[Federal Register Volume 69, Number 137 (Monday, July 19, 2004)]
[Notices]
[Pages 42962-42963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16332]


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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 continue a demonstration project through June 30, 2007, that 
allows selected processors to substitute commercial beef and pork for 
donated beef and pork supplied by the Department of Agriculture (the 
Department, or USDA). Commercial beef and pork used in the 
demonstration project must meet the same specifications required of 
donated beef and pork. Processors wishing to participate in the 
demonstration project must submit proposals for FNS approval by April 
30, 2006. The Department hopes to determine if allowing substitution of 
donated beef and pork 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, 2006. The demonstration project runs until June 30, 
2007.

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 at 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. 7 CFR 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.
    Since June 30, 2001, the Department has exercised its waiver 
authority in 7 CFR 250.30(t) to waive the regulatory restriction under 
7 CFR 250.30(f)(1) and conduct a demonstration project that allows 
selected processors to substitute commercial beef and pork for donated 
beef and pork in the State processing program. Commercial beef and pork 
used in the demonstration project must meet the same specifications 
required of USDA donated beef and pork. Other regulatory and contract 
requirements under 7 CFR 250.30 must also continue to be met by 
processors participating in the demonstration project.
    To date, only a few processors have taken the opportunity to 
participate. FNS hopes to determine through this continuation of the 
demonstration project if the waiver of the regulations would increase 
the number of processors participating in the State processing program, 
or would increase the quantity of donated beef and pork that each 
processor accepts for processing. Additionally, FNS hopes to determine 
if the expected increase 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.

Continuation of Demonstration Project

    The demonstration project is scheduled to continue until June 30, 
2005. However, FNS is further extending it through June 30, 2007, to 
continue to allow processors the opportunity to participate, and to 
determine if such an opportunity has an effect on the end products 
provided to schools and other recipients. All proposals to participate 
must be submitted by April 30, 2006. Except for the waiver of the 
prohibition on substitution of donated beef and pork in

[[Page 42963]]

7 CFR 250.30(f)(1), all regulatory and contract requirements will 
continue to apply, and must be met by processors participating in the 
demonstration project. This includes the requirement in 7 CFR 
250.30(f)(1)(i) that all components of commercial foods substituted for 
any donated food must be of U.S. origin and identical or superior in 
every particular of the donated food specification.
    7 CFR 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 and 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:
     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 
10 pound chubs delivered to schools that 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. 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.
     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.
     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 (7 CFR 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, 2006. 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 AMS' Livestock Division, Commodity 
Procurement Branch and Grading Branch. Processors approved for 
participation in the demonstration project will be required to enter 
into an agreement with FNS and AMS that authorizes the substitution of 
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: July 13, 2004.
Roberto Salazar,
Administrator, Food and Nutrition Service.
[FR Doc. 04-16332 Filed 7-16-04; 8:45 am]
BILLING CODE 3410-30-P