of 13 
poultry houses had environmental samples positive for SE.
    From 1990 to 2001, 14,319 illnesses were attributed to SE 
associated with shell eggs. Of those illnesses, 10,406 occurred during 
1990 through 1995 and 3,913 occurred during 1996 through 2001 (Ref. 9). 
In 2002, there were 32 outbreaks of SE illness, and the SE isolation 
rate (illnesses per 100,000 population) was 1.77 (Ref. 8). Progress has 
been made and there has been a decrease in SE incidence since the mid-
1990s, in part due to egg quality assurance (QA) programs, informing 
and educating consumers and retailers on proper handling, and 
nationwide regulations to keep eggs refrigerated. However, these gains 
are still far short of the public health and foodborne illness gains 
required to meet Healthy People 2010 goals. Healthy People 2010 sets 
forth significant and achievable goals, namely a 50 percent reduction 
in both outbreaks and salmonellosis from foodborne contamination 
(corresponding to a 50 percent reduction from the 2000 goals for SE 
outbreak reduction and a 50 percent reduction in salmonellosis in 
general) (Ref. 10). We estimate that the largest gains towards our 
public health goals will be achieved through implementation of this 
rule. The incidence of SE in the United States remains much higher than 
in the 1970s (1976 SE isolation rate = 0.56) (Ref. 11), and the 
decrease in reported cases of SE illness since 1999 has appeared to 
slow or stop compared to decreases seen in the mid-1990s (Ref. 9). 
Because progress in reducing the number of illnesses and outbreaks 
appears to have greatly slowed or stopped, we believe the additional 
preventive measures, proposed herein, for shell eggs may be needed to 
reduce further the incidence of SE illnesses and meet our public health 
goals.
4. Mechanism of Salmonella Contamination in Eggs
    Previously, Salmonella contamination of shell eggs was thought most 
likely to be caused by trans-shell penetration of bacteria present in 
the egg's environment. The surface of an egg can become contaminated 
with any microorganism that is excreted by the laying hens. In 
addition, contact with nesting materials, dust, feedstuff, shipping and 
storage containers, human beings and other animals may be a source of 
shell contamination. The

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likelihood of trans-shell penetration increases with the length of time 
that the eggs are in contact with contaminating materials.
    While environmental contamination is still a route for Salmonella 
contamination, SE experts now believe that the predominant route 
through which eggs become contaminated with SE is the ``transovarian'' 
route. Though the mechanism is still not well understood, SE will 
infect the ovaries and oviducts of some egg-laying hens, permitting 
transovarian contamination of the interior of the egg while the egg is 
still inside the hen (Refs. 12 and 13). The site of contamination is 
usually the albumen (the egg white).
    It is believed that only a small number of hens in an infected 
flock shed SE at any given time and that an infected hen may lay many 
uncontaminated eggs (Ref. 14). Nonetheless, it has been estimated that 
of the 47 billion shell eggs consumed annually as table eggs (eggs 
consumed as shell eggs, as opposed to eggs that are used to make egg 
products), 2.3 million are SE-positive, exposing a large number of 
people to the risk of illness (Ref. 15).
5. Infectious Dose
    In general, the greater the numbers of microorganisms ingested, the 
greater the likelihood of disease. The likelihood of disease also is 
contingent on the virulence of the microorganism and the susceptibility 
of the host (Ref. 16). However, there is evidence that the infectious 
dose (i.e., amount of microorganisms capable of causing disease) for SE 
can be very low. For example, in a 1994 outbreak attributed to 
consumption of SE-contaminated ice cream, the highest level of 
contamination found in the implicated ice cream was only six 
microorganisms per half-cup (65 gram) serving (Ref. 17). Another 
report, using a different method of measurement, determined that the 
infective dose per serving was 25 microorganisms (Ref. 18). These 
reports indicate that low-level contamination of some foods with SE can 
lead to illness. It is generally believed that SE-contaminated eggs 
initially contain only a few SE microorganisms (less than 20 (Ref. 
19)), which may be sufficient to cause illness.

B. U.S. Egg Industry

    On a per capita basis, Americans consume about 234 eggs per year 
(Ref. 20). U.S. production is relatively stable and has increased only 
slightly, from about 60 billion eggs in 1984 to 67.3 billion eggs in 
1998 (Ref. 21). Generally, about 70 percent of the edible shell eggs 
produced are sold as table eggs while the remainder are processed into 
liquid, frozen or dried pasteurized egg products. The majority of egg 
products are destined for institutional use or further processing into 
foods such as cake mixes, pasta, ice cream, mayonnaise, and bakery 
goods.
    Geographically, commercial egg production in the western United 
States is concentrated in California, and in the eastern United States 
is centered in Ohio, Indiana, Iowa, and Pennsylvania. Other States in 
which major producers are located include Texas, Minnesota, and 
Georgia. Over 4,000 farm sites have 3,000 or more egg-laying hens, 
representing 99 percent of all domestic egg-laying hens and accounting 
for 99 percent of total egg production. There are an additional 65,000 
farms with fewer than 3,000 egg-laying hens, accounting for the balance 
of eggs produced (Ref. 22).

C. Federal Egg Safety Regulatory Agencies and Authorities

    Federal authority to regulate egg safety is shared by FDA and the 
U.S. Department of Agriculture's Food Safety and Inspection Service 
(USDA's FSIS). In addition, USDA's Animal and Plant Health Inspection 
Service (APHIS) conducts a control program that certifies poultry 
breeding stock and hatcheries as SE-monitored and USDA's Agricultural 
Marketing Service (AMS) conducts a surveillance program to ensure 
proper disposition of restricted shell eggs.
    FDA has jurisdiction over the safety of foods generally, including 
shell eggs, under section 201 of the Federal Food, Drug, and Cosmetic 
Act (the FFDCA) (21 U.S.C. 321). The Public Health Service Act (the PHS 
Act) (42 U.S.C. 201 et seq.) authorizes the FDA to make and enforce 
such regulations as ``are necessary to prevent the introduction, 
transmission or spread of communicable diseases from foreign countries 
into the States * * * or from one State * * * into any other State'' 
(section 361(a) of the PHS Act (42 U.S.C. 264(a)). Thus, under the 
FFDCA and the PHS Act, FDA has the authority to regulate a food when 
the food may act as a vector of disease, as in the case of SE-
contaminated eggs.
    USDA has primary responsibility for implementing the Egg Products 
Inspection Act (EPIA) (21 U.S.C. 1031 et seq.). Under the EPIA, FSIS 
has primary responsibility for the inspection of processed egg products 
to prevent the distribution of adulterated or misbranded egg products.
    This proposed rule is part of a joint and coordinated strategy by 
FDA and FSIS to more effectively address egg safety. Pursuant to this 
coordinated strategy, FDA is focusing its efforts on farm practices, 
and on food manufacturing plants, institutions, and restaurants. FSIS, 
in turn, is focusing its efforts on egg products plants and egg 
handlers. Both agencies are evaluating additional measures to improve 
egg safety, and FSIS intends to issue proposed rules in the near future 
for egg products plants and egg handlers, including egg handlers who 
operate in-shell pasteurization treatments. FDA and FSIS will continue 
to work closely together to ensure that our egg safety measures are 
consistent, coordinated, and complementary.

D. Current Federal Egg Safety Measures for Shell Egg Production and 
Retail

    Currently, there are no Federal regulations to reduce the presence 
of SE in eggs during production. However, we recognize that some State 
or local agencies may have requirements in place addressing egg safety 
during production.
    There are several Federal activities related to egg safety at the 
retail level. FSIS issued a final rule for refrigeration and labeling 
of eggs during transport and storage when packed for the ultimate 
consumer (63 FR 45663, August 27, 1998). In addition, FDA issued a 
final rule that requires labeling of eggs and refrigeration of eggs at 
retail establishments (65 FR 76092, December 5, 2000). Further, FDA's 
Food Code provides guidance to retail establishments on the handling 
and storage of potentially hazardous foods, such as shell eggs. Also, 
there have been egg safety education campaigns specifically tailored 
for the retail sector. The following sections describe these egg safety 
measures.
1. Refrigeration of Shell Eggs
    The EPIA was amended in 1991 (Public Law 102-237) to require that 
shell eggs packed for the ultimate consumer be stored and transported 
under refrigeration at an ambient temperature (i.e., the air 
temperature maintained in an egg storage facility or transport vehicle) 
not to exceed 45 [deg]F. The 1991 Amendments to the EPIA also require 
that labels on egg containers indicate that refrigeration of eggs is 
required. Subsequently, USDA's FSIS amended its regulations to require 
shell egg handlers to store and transport shell eggs packed in 
containers destined for the ultimate consumer under refrigeration at an 
ambient temperature of no greater than 45 [deg]F (7.2 [deg]C) (63 FR 
45663). In the FSIS regulation, an egg handler is defined as any 
person, excluding the ultimate consumer, who engages in any business in 
commerce that involves buying or selling any eggs

[[Page 56828]]

(as a poultry producer or otherwise), or processing any egg products, 
or otherwise using any eggs in the preparation of human food. In 9 CFR 
590.5, FSIS defines an ultimate consumer as any household consumer, 
restaurant, institution, or other party who has purchased or received 
shell eggs or egg products for consumption. This regulation became 
effective August 27, 1999.
    FSIS' regulation does not require the ultimate consumer, including 
restaurants and institutions, to maintain shell eggs under 
refrigeration. Consequently, we concluded that it was necessary to 
require that shell eggs be kept refrigerated throughout retail 
distribution. On December 5, 2000, we published a final rule requiring 
that retail establishments, such as grocery stores, farm stands, 
restaurants, schools, and nursing homes, promptly refrigerate eggs upon 
receipt and store and display eggs at an ambient temperature of 45 
[deg]F (7.2 [deg]C) or less (65 FR 76092).
2. Labeling of Shell Eggs
    In an effort to inform consumers of the risks associated with 
consuming raw or undercooked eggs, we require that egg cartons carry 
safe handling instructions (21 CFR 101.17(h)). All eggs not 
specifically processed to destroy Salmonella must carry the following 
safe handling statement: ``SAFE HANDLING INSTRUCTIONS: To prevent 
illness from bacteria: keep eggs refrigerated, cook eggs until yolks 
are firm, and cook foods containing eggs thoroughly.''
3. The FDA Food Code
    Through the Food Code, FDA endeavors to assist those local, State, 
tribal, and Federal governmental jurisdictions assuming primary 
responsibility for preventing foodborne illness and for licensing and 
inspecting establishments within the retail segment of the food 
industry. The Food Code, published by FDA, is not Federal law or 
regulation, and is not preemptive. Rather, it represents our best 
advice to States and local authorities to ensure that food at the 
retail level is safe, properly protected, and properly represented 
(i.e., is what it is purported to be). The Food Code provides guidance 
on food safety, sanitation, and fair dealing that can be uniformly 
adopted for the retail segment of the food industry. The document is 
the cumulative result of the efforts and recommendations of many 
contributing individuals with years of experience. These individuals 
represent a diverse group of regulators, educators, industry leaders, 
and consumer representatives acting through their agencies, companies, 
professional groups, or trade organizations.
    Although the Food Code provisions are not Federal requirements, 
they are designed to be consistent with Federal food laws and 
regulations. The Food Code is written so that all levels of government 
can easily adopt the language of the Food Code into a legal 
requirement.
    All segments of the food industry and Federal, State, and local 
governments share the responsibility to ensure food provided to the 
consumer is safe and does not become a vehicle for a disease outbreak 
or the transmission of communicable disease. By sharing in this 
responsibility, government and industry can ensure consumer 
expectations are met, and food is prepared in a sanitary environment, 
properly presented, and not adulterated.
    The Food Code provides advice on how to prevent foodborne illness 
based on information obtained from CDC investigations. CDC has 
identified risk factors, such as unsafe sources, inadequate cooking, 
improper holding, contaminated equipment, and poor personal hygiene, 
which may lead to foodborne outbreaks. CDC further established five key 
public health interventions to protect consumer health: (1) 
Demonstration of knowledge, (2) employee health controls, (3) 
controlling hands as a vehicle of contamination, (4) time and 
temperature parameters for controlling pathogens, and (5) consumer 
advisories.
    FDA revises sections of the Food Code every 2 years, and publishes 
the revision either as a supplement (most recently in 2003) to the 
existing edition or as a new edition (most recently in 2001), based on 
the extent of revision. Each new edition incorporates the provisions of 
supplements issued between editions. The next revision of the Food Code 
will be in 2005. Provisions relevant to egg safety can be found in the 
2001 Food Code in sections 3-202.11, 3-202.13, 3-202.14, 3-302.13, 3-
401.11, 3-603.11, and 3-801.11.
4. Egg Safety Education Efforts
    Consumer food safety surveys conducted in 1993, 1998, and 2001 by 
FDA and FSIS suggested that consumers are less aware of or concerned 
about risks associated with eggs than they are of risks associated with 
other foods (Refs. 23 and 24). The data indicate that people are most 
likely to follow recommended practices when handling fish, somewhat 
less likely when handling meat or chicken, and much less likely to 
follow recommended practices when breaking eggs. In fact, the majority 
of people (65 percent) do not wash their hands with soap after breaking 
raw eggs (Refs. 23 and 24).
    Comparing the 1998 survey findings with those of 1993, improvement 
in the safe handling of eggs by people 61 and older lagged considerably 
behind that of people 18 to 25 years old. The younger group showed a 42 
percent improvement versus 9 percent for the older group. The 2001 
survey showed no significant difference in consumers' egg-handling 
behavior from 1998 (Ref. 24).
    In consideration of the survey findings, we developed a strategy 
for an education campaign on egg safety that targeted both the general 
public and at-risk populations. We began the campaign with the July 1, 
1999, release of FDA's egg labeling and refrigeration proposed rule to 
take advantage of media and public interest in safe handling 
instructions for shell egg labels and refrigeration requirements for 
eggs at retail establishments. We prepared a video news release (VNR) 
to inform consumers of the proposed regulations and to alert them to 
the potential risks of, and steps to take to avoid, undercooked eggs. 
The VNR was released in conjunction with the July 1999 announcement of 
the proposed egg labeling and refrigeration rule.
    To provide a basic source of print information for consumers on 
eggs and egg safety, we developed a fact sheet, ``Food Safety Facts for 
Consumers: Playing It Safe With Eggs,'' which was released in July 
1999. The fact sheet covers safe buying, handling, preparation, and 
storage of eggs and egg dishes, as well as information on how to avoid 
the hidden risks in foods that contain raw or lightly cooked eggs. A 
corresponding fact sheet was developed for food service personnel, 
entitled ``Food Service Safety Facts: Assuring the Safety of Eggs and 
Egg Dishes Made From Raw, Shell Eggs,'' and was released in September 
1999.
    The consumer fact sheet was targeted to general consumers, 
especially parents of young children and older Americans. The food 
service fact sheet was targeted to institutional preparers of food for 
children, the elderly, and immunocompromised individuals. To reach the 
target audience, the fact sheets were distributed to the print and 
electronic media, 83,000 day care centers, 13,000 nursing home 
directors, school nurses, FDA field staff, extension agents, State and 
local health agencies, and food preparation trade associations. Both 
fact sheets are posted on FDA's Web site www.foodsafety.gov.
    Egg safety information also is incorporated into other food safety

[[Page 56829]]

education initiatives. For example, the widely distributed English and 
Spanish Fight BAC! brochures produced by the public-private Partnership 
for Food Safety Education, of which FDA is a member, include safe egg 
cooking information. The Partnership's Virtual Toolbox, available on 
the fightbac.org Web site, features egg safety information prominently 
among a wide range of other education materials for use by health 
educators.
    We initiated a second phase of the egg safety education campaign 
after publishing the final rules on safe handling labels and 
refrigeration at retail. Our strategy remained unchanged; we targeted 
the general public and at-risk populations. Our campaign message 
focused attention on the new labels on eggs, the potential for human 
sickness caused by bacteria from fresh eggs from any source, and the 
safety of eggs if selected, stored, and prepared properly.
    In addition to the press information FDA distributed about the 
regulations, we prepared and distributed a range of consumer education 
materials, including a video news release; a public service 
announcement/flier sent to 600 publications specializing in health, 
food, elderly issues and parenting, as well as specialized health 
information providers, such as the National AIDS Clearinghouse and 
Hotline, the American Cancer Society and National Cancer Hotline, and 
the Arthritis Foundation; a consumer brochure; and a drop-in feature 
article in English and Spanish. All consumer education materials are 
available on our Web site.
    We currently are distributing educational materials we developed 
for food service and food retail personnel incorporating existing FDA 
regulations and recommendations pertaining to egg safety. These 
materials consist of a brochure entitled ``Assuring the Safety of Eggs 
and Menu and Deli Items Made From Raw, Shell Eggs--Information for 
Retail Food Stores and Food Service Operations,'' and a poster, ``Key 
Temperatures for Egg Safety in Food Service Operations and Retail Food 
Stores.'' Initially, 250 copies each of the brochure and the poster 
were sent to State Egg Program Directors, State Food Service Program 
Directors, FDA Regional Food Specialists, and FDA Public Affairs 
Specialists in the field to use in generating demand for the 
information.
    Since the initial mailing, orders have been steady. As of August 
2004, approximately 202,000 posters and 246,000 brochures had been 
distributed. At least one State, Kentucky, ordered enough (22,000) to 
provide copies to each retail food store, food service establishment 
and food manufacturing firm in the State. In addition, the brochure, 
``Assuring the Safety of Eggs and Menu and Deli Items Made from Raw 
Shell Eggs--Information for Retail Food Stores and Food Service 
Operations,'' was mailed to 70,300 restaurants in September 2002.
    Consumer information on safe handling of eggs is also included in 
two widely distributed FDA consumer publications, To Your Health: Food 
Safety for Seniors and the Fight BAC! Flyer (originally developed as a 
patient handout for the AMA/ANA/FDA/CDC/USDA health professional 
education kit, Kiagnosis and Management of Foodborne Illnesses). 
Distribution of consumer and foodservice educational materials 
continues at professional meetings and conferences, most recently the 
2003-2004 meetings of the American Dietetic Association, American 
Public Health Association, Food Safety Summit, National WIC 
Association, American College of Physicians, National Restaurant 
Association, American Nurses Association, National Association of Area 
Agencies on Aging, National Wellness Conference, and International 
Association for Food Protection.

E. The SE Risk Assessment

    In December 1996, FSIS and FDA, with representatives from other 
government agencies and academia, began a comprehensive risk assessment 
in response to an increasing number of human illnesses associated with 
the consumption of eggs (Ref. 15). Following are the objectives of the 
risk assessment: (1) Establish the unmitigated (without any SE-
prevention measures risk of foodborne illness from SE, (2) identify and 
evaluate potential prevention strategies, (3) identify data needs, and 
(4) prioritize future data collection efforts.
    A team of scientists developed a quantitative model to characterize 
the risks associated with the consumption of eggs contaminated 
internally with SE, using information obtained from academic, 
government, and industry sources, along with scientific literature. The 
risk assessment model consists of five discrete modules (Egg Production 
Module, Shell Egg Module, Egg Products Module, Preparation and 
Consumption Module, and Public Health Module) that may be used 
independently to evaluate the effect of variable changes during a 
particular stage of the farm-to-table continuum. However, the overall 
model encompasses the entire continuum, from the chicken through egg 
production, to egg consumption and human illness. The model predicted 
that using any one intervention (e.g., egg refrigeration or consumer 
egg safety education) could achieve a modest reduction in human SE 
illnesses, while using multiple interventions could achieve a more 
substantial reduction for those interventions tested (Ref. 15). Though 
on-farm mitigations, as such, were not specified in the risk 
assessment, various inputs to the model were tested for cooling and 
refrigeration of eggs, including cooling eggs immediately after lay. 
The SE risk assessment concluded that a broad-based policy, 
encompassing interventions from farm to table, is likely to be more 
effective in eliminating egg-associated SE illnesses than a policy 
directed solely at one stage of the egg production-to-consumption 
continuum.

F. Advance Notice of Proposed Rulemaking on Salmonella Enteritidis in 
Eggs

    In the Federal Register of May 19, 1998 (63 FR 27502), FDA and USDA 
jointly published an advance notice of proposed rulemaking (ANPRM) 
seeking to identify farm-to-table actions that would decrease the food 
safety risks associated with eggs. The agencies requested comment on 
these egg safety actions. In section III.M of this document, we respond 
to comments related to on-farm measures to prevent SE contamination of 
eggs. We respond to comments related to retail standards to reduce the 
risk of egg-associated SE illnesses in section IV.E of this document.

G. Egg Safety Public Meetings

    To address the public health problem of SE, FDA and FSIS decided to 
coordinate efforts in a farm-to-table approach. Consistent with each 
agency's legislative authority, FDA would address egg safety issues at 
the producer and retail levels and FSIS would address these issues at 
egg packers and processors. On March 30, 2000, and April 6, 2000, FDA 
and FSIS held public meetings in Columbus, OH, and Sacramento, CA, 
respectively, to gather information for reducing or eliminating the 
risk of SE in eggs. Comments on specific egg safety questions were 
solicited in a Federal Register document (65 FR 15119, March 21, 2000). 
Interested persons were given until April 20, 2000, to comment.
    In an effort to expand the public process and build upon the two 
public meetings, FDA and FSIS held a public meeting (65 FR 42707, July 
11, 2000) on July 31, 2000, in Washington, DC. The purpose of this 
meeting was to obtain

[[Page 56830]]

comments on the agencies' current thinking on approaches to ensure egg 
safety from farm to table. A document outlining the agencies' current 
thinking on on-farm egg safety standards, packer/processor egg safety 
standards, and retail egg safety standards was made available at the 
public meeting and on the agencies' food safety Web site 
www.foodsafety.gov. Interested persons were given until August 14, 
2000, to comment.
    We are responding to comments from the public meetings in Columbus, 
OH, and Sacramento, CA, and the current thinking meeting in Washington, 
DC in this document. We have responded to comments related to on-farm 
measures to prevent SE contamination of eggs in section III.M of this 
document and to comments on retail standards to prevent egg-associated 
SE illnesses in section IV.E of this document.

H. Current On-Farm Practices

    Most of the information on current on-farm practices comes from the 
APHIS National Animal Health Monitoring System (NAHMS) Layers '99 Study 
(the Layers study) and information on voluntary egg QA programs.
1. The Layers Study
    In 1999, NAHMS conducted a study addressing national table egg 
layers and SE (Refs. 25, 26, and 27). The aim of the study was to 
include information from States that account for at least 70 percent of 
the animal and farm population in the United States. Fifteen States 
(Alabama, Arkansas, California, Florida, Georgia, Indiana, Iowa, 
Minnesota, Missouri, Nebraska, North Carolina, Ohio, Pennsylvania, 
Texas, and Washington) were chosen to participate in the study. These 
15 States represented 82 percent of the 1997 U.S. table egg layers. The 
States, and the operations surveyed within those States, were chosen 
from a ranking of table egg layers summarized in a 1997 National 
Agricultural Statistics Service (NASS) survey of egg layers and egg 
production. NASS maintains information on laying operations that have 
more than 30,000 hens; therefore, each operation participating in the 
Layers study had more than 30,000 laying hens, although all hens may 
not have been on one farm.
    a. Production facilities. Egg laying operations varied considerably 
in size and style of poultry house. Of the farm sites surveyed by the 
Layers study, approximately 34 percent had fewer than 50,000 layers, 29 
percent had 50,000 to 99,999 layers, 20 percent had 100,000 to 199,999 
layers, and 17 percent had 200,000 or more layers. One-third of farm 
sites surveyed had only one layer house, while 16.5 percent had 6 or 
more layer houses.
    Within a poultry house, style also varied. Approximately one-third 
of all poultry houses had six or more banks of cages. A bank is all 
cages between two walkways or between a walkway and a wall. 
Approximately 40 percent of houses had 4 or more vertical levels of 
cages, while approximately 25 percent had only one level. Less than 1 
percent of all poultry houses were cage-free.
    Manure handling varied with house style and also varied regionally. 
Houses with a manure pit at ground level with the house above (high 
rise) accounted for 63 percent of houses in the Great Lakes region and 
48 percent of houses in the Central region. In the Southeast, 40 
percent of farm sites flushed manure to a lagoon. Nonflush scraper 
systems were used on 44 percent of farms in the West region.
    b. Chicks and pullets. When a poultry house is repopulated with new 
laying hens, most of the new layers come from a pullet raising 
facility. A pullet is defined in the Layers study as a chicken less 
than 20 weeks of age. Less than 10 percent of layer farms raised 
pullets at the layer farm site, although some layer farms had their own 
pullet raising facilities at other locations.
    The vast majority (95 percent) of pullets in pullet raising 
facilities came as chicks from National Poultry Improvement Plan (NPIP) 
monitored breeder flocks. USDA's NPIP is a cooperative Federal-State-
industry mechanism intended to prevent and control egg-transmitted, 
hatchery-disseminated poultry diseases. NPIP has different monitoring 
programs for many avian diseases and pathogens, including SE, and all 
flocks in the program must meet the qualifications for ``U.S. Pullorum-
Typhoid Clean'' classification (9 CFR 145.23(b)). Therefore, the fact 
that the chicks were from NPIP-monitored breeder flocks does not mean 
that they were from certified ``U.S. S. Enteritidis Monitored'' breeder 
flocks (9 CFR 145.23(d)).
    Many pullet raising facilities in the Layers Study had their own 
programs for SE monitoring. In the West region, 83 percent of farms 
obtained layers from SE-monitored pullet facilities, and 70 percent of 
layers on all farms came from SE-monitored pullet facilities. Pullet 
facilities used one or more of the following methods to monitor SE: (1) 
Dead chick/chick paper testing, (2) environmental culture, (3) bird 
culture, and (4) serology. Some pullet facilities used competitive 
exclusion products\2\ and/or vaccines to protect pullets against SE.
---------------------------------------------------------------------------

    \2\ Competitive exclusion is a strategy in which benign bacteria 
are introduced into the gut to prevent a pathogen from colonizing 
the gut by blocking all of the sites on the walls of the intestines 
where the pathogen would attach.
---------------------------------------------------------------------------

    c. Production. In 1997, the average flock was placed for its first 
production cycle at 17.5 weeks of age. Flocks in their first production 
cycle reached peak production around 29 weeks of age. At peak 
production, the average maximum number of eggs produced was 90 eggs per 
100 hens per day. Induced molting was used on many farms (83 percent of 
farm sites) to increase the laying cycles of the hens. In the West and 
Southeast regions, 95 percent or more of farms molted birds, while in 
the central region just over half (57 percent) of the farms molted 
birds. On average, molted flocks ended production at 111 weeks of age, 
while nonmolted flocks ended production at 74 weeks of age.
    d. Feed and water. Approximately half (48 percent) of layer houses 
used a chain feed delivery system. Well water was used for watering 
birds by 66 percent of farms. The percentage of farms that tested feed 
for SE varied regionally. For example, finished feed was tested for SE 
by 26 percent of farms in the central region, and 68 percent of farms 
in the West. Approximately 75 percent of farms in both the West and 
Southeast regions tested feed ingredients for SE.
    e. Biosecurity. Approximately two-thirds of farms instituted 
biosecurity measures that did not allow visitors without a business 
reason to enter poultry houses. Sixty-two percent of farms allowed 
business visitors provided they had not been on another poultry farm 
that day. Most farms (76 percent) required that visitors wear clean 
boots. At the majority of farms, employees were required not to be 
around other poultry and not to own their own birds.
    f. Pest control. The Layers study estimated that rodents and flies 
had access to feed in feed troughs on nearly all farms. Fly control was 
practiced on 90 percent of all farms; baiting was the most common form 
of fly control (72 percent of farms). Essentially all farms used some 
type of rodent control. Chemicals and baits were used by 93 percent of 
farms for rodent control. Professional exterminators were used on less 
than 15 percent of farms that used rodent control. Producers rated 
almost 30 percent of farms as having a moderate or severe problem with 
mice and almost 9 percent as having a moderate or severe problem with 
rats.

[[Page 56831]]

    g. Depopulation practices. Depopulation of a poultry house is the 
most opportune time for a producer to thoroughly clean and disinfect 
the house. Most farms did some sort of cleaning between flocks. 
Essentially all farms emptied feeders, 91 percent emptied feed hoppers, 
81 percent flushed water lines, 79 percent dry cleaned cages, walls, 
and ceilings, and 71 percent cleaned fans and ventilation systems. 
Approximately one-third of farm sites never cleaned or disinfected egg 
belts/elevators between flocks. Down time between flocks varied 
regionally; most farms had a down time of more than 11 days, although 
some were down for less than 4 days.
    h. Testing for SE. A 1994 NAHMS survey of farms revealed that 
almost 16 percent of farms tested for SE. The Layers study showed that, 
in 1997, 58 percent of farms tested for SE. The number of farms testing 
for SE varied by region. In the Southeast, almost 84 percent of farms 
had an SE testing program, while in the West only 26 percent had an SE 
testing program. The number and regional distribution of farms doing 
testing for SE is very similar to the number and distribution of farms 
participating in an egg quality assurance (QA) program.
    i. NAHMS Study Testing for SE. In 1994, NAHMS undertook its own 
survey for SE in layer houses. It found that 7 percent of layer houses 
were positive for SE, based on environmental sampling. Only 4 percent 
of houses with fewer than 100,000 laying hens were positive for SE, 
while 16 percent of houses with greater than 100,000 laying hens were 
SE-positive. The study indicated that the number of rodents, cleaning 
and disinfection procedures, biosecurity, and the age of the flock were 
all related to the SE status of the layer house.
2. Voluntary Egg QA Programs
    The Layers study found that 51 percent of all farm sites 
participated in an egg QA program sponsored by a State or commodity 
group (e.g., United Egg Producers (UEP)). Based on this information, we 
estimate that approximately 50 percent of the eggs in the United States 
are produced under an egg QA program.
    In 1992, Congress provided special funding to USDA to begin the SE 
Pilot Project (SEPP). The SEPP was one of the first egg QA programs in 
the United States. The pilot project phase operated for 2 years and 
then, in 1994, the SEPP became the PA Egg QA Program (PEQAP). 
Currently, there are several voluntary egg QA programs operated and 
administered by states or other organizations (Refs. 28, 29, 30, 31, 
and 32). The states that have programs include PA, MD, NY, OH, SC, AL, 
OR, CA and the New England region. The UEP has a program called the UEP 
``Five Star'' Total QA Program (Ref. 33) and the United States Animal 
Health Association has a protocol entitled ``National Standardized 
Salmonella Enteritidis Reduction Program for Eggs'' (Ref. 34). In 
addition, certain egg companies operate an egg QA program within their 
own facilities (Ref. 26).
    Currently the egg QA programs that exist are voluntary for 
producers. All programs have similar requirements but vary in how they 
implement these requirements. All programs require use of chicks from 
NPIP ``U.S. S. Enteritidis Monitored'' breeders or equivalent, 
biosecurity, rodent control, and cleaning and disinfection of poultry 
houses. Most programs require some environmental testing; the amount 
varies among programs from once to four or five times during the life 
of a flock. If an environmental test is SE-positive, several programs 
require egg testing, with diversion if the egg testing is SE positive. 
Several programs also have State government oversight and recordkeeping 
requirements. All existing QA programs have some educational programs 
for participants. There is data indicating that QA programs have been 
effective in reducing SE contamination in poultry houses (see 
discussion in section III) and the provisions in this proposal are 
modeled on those successful programs.

I. Petitions to the Agency

    FDA has received several citizen petitions relevant to this 
proposed rulemaking.
1. Center for Science in the Public Interest
    We received a petition from the Center for Science in the Public 
Interest (CSPI) (filed May 14, 1997, Docket No. 97P-0197) requesting, 
among other things, that FDA require programs to reduce the risk of SE 
for all egg producers. In support of its request, CSPI stated that SE 
in eggs is a serious health problem, illnesses caused by SE in the 
United States have increased, and consumers are at risk of illness from 
SE in raw or undercooked eggs. CSPI requested that producers be 
required to implement on-farm SE prevention programs using Hazard 
Analysis and Critical Control Point (HACCP) principles and modeled 
after the PEQAP program. CSPI also requested the following program 
components: (1) Chicks from SE-monitored breeder flocks, (2) 
environmental sampling for SE of chicks, pullets, and twice during the 
life of layers, (3) cleaning and disinfection of poultry houses if 
environmental tests are SE positive, (4) egg testing if the environment 
is positive with diversion of SE-positive eggs to pasteurization 
plants, (5) biosecurity, (6) rodent control program, (7) program to 
control SE in feed, and (8) refrigerated storage of eggs at 41[deg]F to 
ensure that SE cannot multiply. In addition, CSPI requested that 
producers be required to keep records that would be verified by FDA to 
indicate compliance with SE prevention programs.
2. Rose Acre Farms, Inc.
    We received a petition from Rose Acre Farms, Inc. (filed November 
4, 1996, Docket No. 96P-0418) requesting, among other things, that we 
issue a regulation requiring ``Best Practices'' of egg producers. The 
petitioner stated that ``best practices'' are a set of procedures used 
by egg producers to control the presence of SE to the lowest level 
practical. Rose Acre Farms, Inc. suggested that the ``best practices'' 
might include: (1) Environmental testing of a poultry house for SE, (2) 
egg testing if the environmental testing is SE-positive, (3) cleaning 
and disinfection of poultry houses, (4) a program to reduce SE in feed, 
(5) vaccines, (6) rodent control, (7) biosecurity, (8) egg washing, (9) 
recordkeeping requirements, and (10) use of appropriate third parties 
to audit compliance with program elements. The petitioner requested 
that ``best practices'' programs be accredited individually by FDA and 
USDA. The petitioner also requested that eggs produced under an 
accredited program could never be deemed adulterated, regardless of the 
outcome of environmental testing or implication of a flock in a 
traceback.
    In addition, Rose Acre Farms, Inc. requested that the agency place 
greater emphasis on consumer education and retail foodservice. The 
petitioner suggested that FDA revise the FDA Food Code to prohibit 
pooling of more than three shell eggs by any restaurant or foodservice 
institution. For egg dishes requiring pooling of more than three eggs, 
pasteurized product would have to be used.
3. United Poultry Concerns, Inc. and the Association of Veterinarians 
for Animal Rights
    We received a petition from United Poultry Concerns, Inc., and the 
Association of Veterinarians for Animal Rights (filed April 14, 1998, 
Docket No. 98P-0203/CP1) requesting that FDA eliminate forced molting 
of laying birds in the United States. The petitioners requested that 
forced molting be

[[Page 56832]]

stopped because it is cruel. The petitioners also stated that the 
stress of forced molting promotes a systemic disease in birds in the 
form of SE that renders products derived from these birds a health risk 
to consumers.
    In support of the request to stop forced molting because it 
promotes SE-infection in layers and renders products from these birds a 
health risk to consumers, the petitioners stated that forced molting 
impairs the immune response of laying hens, which invites colonization 
of the intestine and other organs by SE. The petitioners also cited 
studies that they believe demonstrate SE is shed in large numbers in 
the feces of infected, molted birds and spreads more rapidly among 
molted laying hens than among nonmolted ones. The petitioners stated 
that molted birds are more susceptible to SE infection from rodents, 
which have been shown to harbor SE in the poultry house environment. 
The petitioners also cited information that indicates feathers can 
carry SE and that molted birds engage in abnormal feather pecking 
because of the molting conditions.
    United Poultry Concerns, Inc. and the Association of Veterinarians 
for Animal Rights also requested that forced molting be eliminated 
because the living conditions under which forced molting is conducted 
are inherently disease producing. The petitioners cited studies that 
indicate that concentrated confinement of birds in cages allows 48 
square inches of living space per bird. The petitioners stated that the 
confined living space puts an additional stress on birds that lowers 
immune response and exacerbates an SE infection if present.

III. The Proposal to Require SE Prevention Measures for Egg Production

A. Rationale for Proposal

    The incidence and geographical distribution of egg-associated SE 
illnesses have made SE a significant public health concern. Although 
there are Federal rules requiring refrigeration of shell eggs packed 
for the ultimate consumer (FSIS) and at retail (FDA) to limit the 
growth of SE that may be present, there are no Federal requirements to 
address the introduction of SE into the egg during production. The 
Salmonella Enteritidis Risk Assessment Team (Ref. 15) estimated that 1 
in 20,000 eggs are contaminated with SE. Based on annual egg production 
(Ref. 20), this means that 3.3 million SE-contaminated shell eggs may 
be produced annually. Thirty percent of total egg production is used in 
egg products (Ref. 20), leaving an estimated 2.3 million SE-
contaminated shell eggs that may reach the consumer. Therefore, 
interventions that can reduce the number of SE-contaminated eggs 
produced are warranted from a public health standpoint.
    As discussed in section II.I of this document, several States and 
organizations have established voluntary egg QA programs that show 
great promise in reducing the incidence of egg-associated SE illnesses 
in specific regions of the country. Data from the PEQAP program show 
that after three years on the program the number of poultry houses that 
had environmental samples positive for SE decreased from 38 percent in 
1992 to 13 percent in 1995 (Refs. 35 and 36). PEQAP data initially 
indicated that approximately 50 percent of the flocks in the program 
had environmental samples positive for SE at some time during flock 
life, whereas in 1996 approximately 15 percent of PEQAP flocks had 
environmental samples positive for SE at some time during flock life 
(Ref. 36). From 1992 to 1995, there was a decrease in the SE isolation 
rate in humans in the three-State region (NY, NJ, PA) that constitutes 
the market for PA's eggs. This decrease in isolation rate has been 
attributed to the PEQAP program and consumer education (Refs. 35 and 
36).
    Currently in the United States, only 50 percent (Ref. 26) of shell 
eggs are produced under voluntary egg QA programs and the regions that 
have voluntary egg QA programs are not necessarily the regions that 
have had recent outbreaks of SE illnesses (Ref. 9). Therefore, we have 
tentatively concluded that a proposal to require that producers of 
shell eggs for the table market, other than those producers whose eggs 
are treated or sold directly to consumers or who have fewer than 3000 
laying hens, comply with all of the proposed SE prevention measures 
would exclude SE on the farm and, thus, remove sources of SE 
contamination of shell eggs.

B. Shell Egg Producers Covered by Proposed 21 CFR Part 118

    The proposed requirements for SE prevention measures do not apply 
to producers who sell all of their eggs directly to consumers (e.g., 
roadside stand operators) or producers with fewer than 3,000 laying 
hens. Although we could have proposed to require these producers to 
implement SE prevention measures, we opted not to do so because the 
sales by these producers do not contribute significantly to the table 
egg market. In addition, we have no information indicating that an 
outbreak of SE illness has ever been caused by eggs sold directly from 
farmer to consumer or from a producer with fewer than 3,000 laying 
hens. We are soliciting comment on the exemption for producers with 
fewer than 3,000 laying hens and producers who sell all of their eggs 
directly to consumers. Specifically, should these producers be covered 
by some or all of the SE prevention measures?
    We are proposing in Sec.  118.1(a) (21 CFR 118.1(a)) that if you 
are a producer with 3,000 or more laying hens at a particular farm 
whose eggs are going to the table egg market (eggs consumed as shell 
eggs, rather than eggs used in egg products), and not all of your eggs 
receive a treatment as defined in Sec.  118.3, then you must comply 
with all of the requirements in proposed part 118 for eggs produced on 
that farm. You may be selling your eggs to restaurants or other 
foodservice establishments where the presence of SE-contaminated eggs 
could cause a severe public health threat by striking many people at 
one time. In establishments where eggs are combined to make food items, 
one SE-contaminated egg can contaminate a dish that will be served to 
many people. Thus, it is necessary for you to use SE prevention 
measures on your farm to prevent SE contamination of your eggs and 
illness in consumers.
    It is our understanding that it would be difficult for a producer 
to keep eggs produced from individual poultry houses on a farm separate 
from other eggs that may be handled differently. For example, a 
producer could not easily segregate eggs destined for a breaking plant 
from three poultry houses, which would not have to comply with the SE 
prevention measures, from eggs not destined for a breaking plant from 
two other poultry houses, which would have to follow all of the SE 
prevention measures. Furthermore, it would be difficult for the 
producer to maintain proper biosecurity for the two poultry houses 
subject to all of the SE prevention measures if there were three other 
poultry houses on the farm not employing the same biosecurity measures. 
Therefore, we have tentatively concluded that, unless all of the eggs 
from a particular farm receive a treatment as defined in Sec.  118.3 or 
are sold directly to consumers, producers who have 3000 or more laying 
hens on that farm must comply with all of the requirements of proposed 
part 118 if the eggs are produced for the table egg market.
    We are proposing in Sec.  118.1(b) that if you are a producer who 
produces eggs on a farm that will all receive a treatment as defined in 
Sec.  118.3 and you

[[Page 56833]]

have 3,000 or more laying hens, you must comply only with the 
refrigeration requirements for on-farm storage found in proposed Sec.  
118.4(e). As defined in proposed Sec.  118.3, ``treatment'' means a 
technology or process that achieves at least a 5-log destruction of SE 
for shell eggs, or the processing of egg products in accordance with 
the Egg Products Inspection Act. It is important that the load of SE 
within a contaminated egg be kept low prior to treatment so that the 
level of kill given to that egg by the treatment will be sufficient. 
For example, if the in-shell pasteurization process for eggs is 
designed to reduce the level of SE in an egg by ``x'' logs, then the 
incoming SE load of that egg must be less than ``x'' logs for the 
treatment to be successful.
    Refrigeration at 45 [deg]F within 36 hours of laying has been shown 
to slow the multiplication of SE within an egg substantially and is 
discussed in section III.E.5 of this document. We have tentatively 
concluded that, prior to treatment for SE destruction, producers who 
have 3,000 or more laying hens must keep eggs under refrigeration at 45 
[deg]F maximum if they are held at the farm for more than 36 hours. 
Although we are not proposing to require that producers who treat all 
of their eggs to achieve the required destruction of SE comply with all 
of the SE prevention measures, we strongly encourage all egg producers 
to follow non-mandatory SE prevention measures during egg production.

C. Proposed Compliance Dates for Shell Egg Producers of Various Sizes

    We are proposing that, if a producer has 50,000 or more laying 
hens, according to the requirements of proposed part 118, compliance 
would be required 1 year after the date of publication of the final 
rule in the Federal Register. Although producers who currently 
participate in voluntary QA programs may already have some of the 
provisions in place, we recognize that producers will need time to 
implement SE prevention measures, train individuals to implement the 
measures, and begin to incorporate them in their farm practices. We 
believe that 1 year from the date that any final rule is published is a 
realistic timeframe for producers that have 50,000 or more laying hens 
on farm to put measures in place.
    We recognize that smaller producers (those with fewer than 50,000 
but at least 3,000 laying hens) may need more time to comply with the 
requirements of proposed part 118. We tentatively have concluded that 
it is reasonable to allow for extended compliance periods for smaller 
producers. For smaller producers, compliance would be required 2 years 
after the date of publication of the final rule in the Federal 
Register.

D. Definitions

    We are proposing in the introductory paragraph of Sec.  118.3 that 
the definitions and interpretations of terms in section 201 of the 
FFDCA, unless these terms are redefined in this part, are applicable to 
these terms when used in proposed part 118.
    We are proposing in Sec.  118.3 that the term ``biosecurity'' means 
a program to ensure that there is no introduction or transfer of SE 
onto a farm or among poultry houses. As specified in proposed Sec.  
118.4(b), a biosecurity program includes, but is not limited to, 
limiting visitors to a farm, keeping animals and wild birds out of 
poultry houses, requiring personnel to wear protective clothing, and 
ensuring that equipment is not moved among poultry houses or, if it is 
so moved, that it is adequately cleaned before it is moved.
    We are proposing in Sec.  118.3 that the term ``farm'' means all 
poultry houses and the grounds immediately surrounding the poultry 
houses covered under a single biosecurity program. We intend the term 
``farm'' to encompass an entire farming operation at a single 
geographic location. We do not intend to allow, by this definition, 
multiple ``farms'' covered by multiple biosecurity programs at a 
particular geographic site. If we did allow multiple farms at a 
geographic location, a producer could have part of the operation under 
SE prevention measures for eggs going to the table egg market and part 
of the operation under no such measures for eggs going to treatment. 
Such an outcome is contrary to our rationale set forth for proposed 
Sec.  118.1(a).
    We are proposing in Sec.  118.3 that the term ``flock'' means all 
laying hens within one poultry house. We recognize that laying hens of 
different ages sometimes are placed in the same poultry house. Research 
has indicated that once SE is introduced into a poultry house it 
spreads among the laying hens in that house (Refs. 37 and 38).
    We are proposing in Sec.  118.3 that the term ``group'' means all 
laying hens of the same age within one poultry house. This term 
particularly applies to laying hens of the same age that comprise part 
of a multi-aged flock of laying hens within one poultry house.
    We are proposing in Sec.  118.3 that the term ``induced molting'' 
means molting that is artificially initiated. Induced molting is done 
to improve egg production and egg quality.
    We are proposing in Sec.  118.3 that the term ``laying cycle'' 
means: (1) The period of time that a hen begins to produce eggs until 
it undergoes induced molting or is permanently taken out of production; 
and (2) the period of time that a hen produces eggs between successive 
induced molting periods or between induced molting and the time that 
the hen is permanently taken out of production.
    We are proposing in Sec.  118.3 that the term ``molting'' means a 
life stage during which a hen stops laying eggs and sheds its feathers.
    We are proposing in Sec.  118.3 that the term ``pest'' means any 
objectionable animals or insects, including, but not limited to, birds, 
rodents, flies, and larvae. This is also the definition of ``pest'' 
found in 21 CFR part 110.
    We are proposing in Sec.  118.3 that the term ``positive flock'' 
means a flock that produced eggs that tested positive for SE and 
applies until that flock meets the egg testing requirements in proposed 
Sec.  118.6 to return to table egg production.
    We are proposing in Sec.  118.3 that the term ``positive poultry 
house'' means a poultry house from which there has been an 
environmental test that was positive for SE during a laying cycle. A 
poultry house would be considered positive until it had been cleaned 
and disinfected, even if an environmental test is positive for SE prior 
to a molt and then is SE-negative at the post-molt environmental test. 
A negative environmental test after a molt does not invalidate the 
initial positive environmental test or necessarily indicate that SE is 
no longer present. Data from the PEQAP program have indicated that 
cleaning and disinfection procedures can decontaminate an SE-positive 
poultry house (Ref.39). Therefore, we have tentatively concluded that a 
poultry house that has had an SE-positive environmental test must be 
considered positive until it has been cleaned and disinfected according 
to proposed Sec.  118.4(d).
    We are proposing in Sec.  118.3 that the term ``poultry house'' 
means a building, other structure, or separate section within one 
structure used to house poultry. We have also tentatively concluded 
that, for structures comprising more than one section containing 
poultry, each section must have biosecurity procedures in place to 
ensure that there is no introduction or transfer of SE from one section 
to another. In addition, each section must be enclosed and separated 
from the other sections. We interpret ``enclosed and separated'' to 
mean that sections must be separated from one another by walls. Thus, 
under this proposed

[[Page 56834]]

definition, producers would have to limit their designation of 
``sections'' representing separate poultry houses to areas that are 
physically separate from one another. It would not be acceptable under 
this proposed rule to designate areas that are separated, for example, 
only by a walkway or a gate as separate poultry houses.
    We are proposing in Sec.  118.3 that the term ``producer'' means a 
person who maintains laying hens for the purpose of producing shell 
eggs for human consumption.
    We are proposing in Sec.  118.3 that the term ``shell egg (or 
egg)'' means the egg of the domesticated chicken. This differs from the 
definition of ``shell egg'' in the EPIA, because, unlike the EPIA 
definition, FDA's definition does not cover shell eggs of the 
domesticated turkey, duck, goose, or guinea. FDA is focusing its 
resources on domesticated chicken eggs because they have been 
associated with numerous outbreaks of foodborne illness.
    We are proposing in Sec.  118.3 that the term ``treatment'' means 
technologies or processes that achieve at least a 5-log destruction of 
SE for shell eggs or the processing of egg products in accordance with 
the EPIA. In 1997, we recommended to AMS, in response to an AMS request 
to FDA on criteria for shell egg pasteurization, that processors attain 
a 5-log reduction in Salmonella in shell eggs in order for the eggs to 
be considered ``pasteurized.'' We recommended the 5-log lethality based 
on literature available at the time on naturally infected shell eggs 
that indicated, under most storage conditions, an intact shell egg 
could contain between 10\2\ and 10\3\ Salmonella organisms (Ref. 19). 
FDA then added a 2-log safety factor to arrive at the recommendation 
for a 5-log lethality. AMS published this standard in its Federal 
Register notice on official identification of pasteurized shell eggs 
(62 FR 49955, September 24, 1997).
    We are soliciting comment on whether a 5-log reduction or an 
alternative approach to achieve an equivalent level of protection is 
still appropriate to ensure the safety of shell eggs. We intend to work 
with USDA to ensure that shell eggs and egg products are given adequate 
treatments to destroy SE.

