[Federal Register Volume 74, Number 242 (Friday, December 18, 2009)]
[Proposed Rules]
[Pages 67736-67800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-29323]



[[Page 67735]]

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Part III





Department of Agriculture





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Food Safety and Inspection Service



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9 CFR Parts 317 and 381



Nutrition Labeling of Single-Ingredient Products and Ground or Chopped 
Meat and Poultry Products; Proposed Rule

  Federal Register / Vol. 74, No. 242 / Friday, December 18, 2009 / 
Proposed Rules  

[[Page 67736]]


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DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 317 and 381

[FDMS Docket No. FSIS-2005-0018]
RIN: 0583-AC60


Nutrition Labeling of Single-Ingredient Products and Ground or 
Chopped Meat and Poultry Products

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Supplemental Proposed Rule.

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SUMMARY: The Food Safety and Inspection Service (FSIS) is issuing this 
supplemental proposed rule that, if finalized, will amend the Federal 
meat and poultry products inspection regulations to require nutrition 
labeling of the major cuts of single-ingredient, raw meat and poultry 
products, unless an exemption applies.

DATES: Submit comments on or before February 16, 2010.

ADDRESSES: FSIS invites interested persons to submit comments on this 
proposed rule. Comments may be submitted by either of the following 
methods:
     Federal eRulemaking Portal: This Web site provides the 
ability to type short comments directly into the comment field on this 
Web page or attach a file for lengthier comments. Go to http://www.regulations.gov. Follow the online instructions at that site for 
submitting comments.
     Mail, including floppy disks or CD-ROMs, and hand- or 
courier-delivered items: Send to Docket Clerk, U.S. Department of 
Agriculture (USDA), FSIS, Room 2-2127, George Washington Carver Center, 
5601 Sunnyside Avenue, Mailstop 5474, Beltsville, MD 20705-5474.
    Instructions: All items submitted by mail or electronic mail must 
include the Agency name and docket number FSIS-2005-0018. Comments 
received in response to this docket will be made available for public 
inspection and posted without change, including any personal 
information, to http://www.regulations.gov.
    Docket: For access to background documents or to comments received, 
go to the FSIS Docket Room at the address listed above between 8:30 
a.m. and 4:30 p.m., Monday through Friday. All comments submitted in 
response to this proposal, as well as background information used by 
FSIS in developing this document, will be available for public 
inspection in the FSIS Docket Room at the address listed above between 
8:30 a.m. and 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Sally Jones, Senior Technical Advisor, 
Labeling and Program Delivery Division, Office of Policy and Program 
Development, Food Safety and Inspection Service, U.S. Department of 
Agriculture, Beltsville, MD 20705; (301) 504-0878.

Section I

SUPPLEMENTARY INFORMATION:

Background

    Supplemental Proposed Rule: On January 18, 2001, FSIS published a 
proposed rule in the Federal Register entitled, ``Nutrition Labeling of 
Ground or Chopped Meat and Poultry Products and Single-Ingredient 
Products'' (66 FR 4969). Because of the length of time since the 
publication of the proposed rule, FSIS is providing the public an 
opportunity to comment on this supplemental proposed rule. FSIS also 
welcomes comments on relevant issues for which there is new evidence 
since the proposed rule was issued.
    This supplemental proposed rule responds to all comments received 
on the January 18, 2001 proposed rule and explains how the Agency 
intends to proceed with a final rule. Although FSIS has come to 
tentative conclusions regarding the issues raised by the commenters, in 
this supplemental proposed rule, FSIS is requesting additional comments 
on policies for which there were significant differences of opinion 
among commenters.
    Specifically, under the ``Provisions of the Supplemental Proposed 
Rule'' heading below, FSIS is requesting comments on whether nutrition 
information should be allowed on point-of-purchase materials for ground 
or chopped products, as an alternative to requiring nutrition 
information on the product labels. FSIS is also requesting comments on 
the use of statements of lean percentages on the label or in labeling 
of ground or chopped products that do not meet the regulatory criteria 
for ``low fat.'' In addition, under the ``Provisions of the 
Supplemental Proposed Rule'' heading below, FSIS is requesting comments 
on whether it should provide an exemption from nutrition labeling 
requirements for small businesses that include a fat percentage 
statement and lean percentage statement on the labeling or in labeling 
of ground or chopped product. FSIS is requesting copies of any studies, 
surveys, or other data on consumers' perception of and use of point-of-
purchase materials versus nutrition labels for ground or chopped 
product and on consumers' understanding of the nutrient content of 
ground or chopped products. FSIS is also requesting copies of any 
studies, surveys, or data on consumers' use and understanding of fat 
percentage and lean percentage statements on ground or chopped 
products. FSIS will post on its Web site, with this supplemental 
proposed rule, all studies and data submitted to the Agency in response 
to this request. FSIS requests comment on the potential effects of 
disallowing a statement of lean percentage on ground or chopped 
products.
    FSIS will consider all comments received in response to this 
supplemental proposed rule. After evaluating the comments, FSIS intends 
to respond to them, make any appropriate and necessary changes to this 
rule, and issue the final rule in the Federal Register.

