[Federal Register Volume 68, Number 13 (Tuesday, January 21, 2003)]
[Notices]
[Pages 2748-2749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1253]


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 Notices
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  Federal Register / Vol. 68, No. 13 / Tuesday, January 21, 2003 / 
Notices  

[[Page 2748]]



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 continue to provide processors with an opportunity to 
participate in a demonstration project to test program changes in the 
State processing program. In the demonstration project, selected 
processors will be allowed to substitute donated beef and pork supplied 
by the Department of Agriculture (the Department, or USDA) with 
commercial beef and pork. Commercial beef and pork used in the 
demonstration project must meet the same specifications required of 
USDA donated beef and pork. Currently, there are no processors in the 
demonstration project substituting donated beef and pork with 
commercial beef and pork. The demonstration project will continue 
through June 30, 2005; proposals for approval to participate must be 
submitted to FNS by April 30, 2004. Through the demonstration project, 
the Department hopes to determine if allowing this type of substitution 
will result in increased participation of processors, 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 April 30, 2004. The demonstration project runs until June 30, 
2005.

ADDRESSES: Proposals should be sent to Director, Food Distribution 
Division, Food and Nutrition Service, U.S. Department of Agriculture, 
Park Office Center, Room 504, 3101 Park Center Drive, Alexandria, 
Virginia 22302-1594.

FOR FURTHER INFORMATION CONTACT: David Brothers, Schools and 
Institutions Branch, at (703) 305-2668.

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

    Food Distribution Program regulations under 7 CFR 250.30 establish 
the terms and conditions under which distributing agencies, 
subdistributing agencies, and recipient agencies may enter into 
contracts with commercial firms for the processing of USDA donated 
foods under the State processing program, and prescribe the minimum 
requirements to be included in such contracts. Section 250.30(f)(1) 
allows for the full or limited substitution of certain donated food 
items with commercial foods, with the exception of beef and pork. 
Processors have stated that the regulations prohibiting the 
substitution of donated beef and pork reduce the quantity of donated 
beef and pork they are able to accept and process during a given 
period. Processors tend to schedule production around deliveries of the 
donated beef and pork, which decreases their flexibility in providing 
end products to recipients. Some 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 processors can replace donated beef and pork with their commercial 
beef and pork.

Demonstration Project

    7 CFR 250.30(t) authorizes FNS to waive any of the requirements 
contained in food distribution regulations under 7 CFR part 250 for the 
purpose of conducting demonstration projects to test program changes 
designed to improve the State processing of donated foods. In 
accordance with this regulatory authority, the Department waived the 
regulatory restriction under 7 CFR 250.30(f)(1) to conduct a 
demonstration project from June 30, 2001 to June 30, 2003, that 
provided the opportunity for selected processors to substitute donated 
beef and pork with commercial beef and pork in the State processing 
program. Through the demonstration project, announced on May 30, 2001, 
at 66 FR 29282, FNS hoped to determine if the waiver of the regulations 
would increase the number of processors participating in the State 
processing program, and whether it would increase the quantity of 
donated beef and pork that each processor accepts for processing. 
Additionally, FNS sought to determine if the expected increases in 
competition, and in the quantities of donated beef and pork accepted 
for processing, would enable processors to function more efficiently, 
resulting in the production of a greater variety of processed end 
products more quickly and/or at lower costs. To date, no processors 
have taken the opportunity to substitute donated beef and pork with 
commercial beef and pork in the demonstration project.

Continuation of Demonstration Project

    The Department has decided to continue to provide processors with 
the opportunity to participate in the demonstration project through 
June 30, 2005. Processors approved to participate would be allowed to 
substitute donated beef and pork with commercial beef and pork. With 
the exception of the waiver of the prohibition on substitution of 
donated beef and pork in Section 250.30(f)(1), all regulatory and 
contract requirements continue to apply, and must be met by processors 
participating in the demonstration project. Program

[[Page 2749]]

regulations relating to the processing of donated meat products apply 
to the substituted beef and pork in the demonstration project. Section 
250.30(g) requires 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 must 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. The following basic requirements will apply to the 
demonstration project:
    [sbull] 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.
    [sbull] 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 
10 pound chubs delivered to schools which may be sent to processors for 
further processing at a later time.)
    [sbull] 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. USDA 
specifications relative to acceptable tolerance levels for specific 
microorganisms must be met. The age of any commercial product that is 
used in substitution for donated food may not exceed six months.
    [sbull] Substitution of commercial beef and pork may occur in 
advance of the actual receipt of the donated beef and pork by the 
processor. Should a processor choose to use the substitution option 
prior to the purchase of the product by USDA, the processor must assume 
all risks. 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.
    [sbull] 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.
    [sbull] 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) of the 
regulations). All other regulatory and contract requirements remain 
unchanged and must still be met by processors participating in the 
demonstration project.
    Processors must submit proposals to obtain approval for 
participation in the demonstration project by April 30, 2004. The 
written proposals must describe how processors plan to carry out the 
substitution while complying with the above conditions. Proposals must 
include:
    (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 FNS' Food 
Distribution Division, and 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 that 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. However, participation in the 
demonstration project will not ensure that processors will be awarded 
any State processing contracts.

    Dated: January 13, 2003.
Roberto Salazar,
Administrator, Food and Nutrition Service.
[FR Doc. 03-1253 Filed 1-17-03; 8:45 am]
BILLING CODE 3410-30-P