E. The SE Prevention Measures

    Data indicate that voluntary egg QA programs have contributed to a 
decrease in SE in poultry houses and a decrease in SE illnesses. The 
particular program (PEQAP) from which the data were gathered includes 
provisions for chick and pullet procurement, biosecurity, rodent 
control, refrigeration, cleaning and disinfection of poultry houses, 
and monitoring of the poultry house environment through testing for SE 
(Ref. 28). Although the individual provisions were not evaluated for 
their relative importance, the PEQAP results indicate that, when used 
together, the provisions resulted in a decrease in the prevalence of SE 
within a poultry house (Ref. 35). Thus, the agency tentatively 
concludes that SE prevention measures are necessary to reduce the 
incidence of SE illness from consumption of shell eggs, when the eggs 
are not treated to destroy SE.
    All of the provisions of proposed Sec.  118.4 apply to you if you 
are a producer with at least 3,000 laying hens, you produce shell eggs 
for the table market, and you do not sell all of your eggs directly to 
consumers or treat all of your eggs to destroy SE as defined in 
proposed Sec.  118.3 (Sec.  118.1(a)). We are proposing in Sec.  118.4 
that shell egg producers described in Sec.  118.1(a) develop and 
implement the following SE prevention measures: Provisions for 
procurement of chicks and pullets, a biosecurity program, rodent, fly 
and other pest control, cleaning and disinfection of poultry houses 
that have had an environmental or egg test positive for SE, and 
refrigerated storage of eggs at the farm.
    We also are proposing in Sec.  118.4 that the particular form that 
SE prevention measures take be specific to each farm and poultry house 
where eggs are produced. Depending upon whether there are multiple 
poultry houses on a farm and whether the poultry houses vary in house 
style and location, the SE prevention measures may vary among poultry 
houses. For example, one poultry house may require certain rodent and 
pest control measures that another poultry house may not require.
    Further, we are proposing that if you are a producer under section 
Sec.  118.1(a), you must comply with the environmental and egg testing 
requirements in Sec. Sec.  118.5 and 118.6, the sampling and testing 
methodology requirements in Sec. Sec.  118.7 and 118.8, the 
administration requirements in Sec.  118.9, and the recordkeeping 
requirements in Sec.  118.10. We will discuss our rationale for 
compliance with these requirements in the relevant sections of this 
proposed rule.
1. Chicks and Pullets
    We are proposing in Sec.  118.4(a) that you must procure chicks and 
pullets that came as chicks from breeder flocks that meet NPIP's 
standards for ``U.S. S. Enteritidis Monitored'' status or equivalent 
standards. The fact that SE can be transmitted via the transovarian 
route means that chicks can be born SE-positive (Refs. 35 and 40). 
Therefore, they may remain infected as pullets and be placed into 
poultry houses as layers already carrying SE and then contaminate their 
eggs and, in addition, pass SE on to other layers within the poultry 
house (Refs. 38, 41, and 42). We tentatively have concluded that it is 
necessary for you to procure chicks and pullets that came as chicks 
from breeding flocks that meet NPIP's standards for ``U.S. S. 
Enteritidis Monitored'' status (9 CFR 145.23(d)) or equivalent 
standards in order to prevent SE contamination of shell eggs from SE-
positive chicks. Producers that procure pullets from a pullet-raising 
facility need to have an assurance that those pullets came as chicks 
from a breeder flock that meets NPIP's standards for ``U.S. S. 
Enteritidis Monitored'' status or equivalent standards.
    USDA's NPIP is a cooperative Federal-State-industry mechanism for 
controlling certain pathogens and poultry diseases. NPIP has 
established ``U.S. S. Enteritidis Monitored'' standards (9 CFR 
145.23(d)) from which the breeding-hatching industry may conduct a 
program for the prevention and control of SE. Participation in the plan 
is voluntary, except under 9 CFR part 82, subpart C, no hatching eggs 
or newly-hatched chicks from egg-type chicken breeding flocks may be 
moved interstate unless they are classified ``U.S. S. Enteritidis 
Monitored'' under NPIP or meet equivalent standards.
    To be classified ``U.S. S. Enteritidis Monitored,'' under 9 CFR 
145.23(d), a flock and the hatching eggs and chicks produced must come 
from a ``U.S. S. Enteritidis Monitored'' flock, or meconium (first 
bowel movement) from chick boxes and a sample of chicks that died 
within 7 days after hatching must be examined and test negative for 
Salmonella. Throughout the life of a ``U.S. S. Enteritidis Monitored'' 
flock, environmental and blood samples are taken at specified times and 
examined for group D Salmonella (the group that includes SE). Breeder 
flocks may be vaccinated with an SE bacterin, provided that 350 birds 
remain unvaccinated until the flock is at least 4 months of age. 
Hatching eggs produced by the flock are collected as quickly as 
possible, sanitized or fumigated, and incubated in an approved 
hatchery. The flock must also meet feed, facilities, and transport 
requirements.
    A flock is not eligible for the ``U.S. S. Enteritidis Monitored'' 
classification if SE is isolated from a specimen taken from a bird in 
the flock. Isolation of SE

[[Page 56835]]

from an environmental sample of a vaccinated or nonvaccinated flock 
necessitates bird testing. If bird testing reveals no SE contamination, 
then the flock qualifies for the classification. The classification may 
be revoked at any time if procedures are not followed.
    We are aware that most producers purchase pullets from a pullet-
raising facility to repopulate a poultry house. Some of these pullet-
raising facilities have SE-monitoring programs (Ref. 25). We 
specifically request comment on whether we should include in any final 
rule based on this proposal, a requirement that producers certify that 
pullets they procure have come from a facility that has an SE-
monitoring program. If so, what requirements should producers certify 
that a pullet-raising facility has met in order to ensure that the 
pullet raising facility has an adequate SE-monitoring program?
2. Biosecurity
    We are proposing in Sec.  118.4(b) that you develop and implement a 
biosecurity program. Biosecurity refers to procedures that must be 
instituted on farms to prevent SE from being transferred from the 
environment into the poultry house or among poultry houses. Biosecurity 
is a routine part of all existing egg QA programs and is aimed at 
preventing the horizontal spread of SE. According to the Layers study 
(Ref. 26), 66 percent of farm sites already practice some form of 
biosecurity, and poultry houses where visitors were not allowed were 
less likely to test positive for SE. The Swiss have identified control 
of the horizontal spread (i.e., cross contamination from layer to layer 
or poultry house to poultry house) of SE as a major success of their SE 
control program (Ref. 42). We have tentatively concluded that producers 
need to develop and implement a biosecurity program covering the 
grounds and all facilities, including poultry houses, for each egg farm 
in order to prevent the horizontal spread of SE.
    As part of your biosecurity program, you must take measures to 
prevent cross-contamination among poultry houses and contamination of 
poultry houses from the environment. This includes, where practical, 
purchasing separate equipment for each poultry house within a farm 
because shared equipment can cause SE cross-contamination between 
poultry houses. For certain large pieces of equipment (e.g., manure 
removing equipment), we recognize that it is not practical to purchase 
separate pieces of equipment for each house. We also recognize that 
certain pieces of equipment are common to all houses (e.g., egg belts). 
In the Layers study, approximately one-half of the positive 
environments were identified by egg belt or elevator sampling (Ref. 
27). You must keep egg belts, manure-removing equipment, and other 
similar pieces of equipment clean and ensure that these pieces of 
equipment are not sources of SE contamination that can be spread from 
one house to another.
    A comprehensive biosecurity program must also include provisions to 
limit visitors to the farm and poultry houses and to ensure proper 
hygiene of personnel who do move among poultry houses. Proper hygiene 
includes the use of protective clothing that is changed as employees 
move between poultry houses and foot sanitizing stations or other 
appropriate means to protect against contamination. In addition, you 
must prevent stray poultry, wild birds, or other animals from entering 
into poultry houses or on the grounds. You must not allow employees to 
keep poultry at home. You must implement the biosecurity measures 
stated above to prevent spreading SE from one poultry house to another 
on contaminated clothing or spreading SE from the environment into a 
poultry house by allowing stray animals entrance into a poultry house 
or allowing employees to keep their own poultry, which may be carrying 
SE, at home.
3. Rodents, Flies, and Other Pest Control
    We are proposing in Sec.  118.4(c) that you must develop and 
implement a pest and rodent control program to control rodents, flies 
and other pests. Many of the comments that we received after the egg 
safety public meetings in Columbus, OH (March 30, 2000), and 
Sacramento, CA (April 6, 2000), stated that the most important SE 
prevention measure that can be taken within a poultry house is rodent 
and pest control.
    Several investigators have found strong indications that mice are 
carriers of invasive SE in the poultry house (Refs. 43 and 44). Kreager 
(Ref. 45) has stated that the SE status of rodents in a poultry house 
is thought to be indicative of the status of the flock. In fact, data 
indicate that the environments of SE-contaminated flocks are usually 
infected with the same phage type of SE found in mice and eggs also in 
that environment (Ref. 39). According to Davison et al. (Ref. 46), a 
single mouse can produce 100 droppings per day, and each dropping can 
contain up to 230,000 SE organisms. Wray and Davies (Ref. 47) have 
stated that mice may shed Salmonella intermittently for up to 18 weeks 
and may infect chickens consuming the fecal matter. Mice may become 
infected with SE from contaminated manure and then may spread it to 
other poultry houses that were previously SE free (Refs. 46 and 47). A 
few mice in one house can proliferate to 10,000 or more during the life 
of a flock.
    Henzler and Opitz (Ref. 48) found that a poultry house with a large 
rodent population was approximately four times more likely to have an 
SE-positive environment as a poultry house with a small rodent 
population. In the Layers study (Ref. 26), producers reported that they 
had a moderate to severe problem with mice on 30 percent of farms and a 
moderate to severe problem with rats on 9 percent of farms. Rats have 
also been shown to harbor SE and are important vectors because they can 
travel long distances (Ref. 47). Environmental testing for the Layers 
study (Ref. 27) indicated that poultry houses in which 20 or more mice 
were captured (equals a rodent index of 2 or 3, see discussion of 
rodent indexing later in this section) were 9 times more likely to 
contain SE than poultry houses with a lower rodent index.
    In addition to rodents, flies have been shown to harbor SE within 
the poultry house environment. Several Salmonella species were found in 
houseflies and bronze dump flies collected at caged-layer facilities 
that produced eggs that were implicated as the food vehicle in two 
recent outbreaks of SE infections. SE was isolated from 2 of 15 pools 
of houseflies from these facilities (Ref. 49). Both flies and rodents 
are attracted to feed within the poultry house and, according to the 
Layers study, flies and rodents have access to feed troughs on nearly 
all farms.
    These studies indicate that rodents and pests can harbor SE that 
can be transmitted to layers and possibly to their eggs, potentially 
resulting in SE illnesses from consumption of shell eggs. We 
tentatively have concluded that producers must develop and implement a 
program to control rodents, flies and other pests.
    We are proposing to require, under Sec.  118.4(c)(1), that you must 
monitor rodent populations through visual inspection and use of 
mechanical traps or glueboards or another appropriate method. The use 
of traps and glueboards is appropriate if placed at regular intervals 
throughout each poultry house, or wherever rodents are most likely to 
be caught (Ref. 46). Davison et al. (Ref. 46) recommend that 12 traps 
be set per poultry house, left for a week, and checked twice during 
that week. If no mouse is caught at the first check, the trap should be 
moved, but no more than 15 feet. One week of trapping gives

[[Page 56836]]

a good indication of the level of rodent infestation in a poultry 
house; this is called rodent indexing (Ref. 46). If 0 to 10 mice (less 
than 2 mice/day) are caught, the rodent index is low or equal to 1; if 
11 to 25 mice are caught, the rodent index is moderate or equal to 2; 
if 26 or more mice are caught, the rodent index is high or equal to 3. 
A low rodent index indicates acceptable rodent control.
    We are proposing to require that when monitoring indicates 
unacceptable rodent activity (a rodent index of 2 or higher as 
described in Davison et al. (Ref. 46)) within a poultry house, you must 
take appropriate action to reduce the rodent population. We are 
proposing that baiting and trapping are possible methods to reduce a 
rodent population, but may not be effective in all situations. 
Producers, aware of rodent situations in their individual poultry 
houses, should choose a method that will be effective in their houses. 
If rodenticides are used, you should take care to prevent chickens or 
other nonrodents from consuming the bait.
    We also are proposing to require under Sec.  118.4(c)(2) that you 
monitor for flies and other pests through spot cards, Scudder grills, 
sticky traps or some other appropriate method that indicates pest 
activity. Spot cards are index cards used to enumerate the number of 
flies that land within the card area by counting fly specks (Ref. 50). 
Sticky traps are used to count the number of flies stuck to the trap 
(Ref. 51). A Scudder grill or a fly grill is a wooden grill that is 
placed over natural fly concentrations. The number of flies that land 
on the grill in 30 seconds is counted (Ref. 52). Spot cards and sticky 
traps should be checked weekly, while Scudder grills give an instant 
measure of fly activity within a poultry house.
    Axtell (Ref. 50) has suggested that 50 or fewer hits on a spot card 
or sticky trap per week indicates satisfactory fly control. A count of 
less than 20 on a Scudder grill likewise indicates satisfactory fly 
control (Ref. 52). If monitoring indicates pest infestation (i.e., 
levels that do not indicate satisfactory pest control, as described 
above) within a poultry house, producers must use appropriate methods 
to reduce the pest population within a poultry house.
    You would be required, under proposed Sec.  118.4(c)(3), to remove 
debris within a poultry house and vegetation and debris outside of a 
poultry house that may harbor rodents and pests. Maintenance of a 
section of crushed rock around the perimeter of a poultry house helps 
prevent rodents from burrowing near poultry house foundations. Where 
possible, poultry houses should be sealed against entrance by rodents 
and pests.
4. Cleaning and Disinfection
    We are proposing in Sec.  118.4(d) that you must develop procedures 
for cleaning and disinfection of a poultry house that include removal 
of visible manure, dry cleaning, followed by wet cleaning using 
disinfectants, and finally, disinfecting. Further, we are proposing to 
require that you clean and disinfect a positive poultry house prior to 
the addition of new laying hens to the house. It is important, once a 
poultry house has had an SE-positive environmental or egg test, that 
you make every effort to rid the environment of SE before new laying 
hens are placed into that house to prevent the SE problem from being 
perpetuated in the replacement flock. Schlosser et al. (Ref. 39) 
reported that 50 percent of the SE-positive houses that were cleaned 
and disinfected according to PEQAP specifications were SE-negative when 
subsequently sampled. PEQAP cleaning and disinfection procedures 
consist of dry cleaning, wet cleaning (soaking, washing, rinsing), 
disinfection, and possibly fumigation with formaldehyde (Ref. 39). In 
addition, the Layers study found that no poultry house tested positive 
for SE after wet cleaning (i.e., where cages, walls, and ceilings were 
washed) (Ref. 27). We tentatively have concluded that, if an 
environmental test or an egg test is positive for SE during the life of 
a group in a poultry house, producers must clean and disinfect that 
poultry house before new laying hens are added to the house.
    You must develop procedures for cleaning and disinfection in case 
they should ever need to be implemented. The cleaning and disinfection 
must include removal of all visible manure from the poultry house. 
Manure is a reservoir of SE that has been shed by infected laying hens. 
You must begin the cleaning procedure with dry cleaning of the house to 
remove dust, feathers, and old feed. Then, you must wet clean the 
poultry house, including washing with detergents. Detergents must be 
used according to label instructions, followed by recommended rinsing 
procedures. Following cleaning, you must disinfect the poultry house 
with spray, aerosol, fumigation or another appropriate disinfection 
method.
    We are aware of studies that indicate that wet cleaning may have a 
detrimental effect on the SE status of a poultry house. In the report 
by Schlosser et al. (Ref. 39) mentioned in the first paragraph of this 
section, it is noted that, while 50 percent of the houses went from SE-
positive to SE-negative after wet cleaning, 28 percent of the houses 
went from SE-negative to SE-positive. It is not known whether this was 
a testing error or a result of the wet cleaning. In addition, a Danish 
study found a relationship between wet cleaning procedures and SE-
positive pig herds (Ref. 53). The authors were unsure whether the 
cleaning procedures were actually contributing to the presence of SE in 
the pigs or if the study was biased. Because there is some evidence, 
though inconclusive, suggesting that wet cleaning may result in an SE-
positive poultry house environment, we specifically request comment and 
data on this subject. Although we are requiring cleaning and 
disinfection only for houses that have had an environmental or egg test 
that was positive for SE, we recommend that you remove manure and dry 
clean poultry houses as a general management practice every time you 
depopulate a house, even when no SE was detected in the house or eggs.
5. Refrigeration of Shell Eggs Stored More Than 36 Hours
    We are proposing in Sec.  118.4(e) that you must store eggs at or 
below 45[deg]F (7.2[deg]C) ambient temperature if you hold them at the 
farm for more than 36 hours after laying. This proposed requirement is 
the only SE prevention measure that applies to all producers with 3,000 
or more laying hens regardless of whether your eggs will receive a 
treatment.
    As we described in the shell egg refrigeration and labeling 
proposed rule (64 FR 36492 at 36495, July 6, 1999), although fresh 
shell eggs provide an inhospitable environment for Salmonella and other 
microorganisms to multiply, the chemical and physical barriers against 
bacterial movement and growth in shell eggs degrade as a result of the 
time and temperature of holding. Consequently, as a result of 
degradation, SE, if present, has access to the nutrient rich yolk, 
which provides a favorable environment for growth of SE.
    Studies have shown that SE, when inoculated into the albumen of 
whole shell eggs, multiplied to high numbers if the eggs were not 
properly refrigerated (Refs. 54, 55, and 56). One study investigated 
the effect of holding inoculated whole eggs at five different 
temperatures in the range of 4 [deg]C (39 [deg]F) to 27 [deg]C (81 
[deg]F). The investigators found that the SE growth response was 
proportional to the temperature at which the inoculated eggs were held. 
The study demonstrated that SE inoculated in shell eggs can multiply to 
substantial levels if held at 10 [deg]C (50 [deg]F)

[[Page 56837]]

or higher for up to 30 days. The authors concluded that ``because the 
number of SE present at the time an infected egg is laid is probably 
very low, egg storage at 4 [deg]C (39 [deg]F) could be expected to 
result in a smaller risk to the public health than higher storage 
temperatures'' (Ref. 54). In studies by Humphrey (Ref. 55) and Bradshaw 
et al. (Ref. 56), no growth was observed in SE inoculated into whole 
shell eggs at 8 [deg]C (46 [deg]F) and 7 [deg]C (45 [deg]F), 
respectively. We find that the scientific evidence on the growth of SE 
in eggs shows that control of storage temperature of shell eggs can 
effectively prevent the multiplication of any SE present. We seek 
comment and data on the impact of refrigeration on eggs after they 
leave the farm, such as the possibility that the eggs may ``sweat'' 
when removed from refrigeration.
    Although we believe that it is very important that eggs be placed 
into refrigerated storage as soon as possible after they are laid, we 
realize that this may not be practical for all producers. It may be 
several hours or longer after the eggs are laid before they are 
collected or picked up for transport. It may not be practical for 
producers to place eggs under refrigeration within several hours after 
they are laid. It would be reasonable, based on what we know about 
current practices and the risk of SE growth in unrefrigerated eggs, to 
establish a time limit for holding eggs under ambient temperature 
conditions. According to the Layers study (Ref. 26), almost half of the 
farm sites surveyed had egg pick-ups every 1 to 2 days. We believe that 
holding eggs under ambient temperature conditions for up to 36 hours 
would not result in excessive growth of any SE, if present (Ref. 54). 
If eggs will be held at the farm for more than 36 hours after they are 
laid, it is important to place them in an environment that will protect 
the yolk membrane from degradation and, thereby, prevent any SE that 
may be present from multiplying. We have tentatively concluded that if 
eggs will be stored for more than 36 hours after they are laid, 
producers, with 3,000 or more laying hens, must store them at an 
ambient temperature of 45 [deg]F (7.2 [deg]C) or lower.
    We are soliciting comment and data on the 36-hour threshold that 
eggs may be held unrefrigerated at a farm. Is this time frame practical 
for producers with daily egg pickup? Is it practical to refrigerate 
eggs held at farms for less than 36 hours?

F. Indication of the Effectiveness of the SE Prevention Measures: 
Testing

    In addition to implementing SE prevention measures in the poultry 
house environment, we have tentatively concluded it is also important 
that you do environmental testing as an indicator of whether your 
measures are working effectively.
1. Environmental Testing for SE
    Under proposed Sec.  118.1(a), Sec.  118.5 would apply to you if 
you are a shell egg producer with 3,000 or more laying hens, you 
produce shell eggs for the table market but do not sell all of your 
eggs directly to consumers, and any of your eggs that are produced at a 
particular farm do not receive a treatment as defined in Sec.  118.3. 
We are proposing in Sec.  118.5 that you must conduct environmental 
testing for SE as an indicator of whether your SE prevention measures 
are working effectively. According to Schlosser et al. (Ref. 39), the 
Northeast Conference on Avian Diseases recommended that the poultry 
house environment (e.g., manure pits and egg machinery) be sampled by 
swabbing. This recommendation was made with the assumption that, if SE 
was found in the environment, there was a high probability that the 
laying hens in the house were infected. Sampling of manure in a poultry 
house is a simple screening method for determining if laying hens are 
shedding SE. Some studies have shown that manure sampling gives more 
consistent results than sampling of egg machinery (Ref. 39), although 
we recognize that sampling egg machinery may be preferable in certain 
poultry houses, and the Layers study identified almost one-half of 
environmental positives through sampling of egg machinery (Ref. 27). We 
tentatively have determined that environmental testing of the manure or 
egg machinery in a poultry house is an appropriate method for screening 
the environment for SE and should be used as one indicator of the 
effectiveness of your SE prevention measures.
    Testing provides an opportunity for you to evaluate the SE status 
of your poultry houses and to take appropriate action if your measures 
are not preventing SE. Many of the comments we received in response to 
the public meetings in Columbus, OH, and Sacramento, CA, stated that 
environmental testing was an appropriate indicator of whether SE 
prevention measures are working effectively. In addition, most of the 
voluntary egg QA programs contain some level of environmental testing 
for SE to evaluate the effectiveness of the programs.
    Information from an egg QA program with a testing protocol 
indicates that the highest numbers of positive environmental samples 
are found when laying hens are 40 to 45 weeks of age (Ref. 57). The 
Layers study (Ref. 27) found that flocks less than 60 weeks of age 
(younger flocks) were 5 times more likely to test positive for SE than 
older flocks. Accordingly, we are proposing in Sec.  118.5(a) that 
environmental testing for SE be conducted for the flock in each poultry 
house when each group of laying hens making up that flock is 40 to 45 
weeks of age. We are proposing in Sec.  118.5(b) that environmental 
testing for SE also be conducted approximately 20 weeks after the end 
of any induced molting process. We propose to do this because the egg 
industry considers the time period approximately 20 weeks after the end 
of a molting process to be equivalent to the time period when layers 
are 40 to 45 weeks of age in an initial laying cycle.
    An SE-positive environmental test at the 40 to 45 week time period 
notifies a producer that there is a problem with SE contamination. At 
this point, action can be taken to determine if there are SE-
contaminated eggs and to keep SE-contaminated eggs produced by an SE-
positive flock out of the table egg market. Additionally, a positive 
environmental test during the 40 to 45 week period (just after peak 
lay) gives a producer sufficient notice to make arrangements for 
cleaning and disinfection of the contaminated poultry house at 
depopulation. Therefore, we have tentatively concluded that you must 
perform environmental testing for SE on a poultry house when each group 
of laying hens in the flock in that house are 40 to 45 weeks of age 
and, if molted, approximately 20 weeks after the end of any molting 
process.
    We tentatively have concluded in proposed Sec.  118.5(a)(1) that, 
if an environmental test at 40 to 45 weeks for SE is negative, and your 
laying hens do not undergo induced molting, then you do not need to 
perform additional environmental testing on the poultry house, unless 
the flock in that poultry house contains multi-aged laying hens. If the 
flock contains multi-aged laying hens, you must test the environment of 
the poultry house when each group of hens in the flock is 40 to 45 
weeks of age. We are establishing minimum testing requirements to serve 
as one indication of whether your SE prevention measures are working 
effectively, and we believe that one test per laying cycle is 
sufficient for that purpose. In addition, a representative

[[Page 56838]]

from the PEQAP program stated at a recent FDA/FSIS public meeting on 
egg safety (Washington, DC, July 31, 2000) that 75 percent of 
environmental positives will be caught with one environmental test 
(Ref. 58).
    If an environmental test for SE is positive, we have tentatively 
concluded, under proposed Sec.  118.5(a)(2), that you must review 
implementation of your SE prevention measures and begin egg testing 
within 24 hours of receiving notification of the positive environmental 
test, unless you divert eggs to treatment for the life of the flock in 
that poultry house. Review of the SE prevention measures is critical to 
ensure that they are being implemented properly and to eliminate 
improper implementation as a contributor to the SE-positive 
environment. We are proposing that you begin egg testing within 24 
hours of receiving notification of an SE-positive environmental test in 
order to determine as quickly as possible whether SE-contaminated eggs 
are being marketed to consumers.
    Further, we tentatively have concluded, in proposed Sec.  118.5(b), 
that you must perform an environmental test for SE at approximately 20 
weeks after the end of the molting process. Under proposed Sec.  
118.5(b)(1), if an environmental test is negative approximately 20 
weeks after the end of a molting process, and your laying hens are not 
molted again, you do not need to perform additional environmental 
testing, for the reasons previously stated, on that poultry house, 
unless the flock in the poultry house contains multi-aged laying hens. 
If the flock contains multi-aged laying hens, the environment of the 
poultry house must be tested approximately 20 weeks after the end of 
the molting process of each group of hens in the flock in each poultry 
house.
    Under proposed Sec.  118.5(b)(2), if the environmental test for SE 
is positive at approximately 20 weeks after the end of a molting 
process, you must proceed in the same manner as described when the 
environmental test performed when laying hens are 40 to 45 weeks of age 
is positive for SE.
2. Egg Testing for SE
    Under proposed Sec.  118.1(a), Sec.  118.6 would apply to you if 
you are a shell egg producer with 3,000 or more laying hens, you 
produce shell eggs for the table market but do not sell all of your 
eggs directly to consumers, and any of your eggs that are produced at a 
particular farm do not receive a treatment as defined in Sec.  118.3. 
We are proposing in Sec.  118.6 that if you have an environmental test 
that is positive for SE at any point during the life of a flock, you 
must perform egg testing for SE, unless you divert eggs to treatment as 
defined in Sec.  118.3 for the life of the flock in the positive 
poultry house. If an environmental test is SE-positive, the flock in 
that environment may be producing SE-positive eggs. Studies have shown 
that infected laying hens that are shedding SE into the environment are 
not necessarily producing SE-contaminated eggs (Ref. 14). However, data 
from the SE Pilot Project (Ref. 39) showed that 50 percent of flocks 
with an SE-positive environment produced at least one positive egg in 
the time period studied. The prevalence of SE-positive eggs from flocks 
in SE-positive environments was estimated to be approximately 1 in 
3,600 from data from the SE Pilot Project (Ref. 39). The SE Risk 
Assessment (Ref. 15) estimated the prevalence of contaminated eggs to 
be as high as 1 in 1,400 from ``high risk'' flocks with SE-positive 
environments. We have tentatively concluded that, in order to protect 
public health, you must begin testing eggs within 24 hours of receiving 
notification that you have an environmental test that is positive for 
SE, unless you choose to divert eggs to treatment as defined in Sec.  
118.3 for the life of the flock in the positive poultry house.
    We are proposing in Sec.  118.6(c) that you must conduct 4 egg 
tests on the positive poultry house; you must collect and test eggs as 
required by Sec. Sec.  118.7 and 118.8, respectively, at 2-week 
intervals for a total of 4 tests. We are also proposing in Sec.  
118.6(c) that if all four tests are negative for SE, then you may 
continue to supply eggs to the table egg market. However, if any one of 
the four egg tests is positive for SE, we are proposing in Sec.  
118.6(d) that, upon receiving notification of an SE-positive egg test, 
you must divert all eggs from the positive flock for treatment as 
defined in Sec.  118.3 until the provisions of Sec.  118.6(c) are met. 
You may divert eggs from the positive flock to egg products processing 
or to a treatment that will achieve at least a 5-log destruction of SE 
for shell eggs. You may return to providing eggs to the table egg 
market if they have met the provisions of proposed Sec.  118.6(c) (see 
discussion in section III.G.2 of this document) and continue to meet 
the provisions of proposed Sec.  118.6(e), described in the following 
paragraph.
    We are proposing in Sec.  118.6(e) that, if you have had a positive 
egg test in a flock and later meet the number of negative egg tests 
required in Sec.  118.6(c) and return to table egg production, you must 
conduct one egg test per month on that flock (see discussion in section 
III.G.2 of this document) for the life of that previously positive 
flock. Humphrey (Ref. 14) has suggested that laying hens that are 
infected with SE will produce SE-contaminated eggs sporadically. 
Therefore, we believe that it is important that a flock that previously 
has produced positive eggs be monitored throughout its life for 
production of SE-contaminated eggs. Under proposed Sec.  118.6(e)(1), 
if the monthly egg test in paragraph (e) is negative for SE, you may 
continue to supply eggs to the table market. If any of the monthly egg 
tests in paragraph (e) are positive for SE, under proposed Sec.  
118.6(e)(2), you must divert eggs from the positive flock to treatment 
for the life of the flock or until the conditions in paragraph (c) of 
proposed Sec.  118.6 are met.
    The testing schemes described in the previous paragraphs could be 
the basis for a performance based regulatory scheme. We are soliciting 
comment and data on alternative regulatory schemes that would achieve 
the same public health protection as the set of measures we are 
currently proposing. One possibility is a requirement for a specified 
frequency of environmental testing for all producers, followed, if 
necessary, by egg testing and diversion. As long as producers were 
maintaining poultry houses that tested negative for SE, the SE 
prevention measures would be recommended but not required. However, 
some or all of the measures may be required of producers whose houses 
were contaminated with SE. We solicit comment on a testing-based 
regulatory scheme and combinations of the prevention measures that 
might achieve the same public health goals as the current proposal.

G. Sampling and Testing Methodology for SE

    We are proposing in Sec.  118.7 to require that you follow a 
scientifically valid sampling procedure when sampling for SE in the 
poultry house environment and in eggs. Your ability to accurately 
assess the SE status of a flock and its eggs is a factor of the 
sampling methodology used to detect SE in the environment and in eggs. 
To protect public health, it is important that when you perform 
environmental testing for SE, you take representative samples of the 
manure or other appropriate material in poultry houses and, when you 
perform egg testing, you randomly collect 1,000 eggs from a day's 
production.

[[Page 56839]]

1. Sampling of the Poultry House Environment
    We are proposing in Sec.  118.7(a) that you use a scientifically 
valid sampling procedure for conducting environmental sampling within 
each poultry house. Currently, drag swabbing methods are being used to 
sample manure in poultry houses in the voluntary State QA programs 
(Refs. 28, 29, 30, 31, and 32). Drag swabbing has been reported to be 
an effective and convenient method for determining the SE status of a 
flock in a poultry house (Ref. 59). Drag swabbing involves pulling a 
square gauze pad (approximately 4 x 4 inches) that has been moistened 
with canned, evaporated milk across the surface of manure. Information 
on drag swabbing generated for the CA Egg QA Program (CEQAP) indicates 
that a swab becomes saturated with manure after being dragged 
approximately 30 linear feet (Ref. 60) and, therefore, in that program 
an individual swab is only dragged for 30 feet. Most other State 
programs drag a single swab the entire length of a row of cages within 
a poultry house regardless of the length of that row (Refs. 28, 30, 31, 
and 32). As only the one CEQAP study has been done on saturation of a 
drag swab, there is very little information on this subject.
    Currently, two different sampling plans are being used to drag swab 
manure in poultry houses among the voluntary State egg QA programs. 
CEQAP has developed a statistical sampling plan for drag swabbing a 
poultry house based on an assumed level of contamination within that 
house. Based on this assumed level of contamination, the number of 
swabs necessary to give a particular probability of detecting SE can be 
determined. For example, if 10 percent of the area of a poultry house 
is contaminated with SE, taking 32 swabs would give a 96 percent 
probability of detecting SE in that house. For the CEQAP program, the 
total area of a poultry house is divided into 30-foot sections (the 
distance that they have determined it is valid to drag a single swab) 
and, in our example, 32 of those 30-foot sections would be randomly 
selected to be drag swabbed for SE. In this sampling plan, the assumed 
area of contamination can be altered to fit the conditions in a 
particular poultry house with consequent changes in the number of swabs 
that must be taken to retain a 95 percent or better probability of 
detecting any SE that may be present.
    Alternatively, many of the other voluntary egg QA programs drag 
swab the entire length of every row of cages within a poultry house. 
Rows or banks of cages typically have a right and left side. Each side 
of a row is dragged with a fresh swab until all the rows have been 
sampled. One swab is used per side regardless of the length of that 
row. The number of drag swabs taken per house equals twice the number 
of rows in that house. In addition, there are houses with cages that 
are stair-stepped and can be eight cages high with a large manure pit 
beneath them. In houses such as these, the manure belts are usually 
sampled. In houses where the floors are constantly flushed with water, 
the floor in general is swabbed.
    We are aware of the differences in the types of poultry houses 
within the United States and the challenges involved in sampling all 
houses representatively and consistently. We are specifically 
soliciting comment on the appropriateness of different methods of drag 
swabbing, including manure belt and floor swabbing, and egg machinery 
swabbing. We would like comments on the distance an individual swab 
should be dragged and whether or not it is necessary to drag every row 
of every house. We would also like comments on alternative methods of 
sampling (e.g., sampling of the air in a poultry house to detect SE) 
that could be utilized more uniformly in different styles of poultry 
houses. Based on comments received, we will consider what poultry house 
environmental sampling methods should be required in any final rule.
2. Egg Sampling
    In Sec.  118.5(a)(2)(B) and (b)(2)(B), we are proposing to require 
that you begin egg testing within 24 hours of receiving notification of 
a single SE-positive environmental test unless you divert eggs to 
treatment for the life of the flock in the poultry house. In Sec.  
118.7(b)(1), we are proposing that, when you conduct an egg test 
required under Sec.  118.6, you randomly collect and test 1,000 eggs 
from a day's production. The 1,000-egg sample must be tested according 
to proposed Sec.  118.8. You must randomly collect and test 4 1,000-egg 
samples at 2-week intervals for a total test of 4,000 eggs over an 8-
week period. With this sampling scheme, there is approximately a 95 
percent probability that a positive egg will be detected from a flock 
that is producing SE-contaminated eggs with a prevalence of 1 in 1,400 
(Ref. 61). As mentioned previously, data have indicated that an SE-
contaminated flock may be producing SE-contaminated eggs with a 
prevalence of 1 in 1,400 (Ref. 15). We are proposing that eggs be 
tested in 2-week intervals because infected flocks shed SE 
intermittently (Ref. 14). However, the false negative rate of the 
sampling scheme is sensitive to the assumption regarding the prevalence 
of SE-contaminated eggs (Ref. 61). We are soliciting comment on this 
assumption, as well as other scientifically valid egg sampling 
procedures.
    In proposed Sec.  118.7(b)(2) we have tentatively concluded that 
1,000 eggs from a day's production should be tested per month for the 
life of a flock that has had an SE-positive egg test and then met the 
provisions of Sec.  118.6(c) and returned to table egg production. We 
are requiring this monthly egg test for the life of the flock because 
infected layers shed SE intermittently (Ref. 14).

H. Laboratory Methods for Testing for SE

    We are proposing in Sec.  118.8(a) that you must test for SE in 
environmental samples according to the method ``Detection of Salmonella 
in Environmental Samples from Poultry Houses'' and in Sec.  118.8(b) 
that you must test for SE in egg samples according to the preenrichment 
method described by Valentin et al. (Ref. 62). These methods, which are 
incorporated by reference, are required unless you test for SE in 
environmental and egg samples using other methods that are at least 
equivalent in accuracy, precision, and sensitivity in detecting SE. In 
the future, we intend to place the specified methods in FDA's 
Bacteriological Analytical Manual. After publication of this proposed 
rule, the environmental sampling method will be available on FDA's 
Internet Web site at www.cfsan.fda.gov.
    The method for detecting SE in the environment that we are 
specifically proposing to allow, ``Detection of Salmonella in 
Environmental Samples from Poultry Houses,'' is a pre-enrichment method 
followed by primary enrichment method. The basic procedure for 
culturing samples involves incubating pre-enriched samples in 
enrichment broth and then streaking samples of broth onto selective 
media. Following incubation of the samples on the selective media, any 
suspect colonies that have grown on the media are identified 
biologically and serologically. In general, this procedure should give 
results in 5 days following receipt of samples by the laboratory.
    The method for detecting SE in egg samples that we are specifically 
proposing to allow is a pre-enrichment method. The basic procedure for 
culturing involves incubation of pools of 20 eggs, followed by 
enrichment in modified tryptic soy broth. Following incubation and 
enrichment, samples are subcultured and streaked onto media and any 
suspect colonies that have

[[Page 56840]]

grown on the media are identified biochemically and serologically. We 
specifically request comment on appropriate options for conducting and 
funding testing of SE detection methods through State and Federal 
programs.

I. Administration of the SE Prevention Measures

    We are proposing in Sec.  118.9 that one individual at each farm 
must be responsible for administration of the SE prevention measures. 
Oversight by one qualified individual is essential to the effective 
implementation of SE prevention measures for egg production. Because 
egg production operations tend to be small and may have frequent 
turnover in staff, it is particularly important that one individual 
have training equivalent to a standardized curriculum recognized by FDA 
(discussed in the following paragraphs) or be otherwise qualified 
through job experience to administer the SE prevention measures.
    Proposed Sec.  118.9 requires an individual to have the requisite 
training or experience to administer SE prevention measures. Training 
on SE prevention measures for egg production must be at least 
equivalent to that received under a standardized curriculum recognized 
by FDA. We anticipate that 2- or 3-day training sessions will be 
provided by an egg safety training alliance, modeled after the Seafood 
HACCP Alliance. The Seafood HACCP Alliance is a consortium consisting 
of representatives from Federal and State agencies, industry, and 
academia who have worked to create a uniform training program that will 
meet the requirements of the seafood HACCP regulations with minimal 
cost. It is our intention to develop an Egg Safety Alliance to create a 
core curriculum and training materials on SE prevention measures for 
egg production. It also is our intention to use the Egg Safety Alliance 
curriculum and materials as the standard against which other course 
curricula and materials may be judged.
    We also are proposing in Sec.  118.9 that job experience will 
qualify an individual to administer the SE prevention measures if such 
experience has provided knowledge at least equivalent to that provided 
through the standardized curriculum. We acknowledge that a course on SE 
prevention measures for egg production might not be necessary for an 
individual who has experience working on an egg farm and is well-versed 
in SE prevention during egg production. Where job experience has 
imparted a level of knowledge at least equivalent to what an individual 
would receive through the standardized curriculum, that individual 
would be considered qualified to administer the prevention measures 
under proposed Sec.  118.9.
    We are proposing in Sec. Sec.  118.9(a) through (c) that the 
qualified individual designated under Sec.  118.9 must develop and 
implement SE prevention measures for each farm, reassess and modify the 
prevention measures as necessary to ensure that the requirements of 
Sec.  118.4 are met, and review all records created under Sec.  118.10. 
We also are proposing that the individual does not need to have 
performed the monitoring or created the records being reviewed. We have 
tentatively concluded that the prevention measures need to be 
implemented and, if necessary, modified and reassessed by an individual 
who not only is knowledgeable about egg production but who also has 
been trained or is experienced specifically in SE prevention measures 
for egg production so that the individual will be able to recognize 
potential problems.

J. Recordkeeping Requirements for the SE Prevention Measures

    We are proposing recordkeeping requirements related to 
environmental testing and egg testing for SE, diversion, and eggs going 
to treatment.
1. Records that Egg Producers Are Required to Maintain
    Under proposed Sec.  118.1(a), Sec.  118.10 would apply to you if 
you are a shell egg producer with 3000 or more laying hens, you produce 
shell eggs for the table market but do not sell all of your eggs 
directly to consumers, and any of your eggs that are produced at a 
particular farm do not receive a treatment as defined in Sec.  118.3. 
We are proposing in Sec.  118.10(a)(1) that you must keep records 
indicating compliance with environmental and egg sampling performed 
under proposed Sec.  118.7 and results of environmental and egg testing 
performed under proposed Sec.  118.8 as required in proposed Sec. Sec.  
118.5 and 118.6. If applicable, you must also keep records indicating 
compliance with the egg diversion requirements of proposed Sec.  118.6. 
These records may be handwritten logs, invoices, documents reporting 
laboratory results, or other appropriate records.
    Maintenance of appropriate records is fundamental to evaluating the 
effectiveness of your SE prevention measures. As stated in section 
III.A of this document, the combined SE prevention measures, when 
implemented properly, have been shown to result in a decrease in the 
number of poultry houses with SE-positive environments (Ref. 39). We 
have tentatively concluded that in order for you and FDA to evaluate 
whether these measures are being effective, it is necessary for you to 
keep records documenting the results of environmental testing and, if 
applicable, egg testing. We are proposing in Sec.  118.10(a)(2) that if 
egg testing reveals SE-positive eggs you must maintain records 
indicating compliance with the diversion requirements in Sec.  118.6. 
Records of diversion will provide assurance to both you and FDA that 
eggs required to be diverted are not being marketed to consumers and, 
thereby, putting consumers at risk of illness from SE.
    We are proposing in Sec.  118.10(a)(3) that you must keep records 
indicating that all of the eggs at a particular farm will be given a 
treatment as defined in Sec.  118.3, if you have 3,000 or more laying 
hens and you are not complying with the SE prevention measures other 
than refrigeration (i.e., you are a producer described in Sec.  
118.1(b)). These records may include a contract with an in-shell 
pasteurization facility or an egg-breaking facility. It is necessary 
that these records be maintained so that both you and FDA will have an 
assurance that the potential for SE contamination in eggs is being 
addressed through a treatment or through the SE prevention measures.
2. General Requirements for Records Maintained by Egg Producers
    In proposed Sec.  118.10(b), we describe general requirements for 
records that must be maintained. Proposed Sec.  118.10(b)(1) and (b)(2) 
require that records contain your name, the location of your farm, and 
the date and time of the activity that the record reflects. Proposed 
Sec.  118.10(b)(3) requires that the record include the signature or 
initials of the person performing the operation or creating the record. 
The record signing requirement will assure responsibility and 
accountability by the individual who performed the activity. Also, a 
signature or initials ensure that the source of the record will be 
known if any questions regarding the record arise.
    Proposed Sec.  118.10(b)(4) requires that data reflecting 
compliance activities be entered on a record by the person performing 
or observing the activity at the time it is performed or observed in 
order to increase accuracy. The record must contain the actual values 
observed, if applicable.

[[Page 56841]]

3. Length of Time Records Must Be Retained
    Proposed Sec.  118.10(c) requires you to maintain all records in 
accordance with proposed part 118 at your place of business, unless 
stored offsite under Sec.  118.10(d), for 1 year after the flock to 
which the records pertain has been taken permanently out of production. 
You must maintain records for 1 year after a flock is no longer 
producing eggs for consumption to allow for annual inspection and to 
facilitate investigation if the eggs from that flock are implicated in 
an outbreak of a foodborne illness.
4. Offsite Storage of Records
    Proposed Sec.  118.10(d) allows for offsite storage of records 6 
months after the date the records were created. This applies to all 
records required under proposed part 118. We recognize that, under the 
recordkeeping requirements of this part, there may be more records than 
available storage space in an egg production facility. Therefore, we 
are proposing that records may be stored offsite. You must be able to 
retrieve any records you store offsite and provide them at your place 
of business within 24 hours of a request for official review. We would 
consider electronic records to be onsite if they are available from an 
onsite computer, including records transmitted to that computer via a 
network connection.
5. Official Review of Records
    Proposed Sec.  118.10(e) requires you to have all records required 
by part 118 available for official review and copying at reasonable 
times. The agency's access to records required by proposed part 118 is 
essential to understand whether your SE prevention measures are working 
and whether you are complying with the regulations. Our authority to 
require these records, and to provide for agency access to them, is 
discussed elsewhere in this document.
6. Public Disclosure of Records
    Proposed Sec.  118.10(f) states that records required by proposed 
part 118 are subject to the disclosure requirements under 21 CFR part 
20. In another FDA rulemaking that discussed public disclosure of 
required records (60 FR 65096 at 65139, December 15, 1995), we 
concluded:
    [R]ecords and plans should be protected to the extent possible 
in order to promote the implementation of HACCP across the seafood 
industry. FDA has concluded that the public will benefit from the 
protection of records because it will actually strengthen the HACCP 
system. So long as the legitimate public need to be able to evaluate 
the system can be met through other means, the confidentiality of 
HACCP records and plans generally will foster the industry's 
acceptance of HACCP. Even though HACCP may be mandatory under these 
regulations, in order for it to succeed, processors must be 
committed to it because they see value in it for themselves. Fear of 
public disclosure of matters that have long been regarded as 
confidential business matters could significantly undermine that 
commitment. FDA concludes, therefore, that it is in the public 
interest to foster tailored HACCP plans that demonstrate 
understanding and thought, rather than promote the use of rote plans 
and minimally acceptable standards due to fear of public disclosure.
    FDA understands that we cannot make promises of confidentiality 
that exceed the permissible boundaries established under FOIA, nor 
does the agency wish to do so in this case. The agency still does 
not expect that we will be in possession of a large volume of plans 
and records at any given moment. However, given the significant 
interest in this subject as conveyed by the comments, we have 
concluded that the final regulations should reflect the fact that 
the HACCP plans and records that do come into FDA's possession will 
generally meet the definition of either trade secret or commercial 
confidential materials* * *.
    We are not aware of any circumstances that would warrant different 
consideration on issues related to disclosure of records for SE 
environmental and egg sampling and testing and for diversion of eggs 
than those required for seafood HACCP. Therefore, we intend to consider 
records that come into our possession under this rule as generally 
meeting the definition of either a trade secret or commercial 
confidential materials.
7. Comment Solicitation on Recordkeeping Measures
    We are soliciting comment on whether we should require two 
additional recordkeeping measures beyond the proposed recordkeeping 
requirements for environmental and egg sampling and testing, and for 
diversion. This solicitation is being made to assess the importance of 
these additional recordkeeping measures for a comprehensive SE 
prevention plan, given their added costs. First, we are soliciting 
comment on whether we should require that you establish and maintain a 
written SE prevention plan. If required, this SE prevention plan would 
set forth a producer's plan to implement the regulation's prevention 
and testing measures, and the requirement for diversion if eggs test 
positive for SE. A written plan may aid in the planning and 
establishing of efficient, effective, and consistently implemented SE 
prevention measures by facility personnel.
    A written SE prevention plan also would be helpful to FDA 
representatives who inspect an egg facility. A written copy of a plan 
specific to each farm would assist FDA in establishing a link between 
what agency representatives see during an inspection and the overall SE 
prevention measures used on that farm over a longer time period. SE 
prevention measures may be quite different among farms, given different 
facility design and size, and yet be equally effective in meeting FDA's 
requirements. Knowledge of the specific prevention measures taken on a 
farm, as discussed in an SE prevention plan, would assist FDA 
representatives in assessing compliance with the prevention measures.
    The second recordkeeping measure about which we are soliciting 
comment relates to a requirement that you maintain records indicating 
performance and compliance in implementing your facility's specific SE 
prevention measures. In this document, we are specifically proposing to 
require records only for environmental and egg sampling and testing, 
and for diversion of eggs found to be SE positive. We are requesting 
comment on whether we should require other documents demonstrating your 
implementation of the SE prevention measures that could be considered 
by FDA in assessing your compliance efforts, particularly in light of 
an SE-positive environmental test. Such documents, for example, might 
include monitoring records and activity logs. In the absence of other 
records to demonstrate compliance with SE prevention measures, FDA 
representatives who inspect a facility will base their evaluation of 
compliance with the regulation on observations, your sampling, testing, 
and any diversion records, FDA testing, and any other relevant 
information.
    FDA did not propose to require a written plan and monitoring and 
compliance records because of their added costs, which FDA estimates to 
be $14.7 million, an 18 percent increase in the rule's total costs. 
Considering the information in the previous paragraphs, we are 
soliciting comment on the cost-effectiveness of the inclusion of a 
recordkeeping provision for a written SE prevention plan and a 
provision requiring records demonstrating compliance with all SE 
prevention measures in any final rule based on this proposal.
    We also are soliciting comment about whether we should consider 
requiring, in a final rule, that you register with FDA if you are a 
producer who must comply with all of the SE prevention measures, as 
described in proposed Sec.  118.1(a). We would use the producer 
registration information to create a

[[Page 56842]]

database that we would use to efficiently conduct inspections and 
allocate inspection resources. When the provisions of this rule are 
finalized, FDA intends to conduct annual inspections of egg farms. 
Oversight through annual inspection is necessary to ensure that shell 
eggs are being produced under controls that will prevent SE 
contamination and reduce the likelihood that SE-contaminated eggs will 
cause foodborne illness. Therefore, we solicit comment on the efficacy 
of requiring that producers register the location and size of their 
business with FDA.

K. Enforcement of On-Farm SE Prevention Measures for Shell Eggs

    As discussed in section III.L of this document, FDA is proposing 
these regulations under both the FFDCA and the PHS Act. Failure to 
comply with the on-farm requirements proposed in Sec. Sec.  118.1 
through 118.10 would subject a producer to the administrative remedies 
(i.e., diversion or destruction) in Sec.  118.12 of the proposed rule. 
Further, we would consider a failure to comply with the SE prevention 
requirements in proposed Sec. Sec.  118.1 through 118.9 to result in 
the shell eggs being adulterated under section 402(a)(4) of the FFDCA 
(21 U.S.C. 342(a)(4)). Causing the eggs to become adulterated would be 
a violation of section 301(b) of the FFDCA (21 U.S.C. 331(b)), which 
prohibits adulteration or causing adulteration of food in commerce. 
Also, the introduction or delivery for introduction of adulterated 
shell eggs into interstate commerce would be a prohibited act under 
section 301(a) of the FFDCA (21 U.S.C 331(a)). Enforcement of 
adulteration regulations under the FFDCA is conducted under sections 
301, 302, 303, and 304 (21 U.S.C. 332, 333, and 334).
    Section 361 of the PHS Act (42 U.S.C. 264) authorizes the Secretary 
of Health and Human Services (the Secretary), and by delegation FDA, to 
issue regulations that provide for the destruction of articles and for 
other measures that the Secretary determines are necessary to prevent 
the introduction, transmission, or spread of communicable diseases. FDA 
tentatively concludes that the SE on-farm prevention requirements can 
be efficiently and effectively enforced through administrative 
procedures under the PHS Act. Accordingly, FDA is proposing procedures 
in Sec.  118.12 under which FDA or a State or locality may order the 
diversion or destruction of shell eggs that have been produced or held 
in violation of any of the regulations in Sec. Sec.  118.1 through 
118.10. Under proposed Sec.  118.12, FDA or a State or locality may 
issue a written order to the person holding the shell eggs requiring 
that the eggs be diverted or destroyed.
    The proposed regulations would provide for the diversion to a 
treatment that achieves at least a 5-log destruction of SE for shell 
eggs or for processing of the egg products in accordance with the EPIA. 
Because EPIA requires pasteurization of egg products, any Salmonella 
present would likely be eliminated, as it would if the eggs received a 
treatment that achieves at least a 5-log destruction of SE. The written 
order would identify the shell eggs that are affected, and the grounds 
for issuing the order. The written order would provide that, unless the 
order is appealed by either filing a written appeal or by requesting a 
hearing, the shell eggs must be diverted or destroyed within 10-working 
days of the receipt of the order.
    The authority for the enforcement of section 361 of the PHS Act is 
provided, in part, by section 368 of the PHS Act (42 U.S.C. 271). Under 
section 368(a), any person who violates a regulation prescribed under 
section 361 of the PHS Act may be punished by imprisonment for up to 1 
year and may be fined. Individuals violating a regulation issued under 
section 361 may be fined an amount up to $100,000 if death has not 
resulted from the violation or up to $250,000 if death has resulted (18 
U.S.C. 3559 and 3571(c)). In addition, Federal district courts have 
authority to enjoin individuals and organizations from violating 
regulations implemented under section 361 of the PHS Act (Califano v. 
Yamasaki, 442 U.S. 682, 704-05 (1979); United States v. Beatrice Foods 
Co., 493 F.2d 1259, 1271-72 (8th Cir. 1974), cert. denied, 420 U.S. 961 
(1975)).
    We are proposing to amend Sec.  16.5 (21 CFR 16.5) by adding 
paragraph (a)(5) to clarify that the regulatory hearing procedures in 
21 CFR part 16 do not apply to a hearing proposed under Sec.  118.12 on 
an order for diversion or destruction of shell eggs under section 361 
of the PHS Act. We intend for the administrative remedies in proposed 
Sec.  118.12 to be the applicable informal hearing process for any 
order issued under such section.
    Proposed Sec.  118.12(b) requires that shell egg producers allow 
FDA representatives to inspect egg production establishments. FDA does 
not need to provide advance notice before an inspection, and an 
inspection may include, but is not limited to, egg and environmental 
sampling, review of records, and inspection of eggs and equipment.
    Proposed Sec.  118.12(c) provides that States and localities that 
are authorized to inspect or regulate egg production establishments may 
enforce proposed Sec. Sec.  118.4 through 118.10 of the rule through 
inspections under Sec.  118.12(b) and through the administrative 
remedies in Sec.  118.12(a). Proposed Sec.  118.12(c) also provides 
that those States or localities may follow the rule's hearing 
procedures, substituting, where necessary, the appropriate State or 
local officials for designated FDA officials. The State or local 
officials also may use comparable State or local hearing procedures as 
long as such procedures satisfy due process.

L. Legal Authority

    FDA is proposing these regulations under the PHS Act and the FFDCA. 
FDA's legal authority under the PHS Act for the proposed regulations is 
derived from the provisions of sections 311, 361, and 368 (42 U.S.C. 
243, 264, and 271) that relate to communicable disease. The PHS Act 
authorizes the Secretary to make and enforce such regulations as ``are 
necessary to prevent the introduction, transmission, or spread of 
communicable diseases from foreign countries into the States * * * or 
from one State * * * into any other State'' (section 361(a) of the PHS 
Act). (See sec. 1, Reorg. Plan No. 3 of 1966 at 42 U.S.C. 202 for 
transfer of authority from the Surgeon General to the Secretary; see 21 
CFR 5.10(a)(4) for delegation from the Secretary to FDA.) This proposed 
rule would not be the first regulation issued by FDA that relied upon 
the authority of the PHS Act to prevent the transmission of 
communicable disease. For more than 60 years, FDA has used the PHS Act 
as its legal authority (in whole or in part) to issue the following 
regulations:
     Regulations to control the interstate shipment of 
Psittacine birds (21 CFR 1240.65);
     Regulations on the source and use of potable water (21 CFR 
1240.80 to 1240.95);
     Regulations to control the interstate and intrastate 
commerce of turtles (21 CFR 1240.62);
     Regulations to control the interstate shipment of 
molluscan shellfish (21 CFR 1240.60);
     Regulations to require pasteurization of milk and milk 
products (21 CFR 1240.61);
     Regulations to require a safe handling statement on 
cartons of shell eggs that have not been treated to destroy Salmonella 
microorganisms and to require refrigeration of shell eggs held

[[Page 56843]]

for retail distribution (parts 16, 101, and 115 (21 CFR parts 16, 101, 
and 115));
     Regulations governing blood and tissue products in 
intrastate and interstate commerce (parts 606, 640, 1270, and 1271 (21 
CFR parts 606, 640, 1270, and 1271));
     Regulations to require HACCP systems for juice in 
interstate and intrastate commerce (part 120 (21 CFR part 120); and
     Regulations to prevent the monkeypox virus from being 
established and spreading in the United States (21 CFR 1240.63).
    Furthermore, at least one court has supported FDA's use of its PHS 
Act authority to issue regulations to control communicable disease. 
State of Louisiana v. Mathews, 427 F. Supp. 174 (E.D.La. 1977), 
involved an FDA regulation issued under the PHS Act banning the sale 
and distribution of small turtles. Plaintiffs argued that the PHS Act 
only provided FDA with authority to ban individual lots of infected 
turtles that were shown to be health hazards and did not provide 
authority for FDA's broad ban on all small turtles. Id. at 175. The 
court rejected this argument, observing that ``Congress has granted 
broad, flexible powers to federal health authorities who must use their 
judgment in attempting to protect the public health against the spread 
of communicable disease.'' Id. at 176. The court found that FDA's total 
ban was ``permissible as necessary to prevent the spread of 
communicable disease.'' Id.
    Plaintiffs in the case also challenged FDA's authority under the 
PHS Act to promulgate a rule applicable to intrastate commerce. Id. FDA 
had concluded that controlling the spread of disease from contaminated 
turtles required extending the ban to intrastate sales. Id. 
Specifically, FDA reasoned that contaminated turtles may be purchased 
in one State for use as a pet in another and that, without prohibiting 
intrastate sales, unlawful interstate sales would be difficult or 
impossible to stop. Id. The court found that the intrastate ban ``is 
not only authorized by law, but under modern conditions of 
transportation and commerce is clearly reasonable to prevent the 
interstate spread of disease.'' Id.
    In Public Citizen v. Heckler, 602 F. Supp. 611 (D.D.C. 1985), the 
court considered a request to compel the Department to act on a 
petition to ban all domestic sales of raw milk and raw milk products 
because of the risk of transmission of disease from such products. In 
ordering FDA to respond to the petition, the court found that the 
Department had authority to ban raw milk and milk products under the 
PHS Act: ``Under both the [PHS] Act's authorization for regulations to 
control communicable diseases, and the [act's] provisions for the 
control of adulterated foods, the Secretary has both the authority and 
the heavy responsibility to act to protect the nation's health in 
situations such as this one.'' Id. at 613. (internal citations 
omitted). See Public Citizen v. Heckler, 653 F. Supp. 1229, 1242 
(D.D.C. 1987) (ordering FDA to publish a proposed rule banning the 
interstate sale of all raw milk and raw milk products).
    In addition to the PHS Act, FDA's legal authority to require on-
farm prevention measures under proposed Sec. Sec.  118.1 through 118.9 
derives from sections 402(a)(4) and 701(a) of the FFDCA (21 U.S.C. 
371(a)). Under section 402(a)(4) of the FFDCA, a food is adulterated 
``if it has been prepared, packed, or held under insanitary conditions 
whereby it may have become contaminated with filth, or whereby it may 
have been rendered injurious to health.'' Under section 701(a) of the 
FFDCA, FDA is authorized to issue regulations for the FFDCA's efficient 
enforcement. A regulation that requires measures to prevent food from 
being held under insanitary conditions whereby either of the proscribed 
results may occur allows for efficient enforcement of the FFDCA. See, 
e.g., regulations to require HACCP systems for fish and fishery 
products (21 CFR part 123) and juice (part 120) and regulations to 
require a safe handling statement on cartons of shell eggs that have 
not been treated to destroy Salmonella microorganisms and to require 
refrigeration of shell eggs held for retail distribution (parts 101 and 
115).
    Salmonellosis is a communicable disease that results from 
intestinal infection with Salmonella and is characterized by diarrhea, 
fever, abdominal cramps, headache, nausea, and vomiting. Contaminated 
shell eggs are the predominant identified food source of SE-related 
cases of salmonellosis in the United States. Lack of adequate on-farm 
prevention measures for the production of shell eggs can lead to the 
presence of SE in shell eggs and increase the likelihood of human 
illness if the eggs are not treated or thoroughly cooked. Infection may 
also be transmitted from person to person and animal-to-person. The 
provisions in the proposed rule are necessary to prevent SE from 
entering the farm and to prevent SE, if present, from cross 
contaminating the layers or eggs on the farm. We tentatively conclude 
that a regulation to require on-farm measures is necessary to prevent 
the spread of communicable disease and to prevent shell eggs from being 
prepared, packed, or held under insanitary conditions whereby they may 
have become contaminated with filth, or whereby they may have been 
rendered injurious to health.
    Although the egg market is largely regional, it involves 
significant shipment of shell eggs from State to State. Moreover, 
shipment of SE contaminated eggs from one State to another has 
contributed to the geographical spread of disease outbreaks in the U.S. 
human population. For example, eggs from Pennsylvania were implicated 
in an outbreak of SE infection reported in Asbury Park, NJ, involving 
at least 47 persons (Ref. 63). Eggs from Maryland were implicated in an 
outbreak in Livonia, NY, where 12 patrons of a restaurant reported 
gastrointestinal illness linked to consumption of omelets made from 
pooled grade A eggs (Id.). Further, consumption of raw eggs was 
associated with an SE outbreak at a catered wedding reception in New 
York, where Caesar salad dressing was implicated as the cause of SE 
illnesses. The Caesar salad dressing, made with 18 raw shell eggs 
traced to a Pennsylvania producer, was left unrefrigerated for 2 hours 
at the catering establishment, held in an unrefrigerated truck until 
delivered, and served at the reception 4.5 hours later (Ref. 64).
    If eggs are not produced using SE prevention measures, SE is more 
likely to be present in the shell eggs, thereby increasing the 
likelihood of human illness if the eggs are not treated or thoroughly 
cooked. We tentatively conclude that it is necessary for producers with 
3,000 or more layers on a farm that do not sell all of their eggs 
directly to consumers and that produce for the table market shell eggs 
that do not all receive a treatment, to produce shell eggs using all of 
the proposed rule's measures to prevent the spread of communicable 
disease. We also tentatively conclude that only the refrigeration 
requirements of proposed Sec.  118.4 would apply to producers that 
provide shell eggs to the table market but do not sell all of their 
eggs directly to consumers and have 3,000 or more layers at a farm, and 
whose eggs receive a treatment. We have previously explained, in 
section III.B of this document, why we are proposing to exempt 
producers who sell all of their eggs directly to consumers and who have 
fewer than 3,000 laying hens at a farm from the SE prevention measure 
requirements.