The Proposed Rule

    Major cuts: FSIS proposed to require nutrition labeling of the 
major cuts of single-ingredient, raw meat and poultry products 
identified in Sec. Sec.  317.344 and 381.444 that are not ground or 
chopped, except for certain exemptions. FSIS proposed that ``ground 
beef regular without added seasonings,'' ``ground beef about 17% fat,'' 
and ``ground pork'' would no longer be included in the list of major 
cuts in Sec.  317.344.
    FSIS proposed to make the guidelines in place for the voluntary 
nutrition labeling program mandatory for the major cuts of single-
ingredient, raw products that are not ground or chopped. Thus, for 
these products, FSIS proposed that nutrition information be provided on 
the label or at point-of-purchase, unless an exemption would apply. For 
further explanation of the guidelines for voluntary nutrition labeling, 
see 66 FR 4971, January 18, 2001. For further explanation of the 
proposal to make these guidelines mandatory for the major cuts of 
single-ingredient, raw products that are not ground or chopped, see 66 
FR 4973-4975, January 18, 2001.
    In the preamble to the proposed rule, FSIS explained that, in its 
two most recent surveys of the voluntary nutrition labeling of single-
ingredient, raw products, FSIS found that significant participation in 
the voluntary nutrition labeling program did not exist (66 FR 4972, 
January 18, 2001). FSIS regulations provide that a food retailer is 
participating at a significant level (1) if the retailer provides 
nutrition labeling information for at least 90 percent of the major 
cuts of single-ingredient, raw meat and poultry products it sells; and

[[Page 67737]]

