[Federal Register Volume 64, Number 1 (Monday, January 4, 1999)]
[Notices]
[Pages 71-73]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34789]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service


Food Distribution Program: Substitution of Donated Beef and Pork 
With Commercial Beef and Pork

AGENCY: Food and Nutrition Service, USDA.

ACTION: Notice.

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SUMMARY: This notice announces the Food and Nutrition Service's (FNS) 
intent to implement a demonstration project to test program changes 
designed to improve the State processing of donated foods by allowing 
the substitution of donated beef and pork supplied by the Department of 
Agriculture (the Department)with

[[Page 72]]

commercial beef and pork. FNS 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 meat and poultry items and to establish the 
criteria under which substitution would be permitted. The Department 
will use the demonstration project results to further examine whether 
allowing this type of substitution will result in increased processor 
participation and provide a greater variety of processed end products 
to recipient agencies in a more timely manner and/or at lower costs.

DATES: The proposals described in this Notice may be submitted to FNS 
through June 30, 2000. The demonstration project runs until June 30, 
2001.

ADDRESSES: Proposals should be sent to Les Johnson, Director, Food 
Distribution Division, Food and Nutrition 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 FNS 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 Section 250.30(f)(1)(i) 
currently allow for the substitution of certain donated food items with 
commercial foods, with the exception of meat and poultry. Section 
250.30(g) provides that, when donated meat or poultry products are 
processed or when any commercial meat or poultry product is 
incorporated into an end product containing one or more donated foods, 
all of the processing shall 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.
    Currently, only a few companies process donated beef and pork. 
Those processors have stated that the current policy prohibiting the 
substitution of donated beef and pork reduces the quantity of donated 
beef and pork they are able to accept and process during a given 
period. Processors must schedule production around deliveries of the 
donated beef and pork because those products are highly perishable. 
Some of the processors must schedule production around deliveries of 
donated beef and pork for up to 30 States. Vendors do not always 
deliver donated beef and pork to the processors as scheduled, causing 
delays in production. These delays may be alleviated if the processors 
can replace donated beef and pork with their commercial beef and pork.

Demonstration Project

    From October 1, 1998 to June 30, 2001, the Department will operate 
a demonstration project under which it will permit selected processors 
to substitute donated beef and pork in the State processing program for 
commercial beef and pork. Processors may submit proposals and be 
approved to participate in the demonstration project during this time. 
FNS is invoking its authority under 7 CFR 250.30(t) to waive the 
current prohibition in 7 CFR 250.30(f)(1)(i) against substitution of 
beef and pork for purposes of this demonstration project.
    The term substitution in 7 CFR 250.3 is defined to mean the 
replacement of donated foods with like quantities of domestically 
produced commercial foods of the same generic identity and equal or 
better quality.
    FNS is soliciting interested beef and pork 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 beef and pork into end 
products, AMS graders must monitor the process of substituting 
commercial beef and pork to ensure program integrity is maintained.
     Only bulk beef and pork delivered by USDA vendors to the 
processor will be eligible for substitution. No backhauled product will 
be eligible. (Backhauled product is typically frozen beef and pork in 9 
pound chubbs delivered to schools which may be sent to processors for 
further processing at a later time.)
     Commercial beef and pork substituted for donated beef and 
pork must be certified by an AMS grader as complying with the same 
product specifications as the donated beef and pork. The age of any 
commercial product that is used in replacement for donated food may not 
exceed six months.
     Substitution of commercial beef and pork may occur in 
advance of the actual receipt of the donated beef and pork by the 
processor. However, no substitution may occur before the notice to 
deliver for that processor is issued by USDA. Lead time between the 
purchase and delivery of donated beef and pork may be up to five weeks. 
Any variation between the amount of commercial beef and pork 
substituted and the amount of donated beef and pork received by the 
processor will be adjusted according to guidelines furnished by USDA.
     Any donated beef and pork not used in end products because 
of substitution must only be used by the processor in other commercial 
processed products and cannot be sold as an intact unit. However, it 
may be used to fulfill other USDA contracts 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 beef and pork (section 250.30(f)(1)(i) of the 
regulations). All other regulatory and contract requirements remain 
unchanged and must still be met by

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processors participating in the demonstration project.
    The demonstration project will enable FNS to evaluate whether to 
amend program regulations to allow the substitution of donated beef and 
pork with commercial beef and pork in the State processing program. 
Particular attention will be paid to whether such an amendment of the 
regulations would increase the number of processors participating, and 
whether it would increase the quantity of donated beef and pork that 
each processor accepts for processing. Further, FNS will attempt to 
determine whether the expected increase in competition and the expected 
increase in the quantity of donated beef and pork accepted for 
processing will enable processors to function more efficiently, 
producing a greater variety of processed end products more quickly and/
or at lower costs.
    Interested processors should submit a written proposal to FNS 
outlining how they plan to carry out the substitution while complying 
with the above conditions. The proposal must contain (1) a step-by-step 
description of how production will be monitored; and (2) a complete 
description of the records that will be maintained for (a) the 
commercial beef and pork substituted for the donated beef and pork and 
(b) the disposition of the donated beef and pork delivered by USDA. All 
proposals will be reviewed by representatives of the Food Distribution 
Division of FNS and by representatives of the AMS Livestock Division's 
Commodity Procurement Branch and Grading Branch. Companies approved for 
participation in the demonstration project will be required to enter 
into an agreement with FNS and AMS which authorizes the processor to 
substitute donated beef and pork with commercial bulk beef and pork in 
fulfilling any current or future State processing contracts during the 
demonstration project period. Participation in the demonstration 
project will not ensure that processors will be awarded any State 
processing contracts.

    Dated: December 22, 1998.
Samuel Chambers, Jr.,
Administrator, Food and Nutrition Service.
[FR Doc. 98-34789 Filed 12-31-98; 8:45 am]
BILLING CODE 3410-30-U