[[Page 56844]]

    Activities that are intrastate in character, such as the production 
and final sale of shell eggs to a retail establishment or institution 
for ultimate consumption by the consumer within one State, are subject 
to regulation under section 361 of the PHS Act when intrastate 
regulation is necessary to prevent the interstate spread of disease 
(State of Louisiana v. Mathews, 427 F. Supp. 174, 176 (E.D.La. 1977)). 
We tentatively conclude that the on-farm SE prevention measures in 
proposed Sec. Sec.  118.1 through 118.10 must also apply to producers 
of shell eggs who sell their eggs intrastate, other than directly to 
consumers. The record in this rulemaking demonstrates that shell eggs 
can function as a vehicle for transmitting foodborne illness caused by 
Salmonella (Refs. 7, 8, and 9). Similarly, the record (Ref. 65) 
demonstrates that consumers, including tourists and other travelers, 
are likely to purchase intrastate raw shell eggs or products made with 
them. These consumers subsequently take the eggs or products back to 
their home state where the eggs or products are consumed, or the 
consumers carry a communicable disease back to their home state as a 
result of such consumption, thereby creating the risk that foodborne 
illness may be spread from one State to another as a result of such 
consumption. Although producers do not ship such eggs across State 
lines, there have been interstate SE outbreaks associated with such 
eggs (Ref. 66).
    We believe that a regulation to require on-farm SE prevention 
measures or shell eggs produced and sold within a State would reduce 
the risk of SE illness. We are concerned that if we do not require on-
farm prevention measures for shell eggs that are produced and sold in 
one state, the regulations will not prevent the introduction of SE 
contaminated eggs into other states and, thus, will not prevent the 
introduction of salmonellosis from one State to another. We tentatively 
conclude that the spread of salmonellosis among states from SE-
contaminated eggs cannot be adequately controlled without extending the 
on-farm requirements to producers of eggs whose eggs are shipped within 
one state.
    We are proposing to use our authority under section 361 of the PHS 
Act to institute recordkeeping requirements. We have previously imposed 
recordkeeping requirements under section 361 of the PHS Act in 
regulations governing blood and tissue products (parts 606, 640, and 
1270) and juice (part 120).
    Regulations governing blood and blood components require that 
records be kept covering each step in the their collection, processing, 
compatibility testing, storage and distribution and documentation 
covering shipping temperature and donor information (examination 
results, tests, laboratory data, interviews, written consent, and 
health certification) (Sec. Sec.  606.160 and 640.72).
    Recordkeeping requirements are also included in FDA's Human Tissue 
Intended for Transplantation regulations in part 1270, which also 
include requirements that records be maintained relating to infectious 
disease tests, donors, and the receipt, distribution, and disposition 
of human tissue (Sec.  1270.35).
    HACCP systems regulations for juice also require significant 
recordkeeping. The regulations generally require each juice processor 
with a food hazard that is reasonably likely to occur to maintain a 
written hazard analysis and HACCP plan (21 CFR 120.12). The regulations 
further require that such processors maintain records documenting the 
implementation of the sanitation standard operating procedures, the 
ongoing application of the HACCP plan, verification of the HACCP 
system, and validation of the HACCP plan or hazard analysis. Id.
    Section 361 of the PHS act provides FDA with authority to issue 
regulations necessary to prevent the introduction, transmission, or 
spread of communicable disease. Recordkeeping requirements are 
necessary for FDA to ensure that producers follow the sampling, 
testing, and, if necessary, diversion requirements under proposed part 
118 for the production of shell eggs. We are proposing environmental 
testing as an indicator of whether a producer's SE prevention measures 
are effective. Testing would provide information on the SE status of a 
poultry house and indicate the need to take appropriate action if the 
measures were not preventing SE. Under the proposed rule, a positive 
environmental test would necessitate review of the implementation of SE 
prevention measures and testing of eggs (unless all eggs in the poultry 
house are subsequently diverted for the life of the flock). Testing 
would reduce the number of SE-positive eggs that reach consumers by: 
(1) Improving the effectiveness of SE prevention measures by indicating 
when prevention measures are ineffective and need to be modified and 
(2) triggering diversion to treatment of SE-positive eggs.
    Records of SE testing are needed to allow FDA to determine whether 
SE prevention measures are being implemented in an effective manner 
over time. Furthermore, FDA personnel may not be present when producers 
perform environmental sampling and collect eggs for testing. Records 
would allow FDA to verify that sampling is done in a scientifically 
valid manner and that the required testing is conducted. Records would 
also allow FDA to confirm test results and that producers are taking 
appropriate actions based on the results (e.g., reassessment, 
additional testing, diversion). The records would provide assurance, to 
both the producer and FDA, that the risk of SE-contaminated eggs being 
provided to consumers is being minimized, either through an SE-negative 
poultry house or diversion of SE-contaminated eggs.
    In addition to having the authority under the PHS Act to require 
recordkeeping, we believe we also have the authority to require access 
to the records. Because the on-farm sampling, testing, and diversion 
requirements are necessary to minimize the risk of communication of 
salmonellosis, access to records that demonstrate a farm has followed 
such requirements in part 118 is essential to confirm compliance and 
achieve the full benefits of the rule. We also have the authority, 
under section 361 of the PHS Act, to copy the records when necessary. 
We may consider it necessary to copy records when, for example, our 
investigator may need assistance in reviewing a certain record from 
relevant experts in headquarters. If we are unable to copy the records, 
we would have to rely solely on our investigators' notes and reports 
when drawing conclusions. In addition, copying records will facilitate 
followup regulatory actions. Therefore, we have tentatively concluded 
that the ability to access and copy records is necessary to enforce the 
rule and prevent the spread of communicable disease. A failure to 
comply with the rule's records provisions would subject the producer to 
the administrative procedures under proposed Sec.  118.12. In other 
relevant sections of this document, we explain in more detail the 
recordkeeping provisions that we believe are necessary and, because 
they are limited to what is necessary, that we believe do not create an 
unreasonable recordkeeping burden.
    Under the PHS Act, the Federal, State, and local governments have a 
long tradition of cooperation. The PHS Act specifically recognizes 
cooperation between the Federal, State, and local governments as an 
important tool for public health officials. Previously, in the area of 
food safety, FDA has used portions of the PHS Act (e.g., sections 310 
and 311 (42 U.S.C. 242 and 243)) that focus on Federal assistance to 
the States. The Conference for Food

[[Page 56845]]

Protection (CFP) and the Food Code are a result of Federal, State, and 
local cooperation and Federal assistance to States and localities under 
the PHS Act. Section 311 of the PHS Act not only recognizes Federal 
assistance to the States, but it also recognizes that States and 
localities may be able to assist the Federal Government. This section 
provides in part: ``The Secretary is authorized to accept from State 
and local authorities any assistance in the enforcement of quarantine 
regulations made pursuant to this Act which such authorities may be 
able and willing to provide.''
    We believe that, under sections 311 and 361 of the PHS Act, there 
are several ways we could accept assistance from the States in the 
enforcement of the on-farm regulation. For example, FDA could accept 
State and local assistance in the inspection of shell egg farms and 
then use those inspections as the basis for detention and diversion or 
destruction under proposed Sec.  118.12 (as discussed in section III.K 
of this document) or as the basis for an enforcement action under the 
FFDCA. Another option would be to authorize the States and localities 
to conduct inspections and enforce the on-farm requirements through the 
administrative enforcement remedies set out in proposed Sec.  118.12, 
while FDA could hear appeals with judicial review available after FDA's 
decision. FDA also believes that sections 311 and 361 of the PHS Act 
authorize the agency to issue a regulation that would allow States and 
localities to enforce the SE prevention on-farm requirements 
themselves.
    After examining these options, FDA has tentatively concluded that 
all except the last option (allowing States and localities to enforce 
the requirements themselves) would prove too cumbersome. FDA believes 
that a cooperative approach would be the most effective means to 
enforce the on-farm requirements. We are proposing a similar approach 
to the one chosen for the egg labeling and refrigeration regulations 
(parts 101 and 115). Specifically, FDA has tentatively decided to allow 
agencies of those States and localities that are able and willing to 
inspect or regulate shell egg producers, as authorized under sections 
311 and 361 of the PHS Act, to enforce the SE prevention measures along 
with FDA. FDA recognizes that States and localities currently do this 
type of enforcement and has tentatively concluded that this option will 
be the most effective and efficient use of Federal, State, and local 
food safety resources. Accordingly, proposed Sec.  118.12(c) provides 
that those States and localities that are able and willing are 
authorized under sections 311 and 361 of the PHS Act to enforce 
proposed Sec. Sec.  118.1 through 118.10 using the administrative 
procedures in Sec.  118.12, as set out in section III.K of this 
document. With respect to the hearing procedures, we recognize that 
many States and localities already have administrative procedures in 
place for hearings. The proposed regulation would allow them to use a 
similar hearing process as long as that process satisfies basic due 
process requirements.
    FDA recognizes that some of these are new approaches to enforcement 
of food safety regulations, and is soliciting comments on this aspect 
of this proposed regulation. FDA is particularly interested in comments 
on how State, local, and Federal food safety authorities can best work 
together to ensure effective and efficient implementation and 
enforcement of food safety standards.

M. Response to Comments Related to On-Farm Prevention Measures

    In this section, we are responding to comments that the agency 
received in response to the 1998 joint FDA/USDA ANPRM on Salmonella 
Enteritidis in eggs and in response to the public meetings on egg 
safety that the agency sponsored with USDA in Columbus, OH (March 30, 
2000), Sacramento, CA (April 6, 2000) and Washington, DC (July 31, 
2000). FDA/USDA received approximately 73 letters to the 1998 ANPRM 
(Docket No. 97N-0322), each containing one or more comments. We 
received approximately 370 letters to Docket No. 00N-0504 for the 
public meetings on egg safety, each containing one or more comments. 
Comments on both the ANPRM and the public meetings were received from 
egg farmers, egg packers, trade associations, consumers, consumer 
interest groups, animal interest groups, academia, State government 
agencies, and foreign government agencies. We are responding to 
comments received to these dockets to the extent that they are relevant 
to this proposal.
    (Comment 1) A few comments stated that it is not necessary to 
establish regulations for egg safety because the risk of illness from 
an SE-contaminated egg is low. Comments referenced the SE Risk 
Assessment in stating that the risk of an egg being contaminated with 
SE is 0.005 percent. In addition, 30 percent of the 3.3 million eggs 
that are contaminated annually are used for the production of egg 
products that are pasteurized and, therefore, do not result in illness. 
Comments maintained that the risk of illness from the remaining 2.3 
million SE-contaminated eggs is less than the risk from consuming other 
high-protein foods and, therefore, is acceptable and does not warrant 
Federal regulatory action.
    (Response) We do not agree with these comments. We believe that the 
current risk of illness from consuming SE-contaminated eggs is still 
too high, especially when there are cost-effective measures that can be 
taken that will reduce the risk. In 2001, the isolation rate of SE was 
2.0 per 100,000 population and the contribution of SE (corrected for 
underreporting) to total salmonellosis was estimated to have been 
213,046 illnesses, including 2,478 hospitalizations, and 87 deaths 
(Refs. 4 and 5). We estimate that the cost to society of egg-associated 
SE illnesses in a year is $1.8 to 3.1 billion. (See discussion in the 
Preliminary Regulatory Impact Analysis in section V. of this document.)
    As to the argument that eggs do not carry the same risk as other 
high protein foods (presumably meat and poultry), this is not a reason 
to ignore the risk from eggs. USDA has instituted HACCP programs to 
reduce the risk of foodborne illness from meat and poultry. Likewise, 
we are proposing measures in this proposed rule to reduce the risk of 
foodborne illness from eggs because there are practical steps that can 
be taken to reduce that risk. Consumers also are more aware of the 
risks associated with consuming undercooked meat and poultry than they 
are of the risks of consuming raw or undercooked eggs (Ref. 23). Thus, 
we disagree with this comment and believe that the risk of foodborne 
illness from consumption of SE-contaminated eggs is too high and 
warrants Federal regulatory action.
    (Comment 2) Several comments stated that not enough is known about 
the ecology of SE to develop credible on-farm prevention measures. The 
comments further stated that the relationship between an environment 
that is contaminated with SE and an egg that is contaminated with SE 
has not been established and, therefore, it is not possible to develop 
appropriate SE prevention measures.
    (Response) We do not agree with these comments. As stated in 
section III.E of this document, data from the SE Pilot Project have 
shown that certain measures (e.g., rodent and pest control, 
biosecurity, use of SE-monitored chicks, and cleaning and disinfection) 
have been effective in reducing the number of poultry houses with SE-
positive environments (Ref. 39). When these measures were implemented, 
the number of positive houses decreased

[[Page 56846]]

from 38 to 13 percent over a 3-year period. Although we agree that more 
information is needed on the ecology of SE, we believe that prior 
experience from voluntary egg QA programs has indicated that there are 
preventive controls that can be implemented on a farm that will prevent 
SE contamination of eggs.
    We agree that the exact relationship between an environment that is 
contaminated with SE and an egg that is contaminated with SE is not 
known. However, data from existing QA programs have indicated that, 
when a poultry house environment is contaminated with SE, the 
prevalence of SE-contaminated eggs is approximately 1 in 3,600 or, as 
estimated in the SE risk assessment, 1 in 1,400. A prevalence of SE-
contaminated eggs of 1 in 1,400, or even 1 in 3,600, is unacceptable 
from a public health standpoint. Preventive measures have been 
developed to prevent the SE-contamination of poultry houses on a farm, 
which would reduce the production of SE-contaminated eggs that may 
cause foodborne illness. Therefore, it is appropriate that we take 
steps to ensure that producers are employing these preventive measures 
to reduce the prevalence of SE-contaminated eggs by proposing to 
require use of the SE prevention measures.
    (Comment 3) One comment stated that on-farm prevention measures are 
not necessary because most of the outbreaks of SE illness can be 
attributed to improper food handling.
    (Response) We do not agree with this comment. Although we are aware 
that many outbreaks of foodborne illness occur as a result of cross 
contamination during food handling, many egg-associated SE outbreaks 
have been traced back to eggs contaminated during production. In 
section II.A of this document, we discuss several outbreaks that were 
traced back to eggs from farms that had SE-positive environments at the 
time of traceback. In addition, the increase in egg-associated SE 
outbreaks in the mid-1980s occurred at the same time that transovarian 
contamination of SE in eggs was first being detected. Although proper 
handling by retailers and consumers can reduce egg-associated 
illnesses, it is important to take practical measures to prevent eggs 
from becoming contaminated with SE in the first place.
    (Comment 4) Many comments maintained that induced molting of laying 
hens is cruel to the birds and contributes to SE contamination of eggs 
and, therefore, should be banned. In support of this position, these 
comments cited the information outlined in the petition from United 
Poultry Concerns, Inc., and the Association of Veterinarians for Animal 
Rights (described in section II.J of this document) and data on induced 
molting collected during the SEPP.
    (Response) The issue of whether induced molting should be stopped 
because it is cruel to laying birds is outside the scope of this 
proposed rule. With regard to the assertion that induced molting should 
be banned because it contributes to SE contamination of eggs, we do not 
agree with that comment at this time. However, we seek comment, 
discussed below, on whether certain practices related to molting are 
appropriate to reduce SE contamination of eggs within a poultry house.
    Several studies (described in section II.J of this document and 
(Ref. 67)) have been cited in comments as evidence for the claim that 
induced molting increases SE contamination of eggs and, thereby, SE 
illness in consumers. Comments have cited studies by Holt and coworkers 
that indicate that induced molting impairs the laying hens' immune 
systems and invites SE infection. While we agree that the previously 
mentioned studies have implications with regard to the health of laying 
hens, the studies do not address infection of eggs from these birds 
and, therefore, cannot be interpreted to conclude that induced molting 
increases SE contamination of eggs (Ref. 67).
    The comments also cited studies by Holt and coworkers on the 
relationship between indigenous intestinal microflora and induced 
molting. These studies noted a difference in the kinetics of intestinal 
infection between molted and unmolted birds but did not link intestinal 
microflora to intestinal infection and did not discuss transmission of 
SE to eggs. Studies by Henzler and Opitz (Ref. 48) linking induced 
molting and rodents in the poultry house environment were cited in 
comments. Although research has indicated that rodents are an important 
factor in the epidemiology of SE in the poultry house, no evidence 
exists that correlates infected rodents to molting (Ref. 67).
    Comments requesting that we ban induced molting cited a study by 
Holt (Ref. 68) linking stress in molted hens to transmission of SE 
within a poultry house. Possible stress during molting has been 
suggested as a cause for increased intestinal shedding of SE, which 
then increases transmission of SE within a poultry house, observed in 
the Holt study. However, the author of the study did not provide 
evidence to support the hypothesis that stress increases intestinal 
shedding of SE, which then increases transmission of SE within a 
poultry house. The author also suggested several other factors aside 
from induced molting that could result in increased transmission of SE 
to uninfected hens (Ref. 67).
    The comments also cited a study by Bailey and coworkers (Ref. 69), 
as well as the Holt study (Ref. 68), that linked consumption of SE-
contaminated feathers during molting with increased infection. Although 
feather consumption has been observed in molted hens, and some 
researchers have noted that this behavior could contribute to the 
spread of Salmonella in a poultry house, there is no evidence to 
suggest that the behavior is related to stress-induced colonization of 
SE in molted hens (Ref. 67).
    According to the comments, the environment, such as crowded 
conditions, in which induced molting is conducted also encourages SE 
infection and multiplication. Although induced molting in crowded 
conditions may exacerbate transmission of SE, there is little or no 
evidence to suggest that molting in crowded conditions affects SE 
transmission any more than would molting or crowding independently.
    The comments also cited studies by Holt (Ref. 68), by Nakamura, and 
by Seo and coworkers (Ref. 70) indicating that induced molting 
increases fecal shed of SE and that induced molting promotes horizontal 
transmission of SE within a poultry house. We agree that molting 
induced by withholding feed increases fecal shedding of SE in birds 
infected with SE in laboratory environments and increases horizontal 
transmission of SE among birds. Therefore, we question whether certain 
practices related to molting on a farm may be appropriate to reduce SE 
contamination of the environment and, thus, to decrease production of 
SE-contaminated eggs.
    In addition to concerns we have already expressed, we note that 
most of the research conducted on induced molting was done in 
conditions that limit its applicability. Most studies have been done 
with single lines of specific pathogen-free chickens that have been 
exposed to a narrower range of microflora than commercial laying hens. 
Therefore, the pathogen-free chickens may be immunologically na[iuml]ve 
and, consequently, may be more susceptible to serious infection than 
commercial laying hens. Studies also have been performed in controlled 
laboratory settings that do not accurately represent the conditions in 
a poultry house. Finally, molting experiments have typically relied on 
very high populations of a single, laboratory

[[Page 56847]]

modified, and propagated strain of SE. Behavior of single strains may 
not indicate behavior of populations of wild strains of SE.
    The comments opposed to molting also have stated that field data, 
which was used in the SE risk assessment, from the SEPP indicated that 
molted birds lay more SE-contaminated eggs and, therefore, molting 
should be prohibited for public health reasons (Ref. 71). In addition, 
the comments maintained that statements made by Dr. John Mason 
indicated that forced molting caused increased SE-contamination of 
eggs.
    We agree that the field data collected in the SEPP suggest a link 
between molting and production of SE-contaminated eggs. However, we 
have several concerns about the conclusiveness of these data. First, 
there may have been bias in sampling because flocks participating in 
the SEPP were chosen by producers who may have had a tendency to choose 
flocks that were known to be SE-positive in order to implement 
procedures that might change the SE status of those flocks. Therefore, 
these flocks may not be representative of all flocks. Second, the SEPP 
report indicates that the authors realized that differences in egg 
contamination that were being attributed to molting may also be a 
result of the age of the layers since only older flocks are molted. 
With regard to the statements made by Dr. John Mason, he has indicated 
that, when he made statements about forced molting causing increased 
SE-contamination of eggs, he was referring to information from the SEPP 
study and research discussed in the previous paragraphs (Ref. 72).
    At this time we do not believe that we have adequate data upon 
which to rely for a final decision on the issue of the relationship 
between induced molting and SE contamination of the environment and of 
eggs. We know that research currently is being conducted that will 
address several of these data gaps. To discuss some of the research and 
address the data gaps, FDA sponsored an SE research meeting in Atlanta, 
GA, on September 8, 2000 (65 FR 51324, August 23, 2000). Ongoing 
research that was generated or discussed at the meeting includes 
projects on alternative diets for laying hens undergoing molting and an 
on-farm study to evaluate the effect of molting on SE in eggs.
    We specifically request comment and data related to our discussion 
of induced molting. In view of the scientific data that suggest that 
molting by feed withdrawal may increase shedding of SE into the 
environment or eggs (Refs. 68, 70, and 71), we seek comment on the 
following potential prevention measures that we may consider for 
inclusion in any final rule: (1) The use of alternative diets to 
replace feed and water withdrawal to induce molting, (2) the use of 
competitive exclusion (defined in footnote 3 of this document) to 
reduce fecal shedding of SE during molting, (3) more frequent removal 
of manure during and immediately following molting, (4) alternative 
timing for environmental testing or additional environmental testing 
during or immediately following molting, and (5) a prohibition of 
molting in SE-positive houses. Depending upon the comments received, we 
will consider including provisions regarding molting in any final rule. 
These provisions may include, but are not limited to, the need for 
additional testing of molted flocks or restrictions on the manner in 
which a molt may be induced.
    (Comment 5) Many comments addressed the use of vaccines for laying 
hens as an intervention against SE contamination of eggs. Several 
comments stated that vaccines against SE have been proven effective in 
field trials undertaken through PEQAP; flocks in the PEQAP program that 
were vaccinated against SE had significantly fewer environmental 
samples positive for SE than nonvaccinated flocks. In addition, no SE-
positive eggs from a vaccinated flock were found during the 3-year 
study period. A few comments stated that vaccinating flocks against SE 
would have the most significant impact on SE prevention of any possible 
intervention. In addition, a few comments recommended vaccination for a 
flock placed in a poultry house if the previous flock in that house had 
a positive SE environmental test. Conversely, other comments stated 
that the data from the PEQAP study were inconclusive because too few 
flocks were included in the study.
    (Response) We agree that vaccines show promise in reducing the 
prevalence of SE in laying hens. The PEQAP data indicate that the SE 
bacterin vaccines used in that program were 70 percent effective in 
reducing SE-positive environmental samples in flocks (Ref. 73). We find 
these data to be encouraging. In addition, field trials in ME showed 
that vaccination significantly reduced the mean fecal counts of 
vaccinated birds compared to nonvaccinated birds (Ref. 74). We are also 
aware that some existing egg QA programs require their participants to 
vaccinate replacement flocks that are being placed into a house that 
had an environmental SE-positive while the previous flock occupied that 
house.
    However, we also agree that more information on the effectiveness 
of vaccines needs to be generated before we would mandate vaccination 
as an SE prevention measure. Although approximately 900 flocks 
participated in the vaccination field trials in the PEQAP study, less 
than 100 of those flocks were vaccinated (Ref. 73). Only seven poultry 
houses participated in the ME field trials, three of which contained 
vaccinated birds (Ref. 74).
    Vaccines are also expensive and labor intensive; we estimate that 
vaccines cost 13.5 cents per layer, including labor (see discussion in 
the Preliminary Regulatory Impact Analysis in section V. of this 
document). Members of our national egg safety standards working group 
indicated that vaccines are only economically justified for heavily 
contaminated flocks. Since we know that cleaning and disinfection can 
decontaminate an SE-positive poultry house (Ref. 39), we do not believe 
that it is currently appropriate for the agency to propose to require 
that producers incur the additional cost of mandatory vaccines when 
cleaning and disinfection, biosecurity, and rodent and pest control may 
resolve the problem. We encourage producers to use vaccines in the case 
of persistent SE contamination within a poultry house or as prescribed 
by a veterinarian, but do not believe that we currently can justify 
mandating their use.
    (Comment 6) A few comments maintained that there is no indication 
that feed or water has ever been associated with transfer of SE to 
laying hens and should not be included in the required SE prevention 
measures. However, one comment stated that potable water should be one 
of the SE prevention requirements, and several comments stated that SE-
negative feed should be included in mandatory SE prevention measures.
    (Response) Although we acknowledge that feed and water cannot be 
ruled out as potential sources of SE contamination in poultry houses, 
we believe provisions for feed and water are not necessary in the 
required SE prevention measures. We are proposing to establish minimum 
national SE prevention measures, and evidence of feed and water being 
the source of SE contamination of laying hens or shell eggs is rare.
    Although SE contamination of feed has been documented by 
researchers, SE contaminated feed has not been implicated in the 
occurrence of SE in laying hens or in eggs in the United States. 
However, as the Layers study indicated, many producers perform

[[Page 56848]]

some testing of feed or feed ingredients for SE (Ref. 25). We encourage 
this as a general good management practice.
    Water has not been directly implicated in the transfer of SE to 
laying hens and, therefore, we have not included it in the proposed 
provisions in proposed Sec.  188.4. However, we encourage producers to 
ensure that their water meets the microbiological standards established 
by the Environmental Protection Agency for potable water.
    (Comment 7) Several comments stated that routine, complete cleaning 
of poultry houses is not practical, particularly if the house is SE-
negative. A few comments also maintained that wet cleaning and 
disinfection of poultry houses, while it may reduce SE, is not 
practical in colder months.
    (Response) We agree that cleaning and disinfection of poultry 
houses is not warranted to reduce SE if the house is SE-negative. 
Although cleaning and disinfection of an SE-negative poultry house at 
depopulation may be prudent for the control of avian diseases, and dry 
cleaning and manure removal at depopulation are prudent practices in 
general, we do not have data and information that suggest that cleaning 
and disinfecting an SE-negative poultry house would reduce the 
incidence of SE-contaminated environments or SE-contaminated eggs. In 
Sec.  118.4, we are proposing to require that, if an environmental test 
or an egg test is positive for SE, then you must clean and disinfect 
the poultry house before new laying hens are added to the house. If the 
environmental test is negative, then cleaning and disinfection is not 
needed to decontaminate the house of SE. However, we recommend manure 
removal and dry cleaning of poultry houses between occupation by laying 
flocks as a general good management practice.
    We recognize that there are situations in which it may be difficult 
for producers to wet clean a poultry house (i.e., winter months, dirt 
floors). Data from a voluntary QA program (Ref. 39) and the NAHMS SE 
study (Ref. 27) indicate that wet cleaning is effective in 
decontaminating SE-positive poultry houses. However, as we discussed in 
section III.E.4 of this document, there are some studies in which wet 
cleaning may have resulted in some previously SE-negative poultry 
houses becoming positive. Even so, based on the totality of the 
information we presently have, we believe that wet cleaning results in 
an overall reduction in the number of SE-positive poultry houses 
sufficient to justify its inclusion in the required SE-prevention 
measures. We plan to consider comments we receive on the issue and any 
other new evidence before deciding whether to require wet cleaning in a 
final rule.
    (Comment 8) One comment stated that FDA should address on-farm 
washing of eggs because certain producers wash eggs before they are 
sent to a packer/processor.
    (Response) We do not agree with this comment. We are not aware that 
on-farm washing of eggs in an offline operation (i.e., an operation 
that sends its eggs elsewhere for processing for retail sale) is a 
widespread practice. The Layers study indicated that prewashing of eggs 
before processing was practiced on only 5 percent of farms (Ref. 26). 
We would discourage the practice unless producers follow the procedures 
for proper egg washing outlined by USDA in 7 CFR 56.76(e).
    We request comment specifically on the prevalence of on-farm 
washing of eggs in offline operations. If comments indicate that 
prewashing of eggs on the farm is more prevalent than indicated in data 
the agency currently have, we may consider adding a provision for 
washing of eggs to the required SE-prevention measures.
    (Comment 9) Several comments stated that egg testing and diversion 
should not be used as SE management tools and that these activities 
would just divert producers' attention away from practices that will 
reduce SE in poultry houses.
    (Response) Although we agree that egg testing itself is not an SE 
management tool, diversion of eggs that may be contaminated with SE 
from the table egg market is a method of preventing consumer illness 
and may be considered an SE management tool. In addition, we do not 
agree that egg testing and diversion will divert producers' attention 
away from SE prevention measures. We are proposing to require egg 
testing only if the environmental test is SE-positive.
    As stated previously, data have indicated that flocks in an SE-
contaminated environment produce SE-contaminated eggs with greater than 
average prevalence (see comment 2 of this section). These contaminated 
eggs could reach the consumer and cause foodborne illness. It is an 
important public health precaution for a producer to begin egg testing 
upon finding that the poultry house environment is contaminated with 
SE. If egg testing reveals that SE-contaminated eggs are being produced 
by a flock, the eggs from that flock must be diverted to a treatment as 
defined in Sec.  118.3. Diversion prevents foodborne illness that might 
occur had those contaminated eggs reached a consumer. Prevention of 
egg-associated foodborne illness is the goal of the provisions in this 
proposed rule. We are proposing, in Sec.  118.6, egg testing protocols 
by which a producer who must divert eggs can return, after certain 
testing conditions are met, to producing eggs for the table egg market.
    (Comment 10) A few comments stated that any requirements that 
mandated diversion of shell eggs to breaking facilities would be 
devastating to the Hawaiian egg industry because there are no egg 
breaking facilities in HI.
    (Response) We recognize that HI presently has no egg breaking 
facilities to which eggs can be diverted. We will consider the status 
of egg breaking facilities in HI prior to issuing any final rule and 
seek further comment in this proposed rule on options for handling 
diverted eggs in HI.
    (Comment 11) Many comments stated that environmental testing is 
appropriate to indicate whether SE prevention measures are working 
effectively; however, a few comments noted that other methods (e.g., 
egg yolk antibody testing) may prove to be equally effective as 
environmental testing and could also be used to gauge the effectiveness 
of SE prevention measures.
    (Response) We agree with these comments. We have stated in the 
proposal that environmental testing must be used to evaluate the 
effectiveness of the SE prevention measures and have discussed various 
methods to sample manure in a poultry house. However, we have also 
solicited comment on alternative methods of sampling the environment 
that may be more uniform in different styles of poultry house than 
manure testing. We encourage the development of methods that are at 
least as indicative of SE contamination in a poultry house as manure 
testing and that are more rapid and less expensive.
    (Comment 12) Several comments stated that any SE prevention 
measures required for producers should take into account regional 
differences in the egg industry.
    (Response) We agree with the comments. In this proposed rule, we 
are proposing to require specific controls for SE prevention, but are 
not specifying the exact manner in which individual producers must 
comply with the provisions. Each producer must develop SE prevention 
measures that are appropriate for his unique situation, including 
regional differences. We recognize there are regional differences in 
the egg industry and anticipate that they will be reflected in the 
specific SE

[[Page 56849]]

prevention measures. For example, producers with different poultry 
house styles (e.g., open-sided versus enclosed) may choose to perform 
rodent control or cleaning and disinfection in different manners, as 
the most effective method may be differ depending on house style.
    (Comment 13) A few comments requested that, if egg testing is 
required, the number of eggs tested be based on flock size.
    (Response) We do not agree with this comment. We believe that it is 
reasonable to require that producers with 3,000 or more laying hens 
test a total of 4,000 eggs in 4 1,000-egg samples, should their poultry 
house be SE-positive. It is important that enough eggs be tested to 
achieve a certain level of assurance that SE is not present in the eggs 
(see discussion in section III.G.2 of this document and (Ref. 61)).
    (Comment 14) Several comments requested that multiple environmental 
tests be required during the life of a flock to ensure that the maximum 
number of contaminated eggs is being diverted from consumption as table 
eggs.
    (Response) In this proposed rule, we are establishing minimum 
environmental testing requirements as an indicator of the effectiveness 
of SE prevention measures. We do not agree that multiple environmental 
tests are necessary. This minimum testing requirement does not preclude 
producers from testing more frequently during the life of a flock. To 
reach the public health goal of reducing SE illnesses, we have proposed 
to require that producers use their resources towards implementing 
measures that will prevent SE contamination of eggs. These measures 
include use of chicks and pullets from SE-monitored breeder flocks, 
biosecurity, rodent and pest control, cleaning and disinfection of an 
SE-positive poultry house, and refrigerated storage of eggs held at a 
farm more than 36 hours. Testing alone does not reduce SE contamination 
of eggs. We believe that environmental testing can be a useful 
indicator of whether the SE prevention measures are working 
effectively. We believe one environmental test per laying cycle per 
flock in a poultry house is sufficient as an indicator of the efficacy 
of the prevention measures. (See discussion in section III.F.1 of this 
document.)

N. Transportation of Shell Eggs

    To reach the goal of significantly reducing SE illnesses, egg 
safety measures must be put in place along the entire farm-to-table 
continuum. FDA is coordinating efforts with FSIS to cover the 
refrigeration of shell eggs throughout distribution. Refrigerated 
transport and storage of eggs packaged for the ultimate consumer and 
refrigerated storage of eggs at retail are already required by 
regulation (discussed previously in section II.D.1 of this document). 
In a future proposed rulemaking, FSIS may consider applying safety 
standards to the transport of eggs from packer to packer and from 
packer to egg products processing plant. In order to close any gaps in 
the farm-to-table continuum, FDA is seeking comment on whether to 
require refrigerated transport of shell eggs not already required by 
regulation or within USDA's jurisdiction; for example, transport of 
shell eggs from a farm or a packer to a food manufacturing facility. We 
will consider putting into place requirements similar to those we 
finalized for refrigerated storage of shell eggs at retail (i.e., 
transport of shell eggs at or below 45 [deg]F ambient temperature).

IV. Handling and Preparation of Eggs by Retail Establishments

A. Inappropriate Handling of Raw Shell Eggs by Food Preparers

    SE outbreak investigations show that outbreaks commonly occur when 
foods prepared with raw shell eggs are not properly handled by food 
preparers. Common inappropriate practices for foods containing SE-
contaminated shell eggs include temperature abuse (e.g., failing to 
keep eggs and foods prepared with eggs refrigerated) and inadequate 
cooking. When shell eggs are combined to prepare a large volume of an 
egg-containing food which is subsequently temperature abused or 
inadequately cooked, these practices can cause illness in large numbers 
of people if any of the shell eggs were initially contaminated with SE.
    Temperature abuse gives SE the opportunity to multiply, thereby 
increasing the number of viable microorganisms ingested, especially 
when eggs are consumed raw. Temperature abuse and consumption of raw 
shell eggs were associated with an SE outbreak at a catered wedding 
reception in New York, where Caesar salad dressing was implicated as 
the cause of SE illnesses. The Caesar salad dressing was made with 18 
raw shell eggs, left unrefrigerated for 2 hours at the catering 
establishment, held in an unrefrigerated truck until delivered, and 
served at the reception 4.5 hours later (Ref. 64).
    Incomplete cooking of raw shell eggs (e.g., soft-boiled, sunny-
side-up, and soft-poached) also allows ingestion of viable 
microorganisms if any of the eggs were initially contaminated. In 1997, 
incomplete cooking of raw shell eggs was associated with an SE outbreak 
in Nevada where the consumption of Hollandaise sauce served in a 
restaurant was linked to SE illnesses. Review of the food handling 
practices showed that the sauce had been prepared from raw shell eggs 
that were combined, incompletely cooked, and held at room temperature 
for several hours before serving (Ref. 7).
    We also are aware that many consumers eat foods containing raw or 
undercooked shell eggs. An FDA survey indicated that 53 percent of 
1,620 respondents ate foods containing raw shell eggs at some time 
(Ref. 75). Raw shell egg-containing foods mentioned in this survey 
included cookie batter, homemade ice cream, homemade eggnog, Caesar 
salad, frosting, homemade shakes, homemade Hollandaise sauce, and 
homemade mayonnaise. The Menu Census Survey (1992 through 1995) (Refs. 
76 and 77) showed that frosting accounted for 53 percent and salad 
dressing 19 percent of occasions when raw shell egg-containing products 
were consumed.
    The 1996 to 1997 Food Consumption and Preparation Diary Survey 
(Ref. 77) showed that 27 percent of all egg dishes consumed were 
undercooked (described as being runny or having a runny yolk or runny 
white). On average, each person consumed undercooked shell eggs 20 
times a year. Within the at-risk groups, women over 65 and children 
under 6 consumed undercooked shell eggs 21 times a year and 8 times a 
year, respectively. Moreover, consumer focus group research showed that 
many participants did not realize that certain foods, such as chocolate 
mousse or key lime pie, may contain raw or undercooked shell eggs and, 
therefore, are potentially hazardous (Ref. 78).

B. SE and Highly Susceptible Populations

    Certain populations, such as children, the elderly, and 
immunocompromised individuals, are more likely to experience severe 
health problems from eating SE-contaminated eggs than the general 
population (Ref. 16). For example, CDC reported that 54 of the 79 
deaths associated with outbreaks of SE between 1985 and 1998 were of 
individuals in nursing homes (Ref. 79). In addition, the agency found 
that the likelihood of dying from a foodborne illness contracted in a 
nursing home was 13 times higher than outbreaks in other settings. 
According to a U.S. General Accounting Office (GAO) survey of State 
regulatory officials, 24 states reported that they did not require food 
service operators that serve highly

[[Page 56850]]

susceptible populations to use pasteurized eggs for any food item that 
usually contains raw eggs or (2) is prepared by cracking, combining, 
and holding a number of eggs prior to cooking or after cooking and 
prior to service (Ref. 79). A 1998 Dietary Managers Association survey 
of 136 private nursing homes, hospitals, and other care facilities and 
23 Air Force hospitals across the nation showed that 35 percent of 
these institutions use raw eggs to prepare batters for foods that may 
not be fully cooked, such as French toast (Ref. 79).

C. The FDA Food Code

    As noted in section II.D.3 of this document, the FDA Food Code 
provides FDA's best guidance to state and local authorities and to 
retail industry on how to prevent foodborne illness, including special 
provisions for those establishments that serve a highly susceptible 
population. To date, 41 of 56 States and territories, representing 76 
percent of the population, have adopted codes patterned after some 
version (1993 or later) of the FDA Food Code. Twenty-one of those 
States and territories (35.3 percent of the population) have adopted 
codes patterned after the 1999 FDA Food Code, and 2 (2.3 percent of the 
population) have adopted codes patterned after the 2001 version. 
Moreover, agencies in 11 of the 15 remaining States and territories 
that have not adopted a new code since 1993 are in the process of doing 
so, and many efforts at adoption are targeted for completion in 2003. 
Therefore, in 2003 and under the current system of state adoption, most 
state and local authorities, as well as retail industry, will be 
administering some aspects of FDA's best guidance as detailed in the 
FDA Food Code. The egg-relevant safe handling and preparation practices 
can be found in sections 3-202.11(C), 3-202.13, 3-202.14(A), 3-
401.11(A)(1)(a) and (2), and 3-801.11(B)(1) and (2), (D)(1) and (2), 
and (E)(1) and (2) of the 2001 FDA Food Code.

D. Request for Comments

    As noted previously, the incidence and geographical distribution of 
egg-associated SE illnesses have made SE a significant public health 
concern. As discussed in section II.A of this document, data from SE 
outbreaks show that outbreaks can occur when contaminated eggs are 
mishandled by food preparers. Furthermore, consumption data establish 
that some consumers, including highly susceptible populations, eat raw 
or undercooked eggs.
    Many comments to the May 1998 ANPRM and year 2000 public meetings 
maintained that proper handling of shell eggs is an important measure 
that could reduce the incidence of foodborne illness. Some contended 
that we should mandate those provisions of the FDA Food Code related to 
egg safety. At the public meetings and in the current thinking document 
distributed at the July 2000 current thinking meeting, FDA presented a 
farm-to-table approach that proposed regulations to codify all egg-
related provisions of the FDA Food Code. Given State and local 
government authority to manage retail food safety within their 
jurisdictions, FDA is now requesting comment on whether: (1) The 
current FDA Food Code system with State adoption and implementation 
achieves the desired public health outcome among high-risk populations 
or (2) the public health outcome for high-risk populations can only be 
achieved through mandatory Federal standards and, if so, how those 
standards would be best implemented. We consider high-risk populations 
to be those persons who are more likely than other people in the 
general population to experience foodborne disease because of the 
following reasons: (1) Immunocompromised, preschool age children, or 
older adults and (2) obtaining food at a facility that provides 
services such as custodial care, health care, or assisted living, such 
as a child or adult day care center, kidney dialysis center, hospital, 
or nursing home, or that provides nutritional or socialization 
services, such as a senior center.
    If you contend that the desired public health outcome for high-risk 
populations can only be achieved through mandatory Federal standards, 
we specifically request comment on which, if any, of the following 
measures should be mandated for retail establishments that serve highly 
susceptible populations:
     Using raw eggs that are clean, sound, and meet the 
restricted egg tolerances for U.S. Consumer Grade B, which minimizes 
the entry of surface bacteria to the inside of eggs;
     Using raw eggs that have been transported under 
refrigeration, because refrigeration lengthens the effectiveness of the 
eggs' natural defenses against SE and slows the growth rate of SE;
     Using only egg products that have been pasteurized in 
accordance with USDA's requirements under 9 CFR 590.570, which are 
designed to kill or inactivate SE and other bacteria;
     Cooking raw eggs and raw egg-containing foods thoroughly, 
which kills viable SE that may be present;
     Substituting eggs treated to achieve at least a 5-log 
destruction of SE or pasteurized egg products for raw eggs in the 
preparation of foods, e.g., soft-boiled, poached, or sunny-side-up 
eggs, meringue, Caesar salad, hollandaise or B[eacute]arnaise sauce, 
homemade mayonnaise, eggnog, homemade ice cream, that will be served 
undercooked, which minimizes the risk of egg-associated SE illnesses in 
consumers of those foods; and
     Substituting eggs treated to achieve at least a 5-log 
destruction of SE or pasteurized egg products for raw eggs in the 
preparation of foods where eggs are combined, since combining raw eggs 
to prepare a large volume of food that is subsequently temperature-
abused or inadequately cooked can cause illness in large numbers of 
people if any of the eggs were initially contaminated with SE.
    If FDA were to require any of these measures, we would rely on 
section 361 of the PHS Act, just as we are relying on it for the 
requirements we are proposing in this document. (See section III.L of 
this document.)

E. Response to Comments Related to Retail Standards

    (Comment 1) Several comments maintained that the agency should 
place a greater emphasis on the retail segment of the farm-to-table 
continuum because that is where the majority of the SE outbreaks occur, 
with the implicated food containing undercooked eggs.
    (Response) We disagree with this comment. We do not believe that a 
greater emphasis should be placed on any one segment of the farm-to-
table continuum, i.e., producer, packer, processor, or retail 
establishment. In this document, FDA is proposing requirements for the 
producer to produce safe eggs. As stated in section II.G of this 
document, FSIS will develop standards for the packer to maintain the 
safety of eggs, and for the processor to further enhance the safety of 
eggs. At retail, the FDA Food Code provides guidance on handling and 
preparing raw eggs to maintain or enhance egg safety. Additionally, we 
are seeking comment on whether we should require facilities that 
specifically serve a highly susceptible population to follow certain 
safe handling and preparation practices for raw eggs.
    Most SE outbreaks occur at retail establishments because that is 
where the same food is served to large numbers of people. This does not 
mean that retail establishments cause the majority of SE outbreaks due 
to eggs. Rather, the cause is a combination of factors starting at the 
producer level, where the eggs may

[[Page 56851]]

become contaminated, and extending to the retail level, where 
inappropriate handling or preparation practices may not eliminate or 
minimize the impact of the contamination.
    (Comment 2) Many comments supported Federally-mandated food safety 
education, training, and certification for retail food service managers 
and employees.
    (Response) We agree that food safety education and training for 
retail food service managers and employees is necessary, and manager 
certification is a useful means of demonstrating food safety knowledge; 
however, FDA has not decided whether food safety training and 
certification should be Federally mandated. FDA has actively promoted 
industry food safety training and certification, and encouraged joint 
regulatory-industry-academia training initiatives.
    Presently, there are a wide variety of industry management training 
and certification programs being offered by regulatory agencies, 
academic institutions, food companies, industry groups, professional 
associations, and third-party organizations. Most certification 
programs share a common desire to have the food manager certificate 
they issue universally recognized and accepted by others, especially by 
the increasing number of regulatory authorities that require food 
manager certification.
    Certification programs vary in focus and primary mission of 
sponsors, organizational structures, staff resources, revenue sources, 
testing mechanisms, policies toward applicants and employers of food 
managers, and policies pertaining to such things as public information, 
criteria for maintaining certification, and the need for 
recertification. Where courses are offered, they vary in scope, 
content, depth and duration, quality of instructional materials, 
qualifications of instructors, and instructional approach (classroom, 
on-the-job, PC-based, home study, etc.). Where testing is a program 
component, varying degrees of attention are given to test construction 
and test administration as they relate to nationally accepted standards 
(reliability, validity, job analysis, subject weighting, cut scores, 
test security, etc.).
    We believe in the utility of a mechanism for regulatory authorities 
to use in determining which certificates should be considered credible 
based on which certificate-issuing programs meet sound organizational 
and certification procedures and use defensible processes in their test 
development and test administration. Certified food protection managers 
are knowledgeable about the development, implementation and enforcement 
of specific policies, procedures, or standards aimed at preventing food 
borne illness. Specifically, they understand the concepts necessary for 
the identification of hazards, supervising or directing food 
preparation activities, coordinating training, and taking corrective 
action as needed to protect the health of the consumer. CFP recently 
has provided the standards and procedures necessary for the independent 
evaluation and accreditation of food protection manager certification 
programs. (The CFP, founded in 1971, is a non-profit organization 
designed to create a partnership among regulators, industry, academia, 
professional organizations, and consumers to identify problems, 
formulate recommendations, and develop and implement practices that 
ensure food safety.)
    On May 28, 2002, the CFP entered into a cooperative agreement with 
the American National Standards Institute (ANSI) regarding the 
accreditation of certification bodies responsible for ensuring the food 
safety knowledge of all managers it certifies. (ANSI, a private non-
profit organization, administers and coordinates the U.S. voluntary 
standards and conformity assessment system.)
    On June 28, 2002, CFP published a revised version of ``Standards 
for Accreditation of Food Protection Manager Certification Programs.'' 
These standards identify the essential components a Food Protection 
Manager Certification Program must meet for universal acceptance of its 
certificates. The standards have been developed after years of CFP 
research into, and discussion about, Food Protection Manager 
Certification Programs and are based on nationally recognized 
principles used by a variety of organizations providing certification 
programs for diverse professions and occupations.
    In January 2003, ANSI assumed responsibility for accrediting 
certification bodies based on the CFP Standards for Accreditation of 
Food Protection Manager Certification Programs.
    FDA has developed educational materials on safe egg handling and 
preparation practices for food preparers and anticipates making these 
materials widely available to all providers of food safety training or 
certification services. While these materials will address safe 
practices specific to eggs, we believe that all retail food service 
establishments should ensure that their managers and employees are 
properly trained in general safe food practices. We recommend that all 
retail food service establishments follow the management and personnel 
provisions in chapter 2 of the FDA Food Code, specifically sections 2-
101, ``Responsibility,'' 2-102, ``Knowledge,'' and 2-103, ``Duties.'' 
We further recommend that food regulatory officials recognize food 
managers who have been certified through an ANSI-accredited program as 
meeting the food safety knowledge requirement.''
    (Comment 3) One comment called for uniform recordkeeping 
requirements for retail establishments to facilitate traceback and 
recall activities.
    (Response) In the FDA Food Code, FDA recommends the implementation 
of HACCP, of which recordkeeping is a vital component, in food 
establishments because it is a system of preventive controls that is 
the most effective and efficient way to ensure that food products are 
safe. Use of a HACCP system emphasizes the industry's role in 
continuous problem solving and prevention rather than relying solely on 
periodic facility inspections by regulatory agencies.
    HACCP offers two additional benefits over conventional inspection 
techniques. First, it clearly identifies the food establishment as the 
final party responsible for ensuring the safety of the food it 
produces. HACCP requires the food establishment to analyze its 
preparation methods in a rational, scientific manner in order to 
identify critical control points (CCPs) where food safety hazards might 
occur and to establish critical limits and monitoring procedures. A 
vital aspect of the establishment's responsibility under HACCP is to 
establish and maintain records that document adherence to the critical 
limits that relate to the identified CCPs, thus resulting in continuous 
self-inspection.
    Secondly, as recognized in the FDA Food Code, a HACCP system allows 
a regulatory agency to determine an establishment's level of compliance 
more comprehensively. A food establishment's use of HACCP requires 
development of a plan to prepare safe food. This plan and associated 
monitoring records must be shared with the regulatory agency so that 
the agency can verify that the HACCP plan is working. Using 
conventional inspection techniques, an agency can only determine 
conditions during the time of inspection, which provide a ``snapshot'' 
of conditions at the moment of the inspection. However, when evaluating 
an establishment using a HACCP approach, an agency can determine both 
current and past conditions. When regulatory agencies review HACCP

[[Page 56852]]

records, they have, in effect, the ability to look back through time. 
Therefore, a regulatory agency can better ensure that processes are 
under control. ``HACCP Guidelines'' are presented in annex 5 of the 
2001 FDA Food Code.
    In section III.J.8 of this document, we are seeking comment on 
whether we should require egg producers to maintain certain records.
    (Comment 4) One comment stated that the risk of illness is not 
significantly increased if an egg is not fully cooked.
    (Response) We do not agree with this comment. As stated in section 
IV.A of this document, SE outbreak investigations show that outbreaks 
can occur when foods prepared with SE-contaminated eggs are not 
appropriately handled by food preparers. Practices inappropriate for 
foods containing SE-contaminated eggs include temperature abuse (i.e., 
failing to keep the eggs and foods prepared with eggs refrigerated) and 
inadequate cooking. Combining raw eggs to prepare a large volume of an 
egg-containing food that is subsequently temperature abused or 
inadequately cooked can cause illness in large numbers of people if any 
of the raw eggs were initially contaminated with SE.
    As discussed in section IV.A of this document, incomplete cooking 
of raw eggs (e.g., soft-boiled eggs, sunny-side-up eggs) can allow 
ingestion of viable microorganisms, including SE, if any of the eggs 
were initially contaminated. In 1997, incomplete cooking of raw eggs 
was associated with an SE outbreak in Nevada, where the consumption of 
Hollandaise sauce served in a restaurant was linked to SE illnesses. 
Review of the food handling practices showed that the sauce had been 
prepared from raw eggs that were combined, incompletely cooked, and 
held at room temperature for several hours before serving (Ref. 7). 
Another outbreak of SE illness in an Indiana nursing home was linked to 
the consumption of baked eggs. The baked eggs were prepared by 
combining 180 Grade A raw shell eggs, mixing with a whisk, and baking 
in a single pan at (an oven temperature of) 204 [deg]C (400 [deg]F) for 
45 minutes to 1 hour. Investigators believed that inadequate cooking 
occurred because the mixture was not stirred while baked (Ref. 64).
    (Comment 5) One comment asked that we cover rodent control and 
Salmonella monitoring in institutional and commercial kitchens as we 
would for producers as part of an on-farm SE prevention plan.
    (Response) We disagree with this comment. As discussed in section 
IV.A of this document, SE outbreak investigations show that outbreaks 
occur when foods prepared with SE-contaminated eggs are not 
appropriately handled (i.e., temperature abuse, undercooking, combining 
more than one egg) by food preparers. Although the retail establishment 
environment may be the source for some foodborne illness outbreaks, 
this proposed regulation focuses on the control of SE in shell eggs, 
based on practices on the farm. We seek comment on whether we should 
extend the rule to address the contamination of eggs or other foods 
from food service environments serving a highly susceptible population.
    Furthermore, we expect that all retail establishments will make 
sure that their facilities are clean and sanitary and do not contribute 
to the contamination of food being prepared or served. Although this 
proposal does not address rodents or other environmental factors of 
retail establishments that may cause food to become contaminated, we 
recommend that all retail establishments follow the physical facilities 
provisions in chapter 6 of the FDA Food Code, specifically in 
subsections 6-202.15, ``Outer Openings--Protected,'' 6-202.16, 
``Exterior Walls and Roofs, Protective Barrier,'' 6-501.111, 
``Controlling Pests,'' and 6-501.112, ``Removing Dead or Trapped Birds, 
Insects, Rodents, and Other Pests.'' Of course, the retail standards 
contained in the FDA Food Code are additions to basic sanitation 
practices already established by Federal and State regulations covering 
rodent control and environmental hazards.
    (Comment 6) One comment recommended that food handlers be 
periodically tested for Salmonella, Listeria, and Escherichia coli.
    (Response) We disagree with this comment. As discussed in section 
IV.A of this document, SE outbreak investigations show that outbreaks 
can occur as a result of SE-contaminated eggs being inappropriately 
handled by food preparers, including temperature abuse (i.e., failing 
to keep eggs and foods prepared with eggs refrigerated), inadequate 
cooking, and combining two or more eggs. While food preparers may be 
the source for some foodborne illness outbreaks, the scope of this 
proposed regulation addresses the prevention of SE in shell eggs and 
does not extend to contamination of eggs or other foods from other 
sources, such as food preparers. We expect that all retail 
establishments will ensure that the health, cleanliness, and hygienic 
practices of their employees do not contribute to the contamination of 
food being prepared or served. Although this proposal does not require 
that food service workers be tested for the presence of bacteria which 
may cause foodborne illness, we strongly recommend that all retail 
establishments follow the management and personnel provisions in 
chapter 2 of the 2001 FDA Food Code, specifically in section 2-201, 
``Disease or Medical Condition.''

V. Preliminary Regulatory Impact Analysis (PRIA)

A. Introduction

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and 
the Unfunded Reforms Act of 1995 (Public Law 104-4). Executive Order 
12866 directs agencies to assess all costs and benefits of available 
regulatory alternatives and, when regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). Executive Order 12866 
classifies a rule as significant if it meets any one of a number of 
specified conditions, including having an annual effect on the economy 
of $100 million, adversely affecting a sector of the economy in a 
material way, adversely affecting competition, or adversely affecting 
jobs. A regulation is also considered a significant regulatory action 
if it raises novel legal or policy issues. FDA has determined that this 
proposed rule is an economically significant regulatory action.
    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Public Law 104-121) defines a major rule for the purpose of 
congressional review as having caused or being likely to cause one or 
more of the following: an annual effect on the economy of $100 million; 
a major increase in costs or prices; significant adverse effects on 
competition, employment, productivity, or innovation; or significant 
adverse effects on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic or export markets. 
In accordance with the Small Business Regulatory Enforcement Fairness 
Act, the Office of Management and Budget (OMB) has determined that this 
proposed rule, if it becomes final as proposed, would be a major rule 
for the purpose of congressional review.

