Canada Gazette, Part I, Volume 155, Number 28: Regulations Amending the Compensation for Destroyed Animals Regulations
July 10, 2021
Statutory authority
Health of Animals Act
Sponsoring agency
Canadian Food Inspection Agency
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Compensation for Destroyed Animals Regulations (CDAR), made pursuant to section 55 of the Health of Animals Act (HAA), set out the maximum compensation amounts for each animal or species listed, allowing for reasonable compensation to be paid to owners of animals ordered destroyed by the Canadian Food Inspection Agency (CFIA).
The maximum compensation amounts listed for bison in the CDAR were last updated in 2007. The CFIA conducted an analysis of auction prices for breeding bison between 2009 and 2019 and determined that the market value had significantly increased since 2007. Therefore, there is a need to revise the current maximum compensation amounts to reflect current and future trends of the market value for bison and to encourage prompt reporting in the event of an animal disease outbreak.
Background
To prevent or control the spread of animal disease within Canada, the CFIA can order compensation to the owner of animals destroyed pursuant to paragraph 27.6(1)(b) or subsection 48(1) of the HAA. The objective of compensation is to encourage the early reporting of animal disease and the cooperation of animal owners in the CFIA’s efforts to control a disease.
Section 51 of the HAA provides the Minister of Agriculture and Agri-Food (the “Minister”) with the authority to order compensation to the owner of an animal that is ordered destroyed. The actual compensation awarded is based on the market value, as determined by the Minister, that the animal would have had at the time of its evaluation if it had not been required to be destroyed, minus the value of its carcass, as determined by the Minister. The market value shall not exceed the maximum amount established with respect to the animal as prescribed in the schedule (section 2) of the CDAR.
The CDAR were published in 2000. The maximum amounts for each animal listed in the schedule (section 2) were revised and amended in July of 2007 and further amended in November of 2007. At the time, the maximum compensation amounts for the regulated categories “Bison (Bison bison) Bull, 1 year and older” and “Bison (Bison bison) All bison other than those referred to in item 9” were established at $4,000 and $2,500, respectively.
The market value of bison in Canada has increased since the maximum amounts for bison were last updated in 2007. An analysis completed by the CFIA considered data such as auction market prices and changes in the inflation rate, including projected inflation. The analysis shows that there is a need to amend the maximum amounts for bison that are ordered destroyed pursuant to the HAA. Consequently, the maximum compensation amounts currently specified in the CDAR must be amended to more accurately reflect the current market value for both regulated categories of bison.
Objective
The objective of this amendment is to establish new maximum compensation amounts in the CDAR for the two regulated categories of bison: “Bison (Bison bison) Bull, 1 year and older” and “Bison (Bison bison) All bison other than those referred to in item 9.” Doing so would promote early reporting of animal diseases by reducing the economic impact that results when an owner reports that their animal has a reportable disease, under the HAA.
Description
These amendments to the CDAR revise the maximum compensation amounts for bison ordered destroyed to reflect the current market value for both categories of bison, being the bison bull one year and older and all other bison. The new maximum compensation amounts are based on the current and future market value of bison. The amount of compensation awarded would be based on the market value of the animal ordered destroyed, not exceeding the maximum amount prescribed in the CDAR.
Column 3, in items 9 and 10 in the schedule (section 2) to the CDAR, would be amended as follows:
- Item 9: Bison (Bison bison) Bull, 1 year and older: $10,000; and
- Item 10: Bison (Bison bison) All bison other than those referred to in item 9: $6,000.
Regulatory development
Consultation
The Canadian Bison Association (CBA) represents the interests of the bison industry in Canada, and has approximately 550 members in Canada, as well as some in the United States. Within the CBA, there are six provincial associations spanning from British Columbia to Quebec.
In 2017, the CBA presented a case for raising the maximum compensation amounts to $15,000 and $7,500, respectively, for items 9 and 10 referenced above. The CFIA completed a preliminary analysis and engaged in discussions with the CBA. At the end of 2018, the CFIA shared the results of this preliminary analysis, which acknowledged a lack of data to support CBA’s recommended amounts.