(2) if the nutrition label on these products is consistent in content 
and format with the mandatory program, or if nutrition information is 
displayed at point-of-purchase in an appropriate manner. The required 
nutrition labeling provisions for multi-ingredient and heat processed 
products are referred to as ``the mandatory program.'' The regulations 
also provide that significant participation by food retailers exists if 
at least 60 percent of all companies that are evaluated are 
participating in accordance with the guidelines (Sec.  317.343 and 
Sec.  381.443). The term ``companies,'' as used in these regulations, 
refers to individual stores. FSIS used a representative sample of 
stores to assess participation (see 58 FR 640, January 6, 1993). Based 
on the survey data from the two most recent surveys, less than 60 
percent of stores evaluated were participating in accordance with the 
guidelines.
    In the preamble to the proposed rule, FSIS explained that, because 
the most recent surveys showed that significant participation in the 
voluntary nutrition labeling program did not exist, FSIS believed that 
the proposed rule was necessary. FSIS stated that, without nutrition 
information, consumers are not able to assess the nutrient content of 
the major cuts and thus cannot make educated choices about these 
products based on nutrition information. FSIS believed that the lack of 
nutrition information on the labeling of the major cuts was misleading 
(66 FR 4973-4974, January 18, 2001) because it fails to disclose 
material facts about the consequences of consumption of these products. 
Consumers can compare the fat content in major cuts of poultry based on 
whether the product has skin and based on the levels of attached fat in 
the product. Similarly, consumers can compare the fat content among 
major cuts of meat products based on internal marbling and attached 
fat. However, without nutrition labeling for the major cuts, consumers 
cannot assess precise levels of fat (e.g., 10 grams vs. 20 grams of fat 
per serving) and cannot know the levels of specific nutrients, such as 
saturated fat, in these products. Therefore, without nutrition labeling 
of these products, consumers cannot make educated choices about 
consuming the major cuts.
    The FMIA and PPIA provide that product is misbranded if its 
labeling is false or misleading in any particular (21 U.S.C. 601(n)(1) 
and 453(h)(1)). Without nutrition information for the major cuts of 
single-ingredient, raw products, FSIS tentatively concluded that these 
products would be misbranded under section 1(n) of the FMIA or section 
4(h) of the PPIA because the label would fail to reveal significant 
material facts about the consequences of consuming these products(66 FR 
4974, January 18, 2001).
    As explained in the preamble to the proposed rule, although FSIS 
believed that nutrition information on the labels of individual 
packages of single-ingredient, raw products is useful, the Agency 
proposed that nutrition information for the major cuts could also be 
provided on point-of-purchase materials, because consumers have 
reasonable expectations as to the nutrient content of these products. 
Also, FSIS stated that the nutrient content of a given major cut is 
relatively uniform across the market, and these products are not 
formulated in the manner of ground or chopped products (66 FR 4974, 
January 18, 2001).
    Ground or Chopped Products: Ground or chopped products that are 
multi-ingredient or heat processed products are subject to the 
requirements of the mandatory nutrition labeling program; therefore, 
these products are already required to bear nutrition labels, unless 
they qualify for an exemption. FSIS proposed to extend mandatory 
nutrition labeling requirements to all ground or chopped products, 
including single-ingredient, raw ground or chopped products, unless an 
exemption applies. Thus, FSIS proposed to require that nutrition labels 
be provided for all ground or chopped products (livestock species) and 
hamburger, with or without added seasonings, unless an exemption 
applies. Similarly, FSIS proposed to require that nutrition labels be 
provided for all ground or chopped poultry (kind), with or without 
added seasonings, unless an exemption applies. Under the proposed rule, 
products that would be required to bear nutrition labels include 
single-ingredient, raw hamburger, ground beef, ground beef patties, 
ground chicken, ground turkey, ground chicken patties, ground pork, and 
ground lamb.
    In the proposed rule, FSIS explained that, unlike other single-
ingredient, raw products, producers are able to formulate precisely the 
fat content of ground or chopped products. Therefore, in this respect, 
these products are similar to products in the existing mandatory 
program that are required to bear nutrition labels (66 FR 4975, January 
18, 2001). FSIS noted that other single-ingredient, raw products cannot 
be formulated in the same manner or to the same degree as ground beef 
products (66 FR 4976, January 18, 2001).
    FSIS noted that it believed that consumers could not easily see the 
fat in ground or chopped beef. In ground or chopped beef products, the 
fat is uniformly distributed throughout the product, and is not clearly 
distinguishable on the surface of the product (66 FR 4975, January 18, 
2001). FSIS also explained that the Agency believed that consumers 
cannot estimate the level of fat in ground or chopped beef and cannot 
compare the levels of fat in these products to those in other products 
(66 FR 4975, January 18, 2001). Similarly, FSIS explained that ground 
lamb and ground pork may contain varying amounts of fat and varying 
nutrient content, which consumers cannot visually detect (66 FR 4976, 
January 18, 2001). Additionally, FSIS noted that producers sometimes 
use meat from advanced meat recovery (AMR) systems and low temperature 
rendering in ground or chopped beef or pork products, which can affect 
their nutrient content (66 FR 4975 and 4976, January 18, 2001). 
Finally, FSIS noted that, as with the fat on ground meat products, 
consumers cannot readily detect the fat content of ground poultry 
products (66 FR 4976, January 18, 2001). For these reasons, FSIS 
tentatively concluded that ground or chopped meat and poultry products 
that did not bear nutrition information would be misbranded under 
section 1(n)(1) of the FMIA and section 4(h)(1) of the PPIA (66 FR 
4977, January 18, 2001).
    FSIS proposed to require that nutrition information for ground or 
chopped products appear on the label of these products (unless an 
exemption applies), as is required for multi-ingredient and heat 
processed products, rather than on point-of-purchase materials because 
ground or chopped products are similar to multi-ingredient and heat 
processed products in that certain parameters, such as their fat 
content, can be controlled precisely to obtain the desired product. In 
addition, because there are numerous formulations of ground or chopped 
products, it would be difficult for producers or retailers to develop 
point-of-purchase materials that would address all the different 
formulations that exist for these products. Furthermore, it would be 
difficult for consumers to find the correct information for a specific 
ground or chopped product on point-of-purchase materials that include 
information concerning numerous formulations of these products (66 FR 
4977, January 18, 2001).
    Exemptions: FSIS proposed that certain exemptions from nutrition 
labeling requirements would apply to the major cuts of single-
ingredient, raw meat and poultry products and ground or chopped meat 
and poultry products. FSIS proposed the following