B. Need for Regulation

    Private markets operating within the framework of the legal system 
promote the health and safety of consumers. Limitations of both the 
marketplace and the legal system, however, can result in inadequate 
control of some health and

[[Page 56853]]

safety hazards, and reduce societal welfare.
    In a perfectly competitive market in which consumers and producers 
both have full information, the optimal level of production of eggs 
will be provided at an optimal level of safety. In the egg market, 
however, consumers and producers do not have sufficient information on 
the SE status of particular eggs. In the case of SE-contaminated eggs, 
the lack of awareness and information about the risk suggests that an 
inefficiently high demand exists for eggs that are produced without 
using measures to prevent SE.\3\ Since the demand for eggs is not 
sufficiently affected by safety considerations, the farmer's incentive 
to invest in safety measures is diminished. Consequently, the market 
does not provide the incentives necessary for optimal egg safety.
---------------------------------------------------------------------------

    \3\ Many consumers may not know that many common methods of 
preparing eggs for consumption will not eliminate SE in a 
contaminated egg.
---------------------------------------------------------------------------

    With sufficient information for consumers and producers, a legal 
system that awards compensation for harm done due to SE-contaminated 
eggs has the potential to remedy market imperfections by providing 
producers with incentives to provide the level of safety that is best 
for society. The legal system does not ensure the optimum level of 
shell egg safety because consumers who become ill due to SE 
contamination often do not know the reason for or source of their 
illness. Even in cases where consumers are aware that their illness was 
contracted from eggs, imperfect information makes it difficult to 
determine who is ultimately responsible for their illness.
    In sum, the imperfect information about the risk associated with SE 
from particular shell eggs means that neither the legal system nor the 
marketplace is able to provide adequate economic incentives for the 
production of SE free eggs. The government may therefore be able to 
improve social welfare through targeted regulation. In what follows, we 
will look at the costs and benefits of the provisions in the proposed 
rule. We will also look at the costs and benefits of other measures to 
control SE that we considered, but did not include in the proposed 
rule.

C. Economic Analysis of Potential Mitigations: Overview

    We considered many possible SE prevention measures. Because of the 
large number of provisions considered (and the large number in the 
proposed rule) we begin our analysis in this section with an overview 
of our methods of estimating the benefits and costs of the various 
measures to control SE in shell eggs. In section V.D of this document, 
we summarize the benefits and costs of the proposed rule and some 
leading regulatory options. In section V.E of this document, we present 
the detailed analysis of all of the SE prevention measures we 
considered (including those in and those not in the proposed rule).
1. Measuring Benefits
    a. Modeling benefits. The primary benefit of the provisions in this 
proposed rule (and the other possible measures) would be an expected 
decrease in the incidence of SE-related illnesses. The benefits will be 
calculated using the following model:
Benefits = base line risk x prevention (C1, C2, 
C3, * * *) x value of prevention
where,
Benefits = annual health benefits realized due to this proposed rule;
base line risk = the base line level of risk facing consumers today, 
expressed as the number of SE cases attributable to shell eggs;
prevention (C1, C2, C3, * * *) = the 
prevention due to the implementation of a rule with components 
C1, C2, C3, and so on; and
value of prevention = the social cost of one representative case of 
salmonellosis. This cost includes medical costs, the value of lost 
production, and the loss of welfare the individual experiences due to 
pain and suffering and lost leisure time.
    We write the prevention component of the benefits equation in a 
general functional form rather than an additive form because 
combinations of the proposed rule's components (C1, 
C2, C3, * * *) will usually not result in linear, 
proportional reductions of risk. Instead, we assume that some 
components are partial substitutes for one another while others 
complement each other.\4\ The total risk reduction will not be the sum 
of the individual components; the effectiveness of the rule could be 
less than or greater than the sum of its parts.
---------------------------------------------------------------------------

    \4\ An example of substitute components would be rodent poisons 
and traps. By themselves rodent poisons and traps may reduce the 
problem of SE contamination by X percent and Y percent respectively. 
However, when used together the effect on SE contamination will be 
somewhat less than X percent + Y percent (though still higher than 
each component alone).
    When prevention measures are complements, the total prevention 
from using the two measures that reduce risk by A percent and B 
percent separately is greater than A percent + B percent.
---------------------------------------------------------------------------

    b. Base line risk from SE in eggs. We estimated the reduction in SE 
illnesses by applying the percentage prevention to the base line number 
of illnesses. We estimated the base line levels of egg contamination 
and the number of human illnesses that result from such contamination.
    The CDC passive surveillance system recorded 5,614 illnesses due to 
SE in 2001. Using the CDC multiplier (used to estimate total cases 
based on ratio of total to reported cases) of 38, we estimated the 
number of illnesses due to SE to have been 213,330 in 2001.\5\ Because 
SE is not unique to eggs, not all of the 213,330 illnesses due to SE in 
2001 can be attributed to domestic shell eggs. CDC estimates that 16 
percent of the cases reported were acquired outside of the United 
States. Consequently, the base line level of domestic SE cases is 
179,200. A total of 53 percent of all SE illnesses identified through 
outbreak surveillance are attributable to eggs. Where a vehicle of 
transmission was identified, 81 percent of outbreaks and 79 percent of 
illnesses identified through outbreaks were attributed to eggs. The 
midpoint of the lower bound (53 percent) and upper bound (79 percent) 
estimates is 66 percent, which we assume to be the mean percent of 
domestic SE illnesses attributable to eggs. Using these figures we 
calculate a lower bound estimate of 94,980 (53 percent x 179,200), and 
an upper bound estimate of 141,570 (79 percent x 179,200) cases due to 
SE in eggs. The CDC method generates a mean point estimate, based on 
2001 data, of 118,270 (66 percent x 179,200) cases for 2001.
---------------------------------------------------------------------------

    \5\ All data for the calculations in this paragraph and the 
following paragraph are from Meade (Ref. 4) and CDC (Refs. 5, 6, 7, 
and 9).
---------------------------------------------------------------------------

    To estimate a base line level of risk for this proposed rule, we 
adjust the estimated number of cases downward to account for the 
projected effects of the refrigeration and labeling rule, which will 
reduce the number of cases in the coming years. We previously estimated 
that the refrigeration and labeling rule will reduce illnesses from 
shell eggs by 15 to 20 percent. We use the higher figure to ensure 
against double counting, so the net result is a new expected base line 
of 94,620 SE illnesses attributable to eggs and likely to be affected 
by this proposed rule.
    Table 1 of this document illustrates how we arrived at our base 
line.

    Table 1.--Base line Egg-Related Salmonella Enteritidis (SE) Cases
2001 Passive Surveillance Cases............................      5,614
Multiplier.................................................         38
Estimated SE Cases in 2001.................................    213,330

[[Page 56854]]

 
Cases From Outside the United States.......................        -16%
Estimated Domestic SE Cases................................    179,200
Percent of SE Cases From Eggs...........................................
  Minimum..................................................         53%
  Mean.....................................................         66%
  Maximum..................................................         79%
Egg related SE cases in 2001............................................
  Minimum..................................................     94,980
  Mean.....................................................    118,270
  Maximum..................................................    141,570
Adjustment for Refrigeration and Labeling rule.............        -20%
Future Egg Related SE Cases.............................................
  Minimum..................................................     75,980
  Mean.....................................................     94,620
  Maximum..................................................    113,250
------------------------------------------------------------------------

    c. Measuring the health benefits from preventing Salmonellosis. i. 
The economic impact of illness from SE in eggs. Measuring the economic 
impact of illness due to the consumption of SE-contaminated eggs is a 
critical part of our analysis. It is therefore important that we 
include all of the effects of SE on human health. These effects include 
both monetary and non-monetary losses and are both acute and chronic in 
nature.
    Epidemiological evidence suggests that SE leads to both acute and 
chronic illnesses. The acute illness that accompanies SE generally 
causes gastrointestinal symptoms. SE illness may also result in chronic 
arthritis (Ref. 81). Finally, SE can result in death, especially for 
the immunocompromised, children, and the elderly (Ref. 80).
    ii. The consequences of SE illness. We outline the consequences of 
SE illnesses in table 2 of this document. Table 2 of this document 
includes the medical outcomes of SE illness, the duration of conditions 
acquired due to SE illness, and the probability of occurrence for each 
condition with a given level of severity.\6\
---------------------------------------------------------------------------

    \6\ We use recent data from CDC to estimate the relative 
prevalence of illnesses of different severities (Ref. 82). The 
expected duration of illness for each category of severity is taken 
from Zorn and Klontz (Ref. 81).
---------------------------------------------------------------------------

    We classify the gastrointestinal illness caused by SE illness as 
either mild, moderate, or severe. A mild case of SE is defined as a 
case that causes gastrointestinal symptoms, but is not severe enough to 
warrant visiting the doctor. An individual with a mild case of SE 
illness will be ill for 1 to 3 days. A moderate case of SE illness 
lasts for 2 to 12 days and is characterized as a case severe enough to 
necessitate a trip to the doctor or other health care professional. A 
severe case of SE illness results in hospitalization and typically 
lasts from 11 to 21 days.

                           Table 2.--Consequences of Salmonella Enteritidis Infection
----------------------------------------------------------------------------------------------------------------
                                                                                                    Percent of
         Condition and Severity                     Outcome            Duration (Days per Year)        Cases
----------------------------------------------------------------------------------------------------------------
Gastrointestinal Illness........................................................................................
  Mild..................................  No Physician Visit........  1 to 3....................           90.7
  Moderate..............................  Physician Visit...........  2 to 12...................            8.1
  Severe................................  Hospitalized..............  11 to 21..................            1.2
Arthritis.......................................................................................................
  Short-term............................  Waxing and Waning,          1 to 121..................            1.26
                                           Eventually Resolved.
  Long-term.............................  Chronic Arthritis.........  365.......................            2.40
Death...................................  Death.....................  ..........................            0.04
----------------------------------------------------------------------------------------------------------------

    We do not have direct estimates of the distribution of outcomes of 
SE illnesses separate from the outcomes of illnesses for all 
nontyphoidal Salmonella. In the absence of better information we assume 
that all Salmonella serovars will result in similar distributions of 
illness severity. We therefore use information that applies either to 
all 1,400,000 estimated annual cases of salmonellosis or to the 
1,340,000 estimated annual foodborne cases of salmonellosis. Using 
general results for all diarrheal illnesses, CDC has estimated that 
113,000 of the 1,400,000 Salmonella illnesses in 1997 could have 
resulted in physician office visits, a rate of 8.1 percent (113,000 / 
1,400,000) (Ref. 82). CDC also has estimated that foodborne Salmonella 
cases lead to about 15,600 hospitalizations per year, which is about 
1.2 percent (15,600 / 1,340,000) of annual foodborne cases (Ref. 4). We 
assume that the remaining 90.7 percent of gastrointestinal illness 
cases are mild.
    SE may also result in reactive arthritis. This illness can manifest 
itself either as a relatively short-term bout of joint pain or as a 
chronic condition. Studies of outbreaks imply that short-term arthritis 
may last from 1 day to a total of 121 days. Chronic arthritis lasts 
from the time of onset until death. Overall, we estimate that 1 to 10 
percent of SE infections lead to some form of arthritis. We expect two-
thirds of these to be long-term and one-third to be short-term (Ref. 
81).
    The most severe potential result of SE infection is death. CDC 
estimates that 553 deaths occur due to foodborne Salmonella (Ref. 4). 
The estimate implies that about 0.04 percent (553 / 1,340,000) of 
foodborne cases result in death.
    iii. Quality adjusted life years (QALYs). The benefits from this 
regulation will be presented in both monetary and non-monetary terms. 
In section V.E of this document, the benefits will be expressed in 
illnesses and deaths averted by each regulatory provision under 
consideration. In the summary of benefits due to the regulation, we 
present both a cost effectiveness framework (cost per illness averted 
and cost per QALY saved) and a monetary benefits estimation.
    One approach to estimating health benefits involves the use of 
QALYs. QALYs can be used to measure the loss of well being that an 
individual suffers due to a disease or condition. QALYs do not include 
the value of health expenditures caused by the condition in question; 
we estimate health expenditures separately.\7\ QALYs range from 0 to 1 
where 0 is equivalent to death and 1 is equivalent to perfect health.
---------------------------------------------------------------------------

    \7\ Although some QALY estimates include the value of medical 
expenditures, particularly QALY estimates derived from survey data, 
the QALY estimates used in this study do not.
---------------------------------------------------------------------------

    A number of methods have been constructed to measure QALYs. One 
class of methods uses surveys to ask laypersons and doctors to use a 
QALY scale to estimate how much someone else who is afflicted with a 
given symptom or condition will suffer. This direct survey approach has 
been used widely, partly because surveys of QALY values for a large 
variety of symptoms and functional limitations have been

[[Page 56855]]

published (Ref. 81). An alternative method used by Cutler and 
Richardson uses regression analysis to estimate the effect of 
particular conditions on overall health status (Ref. 83). In our 
analysis, we use both methods where appropriate.\8\
---------------------------------------------------------------------------

    \8\ The Cutler and Richardson approach has several advantages 
over the Kaplan, Anderson, and Ganiats approach. However, it is not 
clear that this approach is appropriate for valuing acute illnesses. 
Therefore the Kaplan, Anderson, and Ganiats approach is used for 
acute illnesses and the Cutler and Richardson approach is used for 
chronic conditions. See Scharff and Jessup for a discussion of the 
pros and cons of each approach (Ref. 84).
---------------------------------------------------------------------------

    In table 3 of this document, we present estimates of the number of 
quality adjusted life days (QALDs) lost due to SE. Total QALDs lost are 
derived by multiplying the estimated number of QALYs lost by 365. Then, 
to calculate the disutility per day, or one QALD, we divide by the 
average duration of the illness. Like QALYs, QALDs range from 0 to 1 
where 0 is equivalent to death and 1 is equivalent to perfect health. 
We report the loss in QALDs since most of the illnesses associated with 
Salmonella Enteritidis last days rather than years. The QALD values 
listed for mild, moderate, and severe cases of SE infection were 
estimated by Zorn and Klontz using data from Kaplan, Anderson, and 
Ganiats (Ref. 81). This approach calculated that the acute effects of 
food poisoning (vomiting, diarrhea, and general gastrointestinal 
illness) lead to a loss of QALDs greater than 0.5 for each day of 
illness. Furthermore, these lost QALDs persist for 2 to 16 days. Thus, 
the total loss of QALDs from gastrointestinal illness is calculated to 
be 1.05 to 9.99.

                     Table 3.--Lost Quality Adjusted Life Days Due to Salmonella Enteritidis
----------------------------------------------------------------------------------------------------------------
                                                           Disutility per Day (QALDs Lost)
                                                ---------------------------------------------------- Total QALDs
                    Severity                                                              Average      Lost per
                                                  Functional    Symptom       Total       Days Ill     Illness
----------------------------------------------------------------------------------------------------------------
Illness.........................................................................................................
----------------------------------------------------------------------------------------------------------------
  Mild.........................................         0.44         0.08         0.53            2         1.05
  Moderate.....................................         0.44         0.08         0.53            7         3.68
  Severe.......................................         0.53         0.09         0.62           16         9.99
----------------------------------------------------------------------------------------------------------------
Arthritis.......................................................................................................
----------------------------------------------------------------------------------------------------------------
  Short-term...................................           --           --         0.22           25         5.41
  Long-term....................................           --           --         0.14       18,250     2,613.12
----------------------------------------------------------------------------------------------------------------

    For arthritis, we used the regression of Cutler and Richardson 
(Ref. 83) The regression approach yields estimates of losses per day of 
0.22 for short-term arthritis and 0.14 for long-term arthritis. We 
estimate that short-term arthritis results in a loss of 5.4 to 10.8 
QALDs while long-term arthritis results in a loss of 2,613 to 5,223 
QALDs.
    We do not present the estimated QALYs saved for each provision 
considered in this analysis. Instead, we present benefits by provision 
in an ``illnesses averted'' metric for each option and provision. This 
practice allows us to calculate cost per illness averted by each 
provision. In the summary we present the result of alternate valuation 
methods that do and do not rely on QALY estimates. Since a large 
portion of the loss due to chronic reactive arthritis is due to pain 
and suffering not associated with direct medical expenditures, it is 
difficult to capture the full economic loss due to SE related arthritis 
without using QALYs or some other measure of morbidity effects. 
Benefits estimates not relying on QALY estimates will necessarily be 
significantly lower than estimates with QALYs. The results of all 
methods of valuation are presented in section V.E of this document.
    iv. Valuation of SE illnesses. Table 4 of this document illustrates 
how we calculate the dollar value of a typical case of SE under 
different assumptions. The first column of table 4 of this document 
lists the type of ailment. The second and third columns of table 4 of 
this document are taken from tables 2 and 3 of this document. The 
health loss per case is calculated by multiplying the value of a QALY, 
scaled to the value of a single day, by the actual number of QALDs 
lost, and then discounting where appropriate (only values of chronic 
cases of reactive arthritis are affected by the discount rate). The 
values in this column will vary depending upon the particular 
assumptions about the value of a statistical life (VSL), QALY, and the 
discount rate. The assumptions about the different values for these 
parameters will be discussed in a following paragraph. The fifth column 
of table 4 of this document shows the annual medical costs of each 
condition that is caused by SE infection (long term reactive arthritis 
is the only condition where the afflicted will incur medical costs for 
more than a single year). The sixth column of table 4 of this document 
shows the weighted dollar loss per outcome caused by SE. The 
probability that a case of SE infection results in a given outcome 
(column 2) is multiplied by the sum of the average health and medical 
costs per case. These results will vary depending on the economic 
assumptions. The weighted dollar values in column 6 are summed to 
calculate the total expected loss associated with a typical case of SE. 
We present the range of estimates of dollar losses per case in table 5 
of this document.

[[Page 56856]]



                        Table 4.--Valuing of a Typical Case of Salmonella Enteritidis\1\
----------------------------------------------------------------------------------------------------------------
                                                    Total QALDs                      Medical
         Type and Severity               Case        Lost  per    Health Loss per   Costs per    Weighted Dollar
                                       Breakdown      Illness          Case            Case       Loss per Case
----------------------------------------------------------------------------------------------------------------
Illness.........................................................................................................
----------------------------------------------------------------------------------------------------------------
  Mild.............................       90.7%          1.05    $864                       $0  $784
  Moderate.........................        8.1%          3.68    $3,025                    $74  $250
  Severe...........................        1.2%          9.99    $8,208                 $8,500  $203
----------------------------------------------------------------------------------------------------------------
Arthritis.......................................................................................................
----------------------------------------------------------------------------------------------------------------
  Short-Term.......................        1.26%         5.41    $4,442                   $100  $57
  Long-Term........................        2.40%     2,613.12    $592,411                 $531  $14,244
----------------------------------------------------------------------------------------------------------------
Death..............................        0.04%    18,250.00    $5,000,000        ...........  $2,143
----------------------------------------------------------------------------------------------------------------
Total Expected Loss per Case..................................................................  $17,682
----------------------------------------------------------------------------------------------------------------
\1\ The value of a typical case will actually vary widely depending on assumptions about the VSL, QALY, and the
  discount rate. These figures are based on an assumption of VSL=$5 million, QALY=$300 thousand, and a discount
  rate of 7%.
\2\ ``Health Loss per Case'' and ``Weighted Dollar Loss per Case'' for ``Death'' are calculated using a VSL=$5
  million. If we use the QALD calculation, assuming the average victim of death due to SE loses 50 years of
  life, the Health Loss per Case is $4.14 million and the Weighted Dollar Loss per Case is $1,773.

    Cost of illness estimates usually include the medical costs 
associated with SE. For example, Buzby et al. produced a summary of 
medical and other costs for U.S. salmonellosis cases (Ref. 80).\9\ The 
figures they estimated include the lost productivity of workers due to 
salmonellosis. Because we estimate lost productivity separately, we 
must net out these costs.
---------------------------------------------------------------------------

    \9\ As with the CDC data above, we assume that the 
characteristics of SE-related illnesses are similar to those of 
Salmonella in general.
---------------------------------------------------------------------------

    For mild SE illnesses, we assume that most persons will not obtain 
medical services. The cost estimated for this category chiefly reflects 
lost productivity (Ref. 80).
    For medical costs for those who contract moderate illnesses, we use 
figures from Williams (Ref. 85) updated with medical cost indices (Ref. 
86). In 1996, the average total cost of treatment for a nonurgent 
medical problem, including physician's fees and medication, was $62. We 
adjust these numbers to account for the increased cost of medical care 
since 1996. The consumer price index (CPI) for medical services rose 
from 227.8 in 1996 to 272.5 in June 2001.
    The data for the medical cost of a severe case of SE was obtained 
from the Health Cost and Utilization Project's (HCUP) Nationwide 
Inpatient Sample (NIS) (Ref. 87). Medical costs due to arthritis are 
based on Zorn and Klontz (Ref. 81). Zorn and Klontz estimated that 
short-term arthritis medical costs were approximately $100 per case. We 
estimate that long-term reactive arthritis costs had a present value of 
$5,370 in 1992.\10\ We use the CPI for medical care in general to 
update this cost to current dollars. Between 1992 and June 2001, the 
CPI for medical care rose from 190.1 to 272.5 (Ref. 86).
---------------------------------------------------------------------------

    \10\ This is based on the fact that in 1992 there were $64.8 
billion in costs due to arthritis, 24 percent of these costs were 
medical costs, and there were 40 million arthritis sufferers. This 
yields $389 per arthritis sufferer in direct medical costs. 
Discounted at 7 percent, the present value of medical expenditures 
for 50 years with reactive arthritis is $5,370.
---------------------------------------------------------------------------

    FDA uses a range to estimate the value of an additional year of 
life to reflect the uncertainty in the literature. As a lower bound, 
FDA uses $100,000 per (quality-adjusted) statistical life year. Cutler 
and Richardson (Ref. 83) use a similar estimate, and Garber and Phelps 
(Ref. 88) conclude that estimates of the value of a life year are about 
twice the level of income, though they present a broad range to reflect 
uncertainty associated with risk aversion and discount rates. Updating 
Garber and Phelps' estimates suggests that $100,000 per life year is a 
reasonable estimate, given that median family income in 2002 was about 
$51,000 (Ref. 89). Moreover, this estimate is close to the estimate 
used in FDA's economic analysis of the regulations implementing the 
Nutrition Labeling and Education Act of 1990. To reflect other 
underlying literature, and following suggestions from other federal 
agencies, we begin with an estimate of the VSL of $6.5 million. This 
estimate is consistent with the survey by Aldy and Viscusi (Ref. 90) on 
the premium for risk observed in labor markets. Annualizing this value 
over 35 years at 3 percent and at 7 percent discount rates implies 
estimates of a value of an additional year of life of about $300,000 
and $500,000. Therefore, calculations for estimated benefits will 
reflect three estimates of the value of a statistical life year (VSLY): 
$100,000, $300,000 and $500,000, for both of the methods of estimating 
gains in life years. Total benefits differ from mortality-related 
benefits by including the value of reduced morbidity and health care 
costs. Furthermore, FDA assumes values of a statistical life of $5 
million and $6.5 million. This range of VSL estimates is consistent 
with one reasonable interpretation of studies of willingness to pay to 
reduce mortality risks. (Refs. 90 and 91) FDA uses the lower value to 
reflect the fact that many of the estimates of willingness to pay to 
reduce mortality risk from papers not surveyed by Aldy and Viscusi are 
relatively low.
    In table 5 of this document, value of a typical case of SE under 
different assumptions is shown.

[[Page 56857]]



                            Table 5.--Value of a Typical Case of Salmonella Enteritidis Under Different Economic Assumptions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Discount Rate=$3%                     Discount Rate=7%
                                                                             ---------------------------------------------------------------------------
                                                                              VSL\1\=$5 million   VSL=$6.5 million    VSL=$5 million    VSL=$6.5 million
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSLY\2\=$0                                                                               $2,646             $3,289             $2,464             $3,107
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSLY=$100 thousand                                                                      $11,885                 --             $7,602                 --
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSLY=$300 thousand                                                                      $30,363            $31,006            $17,879            $18,522
--------------------------------------------------------------------------------------------------------------------------------------------------------
VSLY=$500 thousand                                                                           --            $49,484                 --            $28,799
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ VSL means value of a statistical life.
\2\ VSLY value of a statistical life year.

    The expected value of a typical case of SE varies greatly depending 
on the assumptions. The values when the QALY is taken out of the 
calculation are, as expected, the lowest, ranging from $2,464 per case 
to $3,289 per case. These values do not account for pain and suffering, 
which are a large part of the economic loss associated with chronic 
arthritis. The highest expected value for a case of SE, $49,484, occurs 
when we assume a VSL of $6.5 million, a QALY of $500 thousand, and a 
discount rate of 3 percent. The average of all of the values is $17,254 
per case. This most closely corresponds to the assumption set where VSL 
= $5.0 million, QALY = $300 thousand, and the discount rate = 7 
percent, which produces a value of $17,879 per case.
    d. Other benefits. Pathogens other than SE have been associated 
with eggs. In particular, Campylobacter (Ref. 92) and non-SE Salmonella 
(Ref. 14) have been found on the shells of eggs. The presence of 
pathogens on the eggshell may be harmful to humans if one of two 
scenarios occurs. First, under certain conditions, pathogens may 
migrate through the shell of the egg to infect the egg's contents (Ref. 
93). Second, eggshell contamination could result in the contamination 
of egg contents if eggs are broken in such a way that the shell of the 
egg comes into contact with the contents of the egg (Ref. 93).\11\ 
Current USDA washing and sanitizing standards are designed to reduce 
pathogens on the exterior of the egg. Also, pathogen migration is 
unlikely given current USDA standards and industry practices.\12\ 
Consequently, we do not expect benefits from the reduction of illnesses 
due to pathogens other than SE to be large.
---------------------------------------------------------------------------

    \11\ The use of centrifuges would cause this to occur.
    \12\ Most modern egg washing machines are spray-washers (63 FR 
27502 at 27505, May 19, 1998). Migration of SE through the eggshell 
is more commonly associated with immersion washing (Ref. 94).
---------------------------------------------------------------------------

2. Measuring Costs
    The measurement of costs is relatively straightforward. We measure 
costs based on the best available information from government, 
industry, and academic sources. Furthermore, we assume that total costs 
are typically the sum of the costs of individual provisions. What this 
assumption means is that, unlike benefits, the cost of one provision is 
generally independent of the cost of other provisions. Where economies 
of scope with respect to SE mitigation exist, we adjust the costs 
downward to account for the economies.\13\
---------------------------------------------------------------------------

    \13\ Where economies of scope with regards to SE mitigation 
occur, we observe that the incremental cost of one provision 
decreases with the implementation of another provision. For example, 
if rodent control decreases the chance of SE detection through 
environmental testing, we would expect the amount (and the cost) of 
follow up egg testing to decline.
---------------------------------------------------------------------------

3. Coverage of the Analysis
    We estimate costs and benefits of potential prevention measures for 
all farms that produce eggs for distribution in retail markets. Because 
the proposed rule exempts very small farms (<3,000 layers) from all 
provisions, wherever the data permit we calculate costs and benefits 
separately for both very small farms and for larger farms (>3,000 
layers). The separation of costs and benefits by size of farm allows us 
to estimate the total costs and benefits of the proposed rule, as well 
as the total costs and benefits of regulatory alternatives that do not 
necessarily exempt very small farms. In addition, calculating what the 
proposed rule would cost very small farms allows us to measure the 
regulatory relief provided by the exemption for very small farms. 
Farmers who sell all of their eggs directly to consumers are exempt 
from all provisions. Sales of eggs directly to consumers include sales 
of a farmer's own eggs to neighbors, at farmers markets, and at 
roadside stands. Farms that sell their eggs to another person for 
distribution or resale are not assumed to be exempt from the listed 
provisions. We do not anticipate any control measures for farms that 
sell all of their eggs directly to consumers, so we exclude them from 
the analysis.
    We estimate that approximately 4,100 farm sites with roughly 8,600 
poultry houses may be covered by some or all parts of the proposed 
rule. These figures are calculated as follows:
     We used the NASS 1997 Census of Agriculture to determine 
the number of farm sites with layers on hand. NASS estimated that there 
are 69,761 farms with layers over 20 weeks old in their inventory (Ref. 
22).
     Next, we adjusted for the fact that a large portion of 
farms with fewer than 3,000 layers either sell their eggs directly to 
the consumer or do not sell their eggs at all. We estimated that, of 
the approximately 64,800 farms with fewer than 3,000 layers,\14\ over 
33,800 of these farms sell their eggs, but not directly to the 
consumer.\15\
---------------------------------------------------------------------------

    \14\ The NASS Census of Agriculture uses farms with 3,200 birds 
as its cutoff point for categorization. FDA uses 3,000 birds as its 
cutoff point for small versus large farms, because this is the 
measure that is used in other egg and poultry regulations. To adjust 
the NASS data, FDA assumes that all flocks are uniformly distributed 
across the 400 to 3,200 bird category. Using this assumption, 7.1 
percent (200 / 2,800) of these farms fall in the over 3,000 bird 
category while the remaining 92.9 percent fall in the small farm 
category.
    \15\ Based on assumptions that the expert members of the egg 
safety action group did not disagree with, we have calculated that 
approximately 2,860 farms sell eggs via retail channels other than 
farmers markets, roadside stands, and neighborhood sales (Refs. 95, 
96, and 97). Many of the remaining 61,940 very small farms sell 
their eggs to consumers indirectly at roadside stands or farmers 
markets (Ref. 97). In the absence of better information, we assume 
that half of those remaining 61,940 very small farms sell eggs 
indirectly to consumers.
---------------------------------------------------------------------------

     NASS data suggested that 82 percent of layers are table 
egg layers (Ref. 98). For those farms with more than 3,000 layers, we 
adjusted the estimated number of farms affected by the NASS estimate. 
The resulting estimated number of farm sites is illustrated in the 
first column of table 6 of this document.
     The estimated number of houses per farm site is broken 
down by size

[[Page 56858]]

category in table 6 of this document. We used data from the 1999 Table 
Egg Layer Management in the U.S. Survey (Refs. 25 and 26) to estimate 
the number of houses per farm site for those farms with more than 3,000 
layers.\16\ For those farms with fewer than 3,000 layers, we assumed 
that there is only one house per farm site.
---------------------------------------------------------------------------

    \16\ Data from the Layers study are used throughout this 
document. We acquired the data either directly from the NAHMS Web 
site or through direct correspondence with Lindsey Garber, Centers 
for Epidemiology and Animal Health (CEAH), Veterinary Services (VS), 
APHIS, USDA.
---------------------------------------------------------------------------

     We calculate the total number of poultry houses that will 
be affected by this rule by multiplying the adjusted number of farm 
sites by the expected number of houses per farm site. As table 6 of 
this document demonstrates, the majority of the houses are on farm 
sites with fewer than 3,000 layers.

                                                Table 6.--Farms Potentially Covered by the Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Farm Size (No. of layers)                         Adjusted No. of Farm Sites   No. of Houses Per Site      Total No. of Houses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 3,000                                                                              33,824                  1.0                          33,824
--------------------------------------------------------------------------------------------------------------------------------------------------------
3,000 to 19,999                                                                               2,337                  1.4                           3,155
--------------------------------------------------------------------------------------------------------------------------------------------------------
20,000 to 49,999                                                                                940                  1.4                           1,317
--------------------------------------------------------------------------------------------------------------------------------------------------------
50,000 to 99,999                                                                                359                  2.4                             861
--------------------------------------------------------------------------------------------------------------------------------------------------------
100,000 or more                                                                                 443                  7.4                           3,279
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Potential Coverage                                                                     37,903                  1.1                          42,435
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Summary of Costs and Benefits of Regulatory Options and the Proposed 
Rule

    In this section of this document, we summarize the costs and 
benefits of the proposed rule and the regulatory options. In section 
V.E of this document, we provide a detailed analysis of the costs and 
benefits of all of the SE prevention measures we considered, both those 
in and those not in the proposal.
    We considered a number of regulatory options that may be used to 
prevent the problem of SE in eggs, including no new regulatory action, 
classification of SE-positive eggs as restricted or SE-positive, HACCP, 
the proposed rule, more extensive on-farm prevention measures, less 
extensive on-farm prevention measures, and retail prevention measures.
1. No New Regulatory Action
    One possible alternative to the proposed rule is to rely on current 
Federal, State, and industry efforts to control SE in shell eggs. These 
efforts include relying on an FDA final rule for labeling and 
refrigerating shell eggs, FDA educational programs, and the growth of 
membership in State and industry quality assurance programs. We believe 
these methods of control, while valuable, are unable to fully address 
the problem of SE contamination of shell eggs.
    FDA issued a related rule designed to help prevent the growth of SE 
in eggs by requiring refrigeration of shell eggs at retail and 
requiring shell egg labeling (65 FR 76092, December 5, 2000). As part 
of that rule, we set refrigeration temperatures to reduce the potential 
growth of SE inside shell eggs at the retail level, and required safe 
handling instructions on all cases and cartons of shell eggs. We expect 
that the consumption of undercooked and raw eggs will decline as a 
result of that rule. Nevertheless, labeling and refrigeration standards 
do not prevent or limit the growth of SE while eggs are in production.
    FDA also is pursuing a program designed to inform consumers about 
microbial hazards in egg preparation. The nationally distributed Fight 
BAC! program targets children in schools and television audiences with 
a more general food safety message that likely results in better egg 
handling practices. Again, this program, while useful, does not prevent 
the initial contamination of eggs with SE.
    Several of the large egg producing States and industry groups have 
encouraged producers of eggs to follow on-farm practices aimed at 
mitigating SE in their flocks. One of the first States to implement a 
structured quality assurance program was Pennsylvania. Though 
voluntary, the Pennsylvania Egg Quality Assurance Program has been 
accompanied by a significant decrease in SE-related illnesses in those 
areas where eggs from Pennsylvania are marketed. Industry groups also 
have drawn up quality assurance plans as guidelines for their members 
to follow. The voluntary programs have achieved some success in 
reducing SE contamination in eggs, and the more comprehensive plans 
contain many preventive measures similar to those in this proposed rule 
(Ref. 99). These voluntary programs have now been in operation for many 
years and are well-known throughout the industry. Although the State 
and industry programs are potentially effective, many producers choose 
not to participate. As data from CDC show, SE illnesses continue to be 
associated with shell eggs even in those areas where voluntary programs 
are in place. Option 1, relying on current Federal, State, and industry 
efforts to control SE in shell eggs, will be used as a baseline for the 
rest of the analysis.
2. Classification of SE-Positive Eggs as Restricted or SE Positive
    FDA considered the option of labeling eggs that are diverted to 
breaker plants (called ``breakers'') from an SE-positive flock with a 
label similar to the USDA ``restricted'' label or with a ``SE 
positive'' label. The advantage of requiring a label would be that 
high-risk eggs would be identified and could not be resold in the table 
egg market.
    The economic loss associated with labeling eggs as either 
``restricted'' or ``SE positive'' would be very high, as is illustrated 
in table 7 of this document. It has been estimated that eggs labeled SE 
positive will be discounted up to $0.08 per dozen at breaker plants. 
The price received for restricted eggs at the breaker plant is 
equivalent to the price received for checked eggs.\17\ Restricted eggs 
generally command a price that is

[[Page 56859]]

$0.13 to $0.14 less per dozen than do nest run eggs.
---------------------------------------------------------------------------

    \17\ Checked eggs are eggs with minute fissures in their 
eggshells. These eggs generally command less of a price in the 
breaker market because they are more likely to break in transit and 
are more susceptible to contamination.
---------------------------------------------------------------------------

    We believe that the pasteurization process used at breaker plants 
is sufficient to largely eliminate any threat from SE-positive eggs. As 
long as eggs sent to the breaker plant are subjected to pasteurization, 
the benefits from requiring eggs from an SE-positive flock to be 
labeled are insignificant. We rejected the option of labeling eggs from 
an SE-positive flock because the public health benefits of labeling 
these eggs likely would be small and the cost of doing so would be very 
high.

                                             Table 7.--Egg Prices\1\
                                             (Price per Dozen Eggs)
----------------------------------------------------------------------------------------------------------------
                                                                Breaking Eggs              Cost of Diversion
                                 Regional    Shell Egg  --------------------------------------------------------
            Region             Weight  (in    Price to                  Checks And                   Checks and
                                    %)        Producer     Nest Run   Undergrades\2\    Nest Run    Undergrades
----------------------------------------------------------------------------------------------------------------
North Atlantic                      17.0         $0.42        $0.31          $0.17         $0.11         $0.26
----------------------------------------------------------------------------------------------------------------
North Central                       68.4         $0.39        $0.30          $0.17         $0.09         $0.22
----------------------------------------------------------------------------------------------------------------
South Atlantic                       4.3         $0.43        $0.31          $0.17         $0.12         $0.26
----------------------------------------------------------------------------------------------------------------
South Central                        5.1         $0.47        $0.30          $0.17         $0.17         $0.30
----------------------------------------------------------------------------------------------------------------
West                                 5.2         $0.55        $0.31          $0.17         $0.25         $0.39
----------------------------------------------------------------------------------------------------------------
Average Cost of Diverting Eggs\3\                                                          $0.13         $0.24
-------------------------------------------------------------------------------------
Additional Discount for SE+ Eggs\4\ $0.00 to 0.08                                                        $0.00
--------------------------------------------------------------------------------------------------
Total Cost of Diverting Eggs $0.13 to 0.21                                                               $0.24
----------------------------------------------------------------------------------------------------------------
\1\ See section V.F.2 of this document for a full description of the derivation of this table.
\2\ Data on the price received for checks and undergrades is from the Poultry Yearbook (Ref. 100).
\3\ The average cost of diverting eggs is weighted by regional production (Ref. 98).
\4\ SE-positive eggs are intrinsically less valuable than other eggs because they are limited in how they may be
  used.

3. HACCP
    We could require that a HACCP system be implemented on layer farms. 
Although the general sanitation and hazard control measures in the 
proposed rule contain some HACCP-like features, the agency has not 
defined and is not ready to mandate HACCP on farms. HACCP requires the 
science-driven identification of critical control points throughout 
production. The technological knowledge needed to identify critical 
control points for eliminating SE from shell eggs, however, is 
incomplete. In addition, HACCP is most appropriate in situations where 
there are many chemical, physical, and microbiological hazards to 
control. In this proposal, we are concentrating only on the 
microbiological hazard of transovarian SE, a subset of the hazards that 
might be covered under HACCP.
4. The Proposed Rule
    The proposed rule (as described in the previous paragraph) includes 
the following requirements for farms with more than 3000 layers that do 
not have all of their eggs treated or sell all of their eggs directly 
to consumers: Rodent and pest control, biosecurity, cleaning and 
disinfecting, use of SE-monitored chicks and pullets, testing and 
diversion, records of testing and diversion, and refrigeration.
    The benefits from the SE prevention measures in the proposed rule 
would take time to be fully realized, but the costs would be more 
immediately incurred. Table 8 of this document shows the initial costs 
and illnesses averted and the eventual costs and illnesses averted of 
the proposed rule.\18\ Following are the detailed calculations 
underlying table 8 of this document, in section V.E of this document.
---------------------------------------------------------------------------

    \18\ The interest rate is used here to annualize the costs of 
refrigeration equipment, plan designs, and training. For simplicity, 
subsequent summary tables will only include figures reflecting the 
interest rate of 7 percent. Those interested in the total cost 
number reflecting a 3-percent interest rate should subtract roughly 
$5 million from the calculations performed with a 7-percent interest 
rate. The exact difference is shown in section E.1.i of this 
document, describing the costs and benefits of the refrigeration 
option, and section E.2, describing the costs of administrative 
measures.

                        Table 8.--Annual Costs and Illnesses Averted of the Proposed Rule
----------------------------------------------------------------------------------------------------------------
                                                                                                Cost per Illness
                                                               Costs        Illnesses Averted       Averted
----------------------------------------------------------------------------------------------------------------
Initially.......................................................................................................
----------------------------------------------------------------------------------------------------------------
  Interest Rate = 7%...................................        $84,000,000             22,132             $3,795
  Interest Rate = 3%...................................        $79,000,000             22,132             $3,569
----------------------------------------------------------------------------------------------------------------
Eventually......................................................................................................
----------------------------------------------------------------------------------------------------------------
  Interest Rate = 7%...................................        $82,000,000             33,452             $2,451
  Interest Rate = 3%...................................        $77,000,000             33,452             $2,302
----------------------------------------------------------------------------------------------------------------


[[Page 56860]]

5. More Extensive On-Farm SE Prevention Measures
    FDA could issue a proposed rule that provides the following 
information: (1) Does not exempt farms with fewer than 3,000 layers 
from any provisions and (2) includes more on-farm provisions than those 
in the proposed rule. Additional on-farm provisions include requiring 
training, the use of SE-negative feed, and vaccinating flocks against 
SE. We could also require record keeping for all provisions, rather 
than only for sampling, testing, and diversion.
    The option of more extensive controls leads to total eventual costs 
of $243 million and eventual expected number of illnesses averted of 
33,604 (the cost-effectiveness of each additional provision is 
calculated separately and presented in table 33 of this document and in 
the analysis of on-farm prevention measures in section V.E of this 
document). This approach increases costs by over $160 million, while 
only increasing the number of illnesses averted by about 150 cases, for 
a marginal cost-effectiveness of more than $1 million per additional 
illness averted. The main reason for the small increase in benefits 
relative to costs is that much of the increase in costs comes from 
adding farms with fewer than 3,000 layers. The large number of such 
farms (over 33,000, as shown in table 5 of this document) means that 
requiring them to comply with all provisions of the proposed rule would 
greatly increase costs. These farms, however, account for less than 1 
percent of egg production, so requiring them to comply with all of the 
SE prevention measures would have a small effect on the volume of shell 
eggs that could be contaminated with SE. In addition, including these 
very small farms likely would result in the cessation of egg production 
at a large number of farms. For these reasons, FDA has decided not to 
pursue this option.
6. Less Extensive On-Farm SE Prevention Measures
    We could also require fewer controls than the proposed rule. 
Several provisions could be combined to provide a less extensive set of 
controls than in the proposed rule. Many of the prevention measures 
could be put forth as stand-alone regulations. We have not presented 
each of these prevention measures as a separate option, but the reader 
can see the individual effects of the various on-farm prevention 
measures in table 28 (see section V.E of this document). As documented 
in table 28 of this document, the various individual measures would, by 
themselves, generate lower net benefits than the integrated program 
outlined in the proposed rule.
7. Retail SE Prevention Measures
    FDA examined the possibility of including a retail component in the 
proposed rule. In particular, we have qualitatively examined the costs 
and benefits of applying certain SE prevention measures to 
establishments that specifically serve highly susceptible populations. 
Those measures include using only eggs that are clean, sound, contain 
no more restricted eggs than the proportion allowed in U.S. Consumer 
Grade B, and have been transported at an ambient temperature of 45 
[deg]F or below. Other measures that could apply to establishments 
serving highly susceptible populations, but for which we lack data, 
include thoroughly cooking raw eggs and raw egg-containing foods, and 
substituting pasteurized eggs or egg products for raw eggs in the 
preparation of foods where eggs are combined or served undercooked.
    At present, we do not have adequate information to accurately 
estimate the total costs and benefits of all the retail measures. 
Nevertheless, we have estimated that more than 130,000 retail 
establishments would be affected by the retail provisions we examined. 
We ask for comment regarding the costs and benefits of retail 
prevention measures.

E. Benefits and Costs of Potential SE Prevention Measures: Detailed 
Analysis

    In this section, we describe the SE prevention measures we 
considered, including provisions that were not included as proposed 
requirements or that were only required for certain producers in the 
proposed rule. For example, we calculated costs and benefits for SE 
prevention measures, such as rodent control and biosecurity, for 
producers with fewer than 3,000 layers, but these measures would not be 
required of such producers in the proposed rule. In addition, FDA 
looked at a number of administrative requirements designed to support 
the direct SE prevention measures. Finally, we calculated the total 
costs and benefits for the provisions in the proposed rule.
    We examined a number of on-farm measures, which includes the 
following measures:
     Rodent and pest control,
     Biosecurity measures,
     Cleaning and disinfecting of layer houses between flocks,
     The use of SE monitored chicks or pullets,
     The use of SE negative feed,
     Vaccinating flocks against SE,
     Refrigeration of eggs,
     Layer house environmental testing,
     Followup egg testing, and
     The diversion of SE positive eggs.
    For each of the on-farm measures previously discussed, we estimated 
the costs of the following administrative measures: registration, 
training, plan design, and recordkeeping.
    Finally, FDA considered retail provisions to help prevent illness 
from SE positive eggs. The retail provisions would cover retail 
establishments that specifically serve highly susceptible populations.
1. On-Farm SE Prevention Measures
    a. Interdependence of on-farm measures. Rodent control, pest 
control, biosecurity and cleaning and disinfecting all have a role in 
eliminating SE in the poultry house. Although the actions taken under 
each heading may be distinct, the effects of each action are related. 
For example, a biosecurity plan may include provisions to limit 
standing water and high grass in areas adjacent to the poultry house. 
Although categorized as biosecurity measures, these practices also help 
control both rodents and pests. Similarly, cleaning and disinfecting 
removes not only SE, but also rodents and pests.
    This interdependence means that the efficacy of on-farm controls 
cannot be determined by adding the effects of each provision (as 
determined by studies that focus on each provision separately). The 
measurement difficulty arises for two reasons. First, as mentioned 
earlier, when two practices substitute or complement one another, the 
efficacy of the first practice is affected by the introduction of a 
second. Second, a simple comparison of farms that use a given practice 
with farms that do not use that practice is insufficient in measuring 
the effectiveness of the practice in question. The use of one good 
practice tends to be positively correlated with the use of other good 
practices and therefore a simple comparison between farms will 
overstate the effectiveness of the practice. For example, those houses 
that use the best rodent control practices are also likely to be using 
other SE controls as well, so a measure of rodent control effectiveness 
is likely to pick up the effects of good biosecurity, pest control, and 
cleaning and disinfecting practices. On the other hand, a simple farm 
to farm comparison of practices that are correlated with prevalence may 
understate the effectiveness of the practice. For example, a group of 
farms may have practices in place because

[[Page 56861]]

they are part of a voluntary SE plan, which in turn may have been put 
in place in areas with higher than average prevalence. In this case the 
practices would appear to be correlated with higher than average 
prevalence.
    b. Organization of economic analysis of potential provisions. FDA 
has considered a number of on-farm SE prevention measures. The 
provisions that we considered are examined below. We have included 
some, but not all, of these provisions in the proposed rule. The costs 
and benefits of the provisions included in the proposed rule are 
summarized in table 35 in section V.F of this document.
    c. Control of rodents and other pests. i. Rodent and pest control 
provisions. One potential rodent and pest control provision is a 
requirement that each layer house be under a rodent and pest control 
program. Such a program could include the use of traps or poisons to 
reduce rodents and other pests. A provision also might require that 
each farm have a written rodent and pest control plan and that rodent 
and pest control records be kept to verify that the program is 
accomplishing its goals.
    ii. Current industry practices--rodent and pest control. Most farms 
currently address rodent and pest control problems to some extent. 
However, if SE-positive eggs are required to be diverted, there will be 
a financial incentive to find ways to prevent SE in poultry houses. As 
a result, the effectiveness of rodent and pest control in eliminating 
SE in the poultry house will lead many farms to institute rodent and 
pest control programs that are more stringent than those currently in 
place.
    Currently, 99.2 percent of all commercial farms with more than 
30,000 layers use some form of rodent control, but not all methods of 
rodent control are compatible with the goal of eliminating SE in 
poultry houses. In particular, we believe that biological predators 
such as cats should not be used as a method of rodent control because 
cats can be vectors for SE contamination.
    Table 9 of this document illustrates, by farm size, the number of 
programs of rodent control that would satisfy the provisions in the 
proposed rule. Farms that do not use rodent controls as specified in 
this provision (e.g., many farms primarily use cats as a rodent control 
measure) are counted as having unacceptable rodent control programs. 
Based on data from the Layers study (Refs. 25 and 26), we estimate that 
the number of farms with inadequate rodent control programs will range 
from 1.8 percent for farms with over 100,000 layers to 21.0 percent for 
farms with 20,000 to 49,999 layers.\19\ Furthermore, we believe that 
the potential costs of diversion of SE-positive eggs will encourage 
farmers currently using a level of rodent control that would satisfy 
the proposed provision to increase their rodent control efforts.\20\ 
Without better information about the number of farms that would 
increase rodent control efforts, we assume the true number will lie 
between 0 percent and 100 percent of those currently using an 
acceptable level of rodent control.
---------------------------------------------------------------------------

    \19\ Our primary source for on-farm practices related to SE 
prevention measures is the Layers study (Refs. 25 and 26). As the 
only major current survey of the industry, this study has provided 
us with data that has allowed us to characterize the industry. The 
study, however, does not fully represent the industry. A total of 
526 farm sites responded to the first part of the survey and 252 
responded to the second part of the survey. Furthermore, only 
operations with more than 30,000 layers were included in the survey. 
Consequently, we had to approximate the practices of smaller farms 
based on a limited amount of information. Nonetheless, the Layers 
study has added greatly to our understanding of the industry and its 
practices.
    \20\ This conclusion assumes that there will also be a testing 
and diversion component to the proposed rule. If the proposed rule 
does not include a testing and diversion component, it is unlikely 
that farms with an acceptable testing and diversion program would 
increase rodent control efforts beyond what is required, because the 
incentive to avoid diversion would not be present.

                                                                Table 9.--Rodent Control
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Unacceptable Rodent          No. of Farms With          No. of Farms Increasing
                     Farm Size (No. of layers)                           Control (in %)        Unacceptable Rodent Control             effort
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 3,000                                                                    50.0%                            16,912                         8,456
--------------------------------------------------------------------------------------------------------------------------------------------------------
3,000 to 19,999                                                                    18.8%                               439                           949
--------------------------------------------------------------------------------------------------------------------------------------------------------
20,000 to 49,999                                                                   21.0%                               197                           371
--------------------------------------------------------------------------------------------------------------------------------------------------------
50,000 to 99,999                                                                    3.8%                                14                           172
--------------------------------------------------------------------------------------------------------------------------------------------------------
100,000 or more                                                                     1.8%                                 8                           218
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Farms                                                           ........................                        17,570                        10,166
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We assume that between 25 percent and 75 percent of very small 
farms (those with fewer than 3,000 layers) are using an acceptable 
level of rodent control.
    Pests, other than rodents, commonly found in poultry houses include 
flies, mites, beetles, and ants (Ref. 101). For the purposes of this 
provision, however, we chiefly are interested in the presence of flies 
and fly control because they have been implicated in the transmission 
of Salmonella (Ref. 102).
    The survey used to develop the Layers study asked questions about 
on-farm fly control practices (Refs. 25 and 26). Using these data, we 
estimate that over 90 percent of those farms with over 3,000 layers use 
some form of fly control. Some of these methods, however, should not be 
used. In particular, we do not suggest the use of biological predators, 
such as wild birds, for fly control since these predators may 
themselves be vectors for SE transmission (Ref. 102).

[[Page 56862]]



                                                                 Table 10.--Fly Control
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Unacceptable Fly            No. of Farms With          No. of Farms Increasing
                     Farm Size (No. of layers)                           Control (in %)         Unacceptable Fly Control               effort
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 3,000                                                                    50.0%                            16,912                         8,456
--------------------------------------------------------------------------------------------------------------------------------------------------------
3,000 to 19,999                                                                    26.9%                               629                           854
--------------------------------------------------------------------------------------------------------------------------------------------------------
20,000 to 49,999                                                                   17.5%                               165                           388
--------------------------------------------------------------------------------------------------------------------------------------------------------
50,000 to 99,999                                                                   11.8%                                42                           158
--------------------------------------------------------------------------------------------------------------------------------------------------------
100,000 or more                                                                    21.7%                                96                           173
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Farms                                                           ........................                        17,844                        10,030
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 10 of this document shows the number of farms with 
unacceptable (not sufficient to satisfy the proposed rule) programs of 
fly control. We assume that farms that do not use fly control or that 
use biological predators, such as birds, as their primary method of fly 
control are not using acceptable methods. We estimate that a total of 
17,844 farms are using unacceptable methods of fly control.
    The actual number of farms that are using unacceptable methods of 
fly control is likely to be higher than the estimates in table 12 of 
this document would suggest. The mere fact that a particular method is 
used does not automatically guarantee that it is used at its optimal 
level. As with rodent control, even farmers in compliance with the 
proposed provision would be likely to increase their use of fly 
controls. We assume that between 0 and 100 percent of farms using 
acceptable fly control methods will increase their fly control efforts. 
Consequently, an additional 10,030 farms will increase their fly 
control efforts.
    iii. Costs of rodent and pest control.\21\ We estimate the cost of 
rodent and pest control to farms in table 11 of this document. We 
assume that a farm with an adequate rodent and pest control program 
will be using a number of control measures.
---------------------------------------------------------------------------

    \21\ All cost estimates in this section are from data supplied 
to the FDA through a contract with Research Triangle Institute. 
Derivations of estimates are described more fully in a memorandum to 
the record (Ref. 103).
---------------------------------------------------------------------------

    Included in the cost of rodent control are the cost of setting up 
and maintaining bait stations and the cost of rodent indexing. The 
annual cost of rodent control ranges from $30 for the average farm with 
less than 3,000 layers to $4,970 for the typical farm with over 100,000 
layers. The costs of limiting rodents' access to feed and patching 
holes in the walls of poultry houses are not included in our estimates.
    Pest control measures include the cost of sprays, baits, fly 
monitoring, and manure pit fans. We expect the annual cost of pest 
control to range from $110 for farms with less than 3,000 layers to 
$63,500 for farms with more than 100,000 layers.

                                   Table 11.--Cost of Rodent and Pest Control
                                                 (In Thousands)
----------------------------------------------------------------------------------------------------------------
                                    Rodent Control                         Pest Control
  Farm Size (number of  ----------------------------------------------------------------------------
        layers)             Unacceptable                          Unacceptable                          Total
                              Controls      Increased  Effort       Controls      Increased  Effort
----------------------------------------------------------------------------------------------------------------
Less than 3,000                       $501               $125             $1,905               $476       $3,008
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999                       $241               $260             $2,355             $1,600       $4,456
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999                      $133               $125             $1,125             $1,326       $2,709
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                       $15                $93               $544             $1,016      $1,667,
----------------------------------------------------------------------------------------------------------------
100,000 or more                        $40               $541             $6,102             $5,507      $12,187
----------------------------------------------------------------------------------------------------------------
All Farms                             $929             $1,144            $12,031             $9,922      $24,027
----------------------------------------------------------------------------------------------------------------

    The total cost of rodent and pest control, as expressed in table 11 
of this document, is found by multiplying the cost per farm by the 
number of farms affected, as illustrated in tables 9 and 10 of this 
document. For those farms that are already using acceptable rodent and 
pest control methods, but that will increase their rodent and pest 
control efforts, we estimate that the cost of rodent and pest control 
will be approximately half of the cost of farms with unacceptable 
controls. This provision would result in costs of $3.0 million for 
farms with less than 3,000 layers and costs of $21.0 million for farms 
with over 3,000 layers.
    iv. Benefits of rodent control. Rodent control appears to be 
effective in controlling SE. As a critical vector, rodents may spread 
SE throughout a given poultry house and between houses. Rodents spread 
the disease through their droppings, which often are consumed by 
layers. In this section of this document, we merge

[[Page 56863]]

epidemiological data with estimates of the current level of rodent 
infestation on farms to assess the benefits from increased rodent 
control.
    We used the Layers study (Refs. 25 and 26) to determine the 
magnitude of the rodent problem on farms. The first four rows of table 
12 of this document show the percentages of farms in four size 
categories with four severities of mouse or rat infestation.\22\ Table 
12 shows that larger farms are generally more likely to experience 
moderate or severe rodent problems. The greater prevalence in the 
larger houses means that, while only 17 percent of houses have moderate 
or severe rodent problems, 33 percent of all layers are currently in 
houses with moderate or severe problems.\23\
---------------------------------------------------------------------------

    \22\ Severity level is self-assessed by respondents to the 
survey.
    \23\ To determine the percent of houses affected, the percent of 
farms with a given rodent problem was weighted using the number of 
houses in each size category. The number of birds affected was 
determined by weighting the percent of farms with a given rodent 
problem in each size category by the number of birds in each size 
category.