In early 2020, the CBA met with the CFIA and advised that the CBA’s “Canadian National Show & Sale” auctions could be used as data, which includes auction prices, age, sex and weight of individual bison sold.
In November of 2020, the CFIA met with the CBA to present its methodology, analysis, and recommended amounts. Overall, the CBA reacted positively, in particular, on the data used (e.g. breeding bison) and the robustness of the CFIA’s analysis. The CBA requested a slight increase to the proposed amount for all bison other than bulls, given the unknown as to when future amendments to the CDAR are to take place. The CBA also advised that the “all other bison” category is too broad and does not distinguish between different kinds of bison (feeders, breeding, etc.) and suggested that it could be worthwhile to consider revamping the two categories for compensation. The CFIA reviewed its approach to account for future inflation. While the amounts originally shared with the CBA provided a 25% increase to account for future inflation (see “Data and methodology” section), the amounts were revised by providing a 30% increase.
Modern treaty obligations and Indigenous engagement and consultation
The proposed amendments are not expected to have any significant impacts on Indigenous peoples or modern treaty obligations.
Instrument choice
Status quo
The maximum compensation amounts for bison listed in the CDAR were last updated in 2007. In certain cases, the maximum compensation amounts are below the market value. Maintaining the status quo could result in the under-reporting of animal diseases by owners in the event of a disease outbreak, which could negatively impact control or eradication efforts.
Regulatory amendments
The regulatory option would update the maximum compensation amounts payable for bison to reflect current and future market value.
In the event of a suspected disease outbreak, updated maximum compensation values can encourage the early reporting of diseases and the cooperation of animal owners when assessing the market value of a particular animal.
Regulatory analysis
Data and methodology
The CFIA’s analysis used data from the CBA “Canadian National Show & Sale” auctions. These auctions occur once a year (per association) and typically feature breeding bison, which attracts higher values given their genetic traits. Therefore, the analysis mostly considers the auction results of the “premium” or “highest value” bison for a particular year and auction, which was considered to be relevant in setting a maximum compensation amount for bison. A 10-year period was chosen (2009 to 2019) as a broad range of data for the analysis.
The auction prices data was divided into two subsets to reflect each regulated category for bison in the CDAR. An identical analysis was completed for each category, as described below.
To set a revised maximum compensation amount, the CFIA applied an average value methodology along with confidence intervals. The latter focuses on a range of auction prices that is likely to include the actual average auction price with a stated degree of confidence. More importantly, it shows the upper bound (i.e. to recommend a maximum value) for which the actual average auction price could reside for a given level of confidence.
The CFIA reviewed confidence intervals at three distinct degrees of confidence (i.e. 90%, 95%, and 99%). The 99% confidence interval generated the broadest range of values, and the CFIA recommended selecting the maximum value of this range.
The analysis also considered external factors, including past and future changes in price levels, such as inflation, extreme outlier values, historical compensation payments and compensation schemes in other jurisdictions.
Past changes in price levels were examined using the Bank of Canada data, which can be found on the Inflation: Definitions, Graphs and Data web page. The CFIA determined that all auction prices should be increased to account for cumulative year-over-year inflation and future price-level changes. Following consultations with the CBA, the CFIA further determined that the assumed length of time, representing a 13-year period, should be extended to include the date for when the amendments are projected to come into force (2023), rather than the year that the analysis was completed (2020).
The remaining factors considered did not influence the analysis. Compensation amounts and frequency of payments were examined and did not appear to be a driving factor for increasing the maximum regulated amounts. The CFIA has not paid out compensation for bison ordered destroyed since 2013. When compared with other jurisdictions such as the United States, the Canadian federal compensation approach was found to be at least aligned as the American federal program. Finally, the CFIA reviewed outliers in the auction prices (prices were as low as $300 and as high as $35,000) and determined that removing them from the data would not contribute to setting the maximum amounts.
