[Federal Register Volume 62, Number 91 (Monday, May 12, 1997)]
[Notices]
[Pages 25885-25886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12277]


      
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 Notices
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  Federal Register / Vol. 62, No. 91 / Monday, May 12, 1997 / Notices  

[[Page 25885]]


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DEPARTMENT OF AGRICULTURE

Food and Consumer Service


Food Distribution Program: Substitution of Donated Poultry with 
Commercial Poultry

AGENCY: Food and Consumer Service, USDA.

ACTION: Notice.

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SUMMARY: This notice announces the Food and Consumer Service's (FCS) 
intent to continue and expand a demonstration project to test program 
changes designed to improve the State processing of donated chicken by 
allowing the substitution of donated chicken supplied by the Department 
of Agriculture (the Department) with commercial chicken. The Department 
is currently operating a demonstration project that allows selected 
poultry processors to substitute commercial chicken for donated chicken 
in the State processing of donated chicken. Only bulk pack chicken and 
chicken parts are eligible for substitution under the current 
demonstration project. Notice of the project, which operates from 
February 1, 1996 through June 30, 1997, was published in the Federal 
Register at 61 FR 5373 on February 12, 1996. Under the demonstration 
project, FCS invoked its authority under 7 CFR 250.30(t) to waive the 
current prohibition at 7 CFR 250.30 (f)(1)(I) against the substitution 
of poultry items and to establish the criteria under which substitution 
will be permitted.
    The Department will continue to operate the demonstration project 
from July 1, 1997 through June 30, 1999 and will expand the project to 
include bulk pack turkey in addition to the bulk pack chicken and 
chicken parts. The Department will use the results of the demonstration 
project to further examine whether allowing the additional substitution 
will result in increased processor participation and provide a greater 
variety of processed end products to recipient agencies in a more 
timely manner at lower costs.

DATES: The proposals described in this Notice may be submitted to FCS 
through June 30, 1998. Note that the demonstration project runs until 
June 30, 1999.

ADDRESSES: Proposals should be sent to Ellen Henigan, Chief, Schools 
and Institutions Branch, Food Distribution Division, Food and Consumer 
Service, U.S. Department of Agriculture, Park Office Center, Room 501, 
3101 Park Center Drive, Alexandria, Virginia 22302-1594.

FOR FURTHER INFORMATION CONTACT: David Brothers, Schools and 
Institutions Branch, at (703) 305-2644.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This notice has been determined to be not significant and therefore 
was not reviewed by the Office of Management and Budget under Executive 
Order 12866.

Executive Order 12372

    This program is listed in the Catalog of Federal Domestic 
Assistance under 10.550 and is subject to the provisions of Executive 
Order 12372, which requires intergovernmental consultation with State 
and local officials (7 CFR part 3015, subpart V and final rule-related 
notices published at 48 FR 29114, June 24, 1983 and 49 FR 22675, May 
31, 1984).

Regulatory Flexibility Act

    This action is not a rule as defined by the Regulatory Flexibility 
Act (5 U.S.C. 601-612) and is thus exempt from the provisions of that 
Act.

Background

    Section 250.30 of the current Food Distribution Program regulations 
(7 CFR part 250) sets forth the terms and conditions under which 
distributing agencies, subdistributing agencies, and recipient agencies 
may enter into contracts with commercial firms for processing donated 
foods and prescribes the minimum requirements to be included in such 
contracts. Section 250.30(t) authorizes FCS to waive any of the 
requirements contained in 7 CFR part 250 for the purpose of conducting 
demonstration projects to test program changes designed to improve the 
State processing of donated foods.

Current Program Requirements

    The State processing regulations at Sec. 250.30(f)(1)(i) currently 
allow for the substitution of certain specified donated food items with 
commercial foods, with the exception of meat and poultry. Under the 
current regulations at Sec. 250.30(g), when donated meat or poultry 
products are processed or when any commercial meat or poultry products 
are incorporated into an end product containing one or more donated 
foods, all of the processing is required to be performed in plants 
under continuous Federal meat or poultry inspection or continuous State 
meat or poultry inspection in States certified to have programs at 
least equal to the Federal inspection programs. In addition to Food 
Safety Inspection Service (FSIS) inspection, all donated meat and 
poultry processing must be performed under Agricultural Marketing 
Service (AMS) acceptance service grading.
    Traditionally only a few companies have processed donated poultry. 
Those processors have stated that the policy prohibiting the 
substitution of donated poultry reduces the quantity of donated poultry 
they are able to accept and process during a given period. Poultry 
purchased by USDA for further processing is bulk chill packed. 
Processors must schedule production around deliveries of the donated 
poultry since it is a highly perishable product. Some of the processors 
must schedule production around deliveries of donated poultry for up to 
30 individual States. Vendors do not always deliver donated poultry to 
the processors as scheduled, causing delays in production of end 
products. These delays may be alleviated if the processors can 
substitute their commercial poultry for donated poultry.