                                      Table 12.--Severity of Rodent Problem
----------------------------------------------------------------------------------------------------------------
                                                                 Severity in %
                                             ----------------------------------------------------  No. of Houses
                                                 Severe      Moderate      Slight        None       in Category
----------------------------------------------------------------------------------------------------------------
Farm Size (No. of Layers)
----------------------------------------------------------------------------------------------------------------
  <20,000                                           0.0         14.8         81.7          3.5            36,979
----------------------------------------------------------------------------------------------------------------
  20,000 to 49,999                                  9.1         13.2         70.1          7.6             1,317
----------------------------------------------------------------------------------------------------------------
  50,000 to 99,999                                  1.2         28.4         52.3         18.1               861
----------------------------------------------------------------------------------------------------------------
  100,000 or more                                   1.5         32.1         60.1          6.3             3,279
----------------------------------------------------------------------------------------------------------------
Percent of Houses Affected                          0.5         16.9         78.7          3.8    ..............
----------------------------------------------------------------------------------------------------------------
Percent of Layers Affected                          2.9         31.4         60.2          5.5    ..............
----------------------------------------------------------------------------------------------------------------
Risk Ratio                                          4.2          3.1          2.1          1.0             Total
----------------------------------------------------------------------------------------------------------------
Percent of Layers in Houses with Positive          19.2         14.3          9.5          4.6                11
 Environments
----------------------------------------------------------------------------------------------------------------
Maximum Expected SE Reduction from Increased       38.1         34.0         25.8          0.0              27.3
 Rodent Control\1\
----------------------------------------------------------------------------------------------------------------
\1\ These values are calculated using the following equations:
Severe: [( 19.2 - 4.6) / 2] / 19.2 = 38.1%.
Moderate: [( 14.3 - 4.6) / 2] / 14.3 = 34.0%.
Slight: [( 9.5 - 4.6) / 2] / 9.5 = 25.8%.
None: [( 4.6 - 4.6) / 2] / 4.6 = 0.0%.

    Henzler examined the link between rodents and SE, and found that 
environmental tests of manure in houses with large rodent populations 
were 4.2 times more likely to be positive for SE than similar tests in 
houses with small rodent populations.\24\ We assume that the risk ratio 
for SE can be linearly extrapolated between 1 for those farms with no 
rodent problem and 4.2 for those farms with a severe rodent control 
problem. This extrapolation is presented in table 11 of this document 
along with the estimated level of rodent infestation for farms of 
different sizes.
---------------------------------------------------------------------------

    \24\ A total of 84 flocks were examined in Pennsylvania (Ref. 
48).
---------------------------------------------------------------------------

    The third section of the Layers 99 study (Ref. 27)\25\ supports the 
Henzler study. The Layers study finds that farms with a rodent index of 
at least 20 mice have an SE prevalence rate of 10.1 percent, while 
farms with a rodent index of less than 20 mice have a prevalence of SE 
of only 2.0 percent.\26\ This difference is statistically significant.
---------------------------------------------------------------------------

    \25\ The third part of the Layers study (Ref. 27) provides 
estimates for the prevalence of SE on 200 farm sites with different 
management practices. For many of the variables analyzed, however, 
the sample size was too small for statistically significant 
differences to be measured.
    \26\ The standardized rodent index is calculated as (number of 
rodents trapped) x (7 / number of days) x (12 / number of functional 
traps).
    The index standardizes the number of rodents trapped to the 
equivalent of having 12 traps function for 7 days (Ref. 27).
---------------------------------------------------------------------------

    Using data from the Henzler study, we estimated the base level of 
environmental SE prevalence for houses without rodent problems to be 
4.6 percent when the overall prevalence of SE-positive houses is 11 
percent. We calculated the base as Base = Overall / 
[(preventionSEV x BirdsSEV) + 
(preventionMOD x BirdsMOD) + 
(preventionSLT x BirdsSLT) + 
(preventionNON x BirdsNON)]; where Base is the 
base level of prevalence for a rodent free house; ``Overall'' is the 
total prevalence for all houses; ``prevention'' is the risk ratio for 
each level of rodent infestation; and ``Birds'' is the percentage of 
layers in houses with a given rodent problem. The subscripts SEV, MOD, 
SLT, and NON refer to the cases of severe, moderate, slight, and no 
rodent problems. The percentage of layers in houses with environments 
positive for SE is found by multiplying the SE risk ratio times the 
base level of risk. Again, houses with severe rodent control problems 
are 4.2 times more likely to be positive for SE than houses with no 
problems (19.2 percent versus 4.6 percent).
    In the last row of table 12 of this document, we estimate the 
expected reduction in SE due to increased rodent control. If rodent 
control were wholly effective, we would assume that it would result in 
a drop in SE from current levels to 4.6 percent, the level associated 
with no rodent problem. For a severe rodent infestation, rodent control 
would therefore result in a 76.2 percent decline in SE, but such a 
large decline is not likely for most farms. Those farms with a rodent 
control problem probably have a problem partly because of factors not 
experienced by those farms without a problem. House design (open walls, 
dirt floors, and other

[[Page 56864]]

features), unfavorable location (near other rodent-infested entities, 
climate, and so on), and lack of knowledge regarding proper rodent 
control techniques are likely to diminish the effectiveness of rodent 
control. Consequently, we assume that the effectiveness of rodent 
control for a particular farm will be uniformly distributed between no 
reduction and reduction to an SE risk of 4.6 percent. Overall, this 
leads to an estimated average 27.3 percent reduction in SE, as shown in 
table 12 of this document.
    Based on information from the egg industry, we believe that rodent 
control may take up to 4 years to be fully effective. During the 4-year 
transition period, we assume that the effectiveness of rodent control 
will average 13.7 percent, half of the eventual effectiveness.
    We use the base line number of SE cases due to eggs and the value 
of a typical case of salmonellosis to estimate the value of rodent and 
pest control benefits. For farms with fewer than 3,000 layers a rodent 
and pest control program would result in benefits of 71 illnesses 
averted initially and 142 cases averted eventually at a cost of $58,450 
per case averted. For farms with more than 3,000 laying hens, the 
benefit from rodent and pest control increases from an expected 12,853 
illnesses averted initially to 25,701 illnesses averted eventually at a 
cost of $1,390 per illness averted.
    The narrow definition of rodent control is limited to direct 
methods of catching, killing, and blocking rodents from entering a 
poultry house. Measures such as pest control, biosecurity, and cleaning 
and disinfecting also affect rodent control. Cleaning and disinfecting 
a house, when done properly, removes rodents and their nests from an 
infested house. Similarly, biosecurity makes rodent penetration of a 
house more difficult. As a result, the benefits estimated for rodent 
control are partly due to the adoption of other measures that may be 
required. We therefore believe that the expected effect of rodent 
control by itself (assuming no other control measures) would be smaller 
than our estimates suggest.
    v. Benefits of pest control. Pests other than rodents also have 
been shown to be vectors in the spread of SE. In particular, Davies and 
Wray showed that the ingestion of SE-contaminated maggots by a chicken 
protects Salmonella from the stomach acids of the chicken and aids in 
the establishment of SE in the chicken's gut (Ref. 102).\27\ Beetles 
and wild birds have also been implicated in the transmission of SE 
(Ref. 102). Wild birds currently have access to layer feed troughs on 
23.5 percent and flies on 91.3 percent of farms (Refs. 25 and 26).
---------------------------------------------------------------------------

    \27\ See also Olsen (2000) (Ref. 49).
---------------------------------------------------------------------------

    Despite the high prevalence of pests other than rodents on farms, 
most farms do attempt to limit their presence. Approximately 82 percent 
of farms currently use fly control methods other than the use of 
biological predators (Refs. 25 and 26).\28\ As with rodents, the 
effectiveness of fly control is limited by the characteristics of the 
farm. Farms that operate in damp climates and that are not able to seal 
their facilities against pests (many houses have dirt floors and open 
walls) are likely to have more difficulty reducing infestation of all 
pests.
---------------------------------------------------------------------------

    \28\ Use of biological predators is not seen as an effective 
pest control technique because the predators may themselves become a 
vector for SE transmission.
---------------------------------------------------------------------------

    The third section of the Layers study (Ref. 27) illustrates the 
effect of pest control. On those farms in which pests have access to 
feed storage sites, the prevalence of SE is estimated to be 9.6 
percent. For farms on which pests do not have access to feed in 
storage, the prevalence of SE is only 5.8 percent.
    vi. Other benefits of rodent and pest control. The rodent control 
provisions are expected to decrease the rodent population in poultry 
houses. Since rodents consume large amounts of feed, this reduction 
will benefit producers by lowering their feed costs.
    The Cooperative Extension Service of Oklahoma State University 
estimates that each rat in a poultry house consumes $2.18 worth of feed 
annually (Ref. 104). Since mice eat 5 to 10 percent as much as rats 
(Ref. 101), the expected annual loss of feed for each mouse in a house 
is estimated to cost $0.11 to $0.22.
    The upper bound of the savings from increased rodent control due to 
this provision is the cost of implementing the rodent control measures. 
In the absence of mandated rodent control, an informed producer will 
use a level of control that maximizes profits. Any increased rodent 
control that leads to feed savings in excess of the cost of the control 
program already will have been implemented before the implementation of 
a quality assurance program.
    We estimate that an infested house may have over 1,000 mice (Ref. 
48). This infestation will cost a farmer approximately $165 for that 
house (1,000 ' $.165). A house infested with rats may have as many as 
700 rats (Ref. 105). In this case, the infestation costs the farmer 
$1,526 (700 ' $2.18).

                                   Table 13.--Feed Savings from Rodent Control
----------------------------------------------------------------------------------------------------------------
                                  Rodents in a    Feed Savings     % of         Houses in      Cost to Houses in
            Problem                   House        Per House     Houses\1\  Classification\2\    Classification
----------------------------------------------------------------------------------------------------------------
Mice
----------------------------------------------------------------------------------------------------------------
  Severe                                  1,000        $165.00        2.4                114             $18,800
----------------------------------------------------------------------------------------------------------------
  Moderate                                  500         $82.50       25.5              1,212            $100,000
----------------------------------------------------------------------------------------------------------------
  Slight                                    250         $41.25       62.4              2,966            $122,300
----------------------------------------------------------------------------------------------------------------
  None                                        0          $0           9.7                461                  $0
----------------------------------------------------------------------------------------------------------------
Rats
----------------------------------------------------------------------------------------------------------------
  Severe                                    700      $1,526.00        1.6                 76            $116,000
----------------------------------------------------------------------------------------------------------------
  Moderate                                  350        $763.00        6.9                328            $250,200
----------------------------------------------------------------------------------------------------------------
  Slight                                    175        $381.50       43.7              2,077            $792,300
----------------------------------------------------------------------------------------------------------------

[[Page 56865]]

 
  None                                        0          $0          47.8              2,272                  $0
----------------------------------------------------------------------------------------------------------------
Total Cost of Rodents                                                                                 $1,399,700
----------------------------------------------------------------------------------------------
Expected Savings from Control (Assumes 50% reduction)                                                   $699,850
----------------------------------------------------------------------------------------------------------------
\1\ The percentages are from the Layers study (Refs. 25 and 26).
\2\ Because rodent populations are estimated for large houses only (over 54,000 layers), we estimate the number
  of houses to be the number of large house equivalents. This implies that two 27,000-bird houses are counted as
  one house in this analysis.

    The total feed savings from rodent control are illustrated in table 
13 of this document. If rodent control leads to just half of all 
rodents being eliminated, the savings in lost feed from rodent control 
are estimated to be almost $700,000 annually.
    d. Biosecurity. i. Biosecurity provisions. We have examined the 
effects of several potential biosecurity provisions. These include the 
following effects: (1) Limiting visitor access; (2) avoiding the 
movement of contaminated equipment between poultry houses; (3) ensuring 
that employees are hygienic; (4) keeping stray poultry, birds, and 
other animals away from the layer houses; and (5) prohibiting employees 
from keeping poultry at home.
    The first biosecurity measure we examine is the limitation of 
visitors' access on poultry farms. Limiting a visitor's access may 
include prohibiting a visitor from entering a house on one farm if that 
person has already entered a house on another farm. Also, visitors may 
be banned from entering poultry houses altogether.
    Contaminated equipment can also spread SE on a farm. One way to 
mitigate this problem is to ensure that equipment that is used in 
multiple houses (such as forklifts and manure removing equipment) is 
kept clean.
    The hygiene of persons moving between houses affects the likelihood 
of cross-contamination. To protect against cross-contamination, farms 
may require that employees and visitors use footbaths, change their 
clothing, or use protective clothing when on the farm. Farms also may 
choose to require that their employees work on only one farm site on a 
given day.
    Stray poultry, birds, and other animals must also be kept away from 
the farm's grounds and facilities. This may be done keeping grass and 
weeds cut, minimizing the existence of standing pools of water near the 
house, and fencing off the farm site.
    Finally, biosecurity precludes employees of the farm from keeping 
poultry at home.
    ii. Current industry practices; biosecurity. Most farms already 
practice some form of biosecurity.\29\ According to the Layers study, 
68.1 percent of farms do not allow non-business visitors and 22.1 
percent do not allow business visitors into layer houses. Of those that 
do allow visitors to enter, 65.6 percent have biosecurity rules for 
non-business visitors and 69.5 percent have biosecurity rules for 
business visitors.
---------------------------------------------------------------------------

    \29\ All data in this section are from the Layers study (Refs. 
25 and 26).
---------------------------------------------------------------------------

    Farms use different methods to keep employee, contract crew, and 
visitor hygiene at an acceptable level. The Layers study estimates that 
24.5 to 24.6 percent use footbaths, 3.9 to 4.8 percent require showers 
to be taken, and 17.6 to 32.0 percent require persons to change clothes 
or wear coveralls.
    Many farms use biosecurity measures aimed at keeping stray poultry, 
birds, and other animals away from the layer houses. While data on the 
number of farms that trim grass and discourage standing pools of water 
are not available, the Layers study did estimate that fencing is 
currently used at 26.7 percent of farms.
    Finally, 75.7 percent of farms do not allow employees to keep their 
own layers at home.
    iii. Costs of biosecurity. It is difficult to quantify many of the 
costs of biosecurity. This is especially true because the biosecurity 
measures may be implemented in different ways, allowing each farm to 
adapt the measures to their operation, as appropriate. However, a few 
of the costs can be quantified.
    First, the cost of limiting visitors can be estimated as the cost 
of monitoring and providing protective clothing to visitors who are 
allowed on the farm. The cost of monitoring visitors includes the cost 
of posting signs asking visitors to check in, the cost of having 
visitors sign in, and the cost of accompanying visitors around the 
farm. Protective clothing costs $78.75 for a box of 25 disposable 
coveralls and $105.38 for a box of 200 plastic shoe covers (Ref. 106). 
Because farms will choose to implement this part of biosecurity in 
different ways, it is impossible to determine what the actual cost will 
be.
    The cost of cleaning contaminated equipment is uncertain because we 
do not know how individual farmers will choose to do this. In our 
analysis, we assume that the amount of equipment that needs to be kept 
clean increases linearly with the number of houses on a farm. In 
particular, we assume that a farm with two houses requires 1 hour of 
cleaning per week, a farm with three houses requires 2 hours, and so 
on. Using data from the Layers study, we find that the average farm 
with more than 3,000 layers will devote 69 labor hours annually to 
cleaning equipment. At a labor rate of $8.84 per hour, doubled to 
include overhead costs, the total expected labor cost of this provision 
is $1,210 per farm, or $5.0 million for all farms with more than 3,000 
layers. We expect that there will be little or no cost for farms with 
fewer than 3,000 layers because the vast majority of these farms have 
only one layer house.
    The cost of chlorine footbaths also can be estimated. We calculate 
the cost of a footbath as the sum of the cost of the plastic vessel, 
the cost of bleach, and the cost of the labor needed to fill footbaths. 
We estimate the total cost per house on farms with more than 3,000 
layers to be $420 per year.\30\ Houses with fewer than 3,000 layers 
generally are very small and will need only one footbath. As a result, 
the cost per house for farms with fewer than 3,000 layers would be 
$210. Because only 24.6 percent of houses currently use footbaths, the 
total annual cost of footbaths is estimated to be (100 - 24.6 percent) 
x 8,612 houses x $420 per house = $2.7 million. We assume

[[Page 56866]]

that an insignificant number of farms with fewer than 3,000 layers use 
footbaths. Therefore, the cost to these very small farms is $7.1 
million (33,824 houses x $210 per house).
---------------------------------------------------------------------------

    \30\ This estimate is based on the following assumptions: (1) 
The plastic vessel costs $5 and is replaced annually; (2) bleach 
costs $1 a gallon, a gallon is used per footbath, and it is changed 
once a week; (3) there are two footbaths per house; (4) labor costs 
$8.84 an hour (Ref. 107) and is doubled to include costs of 
overhead; and (5) changing the bleach-water mixture takes 10 
minutes. The estimate in the text is calculated as 2 x ($5 + $1 x 1 
x 52 + $17.86 x 0.67 x 52) = $420 per year.
---------------------------------------------------------------------------

    Employee biosecurity also includes the cost of using protective 
clothing when moving between houses. As noted above, the cost of 
plastic coveralls is $78.75 per box of 25, and the cost of plastic shoe 
covers is $105.38 per box of 200. Because employees will only wear 
these garments under certain conditions, it is impossible to precisely 
estimate the annual cost to a farm. We assume that the cost of 
protective clothing increases linearly with the number of houses on a 
farm. In particular, we assume that a farm with two houses will use one 
coverall and two shoe covers per day, a farm with three houses will use 
2 coveralls and 4 shoe covers, and so on. If only one coverall and two 
shoe covers are used per day because of this provision, the annual cost 
would be $1,534 per farm (365 x ($78.75 / 25 + $105.38 / 100)). The 
average cost for a farm with more than 3,000 layers would be $2,027. We 
estimate that the total cost of protective clothing would be $8,268,400 
for farms with more than 3,000 layers. We do not foresee that employees 
on very small farms will use protective clothing because cross-
contamination of SE-positive flocks with SE-negative flocks is unlikely 
(most small farms have one flock), and the cost of protective clothing 
is relatively high for these producers.
    Finally, the cost of keeping stray poultry, birds, and other 
animals away from poultry houses already is accounted for under rodent 
and pest control costs. The estimated cost for a complete rodent and 
pest control program includes all biosecurity measures that contribute 
to rodent and pest control.
    There are potentially significant costs that we have not included 
here. These include the cost of creating barriers (such as fences) to 
keep stray poultry and wildlife from entering a layer house.
    The total measured costs of biosecurity provisions are $16.0 
million for farms with 3,000 or more layers and $7.1 million for farms 
with fewer than 3,000 layers.
    iv. Benefits of biosecurity. The importance of biosecurity in the 
reduction of disease transmission is well established.\31\ For example, 
the Layers study (Ref. 27) estimates that farms allowing non-business 
visitors onsite are five times more likely to test positive for SE than 
farms that ban such visitors. Farms allowing non-business visitors have 
a prevalence of SE of 17.0 percent while farms that do not only have an 
SE prevalence of 3.6 percent. We include the benefits from biosecurity 
with those of rodent control, because the effects cannot be estimated 
separately.
---------------------------------------------------------------------------

    \31\ A number of State extension services have written 
extensively about the importance of biosecurity (Refs. 108, 109, and 
110).
---------------------------------------------------------------------------

    e. Cleaning and disinfecting. i. Cleaning and disinfecting 
provisions. Specific cleaning and disinfecting provisions include the 
removal of all visible manure, a dry clean followed by a wet clean of 
the house, and disinfecting of the house.
    ii. Current industry practices; cleaning and disinfecting. To a 
large extent the layer industry already performs adequate cleaning and 
disinfecting procedures. For larger houses, the Layers study (Refs. 25 
and 26) estimates that, at some point, manure is removed from 100 
percent of houses, 80.5 percent of houses are dry cleaned, 53.6 percent 
of houses are wet cleaned, and 65.1 percent of houses are disinfected. 
The prevalence of these practices on large farms is illustrated in 
table 14 of this document.

                                         Table 14.--Current Cleaning and Disinfecting Practices for Large Farms
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Manure Removal (%)      Dry Clean (%)        Wet Clean (%)        Disinfect (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Between each flock (cleaned annually)                                             96.6                 79.4                 30.6                 44.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
After two or more flocks (cleaned occasionally)                                    3.4                  1.1                 23.0                 20.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Never                                                                              0                   19.5                 46.4                 34.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We assume that smaller farms are likely to remove manure and dry 
clean at the same rate as larger farms. The likely economies of scale 
for wet cleaning and disinfecting houses, however, imply that the cost 
per square foot wet cleaned or disinfected would be higher for small 
farms than for larger farms. The cost of hiring someone to complete the 
job includes the cost of travel time, overhead, and the cost of setting 
up equipment. Farmers may find it economical to rent or buy equipment. 
When this occurs, the farmer's labor hours expended on cleaning and 
disinfecting are likely to be higher than that of trained 
professionals.
    iii. Costs of cleaning and disinfecting. The cost of cleaning and 
disinfecting houses with more than 3,000 layers is illustrated in table 
15 of this document. For each component of cleaning and disinfecting, 
we estimate the annual cost as the number of houses that this provision 
will affect each year times the cost per house. We calculate the number 
of houses affected as the product of the percent of houses not using a 
practice (100 minus the percent using the practice in table 15 of this 
document), the probability of a positive flock, and the number of 
houses with 3,000 or more layers (8,612, calculated from data in table 
6 of this document).

                                      Table 15.--Cost of Cleaning and Disinfecting Houses with 3,000 or more Layers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Probability of a
                                                               Houses Using      Positive Env.     No. of Houses     Cost Per  House   Cost to  Industry
                                                               Practice (%)        Test (%)           Affected
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dry Clean                                                             79.8               8.4                   146             $1,054           $154,090
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 56867]]

 
Wet Clean                                                             38.3               8.4                   446             $5,750         $2,564,834
--------------------------------------------------------------------------------------------------------------------------------------------------------
Disinfect                                                             51.4               8.4                   351               $513           $180,094
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Cost                                                                                                                                    $2,899,018
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The percentages of houses engaged in the different cleaning and 
disinfecting practices (the first column of numbers in table 15 of this 
document) is based on the first two rows of table 14 of this document. 
In table 15 we calculate the percent as CA + (CO x PC), where CA is the 
percent of farms that are cleaned and disinfected annually, CO is the 
percent of farms that are cleaned and disinfected occasionally, and PC 
is the probability that a farm that is cleaned occasionally would have 
been cleaned in a year that it had a positive environmental test. We 
assume that PC is distributed uniformly between 0 and 0.667, with a 
mean value of 0.333. CA and CO are taken directly from table 14 of this 
document.
    The per-house cost for each component is taken from Morales and 
McDowell (Ref. 111). We assume that the true cost of each component is 
distributed uniformly between the low and the high estimates given.
    We show the cost of cleaning and disinfecting separately for farms 
with fewer than 3,000 layers in table 16 of this document. For the 
reasons stated above, we assume that it will be more economical for 
small farmers to do their own cleaning and disinfecting, as opposed to 
hiring professionals.

                Table 16.--Cleaning and Disinfecting Costs for Farms with Fewer than 3,000 Layers
----------------------------------------------------------------------------------------------------------------
                                                                     Dry Clean       Wet Clean       Disinfect
----------------------------------------------------------------------------------------------------------------
Equipment Cost                                                               $10             $90              $0
----------------------------------------------------------------------------------------------------------------
Chemical Costs                                                                $0             $30            $100
----------------------------------------------------------------------------------------------------------------
Labor                                                                       $141            $283             $71
----------------------------------------------------------------------------------------------------------------
Cost per House                                                              $151            $403            $171
----------------------------------------------------------------------------------------------------------------
Percent of Houses Affected                                                  1.7%            6.8%            6.2%
----------------------------------------------------------------------------------------------------------------
No. of Houses Affected                                                       574            2295            2109
----------------------------------------------------------------------------------------------------------------
Total Cost                                                               $86,674        $924,885        $360,639
----------------------------------------------------------------------------------------------------------------

    For each category of cleaning and disinfecting we have estimated 
the equipment, chemical, and labor costs of performing the task. We 
value labor at the average hourly wage for livestock and poultry 
workers, $8.84, doubled to include overhead costs (Ref. 107).
    Dry cleaning is a necessary precursor to wet cleaning. In this 
stage of the process, loose dirt, cobwebs, rodent nests, organic 
matter, litter, and feed are removed from the house. Equipment needs 
include brooms, shovels, wheelbarrows, and other implements. We assume 
that farms already will have these types of equipment but may need to 
pay for protective clothing and masks. We estimate that it will take a 
day of labor to dry clean a small house.
    Wet cleaning is more complicated than dry cleaning. The first step 
of wet cleaning is to cover all sensitive equipment in the house (such 
as lighting and any other electrical appliances) with plastic. Next, a 
pressure washer (in conjunction with an acceptable detergent) is used 
to thoroughly clean the cages and walls of the house. We assume the 
pressure washer will be rented for 3 days. Finally, standing pools of 
water are expelled from the house and the house is left to dry. We 
assume that 2 days worth of labor will be required to complete a wet 
clean on a small house.
    In the final stage, a disinfectant is sprayed throughout the dried 
house (or the house may be professionally fumigated). We assume that 
this will take only a half of a day worth of labor for a small farm.
    We assume that the probability of a positive flock is the same for 
all size farms (8.4 percent). We also assume that the percent of houses 
that would be affected by the drying cleaning provisions would be the 
same for farms with fewer than 3,000 layers as for farms with 3,000 or 
more layers: The percent not dry cleaning multiplied by the probability 
of a positive flock ((1 - 0.798) x 0.084). Small farms are less likely 
to wet clean and disinfect; we assume that the percentage of farms with 
fewer than 3,000 layers not using those practices is uniformly 
distributed between the percentage of farms with 3,000 or more layers 
not using those practices and 100 percent. We therefore estimate that 
81 percent of farms with fewer than 3,000 layers do not wet clean and 
74 percent do not disinfect houses. We multiply these estimates by the 
probability of a positive flock to estimate the percentage of small 
farms affected by the wet cleaning and disinfecting provisions.
    To estimate the number of farms with fewer than 3,000 layers that 
would be affected by dry cleaning, wet cleaning, and disinfecting 
provisions, we multiply the percentage affected by each provision by 
the number of such farms (33,824). For each practice, dry cleaning, wet 
cleaning, disinfecting, we multiply the costs per house by the number 
of houses affected. We then sum the results to estimate the total costs 
of

[[Page 56868]]

cleaning and disinfecting houses on farms with fewer than 3,000 layers. 
The total increased cost of cleaning and disinfecting on these very 
small farms would be about $1.4 million.
    iv. Benefits of Cleaning and Disinfecting. Cleaning and 
disinfecting is another tool that may decrease or eliminate SE in an 
infected house. Schlosser et al. estimate that cleaning and 
disinfecting a house reduces, by 50 percent, the probability that a 
previously infected house will test positive (Ref. 39). Because cross-
contamination is not addressed in this study, the 50 percent reduction 
is likely to be an overestimate of the actual efficacy of cleaning and 
disinfecting. Furthermore, the same study estimates that 28 percent of 
negative houses tested positive after cleaning and disinfecting.
    The Layers Report (Ref. 27) finds that farms that are cleaned and 
disinfected are less likely to be contaminated with SE. No surveyed 
farms that performed wet washes of houses between flocks were found to 
be positive. By contrast, houses that neither wash nor fumigate between 
flocks had SE prevalence rates of 12.2 percent. These results suggest 
that cleaning and disinfecting a layer house is negatively correlated 
with SE prevalence.
    f. SE-Monitored chicks and pullets. i. Chick and pullet provisions. 
We also considered the provision that farmers obtain their chicks or 
pullets from an SE monitored breeder flock.\32\
---------------------------------------------------------------------------

    \32\ NPIP certified or the equivalent.
---------------------------------------------------------------------------

    ii. Current industry practices--SE-monitored chicks and pullets. 
According to the Layers study (Refs. 25 and 26), 94.6 percent of farm 
sites representing 94.5 percent of layers received their chicks from 
flocks that were bred under the NPIP program. Furthermore, NPIP has 
successfully integrated all of these layers into the NPIP U.S. 
Salmonella Enteritidis monitored program (Ref. 112).
    NASS estimates that a total of 138,292,380 pullets and chicks were 
sold in 1997 (Ref. 22). If 94.5 percent of these birds were purchased 
from breeder facilities that are NPIP SE monitored, then 5.5 percent 
(7,606,080) of chicks and pullets are not currently monitored for SE.
    iii. Costs of SE-monitored chicks and pullets. We do not have data 
for the cost of monitoring chicks for SE. However, Morales and McDowell 
(Ref. 111) estimated that pullets monitored for SE cost approximately 
$0.003 to $0.02 more per pullet. If we assume the cost difference is 
the same for chicks, the total increased annual cost of requiring SE-
monitored chicks is estimated to be $22,820 to $152,120 with a mean 
expected value of $87,470.\33\ If we assume that all farms would be 
proportionally affected by this provision, the approximate annual cost 
to farms with fewer than 3,000 layers would be $500, and the annual 
cost to farms with 3,000 or more layers would be $87,000.
---------------------------------------------------------------------------

    \33\ If monitoring costs $0.003 per layer, the total cost is 
7,606,080 layers x $0.003 = $22,820. If monitoring costs $0.02 per 
layer, the total cost is 7,606,080 layers x $0.02 = $152,120. The 
average of these two figures is $87,470.
---------------------------------------------------------------------------

    iv. Benefits of SE-monitored chicks and pullets. The prevalence of 
SE in breeder flocks is relatively low.\34\ Between 1994 and 1996 only 
9 out of 847 breeder flocks (1.1 percent) had environments that tested 
positive for SE. Furthermore, over the same period only two breeder 
flocks (0.2 percent) had layers that tested positive for SE.\35\ For 
our estimate of benefits, we used the 0.2 percent figure because 
breeders under the NPIP program must destroy their flocks when layers 
test positive, not when the environment tests positive.
---------------------------------------------------------------------------

    \34\ The data for this paragraph is drawn from Rhorer (Ref. 
113).
    \35\ Under the NPIP program a flock only loses its certification 
as a NPIP SE-monitored flock if birds test positive.
---------------------------------------------------------------------------

    The 0.2 percent estimate understates the probability that a farm 
not currently using NPIP SE-monitored layers will test positive. To the 
extent that farmers obtain their chicks from multiple sources,\36\ we 
would expect the probability that a farm obtains SE-positive chicks to 
be greater than the underlying prevalence of SE in hatchery flocks.\37\
---------------------------------------------------------------------------

    \36\ The Layers study estimates that 38.2 percent of farms 
obtain pullets from multiple sites (Refs. 25 and 26).
    \37\ The following example illustrates this point. If a farmer 
obtains pullets from two different flocks, each of which has a 0.2 
percent chance of having SE positive birds, the probability that the 
farm will obtain SE positive birds is 0.2 percent + 0.2 percent - 
0.04 percent = 0.36 percent.
---------------------------------------------------------------------------

    We calculated the expected benefit of this provision using the 
percentage of farms affected by the provision multiplied by the 
probability of a positive test. Because only 5.5 percent of farms 
receive birds from breeder flocks that are not SE monitored, the 
expected effect of this provision on SE contamination on the farm and, 
hence, human illness, is projected to be slightly greater than 0.01 
percent (5.5 percent x 0.2 percent). This percent translates into an 
expected benefit of less than one case of SE per year averted at farms 
with fewer than 3,000 layers, and 10 illnesses averted for farms with 
3,000 or more layers. The cost per illness averted is $8,960 for farms 
with fewer than 3,000 layers and $8,410 for farms with more than 3,000 
layers.
    This provision attempts to bar the introduction of SE onto the 
farm. SE can be difficult to control once it has been introduced onto a 
farm, but if SE is never introduced, it is impossible for it to spread. 
For this reason, effective SE control in chick populations has been 
cited as critical.
    g. SE-Negative feed. i. Feed provisions. We considered proposing to 
require the use of feed that meets the standards for SE-negative feed, 
as defined by FDA's Center for Veterinary Medicine (CVM). CVM defines 
SE-negative as 10 subsamples that are negative for SE (measured using 
the Bacteriological Analytical Manual method) collected for a lot of 
feed (60 FR 50098, September 28, 1995). Composite samples may be used 
to reduce testing costs. We received comments that SE-negative feed is 
not currently available commercially.
    ii. Current industry practices--SE monitoring of feed. The layer 
industry obtains feed from both independent feed mills and from egg 
farmers that produce feed in their own mills. The Economic Research 
Service (ERS) report on the feed manufacturing industry estimates that 
egg producers operated a total of 144 feed mills in 1984 (Ref. 114). In 
the absence of more recent data, we assume that they operated the same 
number in 2002. To isolate the number of independent feed mills 
operating in the United States, we used the July 2000 version of Dun's 
Market Identifiers (Ref. 115). Using this database, we were able to 
isolate 210 mills that primarily produce poultry and chicken feeds. We 
consider this figure to be the lower bound of the number of independent 
feed mills producing layer feed. For the upper bound, we assume that 
all 2,459 establishments that Dun's Market Identifiers reports as 
producers of animal feeds produce layer feed.\38\ This estimate is 
similar to the 1984 Economic Research Service estimate of 2,432 primary 
feed manufacturers. Assuming that the true number of feed mills 
producing layer feed is uniformly distributed between the upper and 
lower bounds, we estimate that approximately 1,300 feed mills produce 
layer feed.
---------------------------------------------------------------------------

    \38\ The lower bound estimate is likely to underreport the 
number of mills producing layer feed because most firms did not 
report to Dun's Market Identifiers what kinds of feeds they 
produced.
---------------------------------------------------------------------------

    iii. Costs of monitoring feed for SE. The cost of this provision to 
a feed mill would be the sum of the labor, laboratory, and shipping 
costs for testing, multiplied by the number of lots

[[Page 56869]]

tested. In addition, SE-positive feed would have to be treated or 
destroyed.
    The laboratory cost per test has been estimated to be approximately 
$49.75 per sample.\39\ In addition, we estimate that the collection and 
preparation of each subsample will take approximately 10 minutes. Given 
an hourly wage of $14.65 for production inspectors at grain and feed 
mills (Ref. 117), doubled to include overhead costs, we estimate the 
cost of labor to be $48.84 ($29.30 x 1.667 hours) for each full sample. 
The cost of shipping each sample to a lab is estimated to be $22.\40\ 
The total cost per composite sample is $121.47 ($49.75 + $48.84 + 
$22.88).
---------------------------------------------------------------------------

    \39\ This is the cost of an Association of Official Analytical 
Chemists test for Salmonella genus and a serotype test at Silliker 
Laboratories (Ref. 116). One option that mills have is to initially 
test for the genus of Salmonella ($19.75) and then, if the test is 
positive, follow through with a test for the serotype enteritidis 
($30). We assume that mills will not choose this option because 
Salmonella positive feed is considered adulterated and firms will 
not want to test to see if their feed is adulterated unless mandated 
to do so by FDA.
    \40\ The cost of shipping a 2-pound package overnight in the 
United States ranges from $18.00 to $27.75. These figures include a 
$3 pick-up charge. The average charge is estimated to be $22.88 
(Ref. 118).
---------------------------------------------------------------------------

    Samples must be taken for each lot of feed. We expect that, because 
of limited storage space for finished feed, a lot of feed will not 
exceed 3 days worth of production for most large mills. For some small 
mills, however, a lot may be a week's worth of production; for some 
large mills a lot may be a day's worth of production. Given these 
parameters, we assume that the frequency of feed testing will be 
distributed uniformly between once a week and five times a week with a 
mean frequency of 3 times a week. Consequently, the expected annual 
cost of testing for a typical feed mill is calculated to be 
approximately $18,950 ($121.47 per sample x 52 weeks x 3 times a week). 
The cost of testing all of the approximately 1,450 entities that 
produce feed is estimated to be $27.5 million. If these costs are 
passed on to farmers at a rate proportional to the number of layers on 
the farm, the total cost to farms with fewer than 3,000 layers would be 
$137,500 and the cost to farms with more than 3,000 layers would be 
$27,362,500.
    In the event of a positive feed test, feed mills would have to 
treat or destroy the suspect feed. It is also likely that the mill 
would take action to address the problem at its source. Furthermore, 
any feed that the mill has shipped would be considered adulterated. The 
mill would have to recall this feed and treat or dispose of it, which 
could be very costly. If, however, an SE positive lot were identified 
through testing, this provision would result in increased benefits.
    iv. Benefits of monitoring feed for SE. Feed contaminated with SE 
is theoretically also a vehicle for the introduction of SE on the farm. 
In 1997, SE was found in 0.3 percent of finished feed samples that were 
serotyped in the United Kingdom (Ref. 119). In the United States, 
however, testing for SE in finished layer feed at the mill has almost 
never yielded positive results.\41\ Nonetheless, the fact that SE has 
been isolated from finished feed at mills in the United Kingdom and 
from feed ingredients suggests that SE contamination is a potential 
problem (Ref. 102).
---------------------------------------------------------------------------

    \41\ SE has been isolated in ingredients at feed mills in the 
United States (Ref. 120).
---------------------------------------------------------------------------

    If feed is contaminated with SE, the consequences for human health 
are potentially large. A feed mill that does not test feed for SE and 
becomes contaminated with SE could deliver a large number of shipments 
of contaminated feed before the problem is uncovered. The potential 
financial consequences to the farms using the feed include costs due to 
increased cleaning and disinfecting, egg testing, and diversion of 
eggs. Also, there likely would be adverse health effects from the 
consumption of SE-positive eggs.
    h. Vaccination of flocks. i. Vaccination provision. Inoculating 
layers with vaccines is another potential way of preventing the growth 
of SE in layers. FDA could mandate that all layers be inoculated 
against SE.
    ii. Current industry practices; vaccination of flocks. The Layers 
study (Refs. 25 and 26) estimates that at least 14.6 percent of all 
layers on farms with 3,000 or more layers are vaccinated against SE. We 
assume that an insignificant number of layers on farms with fewer than 
3,000 layers are vaccinated against SE.
    iii. Cost of vaccinating flocks. Vaccination costs approximately 
$0.135 per layer for an inoculation\42\ (Ref. 121). Given 255.5 million 
layers on larger farms and 1.4 million layers on smaller farms, we 
expect that this provision would result in 218.0 million new 
vaccinations on larger farms and 1.4 million new vaccinations on 
smaller farms. Consequently, the cost of vaccination on farms with at 
least 3,000 layers would be $29.3 million. The total cost for farms 
with fewer than 3,000 layers would be $0.2 million.
---------------------------------------------------------------------------

    \42\ This is based on a per layer cost of $0.035 for vaccine 
plus $0.10 for labor (Ref. 121).
---------------------------------------------------------------------------

    iv. Benefits of vaccinating flocks. The evidence regarding the 
efficacy of vaccines in reducing SE in laying hens is mixed. Gast et 
al. showed in an experimental setting that vaccines do partially reduce 
the shed of SE from laying hens (Ref. 122). By contrast, Davison et al. 
used a field experiment to show that vaccines are relatively 
ineffective in stopping the spread of SE on farms (Ref. 123).
    v. Refrigeration. i. Refrigeration provisions. We considered a 
refrigeration provision that all eggs held for more than 36 hours after 
lay be refrigerated at a maximum ambient temperature of 45 [deg]F.
    ii. Current industry practices; refrigeration. Because eggs packed 
on the farm do not have to be transported to a packing plant, we assume 
that eggs on these farms are packed for sale within 36 hours of lay. 
Accordingly, we assume that this provision would impose additional 
costs only on those farms that do not pack their eggs for the ultimate 
consumer, are currently storing their eggs for longer than 36 hours, 
and currently do not refrigerate their eggs at an ambient temperature 
at or below 45 [deg]F. We use data from the Layers study (Refs. 25 and 
26), shown in table 17, to determine the percentage of farms affected 
by the on-farm storage temperature requirements.

                                        Table 17.--Farms Affected by On-Farm Egg Storage Temperature Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        Stored Longer     Temp >45
                     Farm Size (No. of Layers)                       Packed Off-Farm    Than 36 Hours    Degrees F   Percent of Farms     No. of Farms
                                                                           (%)               (%)            (%)           Affected          Affected
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 3,000                                                             100.0             100.0          81.2             81.2                27,465
--------------------------------------------------------------------------------------------------------------------------------------------------------
3,000 to 19,999                                                              98.3              98.2          78.1             75.4                 1,762
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 56870]]

 
20,000 to 49,999                                                             96.3             100.0          75.8             73.0                   686
--------------------------------------------------------------------------------------------------------------------------------------------------------
50,000 to 99,999                                                             83.1              83.4          92.1             63.8                   229
--------------------------------------------------------------------------------------------------------------------------------------------------------
100,000 or more                                                              65.6              75.0          72.6             35.7                   158
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total                                                                        81.2              87.3          81.2             57.6                30,300
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The first three columns of table 17 of this document are taken 
directly from data collected for the Layers study. The percentage of 
farms affected (fourth column) is the product of multiplying the first 
three columns. The number of farms affected (final column) is estimated 
by multiplying the percent of farms affected by this provision by the 
total number of farms covered by the provision.
    It is clear from the percentages of farms affected (fourth column) 
that temperature requirements are more likely to affect smaller farms 
than larger farms. For those farms with fewer than 3,000 layers, we 
assume that all eggs are packed off the farm,\43\ all are stored for 
more than 36 hours, and 81.2 percent (the average for all other 
categories) are stored at a temperature higher than what is required 
for the provision.\44\
---------------------------------------------------------------------------

    \43\ Although there are some small farms that pack their eggs on 
the farm, we assume that most small farms that pack their own eggs 
sell all of their eggs directly to consumers, and therefore are not 
covered by the proposed rule. We have no information regarding how 
many farms that are covered by this rule pack their eggs. We request 
comment on the prevalence of this practice.
    \44\ The assumptions that all eggs from farms with fewer than 
3,000 layers are packed off of the farm and are stored for longer 
than 1 day are based on an extrapolation of the trends by farm size 
that are apparent in table 17 of this document. Because there is no 
obvious trend for compliance with temperature requirements, we use 
the mean value for all farms as our assumption for farms with fewer 
than 3,000 layers.
---------------------------------------------------------------------------

    iii. Cost of refrigeration.\45\ The refrigeration provision will 
cause producers to choose to perform the following tasks: (1) Turn down 
the thermostats in their coolers, (2) install new refrigeration, or (3) 
renegotiate their shipping contracts to require more frequent pickup of 
unpacked eggs.
---------------------------------------------------------------------------

    \45\ All cost estimates in this section are from data supplied 
to FDA through a contract with the Research Triangle Institute. 
Derivation of estimates is more fully described in a memorandum to 
the record (Ref. 124).
---------------------------------------------------------------------------

    In table 17 of this document, we estimate that a total of 30,300 
farms do not meet the standards set by the refrigeration provision. Of 
these farms, some are currently using refrigeration, albeit at higher 
temperatures than the proposed provision would permit. Others do not 
have any refrigeration installed on their farms. We assume that those 
farms that report storing their eggs between 45 and 60 [deg]F already 
have refrigeration installed. For these farms, the cost of complying 
with the refrigeration provision is simply the cost of increasing 
electricity usage to further cool their eggs. For farms that store 
their eggs at a temperature greater than or equal to 60 [deg]F, we 
assume that no refrigeration is currently installed. The cost to these 
farms includes the cost of installing an insulated egg room with 
refrigeration units.
    In table 18, we use data from the Layers study to determine how 
many covered farms will have to install refrigeration and how many will 
only have to reduce the temperatures in their egg rooms. The majority 
of smaller farms lack refrigeration facilities, while larger farms are 
more likely to use refrigeration at an inadequate level.
    The cost of this provision to farms that are using refrigeration at 
an inadequate level is assumed to be the cost of increased energy 
usage.\46\ If temperatures in egg rooms on these farms are uniformly 
distributed between 45 and 60 [deg]F, the average needed temperature 
reduction is 7.5 [deg]F. If the electricity rate is $0.09 per kilowatt-
hour, farms will spend between $23 for farms with fewer than 100 layers 
to over $2,200 for farms with more than 100,000 layers. These estimates 
are based on the assumption that refrigeration must be run 18 hours a 
day to achieve the 45 [deg]F mark, while it must be run 15 hours a day 
to achieve the 60 [deg]F mark. We estimate that the average farm with 
20,000 to 50,000 layers would need to run one 5-horsepower 
refrigeration unit and one 1-horsepower unit to sufficiently cool its 
egg room. A 5-horsepower unit uses 4.83-kilowatt hours per hour of 
operation, while a 1-horsepower unit only uses 1.73-kilowatt hours. 
Therefore, the cost of cooling to 60 [deg]F is (4.83 + 1.73) kilowatt 
hours used per hour x 15 hours of operation x $0.09 per kilowatt hour 
used x 30 days [ap] $265 per month, or about $3,190 per year. The cost 
of cooling to 45 [deg]F is (4.83 + 1.73) kilowatt hours used per hour x 
18 hours of operation per day x $0.09 per kilowatt hour x 30 days [ap] 
$319 per month, or about $3,830 per year. The resulting cost of 
decreasing the ambient temperature in the egg cooler by 15 [deg]F is 
approximately $640. Assuming a linear relationship between 
refrigeration and cost gives us an estimate of approximately $320 for a 
7.5 [deg]F reduction.
---------------------------------------------------------------------------

    \46\ We recognize that some of these farms may require 
additional refrigeration units to achieve the 45 [deg]F threshold. 
However, because we do not currently have information that allows us 
to estimate how many farms fall into this category, we assume that 
the only cost facing farms that use an inadequate level of 
refrigeration will be the cost of increased energy usage.

[[Page 56871]]



                             Table 18.--Annual Cost of Refrigerating Affected Farms
----------------------------------------------------------------------------------------------------------------
                                  No Refrigeration            Inadequate Refrigeration       Total Cost (in
                      -----------------------------------------------------------------        thousands)
  Farm Size (no. of                   Cost per     Cost per                            -------------------------
       Layers)                        Farm (7%     Farm (3%                  Cost per
                          Number      discount     discount      Number        Farm     7% interest  3% interest
                                       rate)        rate)                                   rate         rate
----------------------------------------------------------------------------------------------------------------
Fewer than 100              13,950         $325         $312       11,565          $23       $4,800       $4,618
----------------------------------------------------------------------------------------------------------------
100 to 3,000                 1,066         $833         $733          884          $42         $925         $819
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999                963       $7,763       $5,882          799         $201       $7,636       $5,825
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999               205      $15,026      $11,052          482         $319       $3,234       $2,419
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                94      $28,510      $20,716          135         $553       $2,755       $2,022
----------------------------------------------------------------------------------------------------------------
100,000 or more                 35     $121,329      $87,497          123       $2,219       $4,519       $3,335
----------------------------------------------------------------------------------------------------------------

    The fixed cost of new refrigeration for larger farms includes the 
cost of constructing an egg room, insulating that room, and installing 
refrigeration units. Storage rooms and their insulation are assumed to 
last 30 years. Refrigeration units last from 10 to 20 years. Using 
these values, along with a 7-percent interest rate, we estimate that 
the annualized cost of installing new refrigeration would be from $330 
for a farm with 300 layers to $94,700 for a farm with 400,000 layers. 
With an interest rate of 3 percent, we estimate that the annualized 
cost of installing new refrigeration would be from $230 for a farm with 
300 layers to $60,870 for a farm with 400,000 layers.
    The cost of constructing an egg room equals the number of square 
feet required times the construction cost per square foot. The number 
of square feet required is estimated as the number of square feet 
required per 1,000 dozen eggs times the number of eggs produced in a 
24-hour period (1,000 dozens) times the number of days the eggs are 
expected to be stored. The cost of construction per square foot has 
been estimated to be between $50 and $75. Therefore, for the average 
farm with 20,000 to 50,000 layers the cost of construction is 294 
square feet per thousand dozen eggs x 1.7 thousand dozen eggs x $62.50 
per square foot x 3.9 days worth of storage = $125,000. The amortized 
cost over 30 years at 7 percent is approximately $10,050.
    The cost of insulating an egg room equals the number of square feet 
to be covered times the insulation cost per square foot. Insulation 
costs $11.80 for a 32 square foot sheet. For a farm with 20,000 to 
50,000 layers the expected cost of insulation is therefore 3,670 square 
feet x $0.37 per square foot = $1,350. The annualized cost of 
insulation (amortized over 30 years at 7 percent) is $110.
    The fixed cost of refrigeration for an egg room is the cost of 
buying and installing refrigeration units. We assume that installation 
costs are approximately 5 percent of the purchase price of the unit. 
For a farm with 20,000 to 50,000 layers, the cost of refrigeration is 
the purchase price for needed refrigeration units ($9,100) plus the 
cost of installation ($9,100 x 5 percent) = $9,100 + $455 = $9,555. 
Amortizing this cost over 15 years at 7 percent yields an annual cost 
of $1,050.
    The total annualized cost of installing a refrigerated egg room on 
a farm with 20,000 to 50,000 layers is estimated to be approximately 
$11,200. This figure does not include the cost of energy. Including the 
cost of energy increases the total cost to $15,026.
    The smallest farms (those with fewer than 100 layers) will not have 
to install egg rooms. We believe that farms with fewer than 100 layers 
will be able to store their eggs in a household refrigerator without a 
freezer. We estimate the cost of a 16.7 cubic foot frost-free stand-
alone refrigerator (without a built-in freezer) to be $500. Amortized 
at 7 percent over 15 years brings the annualized cost of this purchase 
to $55. Amortized at 3 percent over 15 years brings the annualized cost 
of this purchase to $42.
    For all types of refrigeration, there also will be a cost 
associated with the use of electricity to run the cooling units. Given 
that electricity costs $0.09 per kilowatt-hour, we estimate that farms 
will spend an additional $270 to $26,600 annually for power.\47\
---------------------------------------------------------------------------

    \47\ As noted previously, for a farm with 20,000 to 50,000 
layers the annualized cost of cooling an egg room to 45 [deg]F is 
(4.83 + 1.73) kilowatt hours used per hour x 18 hours of operation 
per day x $0.09 per kilowatt hour x 30 days [ap] $319 per month, or 
about $3,830 per year.
---------------------------------------------------------------------------

    The cost of this provision to a farm without any refrigeration in 
place is estimated to range from about $325 for farms with fewer than 
100 layers to over $121,300 for farms with more than 100,000 layers. 
The total cost of the refrigeration provision is approximately $23.9 
million ($5.7 million of which is incurred by farms with fewer than 
3,000 layers) using a 7-percent interest rate and approximately $19 
million ($5.4 million of which is incurred by farms with fewer than 
3,000 layers) using a 3-percent interest rate. However, some farms will 
choose to increase the frequency of egg pickups instead of installing 
additional refrigeration to remain in compliance with the provision. If 
more frequent egg pick-ups are a lower cost alternative to 
refrigeration installation, the previously mentioned figures may 
overstate the actual cost of increased refrigeration.
    iv. Impact of refrigeration on egg processors. Eggs washed at a 
temperature more than 40 degrees over their internal temperature are 
more likely to suffer thermal checks. These minute cracks increase the 
chance of egg breakage and egg contamination with pathogens from 
outside of the egg. Because of this problem, egg processors will not 
want to wash eggs that have an internal temperature of less than 50 
degrees.
    We are considering a refrigeration provision requiring that eggs be 
kept at an ambient temperature of 45 degrees, if they are held by the 
producer for more than 36 hours.
    Whether high wash water temperatures will damage refrigerated eggs 
depends on whether the internal temperature of the eggs is less than 50 
degrees. As a result, the cooling rate of refrigerated eggs becomes an 
important question. We ask for comment on this question and on the 
costs to processors.
    v. Benefits of refrigeration. The probability that an individual 
will become ill from an SE-contaminated egg

[[Page 56872]]

depends, among other things, on the number of bacteria within the 
infected egg. Refrigeration of eggs at 45 [deg]F significantly slows 
the reproduction of the SE bacteria (Ref. 15). This provision would 
require that eggs that are stored for more than 36 hours after laying 
be refrigerated at 45 [deg]F while on the farm. In this section, we 
calculate the effectiveness of potential storage and refrigeration 
requirements using the USDA SE risk assessment model (Ref. 15). This 
model is designed to estimate the effects of preventive measures on SE 
illness.
    In the following cost model, we estimate that 35.7 percent (farms 
with fewer than 3,000 layers) to 81.2 percent (farms with more than 
100,000 layers) of farms currently meet the refrigeration standards of 
the proposed provision. Taking a weighted average, we estimate that 
46.6 percent of eggs are produced on farms that do not currently meet 
the standards set forth in the provision.\48\ We programmed the SE risk 
assessment to estimate the effects on SE if all farms meet the 
refrigeration requirement. A storage and refrigeration provision is 
expected to incrementally reduce illnesses by 2.3 percent. In the 
absence of other provisions this percentage reduction translates into a 
benefit of 10 illness averted annually for farms with less than 3,000 
layers and more than 2,160 illnesses averted for farms with more than 
3,000 layers. The cost per illness averted on farms with less than 
3,000 layers is $563,206 when we use a 7 percent interest rate 
($534,829 when we use a 3 percent interest rate). The cost per illness 
averted on farms with more than 3,000 layers is $8,380 when we use a 7 
percent interest rate ($6,282 when we use a 3 percent interest rate).
---------------------------------------------------------------------------

    \48\ The weighted average number of eggs affected by this 
proposed rule is calculated using the following formula. Percent of 
eggs affected = the sum of (farms affectedi x percent of 
birds in size categoryi), where i is an index for farm 
size. This formula yields: Percent of eggs affected = (78.8 percent 
x 0.23 percent) + (71.8 percent x 10.55 percent) + (63.7 percent x 
10.51 percent) + (56.1 percent x 9.67 percent) + (27.5 percent x 
69.04 percent) = 38.9 percent.
---------------------------------------------------------------------------

    j. Routine environmental testing. Environmental testing does not 
serve directly as an SE prevention measure. Testing serves primarily as 
an indicator of the effectiveness of the SE prevention measures.
    i. Environmental testing provision. This potential provision would 
require every farm to routinely test the environment of their layers 
for SE. For flocks that do not undergo a molt, this requirement would 
be limited to a test for SE in the environment when each group of 
layers in the flock is 40 to 45 weeks of age. For those flocks that do 
undergo a molt, testing would be required when each group of layers is 
40 to 45 weeks of age and 20 weeks after molting for each group is 
completed.
    Testing would be accomplished by a method such as swabbing manure 
piles in the poultry house and then culturing those swabs using a 
primary enrichment testing method. We are considering variants of 
sampling protocols that are currently in use. California currently uses 
a sampling plan that relies on randomly swabbing 30-foot sections of 
the poultry house (Ref. 125). To obtain a 95 percent probability of 
catching a house that is 10 percent infected, we estimate that 32 
samples would have to be taken. Many other States, including 
Pennsylvania, require the span of each row of the layer house to be 
swabbed with one swab, regardless of row length (Ref. 39).
    ii. Current industry molting practices. Molted flocks face 
additional testing under this provision, so current industry molting 
practices are an important element in determining the cost of this 
provision. Overall, 62.1 percent of all large flocks are molted once 
and 12.1 percent are molted twice before depopulation (Refs. 25 and 
26). Industry molting practices, however, vary by region and by farm 
size.
    Farms in the Central and Great Lakes regions are least likely to 
molt their flocks while farms in the Southeast and West are most likely 
to use molting as a practice. (See table 19 of this document.)