Recommendation
Based on the analysis described above, it is recommended that items 9 and 10 of the schedule (section 2) to the CDAR be amended as follows:
- Bison (Bison bison) Bull, 1 year and older: $10,000; and
- Bison (Bison bison) All bison other than those referred to in item 9: $6,000.
The amounts chosen reflect a high degree (99%) of statistical certainty and maintain the objective of setting a maximum amount. They represent the maximum of this interval, rounded to the nearest thousand, at a degree of statistical certainty that provides that largest range of values and, therefore, the highest maximum.
One-for-one rule and small business lens
The one-for-one rule does not apply as there is no incremental change in the administrative burden on business.
An analysis under the small business lens concluded that the proposed Regulations would not impact Canadian small businesses.
Regulatory cooperation and alignment
There are no regulatory cooperation and alignment considerations for the proposed amendments. As compensation is only available for Canadian producers, there would be no direct impact on international partners.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
No gender-based analysis plus impacts have been identified for this proposal.
Rationale
The setting of a maximum amount for compensation of a destroyed animal is an important part of animal disease control. A maximum compensation amount that reflects market values can be a powerful tool to limit animal disease outbreaks, safeguard animal health and public health and encourage the cooperation of industry.
The maximum compensation amounts for bison under the schedule (section 2) to the CDAR were last updated in 2007. These amounts are now outdated given the increased auction values for bison, slaughter prices for bison and prices in Canada overall (i.e. inflation) since that time. Therefore, there is a need to amend the maximum amounts to increase the maximum amount to be paid for bison that are ordered destroyed pursuant to the HAA. The proposed amendments to update the maximum compensation amounts for bison were developed in consultation with the CBA and are based on the current and future market value of bison.
Implementation, compliance and enforcement, and service standards
The authority for the Minister to make regulations establishing maximum amounts of compensation for animals ordered destroyed is contained in paragraph 55(b) of the HAA.
All compensation paid in accordance with the CDAR is recommended by a veterinary inspector, the Minister’s delegate, designated under the HAA.
The CFIA bases compensation amounts on the animal’s market value, at the time of its evaluation, up to a maximum amount as stipulated in the CDAR. At the time of evaluation, the CFIA will take into account all available market reports and supporting documents in order to reach a final market value. A mechanism for appeal of compensation amounts is available, as required, pursuant to the HAA.
The new maximum compensation amounts for each regulated category of bison would come into force upon registration and are not retroactive.
The CFIA is currently developing an Agency-wide Animal and Plant Compensation Policy that will set out a standardized approach to the CFIA’s management of animal and plant compensation. Specifically, the policy strives to enhance consistency, predictability, transparency and risk mitigation in the administration of compensation across sectors and commodities.
It is not anticipated that the proposed amendments will affect the application of existing CFIA service standards.
Contact
Regulatory, Legislative and Economic Affairs Division
Canadian Food Inspection Agency
1400 Merivale Road
Ottawa, Ontario
K1A 0Y9
Fax: 613‑773‑5692
Email: cfia.legislation-legislation.acia@canada.ca
PROPOSED REGULATORY TEXT
Notice is given that the Minister of Agriculture and Agri-Food, pursuant to paragraph 55(b) footnote a of the Health of Animals Act footnote b, proposes to make the annexed Regulations Amending the Compensation for Destroyed Animals Regulations.
Interested persons may make representations concerning the proposed Regulations within 75 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Regulatory, Legislative and Economic Affairs Division, Canadian Food Inspection Agency (email: cfia.legislation-legislation.acia@canada.ca).
Ottawa, June 14, 2021
Marie-Claude Bibeau
Minister of Agriculture and Agri-Food
Regulations Amending the Compensation for Destroyed Animals Regulations
Amendment
| Item | Column 3 Maximum Amount ($) |
|---|---|
| 9 | 10,000 |
| 10 | 6,000 |
Coming into Force
2 These Regulations come into force on the day on which they are registered.