Demonstration Project

    From July 1, 1997 to June 30, 1999, the Department will continue to 
operate a demonstration project under which it will permit approved 
processors to substitute commercial poultry for donated poultry in the 
State processing of donated poultry. In addition, it intends to expand 
the project to include bulk pack turkey. Processors may submit 
proposals and be approved to participate in the demonstration project

[[Page 25886]]

during this time. FCS is invoking its authority under 7 CFR 250.30(t) 
to waive the current prohibition in 7 CFR 250.30(f)(1)(i) against the 
substitution of poultry for purposes of this demonstration project.
    The demonstration project will be limited to bulk pack chicken, 
chicken parts, and bulk pack turkey because the processing of such 
items can be readily evaluated. There are a number of reasons why 
poultry is preferable to meat for purposes of this demonstration 
project. The definition of substitution in Sec. 250.3 requires the 
replacement of commercial product for donated food to be of the same 
generic identity and equal or better quality. With bulk pack chicken, 
chicken parts, and bulk pack turkey these requirements can be met 
easily and quickly, but requirements for the substitution of meat would 
be more complicated. For example, the USDA specification for donated 
ground beef calls for quality assurance provisions and certification 
requirements including: (1) Checking fresh chilled beef for condition 
prior to grinding; (2) implementing a sampling program to determine if 
physchrotropic plate count levels exceed 100,000 bacteria per gram; (3) 
assuring removal of bone and trimming defects; (4) complying with time 
and temperature requirements during processing and storing; and (5) 
complying with fat content requirements. These requirements cannot be 
duplicated by many processors. Additionally, donated ground beef is 
delivered frozen. Therefore, unlike bulk chilled poultry, immediate 
processing is not crucial. Bulk pack turkey has been added to the 
original demonstration project that allowed for the substitution of 
bulk pack chicken and bulk pack chicken parts because USDA graders can 
easily determine if commercial turkey meets or exceeds the 
specifications for donated turkey.
    FCS is inviting interested poultry processors to submit written 
proposals to participate in the demonstration project. The following 
basic requirements will apply to the demonstration project:
     As with the processing of donated poultry into end 
products, AMS graders must monitor the processing of any substituted 
commercial poultry to ensure program integrity is maintained.
     Only bulk pack chicken, chicken parts, and bulk pack 
turkey delivered by USDA vendors to the processor will be eligible for 
substitution. No backhauled product will be eligible. (Backhauled 
product is typically cut-up frozen poultry parts delivered to schools 
which may be turned over to processors for further processing at a 
later time.)
     Commercial poultry substituted for donated poultry must be 
certified by an AMS grader as complying with all product specifications 
for the donated poultry.
     Substitution of commercial poultry may occur in advance of 
the actual receipt of the donated poultry by the processor. However, no 
substitution may occur before the product is purchased by USDA and the 
contract is awarded. Lead time between the purchase and delivery of 
donated poultry may be up to five weeks. Any variation between the 
amount of commercial poultry substituted and the amount of donated 
poultry received by the processor will be adjusted according to 
guidelines furnished by USDA.
     Any donated poultry not used in end products because of 
substitution must only be used by the processor at one of its 
facilities in other commercial processed products and cannot be sold as 
an intact unit. However, in lieu of processing the donated poultry, the 
processor may use the product to fulfill other contracts with USDA 
provided all terms of the other contract are met.
     The only regulatory provision or State processing contract 
term affected by the demonstration project is the prohibition on 
substitution of poultry (Sec. 250.30(f)(1)(i) of the regulations). All 
other regulatory and contract requirements remain unchanged and must 
still be met by processors participating in the demonstration project.
    The demonstration project will enable FCS to evaluate whether to 
amend program regulations to provide for the substitution of donated 
poultry with commercial poultry in the State processing program. 
Particular attention will be paid to whether such an amendment of the 
regulations would probably increase the number of processors 
participating, and whether it would probably increase the quantity of 
donated poultry that each processor accepts for processing. Further, 
FCS will attempt to determine whether the expected increase in 
competition and the expected increase in the quantity of donated 
poultry accepted for processing enables processors to function more 
efficiently, producing a greater variety of processed poultry end 
products in a more timely manner at lower costs.
    FCS has determined that the current demonstration project did not 
allow sufficient time for the poultry industry to consider the 
ramifications and possible benefits of the demonstration. The initial, 
but limited, data gathered from recipient agencies, AMS graders, and 
AMS procurement has been positive. USDA is convinced that given 
additional time, more chicken processors will decide to participate. 
Processors in the turkey industry, who are subject to the same 
inspection standards as the chicken industry, have expressed a strong 
desire to enter the demonstration. The limited participation in the 
demonstration, to date, has not provided FCS with sufficient data to 
make an informed decision regarding benefits that might accrue to State 
processing programs should the terms of the demonstration be made 
permanent. Interested processors should submit a written proposal to 
FCS outlining how they plan to carry out the substitution while 
complying with the above conditions. Processors who are currently 
participating in the demonstration should apply to continue in the 
demonstration. The proposal must contain (1) a step-by-step description 
of how production will be monitored (2) a complete description of the 
records that will be maintained for (a) the commercial poultry 
substituted for the donated poultry (b) the disposition of the donated 
poultry delivered. All proposals will be reviewed by representatives of 
the Food Distribution Division of FCS and by representatives of AMS 
Poultry Division's Grading Branch. Companies approved for participation 
in the demonstration project will be required to enter into an 
agreement with FCS and AMS which authorizes the processor to substitute 
commercial bulk pack chicken, chicken parts, and bulk pack turkey in 
fulfilling any current or future State processing contracts during the 
demonstration project period. Participation in the demonstration 
project will not ensure the processor will receive any State processing 
contracts.

    Dated: May 5, 1997.
George A. Braley,
Associate Administrator, Food and Consumer Service.
[FR Doc. 97-12277 Filed 5-9-97; 8:45 am]
BILLING CODE 3410-30-U