                                    Table 19.--Regional Molting Practices\1\
----------------------------------------------------------------------------------------------------------------
                                                                    Times Molted (percent)
                   Region                   --------------------------------------------------------------------
                                                       0                      1                      2
----------------------------------------------------------------------------------------------------------------
Great Lakes                                              30.0                   65.2                    4.8
----------------------------------------------------------------------------------------------------------------
Southeast                                                 7.3                   80.2                   12.5
----------------------------------------------------------------------------------------------------------------
Central                                                  48.8                   51.2                    0.0
----------------------------------------------------------------------------------------------------------------
West                                                     17.9                   50.0                   32.1
----------------------------------------------------------------------------------------------------------------
\1\ Layers study data provided by Animal and Plant Health Inspection Service.

    The implication of the regional disparities in molting practices is 
that any rule that treats molted and non-molted flocks differently will 
also affect regions differently.
    Molting practices also vary by farm size. As table 20 of this 
document illustrates, smaller farms are less likely to molt their 
layers than are larger farms. While almost 85 percent of all farms with 
50,000 or more layers molt their layers, only 27.8 percent of farms 
with fewer than 20,000 layers molt their flocks. This disparity plays a 
significant role in the determination of the expected cost of testing 
and diversion.

                                  Table 20.--Molting Practices by Farm Size\1\
----------------------------------------------------------------------------------------------------------------
                                                                     Times Molted (in %)
         Farm Size (No. of layers)          --------------------------------------------------------------------
                                                       0                      1                      2
----------------------------------------------------------------------------------------------------------------
Fewer than 20,000                                        72.2                   27.8                    0.0
----------------------------------------------------------------------------------------------------------------

[[Page 56873]]

 
20,000-49,999                                            35.3                   54.0                   10.7
----------------------------------------------------------------------------------------------------------------
50,000-99,999                                            13.6                   68.4                   18.0
----------------------------------------------------------------------------------------------------------------
100,000 or more                                          15.7                   72.3                   12.0
----------------------------------------------------------------------------------------------------------------
\1\ Layers study data provided by Animal and Plant Health Inspection Services.

    iii. Current environmental testing practices. According to the 
Layers study, approximately 52 percent of all farms with more than 
30,000 layers currently conduct some routine environmental tests for SE 
(Refs. 25 and 26). The vast majority of these producers are also 
members of formal quality assurance programs. Because very few small 
farmers are members of these programs, we assume that no farmers with 
fewer than 3,000 layers currently engage in routine testing of the 
environment for Salmonella. This assumption is likely to lead to an 
overestimation of testing costs. However, we also assume that all 
houses contain only one group of layers. Because there are some multi-
age houses that are considered to have multiple groups for the purposes 
of testing, assuming that each house has only one group is likely to 
lead to an underestimation of costs.
    iv. Environmental testing costs. The cost of routine environmental 
testing depends on how many samples are tested, the labor cost of 
collecting the samples, the cost of shipping the samples to a 
laboratory, and the laboratory cost per sample tested.
    We assume that it will take approximately 15 minutes to collect and 
pack each sample. Since the wage for a typical livestock and poultry 
worker is approximately $8.84 per hour (Ref. 107), doubled to reflect 
overhead costs, the cost of labor is assumed to be (15 / 60) x $17.68 = 
$4.42 per sample collected.
    The cost of shipping samples will vary by the weight of the 
shipment. We assume that a swab, with its packing material, weighs 
approximately one pound. To calculate the cost of shipping, we estimate 
the average number of swabs sent per shipment and use rate tables (Ref. 
118) to determine the cost of shipment.
    We estimate the laboratory cost of testing for SE that has been 
collected from the environment to be approximately $37.50 per 
sample.\49\
---------------------------------------------------------------------------

    \49\ This is the average of in-State and out-of-State pricing in 
the California Animal Health & Food Safety Laboratory System (Ref. 
126).
---------------------------------------------------------------------------

    The average cost of routine testing for SE in a given house is 
determined by multiplying the number of tests required for that house 
by the expected cost per test. For any plan that is used, the per house 
cost of testing is estimated to be Cost = SWABS x (LABOR + MAIL + LAB), 
where SWABS is the number of required swabs, LABOR is the cost of labor 
per test, MAIL is the cost of shipping samples to a lab, and LAB is the 
laboratory costs of testing for SE.
    To determine the testing cost of the row-based plan, we multiply 
the cost per test by the estimated number of rows that will have to be 
swabbed. We assume that all farms that are currently conducting routine 
testing (52 percent) (Refs. 25 and 26) are in compliance with the row-
based plan.
    The number of rows that will have to be swabbed in larger houses is 
estimated in table 21 of this document. Information for the first three 
columns is drawn from the Layers study (Refs. 25 and 26). We estimate 
the number of houses affected by the provision (the fourth column) by 
multiplying the number of large houses (8,560) by the percent of houses 
affected by the provision (48 percent), and then multiplying the 
product by the percent of houses in the given category. We estimate the 
number of rows that will have to be swabbed because of the provision as 
the number of rows per house times the number of houses affected by the 
provision. A total of 24,960 rows would have to be swabbed due to this 
provision.

                                      Table 21.--No. of Rows to be Swabbed
                                       (Houses With 3,000 or More Layers)
----------------------------------------------------------------------------------------------------------------
                                                        Average No.   Percent of   No. of Houses    No. of Rows
           No. of Rows or Batteries of Cages             of Rows\1\     Houses       Affected        Affected
----------------------------------------------------------------------------------------------------------------
1                                                             1.0          1.9                80              80
----------------------------------------------------------------------------------------------------------------
2 to 3                                                        2.5         12.5               520           1,290
----------------------------------------------------------------------------------------------------------------
4 to 5                                                        4.5         50.8             2,100           9,450
----------------------------------------------------------------------------------------------------------------
6 or more                                                    10.0         34.2             1,410          14,140
----------------------------------------------------------------------------------------------------------------
Total                                                         6.1    ...........           4,110          24,960
----------------------------------------------------------------------------------------------------------------
\1\ The average number of rows per house is estimated as the midpoint of the range estimated by Layers study.
  For the ``6 or more'' category we assume that these houses have an average of 10 rows each. We ask for comment
  on the validity of this assumption.

    Because each row has two sides, each of which will have to be 
swabbed, the total number of swabs required is estimated to be 
approximately 49,910. On average, 12.1 swabs will be used for each 
house with more than 3000 layers.

[[Page 56874]]

The total cost of testing the average large house is $541 (12.1 swabs x 
($4.42 labor + $2.77 shipping\50\ + $37.50 lab culture)) when two swabs 
are used per row.
---------------------------------------------------------------------------

    \50\ The cost of shipping 12 swabs (12 pounds) overnight is 
estimated to be between $26.25 and $40.25, including pickup charges 
(Ref. 118). We divide the average cost of shipping by 12 to obtain 
the cost per swab ($2.77).
---------------------------------------------------------------------------

    We assume that no houses with fewer than 3,000 layers currently 
conduct these tests. Furthermore, we assume that these smaller houses 
have from one to two rows of cages. Thus, the estimated average number 
of swabs used per small farm is three. The total cost of one round of 
testing for each very small farm is $148 (3 swabs x [$4.42 labor + 
$7.42 shipping\51\ + $37.50 lab culture]) when two swabs are used per 
row.
---------------------------------------------------------------------------

    \51\ The cost of shipping 3 swabs (3 pounds) overnight is 
estimated to be between $19.25 and $25.25, including pickup charges 
(Ref. 118). We divide the average cost of shipping by 3 to obtain 
the cost per swab ($7.42).
---------------------------------------------------------------------------

    The random swabbing plan requires that 32 samples be taken per 
house. Although 52 percent of houses are in compliance with the row-
based plan, far fewer are likely to be in compliance with the random 
swabbing plan. In the absence of better information, we assume that 
between 0 and 52 percent (uniformly distributed) of large houses that 
are currently testing use random swabbing plans.\52\ The cost per swab 
under the random swabbing sampling plan is $43.65 ($4.42 labor + $1.73 
shipping\53\ + $37.50 lab culture). The total cost of one round of 
testing under the random swabbing plan is calculated to be $47.2 
million for farms with fewer than 3,000 layers (33,820 houses not in 
compliance x 32 swabs per house x $43.65 cost per swab) and $12.0 
million for farms with more than 3,000 layers (8,610 houses not in 
compliance x 32 swabs per house x $43.65 cost per swab).
---------------------------------------------------------------------------

    \52\ We assume that no small houses are testing using random 
swabbing plans.
    \53\ The cost of shipping 32 swabs (32 pounds) overnight is 
estimated to be between $40.50 and $70.50, including pickup charges 
(Ref. 118). We divide the average cost of shipping ($55.50) by 32 to 
obtain the cost per swab ($1.73).
---------------------------------------------------------------------------

    k. Followup egg testing. i. Egg testing provisions. Followup egg 
testing would occur if an environmental test is positive for SE. If egg 
testing is triggered, the following protocol must be followed. First, 
the farmer must submit 1,000 eggs to a recognized lab initially, and 
subsequently every 2 weeks, for a total of 4,000 eggs. Consistent with 
the method described by Valentin-Bon et al (Ref. 62), the eggs that are 
submitted for testing may be pooled in samples of 10 to 20 eggs each. 
If pooled into samples of 20 eggs each, a total of 200 egg tests are 
conducted. If any of these egg tests are positive, the farm will be 
required to divert its eggs until four consecutive rounds of egg tests 
are found to be negative. Furthermore, a farm that has had a positive 
egg test must continue to test 1,000 eggs each month for the life of 
the flock.
    If the cost of egg testing is high enough, however, the farmer may 
simply choose to forego egg testing and divert all eggs for the life of 
the flock.
    ii. Current industry practices; Followup egg testing. We assume 
that those farms currently under a recognized quality assurance plan 
that mandates egg testing following a positive environmental test are 
currently in partial compliance with this provision. Of the major 
plans, only the Pennsylvania and Maryland plans have followup testing 
provisions that are largely the same as this provision (Ref. 99). 
According to ``Chicken and Eggs'' (Ref. 98), egg production in Maryland 
and Pennsylvania accounted for 9.7 percent of the U.S. total. Only 85 
percent of the eggs in these States fall under the State quality 
assurance programs. We therefore estimate that 8.2 percent (9.7 percent 
x 85 percent) of all eggs are currently in partial compliance. Because 
farms with fewer than 3,000 layers are not currently in these quality 
assurance programs, we assume that no farms with fewer than 3,000 
layers conduct followup egg tests.
    Even farms in compliance with the Pennsylvania and Maryland plans 
are not currently in full compliance with the provision described in 
this section. This provision would require that batches of 1,000 eggs 
be tested, while the Pennsylvania and Maryland plans only require 480 
eggs to be tested in each batch. Farms on either the Pennsylvania or 
the Maryland plans are only 48 percent (480 / 1000) in compliance with 
the provision.
    These numbers suggest that the current net level of compliance with 
the provision is 0 percent for farms with fewer than 3,000 layers and 
3.9 percent (8.2 percent x 48 percent) for farms with more than 3,000 
layers.
    iii. Egg testing costs. The cost of followup egg testing is 
composed of the following: (1) The labor cost of collecting the eggs, 
(2) the value of the eggs being tested, (3) the cost of shipping the 
eggs to a qualified laboratory, and (4) the lab costs of testing the 
eggs.
    The cost of collecting the eggs is the hourly cost of labor times 
the number of hours spent collecting the eggs. We assume that it will 
take the typical farmhand approximately one-half minute per egg to 
randomly select eggs for testing, so the labor cost of egg testing is 
$146.74 per 1,000 eggs tested (50 samples x 20 eggs per sample x 0.0083 
hours per egg x $17.68 dollars per hour) (Ref. 107).
    The lost value of the eggs used for testing is the number of eggs 
tested times the value of an unpacked egg. To avoid the double counting 
of the cost of diversion (for those eggs being tested), we modify this 
value to account for the fact that as many as 26 percent of eggs being 
tested may be under required diversion at the time of testing. The 
price that the typical producer receives for table eggs is about $0.43 
per dozen, while the price a producer receives for diverted eggs is 
about $0.26 per dozen eggs (See table 23). The expected value of a 
diverted egg is the weighted average of the value of a table egg and a 
diverted egg, or about $0.03 per egg.\54\ The value of the eggs tested 
is the value per egg times the number of eggs tested. The value of 
every 1,000 eggs tested is $32.47.
---------------------------------------------------------------------------

    \54\ The following calculation is used to reach this figure. 
[(74 percent of farms not under diversion x $0.46 per dozen table 
eggs) + (26 percent of eggs under diversion x $0.26 per dozen 
diverted eggs)] / 12 eggs in a dozen = $0.03 per egg.
---------------------------------------------------------------------------

    Eggs that are collected will have to be shipped to a laboratory for 
analysis. The cost of shipping these eggs depends on the weight of the 
eggs being shipped. We estimate that 1,000 large eggs weigh 
approximately 111 pounds. The cost of shipping these eggs in two 60-
pound packages (including packing) to the laboratory is approximately 
$179.50.\55\
---------------------------------------------------------------------------

    \55\ The cost of shipping a 60-pound package overnight is 
between $64.50 and $115.00, including pickup charges (Ref. 118). We 
multiply the average cost of shipping ($89.75) by 2 to obtain the 
total cost of $179.50.
---------------------------------------------------------------------------

    The largest cost of egg testing is the laboratory; we estimate the 
lab cost for 1 batch of 20 eggs to be $30 (Ref. 111). Hence, for 50 
tests the laboratory cost of eggs testing is $1,500 per 1,000 eggs 
tested (50 batches x $30 per test).
    The total cost of egg testing is the sum of each of the previously 
stated costs. Therefore, the cost of egg testing is $1,859 per 1,000 
eggs tested ($146.74 collection costs + $32.47 lost income from egg 
sales + $179.50 shipping costs + $1,500 lab costs).
    l. Diversion. i. Diversion provisions. Under this provision, farms 
that test positive for SE in their eggs would be required to divert 
their eggs to breaker plants until they are able to show via testing 
that SE is not present in the eggs produced in the infected house. Both 
the expected level of diversion and the expected cost of diversion will 
vary by each operation's location and size.
    ii. Regional differences in the cost of diversion. Regional 
differences in the

[[Page 56875]]

cost of production have led to the centralization of the breaker 
industry in the North Atlantic and North Central regions of the United 
States. As table 22 of this document shows, these regions are 
responsible for only 52 percent of overall egg production, but over 86 
percent of breaker eggs.\56\ The centralization of the breaker industry 
is even more cogently illustrated in the fourth column of table 22 of 
this document. While 36 to 44 percent of eggs make it to breaker plants 
in the northern regions, the corresponding figures for the west and 
south are only 10 percent and 6 to 7 percent. The primary purpose of 
breaker plants outside of the North appears to be as an outlet for eggs 
not suitable for retail sale as table eggs.
---------------------------------------------------------------------------

    \56\ In table 22 of this document, the number of eggs produced 
includes hatching eggs as well as table eggs. Because most hatching 
eggs are produced in the South and hatching eggs do not go to 
breaker plants, the percentages of eggs going to breaker plants are 
biased downward for the southern regions.

                                   Table 22.--Production and Breaking of Eggs
----------------------------------------------------------------------------------------------------------------
                                            Eggs Produced                Eggs Broken
                                    --------------------------------------------------------   Percent of Eggs
               Region                  Millions of                Thousands of                Produced That Are
                                         Eggs\1\       Percent      Dozens\2\      Percent          Broken
----------------------------------------------------------------------------------------------------------------
North Atlantic                               10,106       12.31         300,406       17.12              35.67
----------------------------------------------------------------------------------------------------------------
North Central                                32,869       40.03       1,212,758       69.12              44.28
----------------------------------------------------------------------------------------------------------------
South Atlantic                               13,979       17.03          69,774        3.98               5.99
----------------------------------------------------------------------------------------------------------------
South Central                                14,512       17.68          84,071        4.79               6.95
----------------------------------------------------------------------------------------------------------------
West                                         10,636       12.95          87,662        5.00               9.89
----------------------------------------------------------------------------------------------------------------
Total                                        82,102      100          1,754,671      100.00              25.65
----------------------------------------------------------------------------------------------------------------
\1\ National Agricultural Statistical Services (NASS) (Ref. 98).
\2\ NASS (Ref. 127).

    To predict how the industry will respond to a provision mandating 
diversion, it is important to know the following reasons: (1) Why the 
breaker egg industry is regionally concentrated while the shell egg 
industry is distributed more evenly throughout the United States and 
(2) why the concentration has occurred in the northern regions of the 
United States.
    There are a couple of reasons why the breaker industry is 
centralized and the shell egg industry is not. First, it is much more 
expensive to transport shell eggs than it is to transport egg products. 
Shell eggs are relatively bulky and are susceptible to breakage in 
transit. Second, shell eggs are ultimately delivered directly to 
consumers in their natural state, while egg products are often used as 
ingredients in large-scale food manufacturing operations. Since 
processed foods are less costly to transport than are their 
ingredients, it makes sense to locate processed foods facilities in 
areas where ingredients are locally available. To the extent that these 
ingredients are available in the northern regions, processed food 
plants will locate there. Consequently, it makes sense to locate 
breaker plants in this region as well.
    If centralization of breaker plants is going to occur, it will 
likely occur in the northern regions, for several reasons. The cost of 
egg production is lowest in the north, partly because feed grains (such 
as corn and wheat) are locally available at low prices in this 
region.\57\ Also, farms in the north are more likely to be 
characterized by large in-line houses (up to 250,000 layers). These 
houses take advantage of economies of scale to produce more eggs more 
cheaply. Furthermore, since the demand for egg products is higher in 
the northern regions, breaker plants can avoid the high transportation 
costs of shipping to food processors by locating closer to their 
customers.
---------------------------------------------------------------------------

    \57\ Shipping grains from the Midwest to the West Coast by rail 
can cost over $1 per bushel (Ref. 128).
---------------------------------------------------------------------------

    The implication of the industry structure, as laid out above, is 
that there are likely to be regional disparities in the cost of 
diversion. Egg products and, hence, breaker egg prices are not expected 
to vary regionally by as much as shell egg prices. Where the cost of 
egg production is high (such as in California), the cost of diversion 
is likely to be high. Similarly, where the price of egg production is 
low (such as in Ohio and Pennsylvania), the cost of diversion is likely 
to be low. Furthermore, there are some remote areas, such as Hawaii, 
where the absence of breaker plants makes local diversion infeasible. 
Because it is not economical to ship these eggs to breaker plants in 
the continental United States, the cost of diversion is simply the lost 
value of a clean table egg.
    FDA met with industry representatives in each of the above regions 
and was given estimates of diversion costs that are consistent with the 
above reasoning. The diversion cost per dozen eggs in PA was estimated 
to be insignificant while the diversion cost in CA was estimated to be 
$0.21 to $0.42 per dozen.
    iii. Effect of operation size on diversion costs. Operation size 
can have a significant effect on average diversion costs for a given 
producer. A large producer is less likely to be affected by an 
individual house that tests positive, because the risk is generally 
spread across many houses and farm sites. Furthermore, in areas where 
it is economically feasible to produce eggs that are dedicated to 
breaker plants, large operations are less likely to have contract 
problems because they can simply substitute SE-positive eggs for the 
eggs that originally were contracted to go to the breaker plant. By 
contrast, the economic losses from a positive house may be devastating 
to a small farm with one house.
    iv. Effect of SE-positive status on diversion costs. It has been 
suggested that eggs from an SE-positive flock will command a lower 
price at the breaker than will other eggs. Indeed, some concern has 
been raised over whether, because of liability concerns, breakers will 
be willing to accept these eggs. The

[[Page 56876]]

pasteurization process for breaker eggs is designed to achieve at least 
a 5-log reduction in any SE that may be in eggs. Furthermore, eggs from 
an SE-positive flock are not explicitly labeled as such under this 
provision. However, because these eggs are limited in how they may be 
used, SE-positive eggs are intrinsically less valuable than SE-negative 
eggs.
    Contracts for both table and breaker eggs are generally in place 
before a specific flock is tested for SE. Producers with SE-positive 
flocks may therefore have to break existing contracts for table eggs 
and make new contracts for breaker eggs. This new contracting not only 
will be costly in its own right, but also may send a signal to packers 
that the eggs that are being supplied under these new contracts are 
more likely to be from an SE-positive flock. To some extent, the packer 
will take this possibility into account and purchase these eggs at a 
discount.
    v. Cost of a diverted egg. Given all of the factors stated in the 
previous paragraphs, we estimate that, on average, breaker eggs from an 
SE-positive flock will command a price below that received for shell 
eggs. Table 23 illustrates the prices that producers receive for shell 
and breaker eggs by region. As expected, the North Central region, with 
its proximity to inexpensive feed and a large food processing industry, 
has the highest level of production, the lowest prices for eggs, and 
the lowest cost for diversion. The West, with its higher feed costs and 
smaller layer houses, has the highest prices for eggs and the highest 
cost of diversion. We find the weighted average cost of diversion to be 
approximately $0.13 per dozen eggs. If there is an additional discount 
for those eggs with SE, the total cost could rise as high as $0.21 per 
dozen eggs.

                                     Table 23.--Total Cost of Diverting Eggs
----------------------------------------------------------------------------------------------------------------
                                                                          Breaking
             Region                Regional Weight   Shell Egg Price      Eggs(Nest      Cost of Diversion (Nest
                                       (in %)        to Producer\1\        Run)\2\                Run)
----------------------------------------------------------------------------------------------------------------
North Atlantic                             12.3              $0.42             $0.31    $0.11
----------------------------------------------------------------------------------------------------------------
North Central                              40.0              $0.39             $0.30    $0.09
----------------------------------------------------------------------------------------------------------------
South Atlantic                             17.0              $0.43             $0.31    $0.12
----------------------------------------------------------------------------------------------------------------
South Central                              17.7              $0.47             $0.30    $0.17
----------------------------------------------------------------------------------------------------------------
West                                       13.0              $0.53             $0.31    $0.22
----------------------------------------------------------------------------------------------------------------
Average Cost of Diverting Eggs\3\                                                       $0.13
---------------------------------------------------------------------------------------
Additional Discount for SE+ Eggs (Ref. 111)                                             $0.00 - 0.08
---------------------------------------------------------------------------------------
Total Cost of Diverting Eggs                                                            $0.13 - 0.21
----------------------------------------------------------------------------------------------------------------
\1\ The shell egg price paid to producers for the North Central Region was estimated as equivalent to the prices
  Agricultural Marketing Service (AMS) reported as paid in Iowa, Minnesota, and Wisconsin. For regions other
  than the North Central Region, the shell egg price to the producer was calculated by discounting the price to
  retailer by a percentage equal to the percent difference between the price to the producer and the price to
  retailer in the North Central Region. All figures were taken from AMS data accessed through The Institute of
  Food and Agricultural Services at the University of Florida (Ref. 129).
\2\ All figures are from AMS data accessed through the North Carolina Department of Agriculture (Ref. 130).
\3\ The average cost of diverting eggs is weighted by regional production (Ref. 98).

    vi. Expected cost of diversion. The expected cost of diversion is 
determined by the cost of diverting an egg, the number of eggs in 
commerce affected by the provision, and the probability that a given 
egg will be diverted.
    m. A model of testing and diversion costs. i. The model. We use a 
dynamic model for estimating testing and diversion costs. We model 
these costs as depending on the probability of SE detection, farm size, 
molting practices, and the farmer's choice between conducting followup 
egg tests and diverting until depopulation.
    In the first stage of the model, we estimate the probabilities 
associated with environmental and egg tests. For environmental tests, 
we estimate that 9.7 percent of all flocks currently test positive. We 
then adjust this estimate downwards to 8.4 percent initially and 7.1 
percent eventually to account for the expected reduction of SE on the 
farm due to adoption of other provisions to reduce SE. In the 
experience of Pennsylvania, a flock with at least one environmental 
positive is likely to have at least one egg test positive 26 percent of 
the time (Ref. 131). We do not know if the experience of Pennsylvania 
is representative of the nation as a whole. In the absence of better 
information, we used the Pennsylvania figure.
    In the next stage of the dynamic model, the expected cost of 
testing and diversion is calculated for farms in each of the five size 
categories used throughout this analysis. There are two reasons why 
this is a necessary step. First, the estimation of cost for different 
size categories allows for the explicit representation of the fact that 
both the number of tests required and the cost of diversion are 
directly related to the number of layers on the farm. Second, using 
different size categories facilitates an algebraic model design that 
uses logical operators to allow farmers (in the model) to make the low 
cost choice between egg testing and diversion.
    Molting practices are accounted for in the next stage. The 
different testing protocols for molted and non-molted layers makes it 
necessary to look at the cost of testing and diversion separately for 
each of these types of flocks. At this stage of the model, we set out 
the possible scenarios for testing and diversion, derive the expected 
cost of each scenario, and calculate the statistical probability that 
each scenario will occur. The mathematical model for this stage is 
contained in appendices A and B of this document.
    In the final stage of the testing cost model, we insert logical 
operators into the model in such a way that farmers are given the 
choice of diverting rather than testing eggs when it is cost-efficient 
to do so. Failure of the model to give the farmer this choice may lead 
to estimated costs that are up to double the actual expected costs.\58\
---------------------------------------------------------------------------

    \58\ A further refinement of the model would be to include the 
option of depopulating the flock and starting over with a new flock. 
There is a large degree of uncertainty over whether this is feasible 
given that the growing cycle of chicks and pullets must be 
coordinated with the laying cycle of flocks. Therefore, we did not 
include this option in our analysis. For the final rule we invite 
comment on the feasibility of this option.

---------------------------------------------------------------------------

[[Page 56877]]

    ii. The costs of testing and diversion. The model described in the 
previous paragraph produces estimates of the annual expected cost of 
testing and diversion for layer houses. Estimates are obtained for each 
of the size categories by molting practice.
    As tables 24 and 25 in this document illustrate, the expected costs 
of testing and diversion for a poultry house range from $150 to $3,760 
depending on house size, environmental testing protocol, and molting 
practices.\59\ The low figures in the environmental testing and total 
cost columns represent costs given the row-based sampling scheme, while 
the high estimates represent the random swab sampling method. The costs 
for molted houses are annualized for the purpose of comparison.
---------------------------------------------------------------------------

    \59\ Tables 24 and 25 of this document present the cost 
estimates for houses based on the current estimated prevalence of 
SE. In the total cost tables (26 and 27 of this document), we also 
present an estimate that reflects the expected prevalence following 
the full implementation of this rule.

                                  Table 24.--Cost Per House (Non-Molted Flocks)
----------------------------------------------------------------------------------------------------------------
    Farm Size (No. of
         layers)          Environmental Testing  Egg Testing   Diversion   Dynamic Total Cost  Static Total Cost
----------------------------------------------------------------------------------------------------------------
Fewer than 3,000          $150 to $1,400                  $0           $4  $154 to $1,404       $1,010 to $2,260
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999           $540 to $1,400                  $0         $750  $1,290 to $2,150     $1,520 to $2,380
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999          $540 to $1,400                $620         $470  $1,630 to $2,490     $1,690 to $2,550
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999          $540 to $1,400                $860         $410  $1,810 to $2,670     $1,810 to $2,670
----------------------------------------------------------------------------------------------------------------
Over 100,000              $540 to $1,400                $860         $760  $2,160 to $3,020     $2,170 to $3,020
----------------------------------------------------------------------------------------------------------------


                                    Table 25.--Cost Per House (Molted Flocks)
----------------------------------------------------------------------------------------------------------------
    Farm Size (No. of
         layers)          Environmental Testing  Egg Testing   Diversion   Dynamic Total Cost  Static Total Cost
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999           $540 to $1,400                $610         $640  $1,800 to $2,650     $1,920 to $2,780
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999          $540 to $1,400                $900         $690  $2,130 to $2,990     $2,180 to $3,040
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999          $540 to $1,400                $920         $700  $2,170 to $3,030     $2,360 to $3,210
----------------------------------------------------------------------------------------------------------------
Over 100,000              $540 to $1,400              $1,050         $940  $2,530 to $3,370     $2,900 to $3,760
----------------------------------------------------------------------------------------------------------------

    The inclusion of a choice to opt out of egg testing also results in 
egg testing costs increasing with farm size. The choice to opt out of 
egg testing significantly increases diversion costs for smaller farms 
while having a limited effect on larger farms.\60\ This difference is 
apparent in the comparison between dynamic total costs and static total 
costs. If the incentive to switch from egg testing into diversion were 
removed, the costs incurred would be the static total costs. 
Nonetheless, diversion costs also generally rise with farm size.
---------------------------------------------------------------------------

    \60\ It is never in the interest of the smallest farms to test 
eggs because the expected cost of testing exceeds the revenue loss 
from simply diverting all eggs for the life of the flock.
---------------------------------------------------------------------------

    Whether or not a farmer chooses to molt the flock also has an 
effect on cost. The annual cost of testing and diversion for a molted 
flock is greater than that for a non-molted flock, largely because a 
molted flock forced to divert for the life of the flock is expected to 
experience diversion for a longer time. In the dynamic model, where the 
farmer can opt out of testing, molting has a secondary effect of 
increasing egg-testing costs due to the high expected cost of opting 
out.
    For comparison with dynamic costs, the static cost of testing and 
diversion is included in the final column of tables 24 and 25 of this 
document. As expected, when the producer is given the choice of opting 
out of egg testing the total cost of testing and diversion falls. The 
savings to the farmer are greatest on the smallest farms, where 
expected costs may fall by over 75 percent.\61\ On the largest farms, 
it is less economical to divert, and thus the cost savings can be 
insignificant.
---------------------------------------------------------------------------

    \61\ This conclusion assumes that the farmer will be paying all 
of the costs of testing and diversion.
---------------------------------------------------------------------------

    To obtain the total cost of testing and diversion for all houses on 
all farms we multiplied the cost per house in each category by the 
number of houses in each category and the percentage of houses that 
would be affected by the provision. These costs are summarized in 
tables 26 and 27 of this document.

            Table 26.--Total Cost of Testing and Diversion: Row-Based Sampling (Thousands of Dollars)
----------------------------------------------------------------------------------------------------------------
   Farm Size (No. of       No. of      Percent     Environmental
        layers)            Houses       Molted        Testing       Egg Testing      Diversion      Total Cost
----------------------------------------------------------------------------------------------------------------
Fewer than 3,000             33,824            0          $5,006              $0            $122          $5,129
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999               3,155           28          $1,268            $513          $2,088          $3,869
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999              1,317           65            $529          $1,017            $736          $2,282
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                861           86            $346            $756            $523          $1,625
----------------------------------------------------------------------------------------------------------------

[[Page 56878]]

 
Over 100,000                  3,279           84          $1,317          $3,200          $2,747          $7,264
----------------------------------------------------------------------------------------------------------------
All Farms, Initially                                      $8,466          $5,487          $6,216         $20,169
----------------------------------------------------------------------------------
All Farms Eventually                                      $8,466          $4,608          $5,236         $18,310
----------------------------------------------------------------------------------------------------------------


           Table 27.--Total Cost of Testing and Diversion: Random Swab Sampling (Thousands of Dollars)
----------------------------------------------------------------------------------------------------------------
   Farm Size (No. of       No. of      Percent     Environmental
        layers)            Houses       Molted        Testing       Egg Testing      Diversion      Total Cost
----------------------------------------------------------------------------------------------------------------
Fewer than 3,000             33,824            0         $47,353              $0            $122         $47,475
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999               3,155           28          $3,269            $513          $2,088          $5,870
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999              1,317           65          $1,364          $1,017            $736          $3,117
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                861           86            $892            $756            $523          $2,171
----------------------------------------------------------------------------------------------------------------
Over 100,000                  3,279           84          $3,397          $3,200          $2,747          $9,344
----------------------------------------------------------------------------------------------------------------
All Farms, Initially                                     $56,275          $5,487          $6,216         $68,978
----------------------------------------------------------------------------------
All Farms, Eventually                                    $56,275          $4,608          $5,236         $66,119
----------------------------------------------------------------------------------------------------------------

    As shown in table 26 of this document, the estimated total cost of 
testing and diversion is approximately $20.2 million when row-based 
sampling is used. When we assume that a random swab method of 
environmental sampling is used, as in table 27, the estimated costs 
increase to $69.0 million. There also will be a cost associated with 
reviewing and updating the SE prevention measures when a poultry house 
tests positive.\62\ We assume that the review and updating would take 
approximately 20 hours of supervisory labor for the typical house. We 
assume that, as with plan design and implementation (see following), 
farms with fewer than 3,000 layers that are subject to SE prevention 
measures would not be equally burdened. We therefore assume that the 
review and updating of the measures for these smaller houses would take 
10 hours of supervisory labor. We estimate the total initial cost of 
review and updating to be $524,900 for farms with at least 3,000 layers 
(20 hours x $36.28 an hour x 8,612 larger houses x 8.4 percent of 
houses testing positive) and $1,030,800 for smaller farms (10 hours x 
$36.28 an hour x 33,824 smaller houses x 8.4 percent of houses testing 
positive). The decline of positive houses from 8.4 percent to 7.1 
percent over 4 years will be met with a corresponding decline in the 
cost of prevention measure review. In particular, the total cost to 
larger farms will fall to $443,700, while the total cost to very small 
farms will fall to $871,300.
---------------------------------------------------------------------------

    \62\ All estimates related to plan design, review, and 
recordkeeping are based on estimates used to calculate the cost of 
HACCP for juice producers (63 FR 24253 at 24275 to 24285, May 1, 
1998).
---------------------------------------------------------------------------

    n. Benefits of testing and diversion. While the primary purpose of 
testing is to obtain an indication of the effectiveness of the farm's 
SE prevention measures, the testing and diversion program would also 
directly reduce SE infection by preventing SE-positive eggs from 
reaching consumers. To the extent that SE-positive eggs are diverted to 
pasteurization, the number of these eggs that reach the consumer in an 
untreated form would decline. We estimate the benefits from diversion 
using the experience of the States.
    The first key measure to be determined is the probability that the 
environment of a flock will test positive. We use two sources to 
estimate the current prevalence of SE-positive houses. Our first source 
is the Layers study (Ref. 27), which recruited 200 farm sites to be 
tested across the United States. We also use estimates based on the 
experience of testing under quality assurance plans.
    The Layers study estimates that 7.1 percent of all houses are 
positive for SE. Regionally, SE prevalence ranges from a low of 0 
percent in the Southeast to a high of 17.2 percent in the Great Lakes 
region. Nonetheless, because only 200 of an original sample of 526 farm 
sites chose to participate in this phase of the study, we are hesitant 
to rely solely on this figure for SE prevalence.
    Regional quality assurance programs have also collected data on SE 
prevalence on the farm. As an upper bound, Pennsylvania experienced a 
prevalence of 40 percent in the early 1990's (Ref. 132). As a lower 
bound, we use 1 to 3 percent, which is the current prevalence of houses 
with SE-positive environments in Maine (Ref. 133). We believe that 
Pennsylvania's current prevalence of 7 to 9 percent (Ref. 131) is a 
likely prevalence for the nation as a whole.\63\ When we put this data 
into a Beta-Pert probability distribution using a uniform distribution 
over 1 to 3 percent as the lower bound, 40 percent as the upper bound, 
and a uniform distribution over 7 to 9 percent as the mode, or most 
likely value, we estimate a national prevalence rate of 12.3 percent.
---------------------------------------------------------------------------

    \63\ This assumption is based on the fact that the number of 
outbreaks in the Northeast (where Pennsylvania is located) has 
fallen to a level equivalent with the rest of the nation (Ref. 7).
---------------------------------------------------------------------------

    We assume that the Layers study and quality assurance program 
estimates are equally likely to be valid. Therefore, we put these 
values in a uniform distribution (7 to 12.3 percent) to estimate that 
9.7 percent of farms would currently test SE-positive. Based on the 
experience of Pennsylvania, we estimate that 26 percent of houses that 
are environmentally positive also will have eggs that test positive 
(Ref. 131).
    These figures imply that 502 million eggs from farms with more than 
3,000 layers and 10 million eggs from farms

[[Page 56879]]

with less than 3,000 layers,\64\ a combined 0.7 percent of all shell 
eggs,\65\ would be diverted each year following the initial effective 
date. Of these eggs, we expect eggs to be positive at a rate of 2.75 
per 10,000 (Ref 39). Consequently, within the pool of all diverted 
eggs, we estimate that an average of 138,000 SE positive eggs from 
farms with more than 3,000 layers and 2,800 SE-positive eggs from farms 
with fewer than 3,000 layers would be diverted annually. Given a total 
estimated number of positive eggs of 1.5 million, we can estimate that 
diversion would decrease the number of SE-related illnesses by 9.4 
percent. This translates to potentially 46 cases of SE per year 
prevented by farms with fewer than 3,000 layers and 8,883 illnesses 
prevented by farms with more than 3,000 layers. For farms with 3,000 or 
fewer layers the cost is $571,800 per SE case prevented. For farms with 
more than 3,000 layers the cost is $2,000 per SE case prevented.
---------------------------------------------------------------------------

    \64\ The total cost of diversion is divided by the cost of 
diversion per egg to obtain the number of eggs diverted.
    \65\ The percent of shell eggs that is diverted is determined by 
dividing the number of eggs diverted by the total number of shell 
eggs produced (69,771 million) as published in the USDA's Chicken 
and Eggs report (Ref. 98).
---------------------------------------------------------------------------

    o. Summary of costs and benefits potential on-farm SE prevention 
measures. Table 28 summarizes the costs and benefits of the potential 
on-farm SE prevention measures. Some features of these summary 
estimates are worth addressing here. First, because the effectiveness 
of rodent and pest control is strongly linked to biosecurity and 
cleaning and disinfecting practices, we estimated the benefits of these 
provisions jointly. Second, we derive benefits without taking into 
account the interdependence of all proposed provisions. Therefore, 
table 28 reflects the incremental effects of each provision starting 
from a baseline of no new regulation. For example, the benefits of 
testing and diversion alone for large farms is 8,883 illnesses avoided 
annually at a cost of $1,800 per SE case avoided. As shown in table 4, 
a typical case of SE costs society roughly $17,700, assuming the VSL=$5 
million, QALY=$300 thousand, and a 7 percent discount rate. Therefore, 
net benefits of testing and diversion alone are $141 million annually 
(8,883 cases avoided* ($17,700 - $1,800)). The benefits reported for 
the provisions in table 28 can be added together, mixed and matched, to 
achieve a rough upper bound estimate of the effectiveness of different 
combinations of provisions. Because there is some substitutability in 
benefits between some of the provisions, particularly between diversion 
and rodent and pest control, the actual benefits of combinations of 
provisions, as well as the proposed rule, will be somewhat smaller than 
what is reflected in table 28. A rough lower bound estimate of the 
incremental effect of each provision when combined with another is 
shown in table 33. Third, we estimate costs and benefits separately for 
farms with fewer than 3,000 layers and for farms with more than 3,000 
layers.

Table 28.--Annual Costs, Illnesses Averted, and Cost per Illness Averted
               of Potential On-Farm Measures, by Farm Size
------------------------------------------------------------------------
                                                   Farm Size
                                     -----------------------------------
                                        <3,000 Layers     >3,000 Layers
------------------------------------------------------------------------
Costs (thousands of dollars)............................................
------------------------------------------------------------------------
  Rodent and Pest Control...........          $3,008           $21,019
                                     -----------------------------------
  Biosecurity.......................          $7,100           $15,954
                                     -----------------------------------
  Cleaning and Disinfecting.........          $1,372            $2,441
                                     -----------------------------------
  SE Monitored Chicks and Pullets...              $0.5             $87
                                     -----------------------------------
  SE Negative Feed..................            $138           $27,363
                                     -----------------------------------
  Vaccination.......................            $188           $29,261
                                     -----------------------------------
  Refrigeration.....................          $5,718           $18,120
                                     -----------------------------------
  Environmental Tests (Row Based              $5,006            $3,460
   Sampling)........................
                                     -----------------------------------
  Environmental Tests (Random                $47,353            $8,922
   Sampling)........................
                                     -----------------------------------
  Egg Tests.........................              $0            $4,608
                                     -----------------------------------
  Diversion.........................            $103            $5,133
                                     -----------------------------------
  Review of SE Prevention Measures..            $871              $444
------------------------------------------------------------------------
Cases of SE Averted (eventual)..........................................
------------------------------------------------------------------------
  Rodent and Pest Control...........             142            25,701
                                     -----------------------------------
  Biosecurity.......................      Included in Rodent Control
                                     -----------------------------------
  Cleaning and Disinfecting.........      Included in Rodent Control
                                     -----------------------------------
  SE Monitored Chicks and Pullets...             < 1                10
                                     -----------------------------------

[[Page 56880]]

 
  SE Negative Feed..................              Theoretical
                                     -----------------------------------
  Vaccination.......................               Uncertain
                                     -----------------------------------
  Refrigeration.....................              10             2,162
  Testing and Diversion.............              46             8,883
------------------------------------------------------------------------
Other Benefits..........................................................
------------------------------------------------------------------------
  Rodent Control (Feed Savings -                  $3.8            $696
   thousands of dollars)............
------------------------------------------------------------------------
Cost per Case of SE Averted (eventual - thousands of dollars)...........
------------------------------------------------------------------------
  Rodent and Pest Control...........             $80.8              $1.5
                                     -----------------------------------
  Biosecurity.......................      Included in Rodent Control
                                     -----------------------------------
  Cleaning and Disinfecting.........      Included in Rodent Control
                                     -----------------------------------
  SE Monitored Chicks and Pullets...              $0.9              $8.7
                                     -----------------------------------
  SE Negative Feed..................              Theoretical
                                     -----------------------------------
  Vaccination.......................               Uncertain
                                     -----------------------------------
  Refrigeration.....................            $571.8              $8.4
                                     -----------------------------------
  Testing and Diversion.............            $559.4              $1.8
------------------------------------------------------------------------

2. Administrative Measures
    FDA has considered a number of administrative requirements that 
could be applied to farms. The provisions that we considered are 
examined below. Some, but not all, of the provisions are in the 
proposed rule. The costs and benefits of the provisions that are in the 
proposed rule are summarized in section V.F.
    a. Plan design and recordkeeping. i. Plan design and recordkeeping 
provisions. We consider a provision that each farm site that sells raw 
eggs to the table egg market, other than directly to the consumer, 
design and monitor an SE prevention plan. If required, this prevention 
plan would include all measures the farm is taking to prevent SE in its 
flock. The following information includes potential components of the 
plan: (1) Chicks and pullets, (2) biosecurity, (3) rodent and other 
pest control, (4) cleaning and disinfecting, (5) feed, and (6) 
refrigeration. Recordkeeping may also be a provision of the plan. 
Records could be required for each of the provisions included in the 
plan, as well as for testing results. Farms may be required to have a 
trained or experienced supervisor that would be responsible for 
overseeing the plan.
    ii. Current industry practices--plan design and recordkeeping. We 
assume that those farms that are currently operating according to 
recognized industry or State quality assurance plans are already 
largely in compliance with the plan design and recordkeeping provisions 
discussed in this section, and therefore would not experience 
additional costs to comply with record keeping provisions. Using data 
from the Layers study (Refs. 25 and 26), we find that 59 percent of 
farms with more than 50,000 layers are currently members of State or 
industry quality assurance plans. Fewer than 8 percent of farms with 
fewer than 50,000 layers are currently members of quality assurance 
plans.\66\ The estimated number of farms and houses affected by plan 
design and recordkeeping provisions is shown in table 29 of this 
document.
---------------------------------------------------------------------------

    \66\ We do not have data on participation by farms with fewer 
than 3,000 layers. We assume that none of these farms are currently 
members of recognized quality assurance programs.

                      Table 29.--Farms Affected by Plan Design and Recordkeeping Provisions
----------------------------------------------------------------------------------------------------------------
 Farm Size (No. of                                        Percent of Farms  Farms Affected by   Houses Affected
      layers)           No. of Farms     Houses Per Farm   on a QA Program     the Proposal     by the Proposal
----------------------------------------------------------------------------------------------------------------
Fewer than 3,000                33,824            1.0               0.0                33,824             33,824
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999                  2,337            1.4               4.9                 2,223              3,000
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999                   940            1.4              27.7                   680                952
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                   359            2.4              58.0                   151                361
----------------------------------------------------------------------------------------------------------------

[[Page 56881]]

 
100,000 or more                    443            7.4              59.7                   179              1,322
----------------------------------------------------------------------------------------------------------------
All Farms                       37,903            1.1              97.8                37,055             39,459
----------------------------------------------------------------------------------------------------------------

    As table 29 of this document shows, we expect that a total of 
37,055 farm sites with 39,459 poultry houses would be affected by plan 
design and recordkeeping provisions, if required.
    iii. Plan design costs. In table 30 of this document we estimate 
the cost of designing a prevention plan and the corresponding cost of 
keeping records of plan performance. Because information on the costs 
of designing the QA plan for eggs is not available, we base these costs 
on assumptions used to analyze the design of HACCP programs (63 FR 
24253 at 24275 to 24285, May 1, 1998). In particular, we assume that 
each farm measure will take approximately 20 hours to design. Farms 
with fewer than 3,000 layers are generally less complex. For these 
farms, we assume that it will take only 10 hours to design each 
component of the plan. We assume that the labor used to design the plan 
costs $18.14 an hour (Ref. 134). We double this figure to account for 
overhead. The cost of designing a plan with one component for a farm 
with less than 3,000 layers is expected to be $363, while the cost to 
larger farms is expected to be $726. Amortized over 10 years at 7 
percent, the total cost of plan design to small farms is expected to be 
$1,747,100 per required provision, while the cost to larger farms will 
be $333,900 per provision. Amortized over 10 years at 3 percent, the 
total cost of plan design to small farms is expected to be $1,438,600 
per required provision, while the cost to larger farms will be $274,900 
per provision.

                                  Table 30.--Cost of Plan Design per Provision
----------------------------------------------------------------------------------------------------------------
                                                         Farms Affected by
               Farm Size (No. of layers)                    the Proposal      Cost Per Farm       Total Costs
----------------------------------------------------------------------------------------------------------------
Fewer than 3,000                                                    33,824               $363        $12,271,200
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999                                                      2,223               $726         $1,612,700
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999                                                       680               $726           $493,400
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                                                       151               $726           $109,300
----------------------------------------------------------------------------------------------------------------
100,000 or more                                                        179               $726           $129,585
----------------------------------------------------------------------------------------------------------------
All Farms                                                           37,055  .................        $14,616,100
----------------------------------------------------------------------------------------------------------------
Amortized Over 10 Years at 7%                                                                         $2,081,000
----------------------------------------------------------------------------------------------------------------

    The total cost of plan design will depend on the number of on-farm 
provisions that are ultimately required by the proposed rule.
    iv. Recordkeeping costs. In table 31 of this document, we estimate 
the cost of keeping records for one proposed provision for all poultry 
houses.

                               Table 31.--Cost of Recordkeeping for One Provision
----------------------------------------------------------------------------------------------------------------
                                                          Houses Affected    Annual Cost Per     Recordkeeping
               Farm Size (No. of layers)                  by the Proposal         House              Costs
----------------------------------------------------------------------------------------------------------------
Fewer than 3,000                                                    33,824               $472        $15,952,600
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999                                                      3,000               $943         $2,830,200
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999                                                       952               $943           $897,900
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                                                       361               $943           $341,100
----------------------------------------------------------------------------------------------------------------
100,000 or more                                                      1,322               $943         $1,246,600
----------------------------------------------------------------------------------------------------------------
All Farms                                                           39,459  .................        $21,268,400
----------------------------------------------------------------------------------------------------------------

    We assume that the time required for recordkeeping is equivalent to 
the time necessary to monitor and document the provisions of a HACCP 
plan (63 FR 24253 at 24275 to 24286). Because the HACCP time estimate 
upon which we are basing our estimate involves multiple controls points 
and monitoring, this assumption tends to overstate the cost of 
recordkeeping for a provision of this proposal. In particular, we 
expect that, for each house affected,

[[Page 56882]]

recordkeeping will take one half an hour per week per required 
provision. At $18.14 an hour, doubled to reflect overhead costs, the 
cost of recordkeeping would be $943 ($18.14 x 52). We estimate that 
farms with fewer than 3,000 layers will have costs that are 
approximately half of those of larger farms. Our reasoning is further 
explained in section V.F.3 of this document.
    b. Training. We are considering a provision that the person 
responsible for overseeing the SE prevention measures be trained or 
have equivalent job experience. A training course would last 2 to 3 
days. The cost of taking a course consists of tuition, the cost of the 
supervisor's labor while in class, and any travel related expenditures 
that may be incurred.
    The cost of a recent 3-day HACCP training course for egg processors 
was advertised to be $450 to $550 (Ref. 135). The cost of the 
supervisor's labor is estimated to be $1,161 (32 hours\67\ x $36.28 an 
hour).
---------------------------------------------------------------------------

    \67\ The number of hours is estimated as 24 hours of class time 
plus 8 hours of travel time.
---------------------------------------------------------------------------

    Travel expenditures consist of transportation, hotel, and 
miscellaneous expenses. These costs range from insignificant 
(reimbursement for minimal mileage) to $1,000 ($400 airfare + $400 
hotel expenses + $200 expenses). We believe that most training will be 
relatively close to where producers are located. In addition, training 
is likely to take place in rural areas where lodging is relatively 
inexpensive. Therefore, we estimate that the most likely travel expense 
will be roughly $200 to $300. We use a Beta-Pert distribution to 
estimate that the expected cost of travel is $330.
    The average cost of attending a training class is estimated to be 
$1,991 ($500 tuition + $1,161 labor + $330). Not all producers will 
have to send a supervisor to a class. The 12 percent of large farms 
already on quality assurance programs will have a trained supervisor 
already running the program. Of the remaining farms, some have 
experienced personnel who do not need formal training. Without better 
information, we assume that the true number of establishments that will 
need to formally train a supervisor will be uniformly distributed 
between 0 and 100 percent for all sizes of farms. Therefore, we expect 
16,910 farms with fewer than 3,000 layers and 1,620 farms with 3,000 or 
more layers to incur training expenses. This cost will have to be 
incurred only at the outset of the program, and then again when a farm 
loses a trained supervisor. The total cost for all farms training a 
supervisor every 10 years, amortized at 7 percent, is estimated to be 
$4.8 million for very small farms and $0.5 million for larger farms. 
Amortized at 3 percent, the total cost is estimated to be $4.0 million 
for farms with less than 3000 layers and $0.4 million for larger farms.
    c. Registration. Under this potential provision, all farms covered 
by any part of the proposed rule would be required to register with 
FDA. We estimate that approximately 33,820 farms with fewer than 3,000 
layers and 4,080 farms with 3,000 or more layers would be covered by a 
registration provision. The cost of registration is composed of the 
labor cost of learning about, obtaining, filling out, and sending the 
registration form to FDA. We assume that the typical producer would 
spend a total of 30 minutes registering and that the value of labor is 
$18.14 per hour, doubled for overhead costs, for a total cost of $18.14 
per producer. The total cost to the industry is $687,600 ($18.14 x 
37,903). Amortized at 7 percent, the annual cost of registration is 
expected to be $97,900. The cost to farms with fewer than 3,000 layers 
would be $87,400, while the cost to farms with more than 3,000 layers 
would be $10,500. Amortized at 3 percent, the annual cost of 
registration is expected to be $80,600. The cost to farms with fewer 
than 3,000 layers would be $71,900, while the cost to farms with more 
than 3,000 layers would be $8,700.
    d. Summary of costs and benefits of administrative provisions. The 
costs of administrative provisions are summarized in table 32 of this 
document. These provisions do not have independently quantifiable 
benefits. The provisions would be likely to generate benefits because 
administrative provisions help farmers verify whether SE prevention 
measures are being implemented appropriately. Early intervention on a 
plan that is not being implemented appropriately could result in 
corrective action to prevent SE that might otherwise occur. 
Furthermore, early troubleshooting in the event that SE is found on 
their farms would help farmers reduce any additional exposure from SE.

     Table 32.--Costs of Potential On-Farm Administrative Provisions
                         (Thousands of Dollars)
------------------------------------------------------------------------
                                                   Farm Size
                                     -----------------------------------
                                        <3,000 Layers     >3,000 Layers
------------------------------------------------------------------------
Costs (eventual)
------------------------------------------------------------------------
  Plan Design                            $1,747 per         $334 per
                                          Provision         Provision
------------------------------------------------------------------------
  Recordkeeping                          $15,953 per       $5,316 per
                                         record kept       record kept
------------------------------------------------------------------------
  Training                            $4,800            $459
------------------------------------------------------------------------
  Registration                        $87               $11
------------------------------------------------------------------------

3. Summary of On-Farm SE Prevention and Administrative Measures
    Table 33 of this document shows the estimated costs and benefits 
for all of the on-farm SE prevention measures that we have considered. 
These totals include covering farms with fewer than 3,000 layers. The 
total costs and benefits of all of these prevention measures represent 
the costs and benefits of the regulatory option (described previously) 
of more extensive on-farm controls. Table 33 can also be used to 
illustrate the costs and lower bound incremental benefits of individual 
provisions or combinations of provisions. Because table 33 shows the 
effects of each provision when all are enacted, and the interdependence 
of rodent and pest control, biosecurity, cleaning and disinfecting, and 
testing and diversion is accounted for, these estimates can be added 
together, mixed and matched, to

[[Page 56883]]

achieve a rough estimate of the lower bound effects of different 
combinations of provisions. Between table 28 and table 33, a bounded 
estimate of the incremental effect of each provision is achieved. For 
example, testing and diversion will cost farms with more than 3,000 
layers an incremental amount between $1,800 and $2,600 per illness 
avoided.

Table 33.--Summary of Annual Costs and Benefits of On-Farm SE Prevention
                     Measures (Thousands of dollars)
------------------------------------------------------------------------
                                                  Farm Size
                                   -------------------------------------
                                          <3,000             >3,000
------------------------------------------------------------------------
On-Farm Measures
------------------------------------------------------------------------
Costs (thousands of dollars)        .................  .................
------------------------------------------------------------------------
  Rodent and Pest Control           $3,008             $21,019
------------------------------------------------------------------------
  Biosecurity                       $7,100             $15,954
------------------------------------------------------------------------
  Cleaning and Disinfecting         $1,372             $2,441
------------------------------------------------------------------------
  SE Monitored Chicks and Pullets   $0.5               $87
------------------------------------------------------------------------
  SE Negative Feed                  $138               $27,363
------------------------------------------------------------------------
  Vaccination                       $188               $29,261
------------------------------------------------------------------------
  Refrigeration                     $5,718             $18,200
------------------------------------------------------------------------
  Environmental Tests (Row Based    $5,006             $3,460
   Sampling)
------------------------------------------------------------------------
  Environmental Tests (Random       $47,353            $8,922
   Sampling)
------------------------------------------------------------------------
  Egg Tests                         $0                 $4,608
------------------------------------------------------------------------
  Diversion                         $103               $5,133
------------------------------------------------------------------------
  Review of SE Prevention Plan      $871               $444
------------------------------------------------------------------------
Cases of SE Averted (eventual)
------------------------------------------------------------------------
  Rodent and Pest Control           142                25,701
------------------------------------------------------------------------
  Biosecurity                       .................  .................
------------------------------------------------------------------------
  Cleaning and Disinfecting         .................  .................
------------------------------------------------------------------------
  SE Monitored Chicks and Pullets   <1                 10
------------------------------------------------------------------------
  SE Negative Feed                  Theoretical        Theoretical
------------------------------------------------------------------------
  Vaccination                       Uncertain          Uncertain
------------------------------------------------------------------------
  Refrigeration                     7                  1,427
------------------------------------------------------------------------
  Testing and Diversion             33                 6,296
------------------------------------------------------------------------
Other Benefits
------------------------------------------------------------------------
  Rodent Control (Feed Savings--    3.8                696
   thousands of dollars)
------------------------------------------------------------------------
Cost per Case of SE Averted (eventual--thousands of dollars)
------------------------------------------------------------------------
  Rodent and Pest Control           $80.8              $1.5
------------------------------------------------------------------------
  Biosecurity                       Included in        Included in
                                     Rodent Control     Rodent Control
------------------------------------------------------------------------
  Cleaning and Disinfecting         Included in        Included in
                                     Rodent Control     Rodent Control
------------------------------------------------------------------------
  SE Monitored Chicks and Pullets   1                  8.7
------------------------------------------------------------------------
  SE Negative Feed                  Theoretical        Theoretical
------------------------------------------------------------------------
  Vaccination                       Uncertain          Uncertain
------------------------------------------------------------------------
  Refrigeration                     816.9              12.8
------------------------------------------------------------------------

[[Page 56884]]

 
  Testing and Diversion\1\          822.8              2.6
------------------------------------------------------------------------
Administrative Measures
------------------------------------------------------------------------
  Plan Design (Assumes 11           $19,217            $3,674
   Provisions)
------------------------------------------------------------------------
  Recordkeeping (Assumes 7 Records  $111,671           $37,212
   Kept)
------------------------------------------------------------------------
  Training                          $4,800             $459
------------------------------------------------------------------------
  Registration                      $87                $11
------------------------------------------------------------------------
\1\ Assumes the average cost for environmental testing between random
  and row based sampling, assuming either type of test is equally
  likely.

