The threat from fire and explosion would be diminished for the government's isolated laboratory on Plum Island "due to the low likelihood of any disease getting off of the island," the report said.

The new National Bio-and Agro-Defense Facility would replace the existing 24-acre research complex on Plum Island, which is about 100 miles northeast of New York City in the Long Island Sound. Besides foot-and-mouth disease, researchers also would study African swine fever, Japanese encephalitis, Rift Valley fever and the Hendra and Nipah viruses. Construction would begin in 2010 and take four years.

The new study expresses the government's confidence it could avoid any outbreak. But it also cautioned that, "should a large release occur there is considerable opportunity for the virus to cause infections and become established in the environment beyond the facility boundary."

A simulated outbreak of foot-and-mouth disease — part of an earlier U.S. government exercise called "Crimson Sky" — ended with fictional riots in the streets after the simulation's National Guardsmen were ordered to kill tens of millions of farm animals, so many that troops ran out of bullets. In the exercise, the government said it would have been forced to dig a ditch in Kansas 25 miles long to bury carcasses.

The new study said U.S. economic losses from an outbreak could ultimately be higher than the $5 billion suffered by Britain in 2001, when an epidemic forced the government to slaughter 6 million sheep, cows and pigs.