4. Retail Provisions
    a. Coverage. We considered whether Federal SE prevention measures 
should cover retail establishments that specifically serve highly 
susceptible populations. Establishments possibly covered would include 
nursing homes, child and adult day care centers, senior centers, and 
hospitals. The 2001 Model Food Code recommends additional safeguards 
for these establishments.
    b. SE prevention measures at retail. i. Provisions. Under the 
measures we considered, establishments that specifically serve 
consumers from highly susceptible populations would be required to 
comply with certain provisions in the Food Code that we describe in 
section IV.D of this document. Those provisions for which we have 
adequate information to estimate costs and benefits would require that 
the previously mentioned establishments:
     Use only eggs that are clean, sound, contain no more 
restricted eggs than the proportion allowed in U.S. Consumer Grade B, 
and have been transported at an ambient temperature of 45 [deg]F or 
below;
     Use pasteurized eggs or egg products in dishes that will 
be undercooked; and
     Substitute pasteurized eggs or egg products for raw shell 
eggs in dishes in which two or more eggs are broken and combined, 
unless the eggs are broken, combined, thoroughly cooked, and served 
immediately or are broken, combined, and used immediately as an 
ingredient in products (such as cookies or muffins) that will be 
thoroughly cooked.
    ii. Current state and industry practices--institutions serving 
highly susceptible populations. These potential provisions are 
currently contained in the 2001 FDA Food Code (Refs. 136, 137, and 
138). To date, 41 of 56 states and territories have adopted some 
version (1993 or later) of the FDA Food Code. Actual coverage is 
complicated, because the states and territories that have adopted the 
FDA Food Code do not necessarily follow all of the provisions, and 
states that have not adopted the FDA Food Code may have other 
regulations that have provisions that provide the same level of 
protection for highly susceptible populations.
    iii. Costs of retail SE prevention measures. Two costs would occur 
if the retail SE prevention measures applicable to establishments that 
specifically serve highly susceptible populations were included in a 
final rule. First, covered retail establishments would incur increased 
costs from using pasteurized eggs and egg products in place of raw 
shell eggs. Second, covered retail establishments would incur costs 
from training employees to hold, prepare, and cook raw eggs properly.
    If retail establishments used pasteurized shell eggs in place of 
unpasteurized shell eggs, they would pay more for their eggs ($0.35 per 
dozen) (Ref. 139). We do not know how many establishments would choose 
to do so. Alternatively, retail establishments could choose to use 
pasteurized egg products in place of unpasteurized shell eggs. If this 
option were chosen, the cost of this provision would be the cost 
differential between shell eggs and pasteurized egg products. We ask 
for comments regarding what these costs would be.
    While there are no provisions that specifically require the 
training of food service industry employees, we believe that employers 
would choose to train their employees to hold, prepare, and cook raw 
eggs in accordance with these provisions. We also ask for comments 
regarding what these costs would be.
    iv. Benefits of retail SE prevention measures. If all 
establishments serving highly susceptible populations were to implement 
these SE prevention measures through either Food Code adoption by 
states and territories (or other governments) or Federal regulations, 
we would expect to largely eliminate SE illnesses due to eggs and egg 
dishes served at these establishments. The USDA Salmonella Enteritidis 
Risk Assessment estimated that 24.7 percent of egg-related SE illness 
occurs from eggs consumed in institutions (Ref. 15). We assume this 
proportion to hold for highly susceptible and other consumers. The SE 
risk assessment also calculates that 50.4 percent of the population 
that becomes ill from SE comes from the highly susceptible 
population.\68\ We therefore expect that a total of 12.4 percent (24.7 
percent x 50.4 percent) of SE illnesses fall into the category of 
highly susceptible consumers who ate contaminated egg dishes at 
institutions. We do not know where highly susceptible consumers eat the 
eggs that make them ill. If we assume that half of these illnesses 
occur in institutions that specifically serve highly susceptible 
populations, these retail provisions would reduce illness due to SE 
contaminated eggs by 6.2 percent. We do not have robust estimates of 
the costs and benefits associated with those provisions.
---------------------------------------------------------------------------

    \68\ The Salmonella Enteritidis Risk Assessment's 
``susceptible'' populations and the Food Code's ``highly 
susceptible'' populations served by institutions are roughly 
equivalent. The SE risk assessment defines susceptible populations 
to include pregnant women, infants, the elderly, and 
immunocompromised persons. Children, the elderly, and 
immunocompromised persons could all be in institutions serving 
highly susceptible populations.
---------------------------------------------------------------------------

F. Summary of Benefits and Costs of the Proposed Rule

    In the previous section of this document, we described and 
estimated the benefits and costs of all of the SE

[[Page 56885]]

prevention measures we have considered. Here, we summarize and estimate 
the benefits and costs of the proposed rule.
1. Coverage
    The proposed rule would only apply to farms with at least 3,000 
layers that do not have all of their eggs treated, do not sell all of 
their eggs directly to consumers, and produce shell eggs for the table 
market. Farms in this category would be required to comply with all 
parts of the proposed rule. No retail establishments are directly 
affected by the proposed rule, because no retail establishments would 
be covered by the proposed rule.
2. Provisions in the Proposed Rule
    a. On-Farm preventive controls. Many of the on-farm preventive 
controls examined above are included in this proposed rule. Provisions 
included in the proposed rule are rodent and pest control, biosecurity, 
cleaning and disinfecting, and procurement of chicks and pullets from 
SE-monitored breeders.
    b. On-Farm SE prevention measures. The proposed rule also contains 
most of the on-farm SE prevention measures described above. In 
particular, the refrigeration, sampling, testing, and diversion 
provisions are included in the proposed rule.
    c. Administrative provisions. Some of the administrative provisions 
we considered are also required by the proposed rule. In particular, 
records for all environmental and egg sampling and testing must be 
kept. Furthermore, farms must keep records indicating compliance with 
diversion requirements.
    Farms are required to use SE prevention measures but are not 
required to have a formal written SE prevention plan. We believe that 
many farms will choose to implement a written plan. Each farm is 
required to have a trained or otherwise qualified individual to 
administer the prevention measures required by the proposed rule.
3. Summary of Costs and Benefits
    In table 34 of this document, we summarize the costs and illnesses 
averted of this proposed rule and its provisions. After the on-farm 
adjustment phase (up to 4 years), we expect costs to fall and illnesses 
averted to increase. Eventually, the proposed rule will prevent 
approximately 33,430 cases of SE per year at a cost of $2,200 per 
illness averted. This value is less than the most conservative estimate 
(one that does not account for the pain and suffering of arthritis) of 
the expected value of an SE related illness, shown in table 5 of this 
document. Furthermore, though not listed in table 34, we also 
calculated the cost per estimated QALY saved. Assuming a 7-percent 
discount rate, we estimate the proposed rule will save approximately 
1,870 QALYs annually. Assuming a 3-percent discount rate the estimated 
number QALYs saved annually is 3,410. This translates to $39,400 per 
QALY saved using a 7 percent discount rate and $21,600 per QALY saved 
using a 3 percent discount rate.\69\ Either estimate falls well below 
our most conservative estimate of $100,000 for the value of a quality 
adjusted statistical life year.
---------------------------------------------------------------------------

    \69\ QALD's were converted back to QALYs for each possible 
outcome by dividing by 365. Annual QALYs lost for a case chronic 
arthritis (0.14) and death (1.0) were summed and subsequently 
discounted (at 3 percent and 7 percent) over 50 years.

      Table 34.--Summary of Annual Costs and Illnesses Averted of the Proposed Rule (Thousands of Dollars)
----------------------------------------------------------------------------------------------------------------
                                              Costs               Illnesses Averted     Cost per Illness Averted
             Provision             -----------------------------------------------------------------------------
                                      Initial      Eventual     Initial      Eventual     Initial      Eventual
----------------------------------------------------------------------------------------------------------------
On-Farm Measures
----------------------------------------------------------------------------------------------------------------
  Procurement of SE-Monitored               $87          $87           10           10         $8.7         $8.7
   Chicks and Pullets
----------------------------------------------------------------------------------------------------------------
  Rodent and Pest Control               $21,019      $21,019       12,851       25,703         $3.1         $1.5
----------------------------------------------------------------------------------------------------------------
  Biosecurity                           $15,594      $15,594        --\1\        --\1\
----------------------------------------------------------------------------------------------------------------
  Cleaning and Disinfecting              $2,899       $2,441        --\1\        --\1\
----------------------------------------------------------------------------------------------------------------
 
  Refrigeration                         $18,200      $18,200        1,693        1,426        $10.8        $12.8
----------------------------------------------------------------------------------------------------------------
  Environmental Testing (Average)        $5,861       $5,861      --\2,3\      --\2,3\
----------------------------------------------------------------------------------------------------------------
  Egg Testing                            $5,487       $4,608        --\2\        --\2\
----------------------------------------------------------------------------------------------------------------
  Review of Program                        $525         $444        --\2\        --\2\
----------------------------------------------------------------------------------------------------------------
  Diversion                              $6,094       $5,133        7,559        6,294         $2.4         $2.5
================================================================================================================
Administrative Measures
----------------------------------------------------------------------------------------------------------------
  Program Management                     $2,672       $2,672           --           --
----------------------------------------------------------------------------------------------------------------
  Recordkeeping                          $5,316       $5,316           --           --
----------------------------------------------------------------------------------------------------------------
  Training                                 $459         $459           --           --
================================================================================================================
Total                                   $84,213      $81,834       22,113       33,433         $3.8         $2.4
----------------------------------------------------------------------------------------------------------------
\1\ Estimated rodent control benefits also include benefits from biosecurity and cleaning and disinfecting.
\2\ The benefits from all elements of the testing and diversion program are reported jointly under diversion.
\3\ The environmental testing cost number reported is the average of the costs of the random swab and row based
  sampling methods.


[[Page 56886]]

    The mean estimated dollar values of the benefits, the complete 
range and discussion of which is presented in section V.E.4 of this 
document and shown in table 37 of this document, range from $82 million 
to $1.65 billion, depending on the assumptions made about VSL, QALY, 
and the discount rate. Although the lowest mean estimated benefits are 
close to the mean estimated costs, these estimated benefits do not 
capture the health effects of chronic reactive arthritis sufferers. The 
most plausible estimated benefits values lie between $250 million and 
$1 billion, well above expected costs. The mean of all of the estimates 
is $580 million and most closely corresponds to the assumption set with 
VSL = $5 million, VSLY = $300 thousand, and the discount rate = 7 
percent. Thus, at the mean, net benefits are roughly $500 million 
annually. Considering the plausible range of benefits and costs, net 
benefits of the proposed rule could be as low as $130 million annually 
and as high as $950 million annually.
    As noted previously, the benefits of some provisions in the 
proposed rule are slightly lower in table 34 of this document than are 
the benefits listed in the analysis of potential provisions. This 
difference arises from the fact that each provision in the proposed 
rule reduces the base line number of illnesses that is used to estimate 
the benefits of the next provision in the list. In the benefits 
estimates for potential provisions, by contrast, the base line number 
of illnesses due to SE in shell eggs is fixed at the total number of 
illnesses estimated for 2001.
    Table 34 of this document illustrates that we have not explicitly 
determined the benefits for the administrative provisions. The 
administrative provisions enhance the effectiveness of the SE 
prevention measures mandated by the rule, and the benefits are 
therefore embedded in the benefits estimates for each control measure.
    In table 34 of this document, we include a cost for program 
management, because we assume that some management will be necessary to 
plan and carry out the provisions of the proposed rule. We assume that 
program management costs will be roughly equal to the cost of the 
potential plan design with eight provisions. We ask for comment on this 
assumption.
    The recordkeeping costs in table 34 of this document are based on 
the requirement to keep testing, sampling, and diversion records. The 
cost of this requirement is assumed to be equal to the cost of one 
record, as presented in table 31 of this document. As discussed in 
section V.E.2.a.iv of this document, this estimated cost is likely to 
overestimate the true cost of keeping testing and diversion records. 
The recordkeeping costs calculated above are estimated for the typical 
record that a farm might keep. A typical record is assumed to reflect 
routine monitoring of a facet of an SE prevention program. Sampling, 
testing, and diversion records are only collected at the time that 
testing or diversion is taking place. We ask for comment regarding the 
actual burden of keeping records associated with the testing and 
diversion provisions of the proposed rule.
4. Analysis of Uncertainty
    In table 34 of this document and elsewhere we present the expected 
effects of the proposed rule as point estimates. While this is a 
convenient way to summarize the effects of individual provisions and 
alternative regulatory options, the use of point estimates neglects the 
large degree of uncertainty intrinsic to the underlying analysis. In 
table 35 of this document, we present the results of a Monte Carlo 
simulation of uncertainty for the eventual annual costs of the proposed 
rule. Results are reported for the 5th and 95th percentiles, as well as 
for the mean value. Because many uncertainties could not be measured, 
this table should not be seen as a complete characterization of the 
uncertainty underlying the analysis. Nonetheless, table 35 of this 
document is a good illustration of the effect of the uncertainties we 
know to exist. Based on the data for which we have been able to 
characterize uncertainty, we believe that the eventual annual cost of 
the proposed rule will lie between $50 million and $1.12 billion. We 
outline descriptions of the distributions used to measure the 
uncertainties accruing to each provision in appendix C of this 
document.

              Table 35.--Costs of the Proposed Rule: Analysis of Uncertainty (Thousands of Dollars)
----------------------------------------------------------------------------------------------------------------
                                                           5th Percentile          Mean         95th Percentile
----------------------------------------------------------------------------------------------------------------
On-Farm Measures
----------------------------------------------------------------------------------------------------------------
  SE Monitoring of Chicks and Pullets                                  $23                $87               $176
----------------------------------------------------------------------------------------------------------------
  Rodent and Pest Control                                          $11,389            $21,019            $32,916
----------------------------------------------------------------------------------------------------------------
  Biosecurity                                                      $15,290            $15,594            $15,894
----------------------------------------------------------------------------------------------------------------
  Cleaning and Disinfecting                                         $1,190             $2,441             $5,567
----------------------------------------------------------------------------------------------------------------
  Refrigeration                                                    $11,850            $18,120            $24,844
----------------------------------------------------------------------------------------------------------------
  Environmental Testing                                             $2,361             $5,861            $10,794
----------------------------------------------------------------------------------------------------------------
  Egg Testing                                                       $3,407             $4,608             $9,186
----------------------------------------------------------------------------------------------------------------
  Review of Program                                                   $330               $444               $875
----------------------------------------------------------------------------------------------------------------
  Diversion                                                         $3,811             $5,133            $10,071
----------------------------------------------------------------------------------------------------------------
Administrative Measures
----------------------------------------------------------------------------------------------------------------
  Program Management                                                $2,672             $2,672             $2,672
----------------------------------------------------------------------------------------------------------------
  Recordkeeping                                                     $4,481             $5,316             $6,833
----------------------------------------------------------------------------------------------------------------
  Training                                                             $44               $459               $912
----------------------------------------------------------------------------------------------------------------

[[Page 56887]]

 
Total                                                              $54,924            $81,754           $123,407
----------------------------------------------------------------------------------------------------------------

    In tables 36 and 37 of this document, we characterize the 
uncertainties associated with the benefits of the proposed rule. A 
description of the distributions underlying the estimates in tables 36 
and 37 can be found in appendix C. The expected annual benefits in 
terms of illness averted from the proposed rule range from nearly 
21,300 SE illnesses averted to more than 49,500 cases of SE illnesses 
averted.

                   Table 36.--Illnesses Averted by the Proposed Rule: Analysis of Uncertainty
----------------------------------------------------------------------------------------------------------------
                                                                                                       95th
                            Provision                             5th Percentile       Mean         Percentile
----------------------------------------------------------------------------------------------------------------
On-Farm Measures
----------------------------------------------------------------------------------------------------------------
  SE Monitoring of Chicks and Pullets                                          7              10              15
----------------------------------------------------------------------------------------------------------------
  Rodent and Pest Control                                                 16,329          25,703          38,082
----------------------------------------------------------------------------------------------------------------
  Biosecurity                                                               Included in Rodent Control
----------------------------------------------------------------------------------------------------------------
  Cleaning and Disinfecting                                                 Included in Rodent Control
----------------------------------------------------------------------------------------------------------------
  Refrigeration                                                              914           1,426           2,125
----------------------------------------------------------------------------------------------------------------
  Testing and Diversion                                                    4,020           6,294           9,281
----------------------------------------------------------------------------------------------------------------
Total                                                                     21,270          33,433          49,503
----------------------------------------------------------------------------------------------------------------

    Table 37 of this document shows that the estimated annual benefits 
in constant 2001 dollars range from $52.4 million to $2.45 billion. The 
large range is due in great part to the uncertainties underlying the 
economic assumptions. Although the lower bound estimate of expected 
benefits overlaps the upper bound of expected costs, it is safe to say 
that nearly all of the estimated distributions of benefits exceed the 
expected costs. Under very reasonable economic assumptions, the 
expected benefits of the proposed rule exceed the expected costs.

Table 37.--Estimated Value of All Illnesses Averted, Given Different Economic Assumptions (Thousands of Dollars)
----------------------------------------------------------------------------------------------------------------
                                                        Discount Rate = 3%
----------------------------------------------------------------------------------------------------------------
                                 VSL = $5 million                               VSL = $6.5 million
----------------------------------------------------------------------------------------------------------------
                                                       95th                                            95th
                  5th percentile       Mean         percentile     5th prcentile       Mean         percentile
----------------------------------------------------------------------------------------------------------------
VSLY = $0                $56,276         $88,457        $130,975         $69,950        $109,950        $162,799
----------------------------------------------------------------------------------------------------------------
VSLY = $100             $252,790        $397,344        $588,333              --              --              --
 thousand
----------------------------------------------------------------------------------------------------------------
VSLY = $300             $645,816      $1,015,119      $1,503,048        $659,490      $1,036,611      $1,534,872
 thousand
----------------------------------------------------------------------------------------------------------------
VSLY = $500                   --              --              --      $1,052,516      $1,654,385      $2,449,587
 thousand
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                        Discount Rate = 7%
----------------------------------------------------------------------------------------------------------------
                                 VSL = $5 million                               VSL = $6.5 million
----------------------------------------------------------------------------------------------------------------
                                                       95th                                            95th
                  5th percentile       Mean         percentile     5th prcentile       Mean         percentile
----------------------------------------------------------------------------------------------------------------
VSLY = $0                $52,406         $82,373        $121,967         $66,079        $103,866        $153,791
----------------------------------------------------------------------------------------------------------------
VSLY = $100             $161,703        $254,170        $376,341              --              --              --
 thousand
----------------------------------------------------------------------------------------------------------------
VSLY = $300             $380,296        $597,764        $885,087        $393,970        $619,257        $916,911
 thousand
----------------------------------------------------------------------------------------------------------------
VSLY = $500                   --              --              --        $612,564        $962,851      $1,425,657
 thousand
----------------------------------------------------------------------------------------------------------------
\1\ VSL means value of a statistical life.
\2\ VSLY value of a statistical life year.


[[Page 56888]]

    Tables 35 through 37 of this document present the results of Monte 
Carlo simulations that treat the costs and benefits as distributions 
rather that as point estimates. The tables show that the range of 
potential costs is much narrower than the range of potential benefits. 
One additional component of costs not captured in the simulation 
involves enforcement costs. If FDA or States devote additional 
resources to inspections as a result of this rule, then the costs of 
those increased resources must be included in the total costs of the 
rule. FDA estimates that the potential social cost of increased 
inspections carried out by FDA or by States in cooperation with FDA, 
including costs of inspections, re-inspections, egg testing, training, 
education, assistance, additional staff, and operating costs, is $8 
million per year. The egg safety program costs increase the expected 
annual costs of the proposed rule to $90 million.
    The monetary estimates of benefits cover a broad range. The range 
is largely generated by the different values placed on cases of chronic 
reactive arthritis that result from SE illness. The higher the value of 
a statistical life year used to value the health effects of chronic 
reactive arthritis, the higher the estimated monetary benefits of this 
proposed rule. If the health effects of reactive arthritis are excluded 
from the estimated benefits, as in the first 4 rows of table 37 of this 
document, then the benefits and cost of the proposed rule are of 
approximately the same magnitude: the distribution of costs and 
benefits overlap and we cannot definitively conclude that the benefits 
exceed costs. Once the health effects of preventing chronic reactive 
arthritis are included, however, even the 5th percentile estimated 
benefits easily exceed estimated costs.

VI. Initial Regulatory Flexibility Analysis

A. Introduction

    FDA has examined the economic implications of this proposed rule as 
required by the Regulatory Flexibility Act (5 U.S.C. 601-612). If a 
proposed rule has a significant economic impact on a substantial number 
of small entities, the Regulatory Flexibility Act requires agencies to 
analyze regulatory options that would lessen the economic effect of the 
proposed rule on small entities.

B. Economic Effects on Small Entities

1. Number of Small Entities Affected
    The Small Business Administration (SBA) defines chicken and egg 
producers to be small if their total revenues are less than $9 million 
(65 FR 30836 at 30841, May 15, 2000). A producer that receives $0.45 
per dozen eggs and has layers that produce 265 eggs per year would have 
to have over 900,000 layers in production to earn revenues of over $9 
million. While there are a number of producers that fall into this 
category, the vast majority of the farms affected by this proposed rule 
are considered to be small by SBA standards.
    We estimate that approximately 8 percent of producers that are 
identified by the standard industrial classification (SIC) codes and 
the North American Industry Classification System (NAICS) as chicken 
and egg producers are large by SBA definition.\70\ However, because the 
smallest egg producers are not classified by SIC or NAICS codes, we 
believe that fewer than 8 percent of egg producers actually fit the SBA 
definition of ``large.''
---------------------------------------------------------------------------

    \70\ Data are drawn from Dun and Bradstreet's financial records 
using the Dialog database (Ref. 140).
---------------------------------------------------------------------------

2. Costs to Small Entities
    The on-farm portion of the proposed rule will result in significant 
costs to small businesses. In this PRIA we have estimated costs by farm 
size. These costs are presented in table 38 of this document. For the 
industry as a whole, the annual cost of the proposed rule is estimated 
to be $2,157 per farm site. This translates into a cost of $0.32 per 
egg layer.

                                  Table 38.--Distribution of Cost by Farm Size
----------------------------------------------------------------------------------------------------------------
                                                    Per Farm Cost of Proposed       Per Layer Cost of Proposed
           Farm Size (No. of layers)                         Rule\1\                           Rule
----------------------------------------------------------------------------------------------------------------
Less than 3,000                                                               $0                          $0
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999                                                          $11,779                          $1.01
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999                                                         $13,364                          $0.47
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                                                         $24,412                          $0.35
----------------------------------------------------------------------------------------------------------------
100,000 or more                                                          $74,266                          $0.19
----------------------------------------------------------------------------------------------------------------
All Farms                                                                 $2,157                          $0.32
----------------------------------------------------------------------------------------------------------------
\1\ These figures are drawn from the Preliminary Regulatory Impact Analysis (PRIA). In the PRIA not all costs
  are explicitly broken out by farm size. In this case, we assume that costs are either: (1) Equal for all farms
  (training and registration), (2) scaled to the number of houses per farm site (cleaning and disinfecting for
  flocks with more than 3,000 layers, biosecurity, and plan review in the case of a positive), or (3) scaled to
  the number of layers per farm site (National Poultry Improvement Plan SE monitored chicks and feed).

C. Regulatory Options

1. Exemption for Small Entities
    a. Exemption for all small entities. One possible approach to 
reduce the impact on small entities would be to exempt all small 
entities from the rule. Although this would significantly reduce costs, 
it would also significantly reduce benefits. As mentioned above, under 
the SBA size standards the vast majority of farms affected by this 
proposed rule are small. Small farms include not only farms with a few 
hundred layers, but also some larger farms with over 100,000 layers. 
This exemption would lead to a significant reduction in the benefits 
estimated for the proposed rule.
    The alternative approach implemented in the proposed rule exempts 
farms with fewer than 3,000 layers.\71\ While over 89 percent of the 
farm sites covered by this rule have fewer than 3,000 layers, less than 
1 percent of the eggs produced in the

[[Page 56889]]

United States are produced on these farms.
---------------------------------------------------------------------------

    \71\ An exemption for farms with fewer than 3,000 birds is 
consistent with the exemption given by the EPIA for egg farms that 
are also egg processors.
---------------------------------------------------------------------------

    FDA has decided to exempt all farms with fewer than 3,000 layers 
from all provisions of this proposed rule. By exempting these farms, we 
reduce expected benefits by less than one percent while reducing 
expected costs by half.
    We also exempt from all parts of the proposed rule those farms that 
sell all of their eggs directly to consumers.
2. Longer Compliance Periods
    We recognize that it may be more difficult for some small farms to 
learn about and implement these SE prevention measures than it will be 
for other farms. FDA is therefore proposing to give farm sites with 
3,000 or more but fewer than 50,000 layers, 2 years (as opposed to 1 
year for larger farm sites) to comply with this proposed rule.

D. Description of Recordkeeping and Recording Requirements

    The Regulatory Flexibility Act requires a description of the 
recordkeeping required for compliance with this proposed rule. We 
require recordkeeping for the sampling, testing, and diversion 
provisions of the proposed rule. The cost of recordkeeping is exhibited 
in table 39 of this document. How recordkeeping costs are calculated is 
detailed in section V.E of this document.

                                  Table 39.--Cost of Recordkeeping by Farm Size
----------------------------------------------------------------------------------------------------------------
                                                                                         Per Layer Cost of
          Farm Size (No. of layers)             Per Farm Cost of Recordkeeping             Recordkeeping
----------------------------------------------------------------------------------------------------------------
Less than 3,000                                                               $0                          $0
----------------------------------------------------------------------------------------------------------------
3,000 to 19,999                                                           $2,830                          $0.11
----------------------------------------------------------------------------------------------------------------
20,000 to 49,999                                                            $898                          $0.05
----------------------------------------------------------------------------------------------------------------
50,000 to 99,999                                                            $341                          $0.03
----------------------------------------------------------------------------------------------------------------
100,000 or more                                                           $1,247                          $0.02
----------------------------------------------------------------------------------------------------------------
All Farms                                                                   $135                          $0.02
----------------------------------------------------------------------------------------------------------------

E. Summary

    FDA finds that, under the Regulatory Flexibility Act (5 U.S.C. 
605(b)), this proposed rule would have a significant impact on a 
substantial number of small entities. More than 1,000 small farms would 
be affected by the proposed rule.

VII. Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4) 
requires cost-benefit and other analyses for rules that would cost more 
than $100 million in a single year. The current inflation-adjusted 
statutory threshold is $115 million. Since the estimated annual cost 
for this proposed rule is less than $115 million, FDA has determined 
that this proposed rule, if it becomes a final rule as proposed, would 
not be a significant rule under UMRA.

VIII. Federalism

    FDA has analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132 on federalism. We have 
examined the effects of the requirements of this proposal for on-farm 
SE prevention measures for shell egg production on the relationship 
between the Federal Government and the States. The agency concludes 
that preemption of State or local rules that establish requirements for 
production of shell eggs that would be less stringent than Federal law 
is consistent with this Executive Order. Section 3(b) of Executive 
Order 13132 recognizes that Federal action limiting the policymaking 
discretion of States is appropriate ``where there is constitutional and 
statutory authority for the action and the national activity is 
appropriate in light of the presence of a problem of national 
significance.'' The constitutional basis for FDA's authority to 
regulate the safety and labeling of foods is well established.
    Section 4(a) of Executive Order 13132 expressly contemplates 
preemption where the exercise of State authority conflicts with the 
exercise of Federal authority under a Federal statute. Moreover, 
section 4(b) of Executive Order 13132 authorizes preemption of State 
law by rulemaking when the exercise of State authority directly 
conflicts with the exercise of Federal authority under the Federal 
statute or there is clear evidence to conclude that Congress intended 
the agency to have the authority to preempt State law.
    State and local laws and regulations that would impose less 
stringent requirements for production of shell eggs would undermine the 
agency's goal of ensuring that shell eggs are produced using measures 
that will prevent their contamination with SE and, thus, reduce the 
risk of foodborne illness. The proposed requirements for production of 
shell eggs are the minimal prevention measures that we believe are 
necessary to ensure safety.
    The proposed rule would establish national minimum prevention 
measures with respect to production of shell eggs. However, the egg 
production requirements of this proposed rule do not preempt State and 
local laws, regulations, and ordinances that establish more stringent 
requirements with respect to production requirements. As required by 
the Executive order, States and local governments will be given, 
through this notice of proposed rulemaking, an opportunity to 
participate in the proceedings to preempt State and local laws. In 
addition, appropriate officials and organizations will be consulted 
before this proposed action is implemented; the agency plans to have 
public meetings specifically addressing the issue of implementation of 
these proposed regulations. The agency consulted with a working group 
comprised of State officials in developing the provisions of this 
proposed rule and plans to continue to consult with this group in the 
development of a final rule. In addition, we sent facsimiles of a 
Federal Register document announcing a public meeting on egg safety and 
the availability of egg safety ``current thinking'' documents prepared 
by FDA and USDA to Governors, State health and agriculture 
commissioners, State attorneys general, and State food program 
coordinators.

IX. Environmental Impact

    The agency has determined under 21 CFR 25.30(j) that this action is 
of a type

[[Page 56890]]

that does not individually or cumulatively have a significant effect on 
the human environment. Therefore, neither an environmental assessment 
nor an environmental impact statement is required.

X. Paperwork Reduction Act of 1995

    This proposed rule contains information collection provisions that 
are subject to review by OMB under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501-3520). A description of these provisions is given in 
the following paragraphs with an estimate of the annual recordkeeping 
burden. Included in the estimate is the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing each 
collection of information.
    FDA invites comments on these topics: (1) Whether the proposed 
collection of information is necessary for the proper performance of 
FDA's functions, including whether the information will have practical 
utility; (2) the accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (3) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (4) ways 
to minimize the burden of the collection of information on respondents, 
including the use of automated collection techniques, when appropriate, 
or other forms of information technology.
    Title: Control of Salmonella Enteritidis in Shell Eggs During 
Production--Recordkeeping Provisions Under Proposed Part 118.
    Description: FDA is proposing to require shell egg producers to 
implement SE measures to prevent SE from contaminating eggs on the 
farm. We are only proposing recordkeeping provisions for the sampling, 
testing and diversion requirements for shell egg producers.
    We have tentatively concluded that recordkeeping is necessary for 
the success of the SE prevention measures. Records of testing and 
diversion will assist FDA in determining if the farm in question 
currently has a problem with SE and is making an effort to ameliorate 
any problem it might have. FDA's statutory authority for these proposed 
requirements is discussed in section III.L of this document.
    Description of Respondents: Businesses or other for profit 
organizations.
    FDA estimates the burden of this collection of information as 
follows:

                               Table 40.--Estimated Annual Recordkeeping Burden\1\
----------------------------------------------------------------------------------------------------------------
                         No. of        Annual Frequency     Total Annual        Hours per
  21 CFR Section     Recordkeepers     of Recordkeeping       Records          Recordkeeper       Total Hours
----------------------------------------------------------------------------------------------------------------
118.10                         5,635                  1              5,635                 26            146,510
----------------------------------------------------------------------------------------------------------------
Total                                                                                                    146,510
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

    The burden estimates in table 40 in this document are based on 
estimates of the total number of layer houses affected by this proposed 
rule from statistics obtained from the NASS. Individual burdens were 
obtained by estimating the number of layer houses affected by each 
portion of the proposed rule and multiplying it by the corresponding 
number of records required annually and the hours needed to complete 
the record. These burden estimates are an estimate of the hours needed 
to complete each record contained in the agency's PRIA prepared for 
this proposed rule.
    In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), the agency has submitted the information collection 
provisions of this proposed rule to OMB for review. Interested persons 
are requested to submit comments regarding information collection to 
OMB, via facsimile on 202-395-6974, Attn: Desk Officer for FDA.

XI. Comments

    Submit written comments regarding this proposal to the Division of 
Dockets Management (see ADDRESSES), unless comments regard information 
collection. Submit electronic comments to http://www.fda.gov/dockets/
ecomments. Submit comments regarding information collection to OMB (see 
ADDRESSES). Submit a single copy of electronic comments or two copies 
of any mailed comments, except that individuals may submit one paper 
copy. Comments are to be identified with the docket number found in 
brackets in the heading of this document. Received comments may be seen 
in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday 
through Friday.

XII. References

    The following references have been placed on display in the 
Division of Dockets Management (see ADDRESSES) and may be seen by 
interested persons between 9 a.m. and 4 p.m., Monday through Friday.
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University of Minnesota Extension Service, 1997.
    110. Carey, J. B., J. F. Prochaska, and J. S. Jeffrey, Poultry 
Facility Biosecurity, Texas Agricultural Extension Service, 1997.
    111. Morales, R. A. and R. M. McDowell, ``Chapter 25: Economics 
Consequences of Salmonella enterica Serovar Enteritidis Infection in 
Humans and the U.S. Egg Industry'' in Salmonella enterica Serovar 
Enteritidis in Humans and Animals, Iowa State University Press, 
Ames, IA, 1999.
    112. E-mail Correspondence between Robert Scharff, FDA, and 
Andrew Rhorer, August 15, 2000.
    113. Rhorer, A. R., ``Chapter 27: Control of Salmonella enterica 
Serovar Enteritidis Under the National Poultry Improvement Plan'' in 
Salmonella enterica Serovar Enteritidis in Humans and Animals, Iowa 
State University Press, Ames, IA, 1999.
    114. Economic Research Service, The Formula Feed Manufacturing 
Industry, 1984, Washington, DC: U.S. Department of Agriculture, 
accessed online August 21, 2000.
    115. Dun and Bradstreet, Dun's Market Identifiers, The Dialog 
Corp. Mountain View, CA, August 22, 2000.
    116. Memorandum to the record of phone conversation between John 
Sheehan, FDA, and Silliker Laboratories, August 17, 2000.
    117. Bureau of Labor Statistics, 2003 National Occupational 
Employment and Wage Estimates, Washington, D.C., U.S. Department of 
Labor, accessed online August 31, 2004.
    118. Federal Express, FedEx Standard Overnight Per-Pound Rates, 
Federal Express, accessed online June 10, 2002.
    119. McChesney, D. G. and G. Kaplan, ``Salmonella Survey of 
Animal Feed and Protein Products at Feed Mills and On-Farm Mixer,'' 
Food and Drug Administration, Center for Veterinary Medicine, 
Division of Animal Feeds, 7500 Standish Pl., rm. E478, Rockville, MD 
20855.
    120. McChesney, D. G., G. Kaplan, and P. Gardner, ``FDA Survey 
Determines Salmonella Contamination,'' Feedstuffs 67, February 13, 
1995.
    121. Wood, Richard, ``The Comments of the Food Animal Concerns 
Trust About the Egg Safety Action Plan,'' comment 4, Food 
and Drug Administration Docket No. 00N-0504.
    122. Gast, R.K., H.D. Stone, P.S. Holt, ``Evaluation of the 
Efficacy of Oil-Emulsion Bacterins for Reducing Fecal Shedding of 
Salmonella Enteritidis by Laying Hens,'' Avian Diseases 37: 1085-91, 
1993.
    123. Davison, S., C.E. Benson, D.J. Henzler, R.J. Eckroade, 
``Field Observations with Salmonella Enteritidis Bacterins,'' Avian 
Diseases 43: 664-9, 1999.
    124. FDA Memorandum, Research Triangle Institute to the Record, 
September 3, 2000.
    125. Riemann, H., S. Himathongkham, D. Willoughby, R. Tarbell, 
and R. Breitmeyer, ``A Survey for Salmonella by Drag Swabbing Manure 
Piles in California Egg Ranches,'' Avian Diseases, vol. 42, pp. 67-
71, 1998.
    126. California, Animal Health & Food Safety Laboratory System, 
University of California, Davis, School of Veterinary Medicine, 
accessed online May 31, 2000.
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(issues covering January through December 1999), Washington, DC: 
U.S. Department of Agriculture, accessed online February 2, 2000.
    128. Agricultural Marketing Service, Grain Transportation 
Report, United States Department of Agriculture, January 4, 2000.
    129. Agricultural Marketing Service, USDA AMS, Poultry Market 
News, data accessed online through the Institute of Food and 
Agricultural Sciences, University of Florida, April 24, 2000.
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News, data accessed online through the North Carolina Department of 
Agriculture & Consumer Services, Division of Marketing, Market News, 
April 24, 2000.
    131. Memorandum of estimates given by Phillip Debok at the Egg 
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Team, Salmonella Enteritidis Review Team Report, Washington, DC: 
Food Safety Inspection Service, U.S. Department of Agriculture, 
January 18, 1997.
    133. Memorandum of estimate given by Michael Opitz at the Egg 
Safety Workshop, January 10-14, 2000.
    134. Bureau of Labor Statistics, 2003 National Occupational 
Employment and Wage Estimates, Washington, D.C., U.S. Department of 
Labor, accessed on-line August 31, 2004.
    135. U.S. Poultry & Egg Association Educational Programs, U.S. 
Poultry and Egg Association, accessed online August 8, 2000.
    136. U.S. Public Health Service, ``Food Code: 2001, 
Recommendations of the United States Public Health Service, Food and 
Drug Administration,'' Annex 3, Chapter 3, Section 3-801.11.
    137. Shah, D. B., J. G. Bradshaw, and J. T. Peeler, ``Thermal 
Resistance of Egg-Associated Epidemic Strains of Salmonella 
enteritidis,'' Journal of Food Science, 56:391-393, 1991.
    138. U.S. Public Health Service, ``Food Code: 2001, 
Recommendations of the United States Public Health Service, Food and 
Drug Administration,'' Section 3-401.11 and Annex 3, Chapter 3, 
Section 3-401.11.
    139. Severson, Kim, ``Pending Pasteurization Policy Could Alter 
Eggs Forever,'' San Francisco Chronicle, online, April 19, 2000.
    140. Dun and Bradstreet, Dun's Market Identifiers, The Dialog 
Corp. Mountain View, CA, August 21, 2000.

List of Subjects

21 CFR Part 16

    Administrative practice and procedure.

21 CFR Part 118

    Eggs and egg products, Incorporation by reference, Recordkeeping 
requirements, Safety.
    Therefore, under the Federal Food, Drug, and Cosmetic Act and the 
Public Health Service Act, and under the authority delegated to the 
Commissioner of Food and Drugs, it is proposed that 21 CFR chapter I be 
amended as follows:

PART 16--REGULATORY HEARING BEFORE THE FOOD AND DRUG ADMINISTRATION

    1. The authority citation for 21 CFR part 16 continues to read as 
follows:

    Authority: 15 U.S.C. 1451-1461; 21 U.S.C. 141-149, 321-394, 
467f, 679, 821, 1034; 28 U.S.C. 2112; 42 U.S.C. 201-262, 263b, 364.
    2. Section 16.5 is amended by adding paragraph (a)(5) to read as 
follows:


Sec.  16.5  Inapplicability and limited applicability.

    (a) * * *
    (5) A hearing on an order for diversion or destruction of shell 
eggs under section 361 of the Public Health Service Act (42 U.S.C. 
264), and Sec.  118.12 of this chapter.
* * * * *
    3. Part 118 is added to read as follows:

PART 118--PRODUCTION AND STORAGE OF SHELL EGGS

Sec.
118.1 Shell egg producers covered by the requirements in this part.
118.3 Definitions.
118.4 Salmonella Enteritidis (SE) prevention measures.
118.5 Environmental testing for Salmonella Enteritidis (SE).
118.6 Egg testing for Salmonella Enteritidis (SE).
118.7 Sampling methodology for Salmonella Enteritidis (SE).
118.8 Testing methodology for Salmonella Enteritidis (SE).
118.9 Administration of the Salmonella Enteritidis (SE) prevention 
measures.
118.10 Recordkeeping requirements for the Salmonella Enteritidis 
(SE) prevention measures.
118.12 Enforcement and compliance.

    Authority: 21 U.S.C. 321, 331-334, 342, 371, 381, 393; 42 U.S.C. 
243, 264, 271.


Sec.  118.1   Shell egg producers covered by the requirements in this 
part.

    If you are a shell egg producer with 3,000 or more laying hens at a 
particular farm that does not sell all of your eggs directly to 
consumers and that produces shell eggs for the table market, you are 
covered by some or all of the requirements in this part, as follows:
    (a) If any of your eggs that are produced at the particular farm do 
not

[[Page 56894]]

receive a treatment as defined in Sec.  118.3, you must comply with all 
of the requirements of this part for egg production on that farm.
    (b) If all of your eggs that are produced at the particular farm 
receive a treatment as defined in Sec.  118.3, you must comply only 
with the refrigeration requirements in Sec.  118.4 for production of 
eggs on that farm.


Sec.  118.3   Definitions.

    The definitions and interpretations of terms in section 201 of the 
Federal Food, Drug, and Cosmetic Act (the FFDCA) (21 U.S.C. 321) are 
applicable to such terms when used in this part, except where they are 
redefined in this part. The following definitions also apply:
    Biosecurity means a program, including limiting visitors to poultry 
houses, keeping small animals out of poultry houses, and requiring 
personnel to wear protective clothing, to ensure that there is no 
introduction or transfer of Salmonella Enteritidis (SE) onto a farm or 
among poultry houses.
    Farm means all poultry houses and grounds immediately surrounding 
the poultry houses covered under a single biosecurity program.
    Flock means all laying hens within one poultry house.
    Group means all laying hens of the same age within one poultry 
house.
    Induced molting means molting that is artificially initiated.
    Laying cycle means the period of time that a hen begins to produce 
eggs until it undergoes induced molting or is permanently taken out of 
production and the period of time that a hen produces eggs between 
successive induced molting periods or between induced molting and the 
time that the hen is permanently taken out of production.
    Molting means a life stage during which hens stop laying eggs and 
shed their feathers.
    Pest means any objectionable animals or insects including, but not 
limited to, birds, rodents, flies, and larvae.
    Positive flock means a flock that has had an egg test that was 
positive for SE and applies until that flock meets the egg testing 
requirements in Sec.  118.6(b) to return to table egg production.
    Positive poultry house means a poultry house from which there has 
been an environmental test that was positive for SE during any of the 
laying cycles of a group in the poultry house until that house is 
cleaned and disinfected according to Sec.  118.4(d).
    Poultry house means a building, other structure, or separate 
section within one structure used to house poultry. For structures 
comprising more than one section containing poultry, each section is 
enclosed and separated from the other sections, and each section has a 
biosecurity program in place to ensure that there is no introduction or 
transfer of SE from one section to another.
    Producer means a person who maintains laying hens for the purpose 
of producing shell eggs for human consumption.
    Shell egg (or egg) means the egg of the domesticated chicken.
    Treatment means a technology or process that achieves at least a 5-
log destruction of SE for shell eggs, or the processing of egg products 
in accordance with the Egg Products Inspection Act.


Sec.  118.4   Salmonella Enteritidis (SE) prevention measures.

    You must have SE prevention measures that are specific for each 
farm where you produce eggs and that include, at a minimum, the 
following:
    (a) Chicks and pullets. You must procure chicks and pullets that 
came as chicks from SE-monitored breeder flocks that meet the National 
Poultry Improvement Plan's standards for ``U.S. S. Enteritidis 
Monitored'' status (9 CFR 145.23(d)) or equivalent standards.
    (b) Biosecurity. You must develop and implement a biosecurity 
program. The biosecurity program must include the grounds and all 
facilities at each farm. As part of this program you must:
    (1) Limit visitors on the farm and in the poultry houses;
    (2) Ensure that equipment that is moved among poultry houses is 
kept clean and is not a source of SE contamination;
    (3) Ensure the proper hygiene of persons that move between poultry 
houses through use of protective clothing and sanitizing stations, or 
other appropriate means that will protect against cross contamination;
    (4) Prevent stray poultry, wild birds, and other animals from 
entering grounds and facilities; and
    (5) Not allow employees to keep poultry at home.
    (c) Rodents, flies, and other pest control. You must develop and 
implement a pest and rodent control program to reduce the rodent, fly 
and other pest populations in your poultry house(s). As part of this 
program, you must:
    (1) Monitor for rodents by visual inspection and mechanical traps 
or glueboards or another appropriate monitoring method and, when 
monitoring indicates unacceptable rodent activity within a poultry 
house, use appropriate methods to achieve satisfactory rodent control;
    (2) Monitor for pests by spot cards, Scudder grills, or sticky 
traps or another appropriate monitoring method and, when monitoring 
indicates unacceptable pest activity within a poultry house, use 
appropriate methods to achieve satisfactory pest control.
    (3) Remove debris within a poultry house and vegetation and debris 
outside a poultry house that may provide harborage for pests.
    (d) Cleaning and disinfection. You must develop procedures for 
cleaning and disinfecting a poultry house as outlined in paragraphs 
(d)(1) through (d)(4) of this section. You must clean and disinfect the 
poultry house according to these procedures before new laying hens are 
added to the house, if you have had an environmental test or an egg 
test that was positive for SE at any point during the life of a flock 
that was housed in the poultry house prior to depopulation. As part of 
the cleaning and disinfection procedures, you must:
    (1) Remove all visible manure;
    (2) Dry clean the positive poultry house to remove dust, feathers, 
and old feed;
    (3) Wet clean the positive poultry house, including washing with 
detergents. Use detergents according to label instructions, followed by 
recommended rinsing procedures; and
    (4) Following cleaning, disinfect the positive poultry house with 
spray, aerosol, fumigation, or another appropriate disinfection method.
    (e) Refrigeration. You must store eggs at or below 45 [deg]F 
ambient temperature if you hold them for more than 36 hours after 
laying.


Sec.  118.5   Environmental testing for Salmonella Enteritidis (SE).

    (a) Environmental testing when laying hens are 40 to 45 weeks of 
age. As one indicator of the effectiveness of your SE prevention 
measures, you must perform environmental testing for SE (as described 
in Sec. Sec.  118.7 and 118.8) in a poultry house when any group of 
laying hens constituting the flock within the poultry house is 40 to 45 
weeks of age.
    (1) If an environmental test at 40 to 45 weeks is negative and your 
laying hens do not undergo induced molting, then you do not need to 
perform any additional environmental testing within that poultry house, 
unless the poultry house contains more than one group of laying hens. 
If the poultry house contains more than one group of laying hens, then 
you must perform environmental testing on the poultry house when each 
group of laying hens is 40 to 45 weeks of age.

[[Page 56895]]

    (2) If the environmental test at 40 to 45 weeks is positive, then 
you must:
    (i) Review and make any necessary adjustments to your SE prevention 
measures to ensure that all measures are being properly implemented and
    (ii) Begin egg testing (described in Sec.  118.6) within 24 hours 
of receiving notification of the positive environmental test, unless 
you divert eggs to treatment as defined in Sec.  118.3 for the life of 
the flock in that poultry house.
    (b) Environmental testing after an induced molting period. If you 
induce a molt in a flock or a group in a flock, you must perform 
environmental testing for SE in the poultry house approximately 20 
weeks after the end of any molting process.
    (1) If an environmental test approximately 20 weeks after the end 
of the molting process is negative and none of your laying hens in that 
poultry house is molted again, then you do not need to perform any 
additional environmental testing in that poultry house. Each time a 
flock or group within the flock is molted, you must perform 
environmental testing in the poultry house approximately 20 weeks after 
the end of the molting process.
    (2) If the environmental test approximately 20 weeks after the end 
of a molting process is positive, then you must:
    (i) Review and make any necessary adjustments to your SE prevention 
measures to ensure that all measures are being properly implemented; 
and
    (ii) Begin egg testing (described in Sec.  118.6) within 24 hours 
of receiving notification of the positive environmental test, unless 
you divert eggs to treatment as defined in Sec.  118.3 for the life of 
the flock in that poultry house.


Sec.  118.6   Egg testing for Salmonella Enteritidis (SE).

    (a) If you have an SE-positive environmental test at any time 
during the life of a flock, you must divert eggs to treatment (defined 
in Sec.  118.3) for the life of the flock in that positive poultry 
house or conduct egg testing as specified in paragraphs (b) through (e) 
of this section.
    (b) Eggs must be sampled as described in Sec.  118.7 and tested 
using methodology as described in Sec.  118.8.
    (c) You must conduct four egg tests, using sampling and methodology 
in Sec. Sec.  118.7 and 118.8, on the flock in the positive poultry 
house at 2-week intervals. If all four tests are negative for SE, you 
are not required to do further egg testing.
    (d) If any of the four egg tests is positive for SE, you must 
divert, upon receiving notification of an SE-positive egg test, all 
eggs from that flock to treatment (defined in Sec.  118.3) until the 
conditions of paragraph (c) of this section are met.
    (e) If you have a positive egg test in a flock and divert eggs from 
that flock and later meet the negative test result requirements 
described in paragraph (c) of this section and return to table egg 
production, you must conduct one egg test per month on that flock, 
using sampling and methodology in Sec. Sec.  118.7 and 118.8, for the 
life of the flock.
    (1) If all the monthly egg tests in paragraph (e) of this section 
are negative for SE, you may continue to supply eggs to the table 
market.
    (2) If any of the monthly egg tests in paragraph (e) of this 
section is positive for SE, you must divert eggs from the positive 
flock to treatment for the life of the flock or until the conditions of 
paragraph (c) of this section are met.


Sec.  118.7  Sampling methodology for Salmonella Enteritidis (SE).

    (a) Environmental sampling. An environmental test must be done for 
each poultry house in accordance with Sec.  118.5(a) and (b). Within 
each poultry house, you must sample the environment using a 
scientifically valid sampling procedure.
    (b) Egg sampling. When you conduct an egg test required under Sec.  
118.6, you must randomly collect and test the following number of eggs 
from the positive poultry house.
    (1) To meet the egg testing requirements of Sec.  118.6(c), you 
must randomly collect 1,000 eggs from a day's production. The 1,000-egg 
sample must be tested according to Sec.  118.8. You must randomly 
collect and test four 1,000-egg samples at 2-week intervals for a total 
of 4,000 eggs.
    (2) To meet the monthly egg testing requirement of Sec.  118.6(e), 
you must randomly collect 1,000 eggs from a day's production per month 
for the life of the flock. Eggs must be tested according to Sec.  
118.8.


Sec.  118.8  Testing methodology for Salmonella Enteritidis (SE).

    (a) Testing of environmental samples for SE. Testing to detect SE 
in environmental samples must be conducted by the method entitled 
``Detection of Salmonella in Environmental Samples from Poultry 
Houses'' dated January 19, 2001, (proposed for inclusion in FDA's 
Bacteriological Analytical Manual) or another method that is at least 
equivalent to the method cited previously in accuracy, precision, and 
sensitivity in detecting SE. The Director of the Federal Register 
approves the incorporation by reference ``Detection of Salmonella in 
Environmental Samples from Poultry Houses'' in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51. You may obtain a copy from Division of Dairy 
and Egg Safety (HFS-306), Center for Food Safety and Applied Nutrition, 
Food and Drug Administration, 5100 Paint Branch Parkway, College Park, 
MD 20740, or you may examine a copy at the Center for Food Safety and 
Applied Nutrition's Library, 5100 Paint Branch Parkway, College Park, 
MD or at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/code_of_
federal_regulation/ibr_locations.html.
    (b) Testing of egg samples for SE. Testing to detect SE in egg 
samples must be conducted according to the pre-enrichment method 
described by Valentin et al., in the Journal of Food Protection, or 
another method that is at least equivalent to the method cited 
previously in accuracy, precision, and sensitivity in detecting SE. The 
egg sampling method is incorporated by reference in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. You may obtain a copy from Division of 
Dairy and Egg Safety (HFS-306), Center for Food Safety and Applied 
Nutrition, Food and Drug Administration, 5100 Paint Branch Parkway, 
College Park, MD 20740, or you may examine a copy at the Center for 
Food Safety and Applied Nutrition's Library, 5100 Paint Branch Parkway, 
College Park, MD or at the National Archives and Records Administration 
(NARA). For information on the availability of this material at NARA, 
call 202-741-6030, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulation/ibr_locations.html.


Sec.  118.9.   Administration of the Salmonella Enteritidis (SE) 
prevention measures.

    You must have one individual at each farm who is responsible for 
administration of the SE prevention measures. This individual must have 
successfully completed training on SE prevention measures for egg 
production that is at least equivalent to that received under a 
standardized curriculum recognized by the Food and Drug Administration 
or must be otherwise qualified through job experience to administer the 
SE prevention measures. Job experience

[[Page 56896]]

will qualify an individual to perform these functions if it has 
provided knowledge at least equivalent to that provided through the 
standardized curriculum. This individual is responsible for:
    (a) Development and implementation of SE prevention measures that 
are appropriate for your specific farm and meet the requirements of 
Sec.  118.4;
    (b) Reassessing and modifying the SE prevention measures as 
necessary to ensure that the requirements in Sec.  118.4 are met; and
    (c) Review of records created under Sec.  118.10. The individual 
does not need to have performed the monitoring or created the records.


Sec.  118.10   Recordkeeping requirements for the Salmonella 
Enteritidis (SE) prevention measures.

    (a) Records that egg producers are required to maintain. You must 
maintain the following records:
    (1) Records of environmental and egg sampling performed under Sec.  
118.7 and the results of SE testing performed under Sec.  118.8 as 
required in Sec. Sec.  118.5 and 118.6.
    (2) Records indicating compliance with the diversion requirements 
in Sec.  118.6.
    (3) Records indicating that all of the eggs at a particular farm 
will be given a treatment as defined in Sec.  118.3, if you are a 
producer complying with the requirements of this section as described 
in Sec.  118.1(b).
    (b) General requirements for records maintained by egg producers. 
All records required by Sec.  118.10(a) must include:
    (1) Your name and the location of your farm,
    (2) The date and time of the activity that the record reflects,
    (3) The signature or initials of the person performing the 
operation or creating the record, and
    (4) Data and information reflecting compliance activities must be 
entered on records at the time the activity is performed or observed, 
and the records must contain the actual values observed, if applicable.
    (c) Length of time records must be retained. You must retain all 
records required by this part at your place of business, unless stored 
offsite under Sec.  118.10(d), for 1 year after the flock to which they 
pertain has been taken permanently out of production.
    (d) Offsite storage of records. You may store the records required 
by this part offsite after 6 months following the date that the 
monitoring occurred. You must be able to retrieve and provide the 
records at your place of business within 24 hours of request for 
official review. Electronic records are considered to be onsite if they 
are accessible from an onsite location.
    (e) Official review of records. You must have all records required 
by this part available for official review and copying at reasonable 
times.
    (f) Public disclosure of records. Records required by this part are 
subject to the disclosure requirements under part 20 of this chapter.


Sec.  118.12  Enforcement and compliance.

    (a) Authority. This part is established under authority of the 
Public Health Service Act (the PHS Act). Under the FFDCA, the Food and 
Drug Administration (FDA) can enforce the food adulteration provisions 
under 21 U.S.C. 331 through 334 and 342. Under the PHS Act (42 U.S.C. 
264), FDA has the authority to make and enforce regulations for the 
control of communicable diseases. FDA has established the following 
administrative enforcement procedures for the diversion or destruction 
of shell eggs and for informal hearings under the PHS Act:
    (1) Upon a finding that any shell eggs have been produced or held 
in violation of this part, an authorized FDA representative or a State 
or local representative in accordance with paragraph (c) of this 
section may order such eggs to be diverted, under the supervision of 
said representative, for processing in accordance with the Egg Products 
Inspection Act (EPIA) (21 U.S.C. 1031 et seq.) or by a treatment that 
achieves at least a 5-log destruction of SE or destroyed by or under 
the supervision of an officer or employee of FDA, or, if applicable, of 
the State or locality in accordance with the following procedures:
    (i) Order for diversion or destruction under the PHS Act. Any 
district office of FDA or any State or locality acting under paragraph 
(c) of this section, upon finding shell eggs that have been produced or 
held in violation of this regulation, may serve a written order upon 
the person in whose possession the eggs are found requiring that the 
eggs be diverted, under the supervision of an officer or employee of 
the issuing entity, for processing in accordance with the EPIA (21 
U.S.C. 1031 et seq.) or by a treatment that achieves at least a 5-log 
destruction of SE or destroyed by or under the supervision of the 
issuing entity, within 10-working days from the date of receipt of the 
order, unless, under paragraph (a)(2)(iii) of this section, a hearing 
is held, in which case the eggs must be diverted or destroyed 
consistent with the decision of the Regional Food and Drug Director 
under paragraph (a)(2)(v) of this section. The order must include the 
following information:
    (A) A statement that the shell eggs identified in the order are 
subject to diversion for processing in accordance with the EPIA or by a 
treatment that achieves at least a 5-log destruction of SE or 
destruction;
    (B) A detailed description of the facts that justify the issuance 
of the order;
    (C) The location of the eggs;
    (D) A statement that these eggs must not be sold, distributed, or 
otherwise disposed of or moved except as provided in paragraph 
(a)(1)(iv) of this section;
    (E) Identification or description of the eggs;
    (F) The order number;
    (G) The date of the order;
    (H) The text of this entire section;
    (I) A statement that the order may be appealed by written appeal or 
by requesting an informal hearing;
    (J) The name and phone number of the person issuing the order; and
    (K) The location and telephone number of the office or agency 
issuing the order and the name of its Director.
    (ii) Approval of District Director. An order, before issuance, must 
be approved by FDA's District Director or the Acting District Director. 
If prior written approval is not feasible, prior oral approval must be 
obtained and confirmed by written memorandum as soon as possible.
    (iii) Labeling or marking of shell eggs under order. An FDA, State, 
or local representative issuing an order under paragraph (a)(1)(i) of 
this section must label or mark the shell eggs with official tags that 
include the following information:
    (A) A statement that the shell eggs are detained in accordance with 
regulations issued under section 361(a) of the PHS Act (42 U.S.C. 
264(a)).
    (B) A statement that the shell eggs must not be sold, distributed 
or otherwise disposed of or moved except, after notifying the issuing 
entity in writing, to:
    (1) Divert them for processing in accordance with the EPIA or by a 
treatment that achieves at least a 5-log destruction of SE or destroy 
them, or
    (2) Move them to an another location for holding pending appeal.
    (C) A statement that the violation of the order or the removal or 
alteration of the tag is punishable by fine or imprisonment or both 
(section 368 of the PHS Act (42 U.S.C. 271)).
    (D) The order number and the date of the order, and the name of the 
government representative who issued the order.

[[Page 56897]]

    (iv) Sale or other disposition of shell eggs under order. After 
service of the order, the person in possession of the shell eggs that 
are the subject of the order must not sell, distribute, or otherwise 
dispose of or move any eggs subject to the order unless and until 
receiving a notice that the order is withdrawn after an appeal except, 
after notifying FDA's district office or, if applicable, the State or 
local representative, in writing, to:
    (A) Divert or destroy them as specified in paragraph (a)(1)(i) of 
this section, or
    (B) Move them to another location for holding pending appeal.
    (2) The person on whom the order for diversion or destruction is 
served may either comply with the order or appeal the order to the 
Regional Food and Drug Director in accordance with the following 
procedures:
    (i) Appeal of a detention order. Any appeal must be submitted in 
writing to FDA's District Director in whose district the shell eggs are 
located within 5 working days of the issuance of the order. If the 
appeal includes a request for an informal hearing, the hearing must be 
held within 5 working days after the appeal is filed or, if requested 
by the appellant, at a later date, which must not be later than 20 
calendar days after the issuance of the order. The order may also be 
appealed within the same period of 5 working days by any other person 
having an ownership or proprietary interest in such shell eggs. The 
appellant of an order must state the ownership or proprietary interest 
the appellant has in the shell eggs.
    (ii) Summary decision. A request for a hearing may be denied, in 
whole or in part and at any time after a request for a hearing has been 
submitted, if the Regional Food and Drug Director or his or her 
designee determines that no genuine and substantial issue of fact has 
been raised by the material submitted in connection with the hearing or 
from matters officially noticed. If the Regional Food and Drug Director 
determines that a hearing is not justified, written notice of the 
determination will be given to the parties explaining the reason for 
denial.
    (iii) Informal hearing. Appearance by any appellant at the hearing 
may be by mail or in person, with or without counsel. The informal 
hearing must be conducted by the Regional Food and Drug Director or his 
designee, and a written summary of the proceedings must be prepared by 
the Regional Food and Drug Director.
    (A) The Regional Food and Drug Director may direct that the hearing 
be conducted in any suitable manner permitted by law and by this 
section. The Regional Food and Drug Director has the power to take such 
actions and make such rulings as are necessary or appropriate to 
maintain order and to conduct an informal, fair, expeditious, and 
impartial hearing, and to enforce the requirements concerning the 
conduct of hearings.
    (B) Employees of FDA will first give a full and complete statement 
of the action that is the subject of the hearing, together with the 
information and reasons supporting it, and may present oral or written 
information relevant to the hearing. The party requesting the hearing 
may then present oral or written information relevant to the hearing. 
All parties may conduct reasonable examination of any person (except 
for the presiding officer and counsel for the parties) who makes any 
statement on the matter at the hearing.
    (C) The hearing shall be informal in nature, and the rules of 
evidence do not apply. No motions or objections relating to the 
admissibility of information and views will be made or considered, but 
any party may comment upon or rebut any information and views presented 
by another party.
    (D) The party requesting the hearing may have the hearing 
transcribed, at the party's expense, in which case a copy of the 
transcript is to be furnished to FDA. Any transcript of the hearing 
will be included with the Regional Food and Drug Director's report of 
the hearing.
    (E) The Regional Food and Drug Director must prepare a written 
report of the hearing. All written material presented at the hearing 
will be attached to the report. Whenever time permits, the Regional 
Food and Drug Director may give the parties the opportunity to review 
and comment on the report of the hearing.
    (F) The Regional Food and Drug Director must include as part of the 
report of the hearing a finding on the credibility of witnesses (other 
than expert witnesses) whenever credibility is a material issue, and 
must include a recommended decision, with a statement of reasons.
    (iv) Written appeal. If the appellant appeals the detention order 
but does not request a hearing, the Regional Food and Drug Director 
must render a decision on the appeal affirming or revoking the 
detention order within 5 working days after the receipt of the appeal.
    (v) Regional Food and Drug Director decision. If, based on the 
evidence presented at the hearing or by the appellant in a written 
appeal, the Regional Food and Drug Director finds that the shell eggs 
were produced or held in violation of this section, he must affirm the 
order that they be diverted, under the supervision of an officer or 
employee of FDA for processing under the EPIA or by a treatment that 
achieves at least a 5-log destruction of SE or destroyed by or under 
the supervision of an officer or employee of FDA; otherwise, the 
Regional Food and Drug Director must issue a written notice that the 
prior order is withdrawn. If the Regional Food and Drug Director 
affirms the order, he must order that the diversion or destruction be 
accomplished within 10-working days from the date of the issuance of 
his decision. The Regional Food and Drug Director's decision must be 
accompanied by a statement of the reasons for the decision. The 
decision of the Regional Food and Drug Director constitutes final 
agency action, subject to judicial review.
    (vi) No appeal. If there is no appeal of the order and the person 
in possession of the shell eggs that are subject to the order fails to 
divert or destroy them within 10-working days, or if the demand is 
affirmed by the Regional Food and Drug Director after an appeal and the 
person in possession of such eggs fails to divert or destroy them 
within 10-working days, FDA's district office or, if applicable, the 
State or local representative may designate an officer or employee to 
divert or destroy such eggs. It shall be unlawful to prevent or to 
attempt to prevent such diversion or destruction of the shell eggs by 
the designated officer or employee.
    (b) Inspection. Persons engaged in production of shell eggs must 
permit authorized representatives of FDA to make, at any reasonable 
time, an inspection of the egg production establishment in which shell 
eggs are being produced. Such inspection includes the inspection and 
sampling of shell eggs and the environment, the equipment related to 
production of shell eggs, the equipment in which shell eggs are held, 
and examination and copying of any records relating to such equipment 
or eggs, as may be necessary in the judgment of such representatives to 
determine compliance with the provisions of this section. Inspections 
may be made with or without notice and will ordinarily be made during 
regular business hours.
    (c) State and local cooperation. Under sections 311 and 361 of the 
Public Health Service Act, any State or locality that is willing and 
able to assist the agency in the enforcement of Sec. Sec.  118.4 
through 118.10, and is authorized to inspect or regulate egg production 
establishments, may, in its own jurisdiction, enforce Sec. Sec.  118.4 
through

[[Page 56898]]

118.10 through inspections under paragraph (b) of this section and 
through administrative enforcement remedies specified in paragraph (a) 
of this section unless FDA notifies the State or locality in writing 
that such assistance is no longer needed. When providing assistance 
under paragraph (a) of this section, a State or locality may follow the 
hearing procedures set out in paragraphs (a)(2)(iii) through (a)(2)(v) 
of this section, substituting, where necessary, appropriate State or 
local officials for designated FDA officials or may utilize comparable 
State or local hearing procedures if such procedures satisfy due 
process.

    Dated: September 15, 2004.
Lester M. Crawford,
Acting Commissioner of Food and Drugs.
    Note: The following appendices will not appear in the Code of 
Federal Regulations.

Appendix A to the PRIA: Costs of Alternative Testing and Diversion 
Scenarios

    The costs of testing and diversion depend on a number of factors, 
including the probabilities of SE-positive results for environmental 
and egg tests, the costs of testing and diversion, and whether the 
layers are molted. FDA assumes that there are five possible scenarios 
for non-molted layers and seventeen possible scenarios for molted 
layers.
    Non-molted layers--all scenarios. The environmental testing costs 
are calculated to be the laboratory cost of environmental testing 
(CNT) plus the labor cost of collecting one test 
(CNL) times the number of tests to be collected 
(NNT), or: CostNT = (CNT + 
CNL) x NNTS.
    Scenario 1: 40 to 45 week environmental test negative.
     In the first scenario, the 40 to 45 week environmental 
test is negative. No other tests are taken.
     There are no egg testing or diversion costs in this 
scenario.
     The first scenario occurs with a probability 
PS1 = (1 - pN1), where pN1 is the 
probability that the 40 to 45 week environmental test is positive.
    Scenario 2: 40 to 45 week environmental test positive. Egg testing 
negative.
     In scenario two, a positive 40 to 45 week environmental 
test triggers egg testing. All 4 of the required egg tests come up 
negative. No other tests are performed.
     This is the first scenario under which eggs will have to 
be tested. The cost of an egg test is the sum of the laboratory 
(CGT), labor (CGL), and lost revenue 
(CGG) costs for a 20-egg test times the number of 20 egg 
batches to be tested (NGT) times the number of test 
collections (4). If 1,000 eggs were tested, they would be tested in 50 
20-egg tests. The total cost of egg testing is therefore: 
CostGT2 = (CGT + CGL + CGG) 
x NGT x 4.
     There are no diversion costs in this scenario.
     The probability that this scenario will occur is equal to 
PS2 = pN1 x (1 - pG1), where 
pG1 is the probability that the first egg test is positive.
    Scenario 3: 40 to 45 week environmental and first egg test 
positive. Subsequent egg test negative.
     In this scenario, a positive 40 to 45 week environmental 
test triggers egg testing. One of the 4 required egg tests is positive, 
and the farmer must divert. The next 4 egg tests are negative, 
diversion is stopped, and eggs are tested monthly for the life of the 
flock without any additional positive results.
     In this case, there will be two sets of egg tests. In 
addition, the farm will be expected to test monthly for the remaining 
life of the flock (LF - 1).\1\ The total cost of egg testing is 
therefore: CostGT3 = (CGT + CGL + 
CGG) x NGT x (8 + LF3 - 1).
---------------------------------------------------------------------------

    \1\ The remaining test life of the flock is LF -1 (LF is the 
remaining number of months) because the last month of lay generally 
produces substandard eggs that are sent to the breaker regardless of 
SE status. Thus, this last month is omitted from our calculations.
---------------------------------------------------------------------------

     The cost of diversion is the price differential between a 
table egg and an SE-positive egg (DC) times the number of days diverted 
times the number of eggs produced per day by a typical bird (0.72) 
times the number of layers in a typical layer house (HS). We expect 
that a set of four 1,000-egg tests will occur over a total of 8 weeks 
including laboratory time. Therefore, the total number of days diverted 
is equal to 56. This figure assumes that only one egg positive will be 
found and that diversion will end after eight weeks of testing. The 
total cost of diversion is: CostD3 = DC x 56 x 0.72 x HS.
     The probability that this scenario will occur is equal to 
PS3 = pN1 x pG1 x (1 - 
pG2), where pG2 is the probability that the 
second egg test is positive.
    Scenario 4: 40 to 45 week environmental and first two egg tests 
positive. Eventually test off diversion.
     In this scenario, a positive 40 to 45 week environmental 
test triggers egg testing. One of the first 4 1,000-egg tests comes up 
positive, and the farmer must divert. After the positive egg test, one 
of the next 4 egg tests is also positive, and the farmer continues to 
divert. However, the farmer eventually tests off diversion, and eggs 
are tested monthly for the life of the flock.
     The cost of egg testing in this scenario builds on the 
cost of egg testing in scenario 3. In this case the cost is equivalent 
to that of the last case with the exception that testing continues to 
occur halfway to the end of lay. Mathematically, this is written as: 
CostGT4 = (CGT + CGL + CGG) 
x [(8 x NGT) + 2.17 x (LF4 - 1) x NGT5 
/ 2 + (LF4 - 1) x NGT / 2].
     The cost of diversion equals the cost of diversion in 
scenario 3 (DC x 56 x 0.72 x HS) plus the cost of diversion for half of 
the remaining lay period DC x [30 x (LF4 - 1) / 2] x 0.72 x 
HS. After like terms are grouped, the total cost under this scenario 
can be written as: CostD4 = (DC x 0.72 x HS) x (56 + 30 x 
(LF4 - 1) / 2).
     The probability that this scenario will occur is equal to 
PS4 = pN1 x pG1 x pG2 x (1 
- pG3), where pG3 is the probability that the 
farm never tests out of diversion.
    Scenario 5: 40 to 45 week environmental and first two egg tests 
positive. Farm stays on diversion for the life of the flock.
     In this scenario, a positive 40 to 45 week test triggers 
egg testing. One of the first 4 egg tests comes up positive, and the 
farmer must divert. One of the 4 subsequent 1,000-egg tests also comes 
up positive and the farmer continues to divert. Subsequent tests 
continue to be positive, and the farmer diverts for the life of the 
flock.
     The cost of egg testing is equivalent to the cost of 
testing every two weeks for the life of the flock following the first 
egg positive, or CostGT5 = 2 x (CGT + 
CGL + CGG) x [(8 x NGT) + 2.17 x 
(LF5 - 1) x NGT.
     The farm is forced to divert eggs for the life of the 
flock following the first egg positive, or CostD = (DC x 
0.72 x HS) x (56 + 30 x (LF5 - 1)).
     The probability that this scenario will occur is equal to 
PS5 = pN1 x pG1 x pG2 x 
pG3.
    a. Molted layers. The introduction of molted flocks complicates the 
analysis of testing costs by introducing new protocols for end of cycle 
testing. Molting increases the original 6 scenarios to 22. Also, molted 
flocks have a much longer life expectancy than do non-molted flocks. 
Any problems resulting from analyzing flocks with different life spans 
is dealt with in the latter part of this appendix where the costs are 
annualized. The method used to estimate the cost of testing and 
diversion for molted flocks is outlined below.
    b. All scenarios. Under all scenarios with molted layers, the 
producer will have to conduct two sets of environmental tests. The 
costs of

[[Page 56899]]

environmental testing are: CostNT = 2 x (CNT + 
CNL) x NNTS.
    Scenario 1a: 40 to 45 week environmental test negative. Post-molt 
environmental test negative.
     In the first scenario for molted layers, both the 40 to 45 
week and the post-molt environmental tests are negative. No further 
action is required.
     There are no egg testing or diversion costs in this 
scenario.
     The first scenario occurs with a probability 
PS1a = (1 - pN1) x (1 - pN3A), where 
pN1 is the probability that the 40 to 45 week environmental 
test is positive and pN3A is the probability that the post-
molt environmental test is positive.
    Scenario 1b: 40 to 45 week environmental test negative. Post-molt 
environmental test positive. Egg test negative.
     In this scenario, the 40 to 45 week environmental test is 
negative. However, a positive post-molt test triggers egg testing. 
Further testing is avoided because all 4 egg tests are negative.
     As with non-molted flocks, the cost of an egg test is the 
sum of the laboratory (CGT), labor (CGL), and 
lost revenue (CGG) costs for a 20-egg test times the number 
of 20-egg batches to be tested (NGT) times the number of 
test collections (4). The total cost of egg testing is therefore: 
CostGT1b = (CGT + CGL + 
CGG) x NGT x 4.
     There are no diversion costs in this scenario.
     This scenario occurs with a probability PS1b = 
(1 - pN1) x pN3A x (1 - pG1A), where 
pG1A is the probability that the first set of egg tests, if 
taken, will be positive.
    Scenario 1c: 40 to 45 week environmental test negative. Post-molt 
environmental test positive. First egg test positive. Second egg test 
negative.
     In this scenario, the 40 to 45 week environmental test is 
negative. However, a positive post-molt environmental test triggers egg 
testing. One of the first 4 post-molt eggs tests is positive, 
triggering diversion. The 4 post-molt tests are negative and diversion 
is stopped. Eggs are tested monthly for the life of the flock without 
any additional positive test results.
     In this case, there will be two sets of egg tests. In 
addition, the farm will be expected to test monthly for the remaining 
life of the flock (LF1c - 1). The total cost of egg testing 
is therefore: CostGT1c = (CGT + CGL + 
CGG) x NGT x (8 + LF1c - 1).
     The cost of diversion is the price differential between a 
table egg and an SE-positive egg (DC) times the number of days diverted 
times the number of eggs produced per day by a typical bird (0.72) 
times the number of layers in a typical poultry house (HS). We expect 
that a set of four 1,000-egg tests will occur over a total of 8 weeks 
including laboratory time. Therefore, the total number of days diverted 
is equal to 56. The total cost of diversion is: CostD1c = DC 
x 56 x 0.72 x HS.
     This scenario occurs with a probability PS1c = 
(1 - pN1) x pN3A x pG1A x (1 - 
pG2A), where pG2A is the probability that a 
second set of egg tests, if taken, will be positive.
    Scenario 1d: 40 to 45 week environmental test negative. Post-molt 
environmental test positive. First two egg tests positive. Farm 
eventually tests out of diversion.
     In this scenario, the 40 to 45 week environmental test is 
negative. However, a positive post-molt environmental test triggers egg 
testing. One of the first 4 egg tests comes up positive, and the farmer 
must divert. One of the second four egg tests also comes up positive, 
and the farmer continues to divert. Eventually, however, the farm is 
able to test off diversion and diversion is stopped. Eggs are tested 
monthly for the life of the flock without any additional positive test 
results.
     In this case, there will be eight egg tests (occurring in 
2 week intervals), tests every 2 weeks for half of the remaining life 
of the flock, and monthly tests for the remaining half of the life of 
the flock. The total cost of egg testing is therefore: 
CostGT1d = (CGT + CGL + 
CGG) x NGT x [8 + 2.17 x (LF1d - 1) / 
2 + (LF1d - 1) / 2].
     In this case, diversion costs will be borne by the 
producer for the 8 weeks of the second set of egg tests plus half of 
the remaining lay period. The total cost of diversion is: 
CostD1d = DC x 0.72 x HS x [56 + 30 x (LF1d - 1) 
/ 2].
     This scenario occurs with a probability PS1d = 
(1 - pN1) x pN3A x pG1A x 
pG2A x (1- pG3A), where pG3A is the 
probability that a farm with two positive sets of egg tests will not be 
able to test off of diversion.
    Scenario 1e: 40 to 45 week environmental test negative. Post-molt 
environmental test positive. First two egg tests positive. Farm diverts 
to depopulation.
     In this scenario, the 40 to 45 week environmental test is 
negative. However, a positive post-molt environmental test triggers egg 
testing. One of the first four egg tests is positive, and the farmer 
must divert. One of the second four egg tests also comes up positive, 
and the farmer continues to divert. The farm is never able to test off 
diversion.
     The cost of egg testing is equivalent to the cost of 
testing every two weeks for the life of the flock following the first 
egg positive, or CostGT1e = (CGT + CGL 
+ CGG) x NGT x [8 + 2.17 x (LF1e - 
1)].
     In this case, diversion costs will be borne by the 
producer for the 8 weeks of the second set of egg tests plus all of the 
remaining lay period. The total cost of diversion is: 
CostD1e = DC x 0.72 x HS x [56 + 30 ' (LF1e - 
1)].
     This scenario occurs with a probability PS1e = 
(1 - pN1) x pN3A x pG1A x 
pG2A x pG3A.
    Scenario 2a: 40 to 45 week environmental test positive. Pre-molt 
egg test negative. Post-molt environmental test is negative.
     The 40 to 45 week environmental test is positive. The 4 
egg tests are negative. No action is taken until the post-molt 
environmental test, which is negative. Further testing is avoided.
     The 4 egg tests are done pre-molt at a cost of: 
CostGT = (CGT + CGL + CGG) 
x NGT x 4.
     There are no diversion costs in this scenario.
     This scenario occurs with probability PS2a = 
pN1 x pN2 x (1 - pG1E) x (1 - 
pN3C), where pG1E is the probability that a pre-
molt egg test will be positive and pN3C is the probability 
that the end of cycle environmental test will be positive.
    Scenario 2b: 40 to 45 week environmental test positive. Pre-molt 
egg test negative. Post-molt environmental test positive. Egg test 
negative.
     The 40 to 45 week environmental test is positive. The four 
egg tests are negative. No action is taken until the post-molt 
environmental test, which is positive. All four post-molt egg tests are 
negative.
     In this case two sets of 4 1,000-egg tests are required. 
The cost of this testing is: CostGT = (CGT + 
CGL + CGG) x NGT x 8.
     There are no diversion costs in this scenario.
     This scenario occurs with a probability PS2b = 
pN1 x pN2 x (1 - pG1E) x 
pN3C x (1 - pG1c), where pG1C is the 
probability that the first set of post-molt egg tests will be positive.
    Scenario 2c: 40 to 45 week environmental test positive. Pre-molt 
egg test negative. Post-molt environmental test positive. First egg 
test positive. Second egg test negative.
     The 40 to 45 week environmental test is positive. All four 
required egg tests are negative. No action is taken. The post-molt 
environmental test is positive, triggering egg testing. One of the four 
egg tests is positive, triggering diversion. All four of the second 
tests

[[Page 56900]]

are negative, and diversion is stopped. Eggs are tested monthly for the 
remaining life of the flock.
     In this case, there will be three sets of egg tests. In 
addition, the farm will be expected to test monthly for the remaining 
life of the flock (LF2c - 1). The total cost of egg testing 
is therefore: CostGT = (CGT + CGL + 
CGG) x NGT x (12 + LF2c - 1).
     The cost of diversion is the price differential between a 
table egg and a SE positive egg (DC) times the number of days diverted 
times the number of eggs produced per day by a typical bird (0.72) 
times the number of layers in a typical layer house (HS). We expect 
that a set of four 1,000-egg tests will occur over a total of 8 weeks, 
including laboratory time. Therefore, the total number of days diverted 
is equal to 56. The total cost of diversion is: CostD = DC x 
56 x 0.72 x HS.
     This scenario occurs with a probability PS2c = 
pN1 x pN2 x (1 - pG1E) x 
pN3C x pG1c x (1 - pG2C), where 
pG2C is the probability that a second set of egg tests, if 
taken, will be positive.
    Scenario 2d: 40 to 45 week environmental test positive. Pre-molt 
egg test negative. Post-molt environmental test positive. The first two 
egg tests positive. Farm eventually tests out of diversion.
     The 40 to 45 week environmental test is positive. All four 
pre-molt egg tests are negative. No action is taken. The post-molt 
environmental test is positive, triggering egg testing. One of the 
first four post-molt egg tests comes up positive, and the farmer must 
divert. One of the second four post-molt egg tests also comes up 
positive, and the farmer continues to divert. The farm is eventually 
able to test off of diversion. Eggs are tested monthly for the 
remaining life of the flock.
     In this case, there will be 12 egg tests (occurring in 2 
week intervals), tests every 2 weeks for half of the remaining life of 
the flock, and monthly tests for the remainder of the life of the 
flock. The total cost of egg testing is therefore: CostGT = 
(CGT + CGL + CGG) x NGT x 
[12 + 2.17 x (LF2d - 1) / 2 + (LF2d - 1) / 2].
     In this case, diversion costs will be borne by the 
producer for the 8 weeks of the second set of egg tests plus half of 
the remaining lay period. The total cost of diversion is: 
CostD = DC x 0.72 x HS x [56 + 30 x (LF2d - 1) / 
2].
     This scenario occurs with a probability PS2d = 
pN1 x pN2 x (1 - pG1E) x 
pN3C x pG1c x pG2C x (1 - 
pG3C), where pG3C is the probability that a farm 
with two positive sets of egg tests will not be able to test off of 
diversion.
    Scenario 2e: 40 to 45 week environmental test positive. Pre-molt 
egg test negative. Post-molt environmental test positive. First two egg 
tests positive. Farm diverts until depopulation.
     The 40 to 45 week environmental test is positive. All four 
pre-molt egg tests are negative. No action is taken. The post-molt 
environmental test is positive, triggering egg testing. One of the 
first four post-molt egg tests comes up positive, and the farmer must 
divert. One of the second 4 post-molt egg tests also comes up positive, 
and the farmer continues to divert. The farm is never able to test out 
of diversion.
     The cost of egg testing is equivalent to the cost of 
testing every 2 weeks for the life of the flock following the first egg 
positive, or CostGT = (CGT + CGL + 
CGG) x NGT x [12 + 2.17 x (LF2e - 1)].
     In this case, diversion costs will be borne by the 
producer for the 8 weeks of the second set of egg tests plus all of the 
remaining lay period. The total cost of diversion is: CostD 
= DC x 0.72 x HS x [56 + 30 x (LF2e - 1)].
     This scenario occurs with a probability PS2e = 
pN1 x pN2 x (1 - pG1E) x 
pN3C x pG1c x pG2C x pG3C.
    Scenario 3a: 40 to 45 week environmental test positive. First pre-
molt egg test positive. Second pre-molt egg test negative. Post-molt 
environmental test is negative.
     The 40 to 45 week environmental test is positive. On of 
the first four pre-molt egg tests is positive, triggering diversion. 
All four of the second pre-molt tests are negative, ending diversion. 
No further action is taken until the post-molt environmental test, 
which is negative. Further testing is avoided.
     Two sets of egg tests are carried out pre-molt. Also, 
monthly egg tests must be taken for the life of the flock. The cost of 
egg testing is: CostGT = (CGT + CGL + 
CGG) x NGT x (8 + LF3a - 1).
     Eggs are diverted between the first and second egg tests. 
We expect that a set of 4 1,000-egg tests will occur over a total of 8 
weeks, including laboratory time. Therefore, the total number of days 
diverted is equal to 56. The total cost of diversion is: 
CostD = DC x 56 x 0.72 x HS.
     This scenario occurs with probability PS3a = 
pN1 x pN2 x pG1E x (1 - 
pG2E) x (1 - pN4D), where pG2E is the 
probability that the second set of pre-molt egg tests will be positive 
and pN3D is the probability that the end of cycle 
environmental test will be positive.
    Scenario 3b: 40 to 45 week environmental test positive. First pre-
molt egg test positive. Second pre-molt egg test negative. Post-molt 
environmental test positive. Egg test negative.
     The 40 to 45 week environmental test is positive. One of 
the first four pre-molt egg tests is positive, triggering diversion. 
All four of the second pre-molt egg tests are negative, ending 
diversion. No action is taken until the post-molt environmental test, 
which is positive. The first four post-molt egg tests are negative.
     In this case, three sets of egg tests are required. 
Furthermore, monthly egg testing is required for the life of the flock. 
The cost of this testing is: CostGT = (CGT + 
CGL + CGG) x NGT x (12 + 
LF3b - 1).
     Eggs are diverted between the first and second egg tests. 
We expect that a set of four 1,000-egg tests will occur over a total of 
8 weeks, including laboratory time. Therefore, the total number of days 
diverted is equal to 56. The total cost of diversion is: 
CostD = DC x 56 x 0.72 x HS.
     This scenario occurs with a probability PS3b = 
pN1 x pN2 x pG1E x (1 - 
pG2E) x pN4D x (1 - pG1D), where 
pG1D is the probability that the first set of post-molt egg 
tests will be positive.
    Scenario 3c: 40 to 45 week environmental test positive. First pre-
molt egg test positive. Second pre-molt egg test negative. Post-molt 
environmental test positive. First egg test positive. Second egg test 
is negative.
     The 40 to 45 week environmental test is positive. One of 
the first four pre-molt egg tests is positive, triggering diversion. 
The second 4 pre-molt egg tests are negative, ending diversion. No 
action is taken until the post-molt environmental test, which is 
positive. One of the first four post-molt egg tests is positive, 
triggering diversion. The second four post-molt egg tests are negative 
and diversion is stopped. Eggs are tested monthly for the remaining 
life of the flock.
     In this case, there will be four sets of egg tests. In 
addition, the farm will be expected to test monthly for the remaining 
life of the flock (LF3c - 1). The total cost of egg testing 
is therefore: CostGT = (CGT + CGL + 
CGG) x NGT x (16 + LF3c - 1).
     Twice in the life of this flock eggs have tested positive 
in one test and negative in the next. We expect that a set of four 
1,000-egg tests will occur over a total of 8 weeks, including 
laboratory time. Therefore, the total number of days diverted is equal 
to 56. The total cost of diversion is: CostD = DC x 112 x 
0.72 x HS.
     This scenario occurs with a probability PS3c = 
pN1 x pN2 x pG1E x (1 - 
pG2E) x pN4D x pG1D x (1 - 
pG2D), where

[[Page 56901]]

pG2D is the probability that a second set of egg tests, if 
taken, will be positive.
    Scenario 3d: 40 to 45 week environmental test positive. First pre-
molt egg test positive. Second pre-molt egg test negative. Post-molt 
environmental test positive. First two egg tests positive. Farm 
eventually tests out of diversion.
     The 40 to 45 week environmental test is positive. One of 
the first four pre-molt egg tests is positive, triggering diversion. 
The second four pre-molt egg tests are negative, ending diversion. No 
action is taken until the post-molt environmental test, which is 
positive. One of the first four post-molt egg tests comes up positive, 
and the farmer must divert. One of the second four post-molt egg tests 
also comes up positive, and the farmer continues to divert. The farm is 
eventually able to test off of diversion. Eggs are tested monthly for 
the remaining life of the flock.
     In this case, there will be eight egg tests (occurring in 
2 week intervals), tests every 2 weeks for half of the remaining life 
of the flock, and monthly tests for the remainder of the life of the 
flock. The total cost of egg testing is therefore: CostGT = 
(CGT + CGL + CGG) x NGT x 
[16 + 2.17 x (LF3d - 1) / 2 + (LF3d - 1) / 2].
     In this case, diversion costs will be borne by the 
producer for the 8 weeks of the second set of egg tests plus half of 
the remaining lay period. The total cost of diversion is: 
CostD = DC x 0.72 x HS x [112 + 30 x (LF3d - 1) / 
2].
     This scenario occurs with a probability PS3d = 
pN1 x pN2 x pG1E x (1 - 
pG2E) x pN4D x pG1D x pG2D 
x (1 - pG3D), where pG3D is the probability that 
a farm with two positive sets of egg tests will not be able to test off 
of diversion.
    Scenario 3e: 40 to 45 week environmental test positive. First pre-
molt egg test positive. Second pre-molt egg test negative. Post-molt 
environmental test positive. First two egg tests positive. Farm diverts 
until depopulation.
     The 40 to 45 week environmental test is positive. One of 
the first four eggs tests is positive, triggering diversion. and the 
second four pre-molt tests are negative, ending diversion. No action is 
taken until the post-molt environmental test, which is positive. One of 
the first four post-molt egg tests comes up positive, and the farmer 
must divert. One of the second four post-molt egg tests also comes up 
positive, and the farmer continues to divert. The farm is never able to 
test out of diversion.
     The cost of egg testing is equivalent to the cost of 
testing every 2 weeks for the life of the flock following the first egg 
positive, or CostGT = (CGT + CGL + 
CGG) x NGT x [16 + 2.17 x (LF3e - 1)].
     In this case diversion costs will be borne by the producer 
for the 16 weeks following each second set of egg tests plus the 
remaining lay period. The total cost of diversion is: CostD 
= DC x 0.72 x HS x [112 + 30 x (LF3e - 1)].
     This scenario occurs with a probability PS3e = 
pN1 x pN2 x pG1E x (1 - 
pG2E) x pN4D x pG1D x pG2D 
x (1 - pG3D).
    Scenario 4: 40 to 45 week environmental test positive. First pre-
molt egg test positive. Second pre-molt egg test positive. Farm 
eventually tests out of diversion.
     The 40 to 45 week environmental test is positive. One of 
the first four pre-molt egg tests is positive, triggering diversion. 
One of the second four pre-molt egg tests is also positive. Because the 
farm is already under diversion at the time of molt no post-molt test 
is needed. However, the farm eventually tests out of diversion. Eggs 
are tested monthly for the remaining life of the flock.
     In this case there will be eight egg tests (occurring in 2 
week intervals), tests every 2 weeks for half of the remaining life of 
the flock, and monthly tests for the remainder of the life of the 
flock. The total cost of egg testing is therefore: CostGT = 
(CGT + CGL + CGG) x NGT x 
[8 + 2.17 x (LF4 - 1) / 2 + (LF4 - 1) / 2].
     Diversion costs will be borne by the producer for the 8 
weeks of the second set of egg tests plus half of the remaining lay 
period. The total cost of diversion is: CostD = DC x 0.72 x 
HS x [56 + 30 x (LF4 - 1) / 2].
     This scenario occurs with a probability PS4 = 
pN1 x pN2 x pG1E x pG2E x 
(1 - pG3E), where pG3e is the probability that a 
farm with two positive sets of egg tests will not be able to test off 
of diversion.
    Scenario 5: 40 to 45 week environmental test positive. First pre-
molt egg test positive. Second pre-molt egg test positive. Farm diverts 
until depopulation.
     The 40 to 45 week environmental test is positive. One of 
the first four pre-molt egg tests is positive, triggering diversion. 
One of the second four pre-molt egg tests is also positive. Because the 
farm is already under diversion at the time of molt, no post-molt test 
is needed. The farm is never able to test out of diversion.
     The cost of egg testing is equivalent to the cost of 
testing every two weeks for the life of the flock following the first 
egg positive, or CostGT = (CGT + CGL + 
CGG) x NGT x [8 + 2.17 x (LF5 - 1)].
     In this case, diversion costs will be borne by the 
producer for the 16 weeks following each second set of egg tests plus 
the remaining lay period. The total cost of diversion is: 
CostD = DC x 0.72 x HS x [56 + 30 x (LF5 - 1)].
     This scenario occurs with a probability PS5 = 
pN1 x pN2 x pG1E x pG2E x 
pG3E.

[[Page 56902]]

[GRAPHIC] [TIFF OMITTED] TP22SE04.000


Appendix C to the PRIA: Distributions Used in the Analysis of 
Uncertainty

[[Page 56903]]



            Distributions Used in the Analysis of Uncertainty
------------------------------------------------------------------------
           Variable            @Risk Formula Used          Notes
------------------------------------------------------------------------
Coverage of the Proposed Rule
------------------------------------------------------------------------
  Farms Selling to Retail (50  Risk Uniform (0%,   Egg Safety Action
   to 99 layers)                50%)                Group Approved
                                                    Assumption
------------------------------------------------------------------------
  Farms Selling to Retail      Risk Uniform (10%,  Egg Safety Action
   (100 to 399 layers)          90%)                Group Approved
                                                    Assumption
------------------------------------------------------------------------
  Farms Selling to Retail      Risk Uniform (50%,  Egg Safety Action
   (400 to 3000 layers)         100%)               Group Approved
                                                    Assumption
------------------------------------------------------------------------
  Farms Not Selling in Retail  Risk Uniform (0%,   Egg Safety Action
   that Sell Directly to        100%)               Group Approved
   Consumers                                        Assumption
------------------------------------------------------------------------
  Number of Houses per Farm    Risk Normal (1.7,   From Layers 99
   Site (3,000 to 19,999        0.5)
   layers)
------------------------------------------------------------------------
  Number of Houses per Farm    Risk Normal (1.8,   From Layers 99
   Site (20,000 to 49,999       0.2)
   layers)
------------------------------------------------------------------------
  Number of Houses per Farm    Risk Normal (2.4,   From Layers 99
   Site (50,000 to 99,999       0.3)
   layers)
------------------------------------------------------------------------
  Number of Houses per Farm    Risk Normal (7.4,   From Layers 99
   Site (Over 100,000 layers)   0.8)
------------------------------------------------------------------------
Egg Prices
------------------------------------------------------------------------
  Wholesale Price of Table     Risk Uniform        USDA
   Eggs- North Atlantic         ($0.66, $0.70)
------------------------------------------------------------------------
  Wholesale Price of Table     Risk Uniform        USDA
   Eggs- North Central          ($0.57, $0.69)
------------------------------------------------------------------------
  Wholesale Price of Table     Risk Uniform        USDA
   Eggs- South Atlantic         ($0.63, $0.76)
------------------------------------------------------------------------
  Wholesale Price of Table     Risk Uniform        USDA
   Eggs- South Central          ($0.69, $0.83)
------------------------------------------------------------------------
  Wholesale Price of Table     Risk Uniform        USDA
   Eggs- West                   ($0.75, $0.95)
------------------------------------------------------------------------
  Value of Checks/UnderGrades  Risk Uniform        USDA
   - North Atlantic             ($0.14, $0.19)
------------------------------------------------------------------------
  Value of Checks/UnderGrades  Risk Uniform        USDA
   - North Central              ($0.15, $0.18)
------------------------------------------------------------------------
  Value of Checks/UnderGrades  Risk Uniform        USDA
   - South Atlantic             ($0.14, $0.19)
------------------------------------------------------------------------
  Value of Checks/UnderGrades  Risk Uniform        USDA
   - South Central              ($0.15, $0.18)
------------------------------------------------------------------------
Benefits Estimation
------------------------------------------------------------------------
  Percent of SE cases from     Risk Uniform (53%,  CDC Range from
   Eggs                         79%)                Outbreaks
------------------------------------------------------------------------
  Percent of Illnesses         Risk Pert (0%, 3%,  Range Estimated in
   Resulting in Arthritis       10%)                Traceback Studies
------------------------------------------------------------------------
  Arthritis Cases that are     Risk Beta (10, 19)  Based on Zorn and
   Short-Term                                       Klontz
------------------------------------------------------------------------
  Percent of SE Positive Eggs  Risk Uniform        Estimate is a
   Diverted in First Four       (6.7%, 9.4%)        Synthesis of
   Years                                            'Initial' and
                                                    'Eventual' Estimates
                                                    from the Testing and
                                                    Diversion Model
------------------------------------------------------------------------
SE Monitored Chicks/Pullets
------------------------------------------------------------------------
  Percent of Pullets in NPIP   Risk Normal         Layers 99
   SE Monitored Program         (94.5%, 1.8%)
------------------------------------------------------------------------
Biosecurity
------------------------------------------------------------------------
  Percent of Large Houses      Risk Uniform (Risk  Layers 99
   with Footbaths               Normal (24.5%,
                                5.4%), Risk
                                Normal (24.6%,
                                6.4%))
------------------------------------------------------------------------
Rodent and Pest Control - Primary Method of Fly Control
------------------------------------------------------------------------
  Residual Spray (less than    Risk Normal         Layers 99
   20,000 layers)               (42.1%, 22.2%)
------------------------------------------------------------------------
  Baits (less than 20,000      Risk Normal         Layers 99
   layers)                      (11.4%, 6.5%)
------------------------------------------------------------------------
  Larvicide (feed) (less than  Risk Normal         Layers 99
   20,000 layers)               (17.2%, 9.8%)
------------------------------------------------------------------------
  Biological Predators less    Risk Normal         Layers 99
   than 20,000 layers)          (20.1%, 15.8%)
------------------------------------------------------------------------

[[Page 56904]]

 
  Other (less than 20,000      Risk Normal (2.4%,  Layers 99
   layers)                      2.3%)
------------------------------------------------------------------------
  None (less than 20,000       Risk Normal (6%,    Layers 99
   layers)                      4.8%)
------------------------------------------------------------------------
  Residual Spray (20,000 to    Risk Normal         Layers 99
   49,999 layers)               (14.2%, 7.4%)
------------------------------------------------------------------------
  Baits (20,000 to 49,999      Risk Normal         Layers 99
   layers)                      (32.6%, 9.4%)
------------------------------------------------------------------------
  Larvicide (spot) (20,000 to  Risk Normal (0.9%,  .....................
   49,999 layers)               0.6%)
------------------------------------------------------------------------
  Larvicide (feed) (20,000 to  Risk Normal         Layers 99
   49,999 layers)               (26.6%, 12.6%)
------------------------------------------------------------------------
  Sprays/Foggers (20,000 to    Risk Normal (4.2%,  Layers 99
   49,999 layers)               2.3%)
------------------------------------------------------------------------
  Other (20,000 to 49,999      Risk Normal (4%,    Layers 99
   layers)                      2%)
------------------------------------------------------------------------
  None (20,000 to 49,999       Risk Normal         Layers 99
   layers)                      (17.5%, 6.9%)
------------------------------------------------------------------------
  Residual Spray (50,000 to    Risk Normal (24%,   Layers 99
   99,999 layers)               7.2%)
------------------------------------------------------------------------
  Baits (50,000 to 99,999      Risk Normal         Layers 99
   layers)                      (38.5%, 8%)
------------------------------------------------------------------------
  Larvicide (feed) (50,000 to  Risk Normal         Layers 99
   99,999 layers)               (12.8%, 6.1%)
------------------------------------------------------------------------
  Sprays/Foggers (50,000 to    Risk Normal         Layers 99
   99,999 layers)               (12.9%, 6.8%)
------------------------------------------------------------------------
  Biological Predators         Risk Normal (6.8%,  Layers 99
   (50,000 to 99,999 layers)    3.1%)
------------------------------------------------------------------------
  None (50,000 to 99,999       Risk Normal (5%,    Layers 99
   layers)                      2.1%)
------------------------------------------------------------------------
  Residual Spray (Over         Risk Normal (14%,   Layers 99
   100,000 layers)              3.9%)
------------------------------------------------------------------------
  Baits (Over 100,000 layers)  Risk Normal         Layers 99
                                (39.1%, 8%)
------------------------------------------------------------------------
  Larvicide (spot) (Over       Risk Normal (0.8%,  Layers 99
   100,000 layers)              0.7%)
------------------------------------------------------------------------
  Larvicide (feed) (Over       Risk Normal (9.2%,  Layers 99
   100,000 layers)              2.9%)
------------------------------------------------------------------------
  Sprays/Foggers (Over         Risk Normal         Layers 99
   100,000 layers)              (10.4%, 4%)
------------------------------------------------------------------------
  Biological Predators (Over   Risk Normal         Layers 99
   100,000 layers)              (12.9%, 6.4%)
------------------------------------------------------------------------
  Other (Over 100,000 layers)  Risk Normal (4.8%,  Layers 99
                                2.3%)
------------------------------------------------------------------------
  None (Over 100,000 layers)   Risk Normal (8.8%,  Layers 99
                                2.4%)
------------------------------------------------------------------------
Rodent and Pest Control - Primary Method of Rodent Control
------------------------------------------------------------------------
  Chemicals or Bait (less      Risk Normal         Layers 99
   than 20,000 layers)          (63.6%, 17.6%)
------------------------------------------------------------------------
  Traps or Tape (less than     Risk Normal         Layers 99
   20,000 layers)               (17.6%, 15.7%)
------------------------------------------------------------------------
  Cats (less than 20,000       Risk Normal         Layers 99
   layers)                      (18.8%, 10.3%)
------------------------------------------------------------------------
  Chemicals or Bait (20,000    Risk Normal         Layers 99
   to 49,999 layers)            (71.6%, 6.4%)
------------------------------------------------------------------------
  Traps or Tape (20,000 to     Risk Normal (7.4%,  Layers 99
   49,999 layers)               3.6%)
------------------------------------------------------------------------
  Cats (20,000 to 49,999       Risk Normal (18%,   Layers 99
   layers)                      6.6%)
------------------------------------------------------------------------
  None (20,000 to 49,999       Risk Normal (3%,    Layers 99
   layers)                      2%)
------------------------------------------------------------------------
  Chemicals or Bait(50,000 to  Risk Normal (94%,   Layers 99
   99,999 layers)               2%)
------------------------------------------------------------------------
  Traps or Tape (50,000 to     Risk Normal (2.2%,  Layers 99
   99,999 layers)               1%)
------------------------------------------------------------------------
  Cats (50,000 to 99,999       Risk Normal (3.8%,  Layers 99
   layers)                      1.6%)
------------------------------------------------------------------------
  Chemicals or Bait (Over      Risk Normal         Layers 99
   100,000 layers)              (90.6%, 2.7%)
------------------------------------------------------------------------
  Traps or Tape (Over 100,000  Risk Normal (6.6%,  Layers 99
   layers)                      2.4%)
------------------------------------------------------------------------
  Cats (Over 100,000 layers)   Risk Normal (1.4%,  Layers 99
                                0.7%)
------------------------------------------------------------------------

[[Page 56905]]

 
  Other (Over 100,000 layers)  Risk Normal (1%,    Layers 99
                                0.5%)
------------------------------------------------------------------------
  None (Over 100,000 layers)   Risk Normal (0.4%,  Layers 99
                                0.3%)
------------------------------------------------------------------------
Rodent and Pest Control - Other
------------------------------------------------------------------------
  Cost of Fly Control (3,000   Risk Uniform        RTI costs using
   to 19,999 layers)            ($3,028, $5,560)    assumptions of low
                                                    and high severity
                                                    fly problems
------------------------------------------------------------------------
  Cost of Fly Control (20,000  Risk Uniform        RTI costs using
   to 49,999 layers)            ($5,342, $9,675)    assumptions of low
                                                    and high severity
                                                    fly problems
------------------------------------------------------------------------
  Cost of Fly Control (50,000  Risk Uniform        RTI costs using
   to 99,999 layers)            ($9,873, $17,979)   assumptions of low
                                                    and high severity
                                                    fly problems
------------------------------------------------------------------------
  Cost of Fly Control (Over    Risk Uniform        RTI costs using
   100,000 layers)              ($48,626,           assumptions of low
                                $88,228)            and high severity
                                                    fly problems
------------------------------------------------------------------------
Cleaning and Disinfecting
------------------------------------------------------------------------
  Manure Removal - Between     Risk Normal         Layers 99
   Each Flock                   (96.6%, 1.6%)
------------------------------------------------------------------------
  Manure Removal - After 2 or  Risk Normal (3.4%,  Layers 99
   More Flocks                  1.6%)
------------------------------------------------------------------------
  Dry Clean - Between Each     Risk Normal         Layers 99
   Flock                        (79.4%, 3.7%)
------------------------------------------------------------------------
  Dry Clean - After 2 or More  Risk Normal (1.1%,  Layers 99
   Flocks                       0.6%)
------------------------------------------------------------------------
  Wet Clean - Between Each     Risk Normal         Layers 99
   Flock                        (30.6%, 4.5%)
------------------------------------------------------------------------
  Wet Clean - After 2 or More  Risk Normal (23%,   Layers 99
   Flocks                       5.7%)
------------------------------------------------------------------------
  Disinfect - Between Each     Risk Normal         Layers 99
   Flock                        (44.5%, 5.4%)
------------------------------------------------------------------------
  Disinfect - After 2 or More  Risk Normal         Layers 99
   Flocks                       (20.6%, 5.9%)
------------------------------------------------------------------------
Training
------------------------------------------------------------------------
  Tuition                      Risk Uniform        Web Sources
                                ($450, $550)
------------------------------------------------------------------------
  Travel                       Risk Pert           See Text
                                ($0,$250,$1000)
------------------------------------------------------------------------
  Farms Not on a QA Plan that  Risk Uniform (0%,   Assumption
   will be Affected by the      100%)
   Proposed Rule
------------------------------------------------------------------------
Testing and Diversion
------------------------------------------------------------------------
  Current Positive             Risk Uniform        See Text
   Environmental Tests          (7.1%, Risk Pert
                                (2%, 8%, 40%))
------------------------------------------------------------------------
  Probability Random Swabbing  Risk Uniform (0%,   Assumption
   Regime is Chosen by FDA      100%)
------------------------------------------------------------------------
  Percent of Farms Adequately  Risk Uniform (0%,   52% are currently
   Testing Environments         52%)                conducting some
                                                    level of testing
                                                    (Layers 99). Most of
                                                    these farms will not
                                                    be conducting an
                                                    adequate level of
                                                    testing.
------------------------------------------------------------------------
Refrigeration
------------------------------------------------------------------------
  Percent of Eggs Processed    Risk Normal         Layers 99
   Off-Farm (3,000 to 19,999    (98.3%, 1.3%)
   layers)
------------------------------------------------------------------------
  Percent of Eggs Processed    Risk Normal         Layers 99
   Off-Farm (20,000 to 49,999   (96.3%, 1.4%)
   layers)
------------------------------------------------------------------------
  Percent of Eggs Processed    Risk Normal         Layers 99
   Off-Farm (50,000 to 99,999   (83.1%, 7.6%)
   layers)
------------------------------------------------------------------------
  Percent of Eggs Processed    Risk Normal         Layers 99
   Off-Farm (Over 100,000       (65.6%, 6%)
   layers)
------------------------------------------------------------------------
  Percent of Eggs Stored at    Risk Normal         Layers 99
   Less then 45 Degrees         (21.9%, 16.1%)
   (3,000 to 19,999 layers)
------------------------------------------------------------------------

[[Page 56906]]

 
  Percent of Eggs Stored at    Risk Normal         Layers 99
   Less then 45 Degrees         (24.2%, 13.4%)
   (20,000 to 49,999 layers)
------------------------------------------------------------------------
  Percent of Eggs Stored at    Risk Normal         Layers 99
   Less then 45 Degrees         (11.1%, 3.6%)
   (50,000 to 99,999 layers)
------------------------------------------------------------------------
  Percent of Eggs Stored at    Risk Normal         Layers 99
   Less then 45 Degrees (Over   (27.3%, 8.6%)
   100,000 layers)
------------------------------------------------------------------------
Refrigeration
------------------------------------------------------------------------
  Farms that Store Eggs at     Risk Normal         Layers 99
   Greater than 60 Degrees      (42.7%, 22.7%)
   (3,000 to 19,999 layers)
------------------------------------------------------------------------
  Farms that Store Eggs at     Risk Normal         Layers 99
   Greater than 60 Degrees      (22.6%, 8.8%)
   (20,000 to 49,999 layers)
------------------------------------------------------------------------
  Farms that Store Eggs at     Risk Normal         Layers 99
   Greater than 60 Degrees      (37.7%, 10.5%)
   (50,000 to 99,999 layers)
------------------------------------------------------------------------
  Farms that Store Eggs at     Risk Normal         Layers 99
   Greater than 60 Degrees      (17.1%, 5.1%)
   (Over 100,000 layers)
------------------------------------------------------------------------
  Farms that Store Eggs at 50  Risk Normal         Layers 99
   to 60 Degrees (3,000 to      (35.4%, 17.2%)
   19,999 layers)
------------------------------------------------------------------------
  Farms that Store Eggs at 50  Risk Normal         Layers 99
   to 60 Degrees (20,000 to     (53.2%, 12.1%)
   49,999 layers)
------------------------------------------------------------------------
  Farms that Store Eggs at 50  Risk Normal         Layers 99
   to 60 Degrees (50,000 to     (51.2%, 13%)
   99,999 layers)
------------------------------------------------------------------------
  Farms that Store Eggs at 50  Risk Normal         Layers 99
   to 60 Degrees (Over          (55.6%, 17.4%)
   100,000 layers)
------------------------------------------------------------------------
  Egg Room Construction        Risk Uniform        RTI estimates for
   (3,000 to 19,999 layers)     ($3,723, $5,584)    costs of $50 and $75
                                                    per square foot
------------------------------------------------------------------------
  Egg Room Construction        Risk Uniform        RTI estimates for
   (20,000 to 49,999 layers)    ($8,036, $12,054)   costs of $50 and $75
                                                    per square foot
------------------------------------------------------------------------
  Egg Room Construction        Risk Uniform        RTI estimates for
   (50,000 to 99,999 layers)    ($15,936,           costs of $50 and $75
                                $23,903)            per square foot
------------------------------------------------------------------------
  Egg Room Construction (Over  Risk Uniform        RTI estimates for
   100,000 layers)              ($69,625,           costs of $50 and $75
                                $104,438)           per square foot
------------------------------------------------------------------------
Note. We list the formulas used by @Risk, the program we used to run the
  simulations. Risk Uniform generates a uniform distribution with
  parameters representing minimum and maximum values. Risk Normal is the
  normal distribution, with the parameters representing mean and
  standard deviation. Risk Pert is the Beta-Pert Distribution; the three
  parameters represent the minimum, most likely, and maximum values.
  Risk Beta is a Beta distribution with parameters based on the number
  of successes (adjusted for prior) and the number of failures (adjusted
  for prior).

[FR Doc. 04-21219 Filed 9-20-04; 11:00 am]
BILLING CODE 4160-01-S