[[Page 67738]]

exemptions from nutrition labeling requirements for ground or chopped 
products: ground or chopped products that qualify for the small 
business exemption in Sec. Sec.  317.400(a)(1) and 381.500(a)(1); 
ground or chopped products in packages that have a total surface area 
available to bear labeling of less than 12 square inches, provided that 
the product's labeling includes no nutrition claims or nutrition 
information and provided that an address or telephone number that a 
consumer can use to obtain the required information is included on the 
label; ground or chopped products that are intended for further 
processing; ground or chopped products that are not for sale to 
consumers; ground or chopped products that are in small packages that 
are individually wrapped packages of less than \1/2\ ounce net weight; 
ground or chopped products that are custom slaughtered or prepared; and 
ground or chopped products that are intended for export.
    FSIS proposed the following exemptions for major cuts of single-
ingredient, raw products that are not ground or chopped: major cuts 
intended for further processing; major cuts not for sale to consumers; 
major cuts in small packages that are individually wrapped packages of 
less than \1/2\ ounce net weight; major cuts that are custom 
slaughtered or prepared; and major cuts that are intended for export.
    FSIS proposed to exempt ground or chopped products that qualified 
for the small business exemption from nutrition labeling requirements 
for the main reason stated in the January 6, 1993, final rule: because 
these requirements would create undue economic hardship for small 
businesses (58 FR 638). FSIS stated in the proposed rule that it did 
not believe that the reasons that necessitated the establishment of the 
small business exemption, as explained in the January 6, 1993 final 
rule, are applicable to the major cuts of single-ingredient, raw meat 
and poultry products produced by small businesses. For these products, 
FSIS proposed that nutrition information may be provided on labels or, 
alternatively, at their point-of-purchase. In addition, FSIS explained 
that it intended to make point-of-purchase materials available over the 
Internet free of charge. Therefore, the nutrition labeling requirement 
for major cuts of single-ingredient, raw products should not impose an 
economic hardship for ``small businesses'', including those that are 
retail stores (66 FR 4978, January 18, 2001).
    In the preamble to the January 6, 1993, final rule, FSIS explained 
that it was proposing an exemption from nutrition labeling requirements 
for products intended for further processing and products not for sale 
to consumers because consumers do not see the nutrition information on 
products used for further processing or products that are not for sale 
to consumers. The Agency also explained that it would exempt 
individually wrapped packages of less than \1/2\ ounce net weight, 
provided no nutrition claim or nutrition information was made on the 
label, because these products are an insignificant part of the diet. 
With regard to the custom exemption, the Agency explained that an 
exemption should apply because these custom services are performed 
solely for individuals. Finally, the Agency explained that products 
intended for export should be exempt because these products are labeled 
according to the requirements of the country where the product is to be 
exported (58 FR 639, January 6, 1993). In the January 18, 2001, 
proposed rule, the Agency proposed these exemptions because the Agency 
had tentatively determined that the bases for these exemptions, as 
explained in the January 6, 1993, final rule, are valid as applied to 
nutrition labeling for ground or chopped products and for major cuts of 
single-ingredient, raw products. Therefore, FSIS proposed that any 
ground or chopped product or major cut of single-ingredient, raw 
product that qualifies for any of these exemptions will continue to be 
exempt (66 FR 4979, January 18, 2001).
    Under current regulations, products in packages that have a total 
surface area available to bear labeling of less than 12 square inches 
are exempt from nutrition labeling, provided the product's labeling 
includes no nutrition claims or nutrition information and provided that 
an address or telephone number that a consumer can use to obtain the 
required information is included on the label. FSIS allowed for 
nutrition information to be provided by alternative means for products 
of this size in order to incorporate sufficient flexibility in the 
regulations (58 FR 47625, January 6, 1993). As explained in the 
proposed rule, for ground or chopped products, FSIS believes it is 
necessary to provide this flexibility for products in packages that 
have a total surface area available to bear labeling of less than 12 
square inches, provided that the labels for these products bear no 
nutrition claims or nutrition information. However, because nutrition 
information for the major cuts of single-ingredient, raw meat and 
poultry products may be provided on point-of-purchase materials, FSIS 
proposed that the provisions for providing nutrition labeling by 
alternate means for products in packages that have a total surface area 
available to bear labeling of less than 12 square inches would not 
apply to the major cuts of single-ingredient, raw meat and poultry 
products (66 FR 4979, January 18, 2001).
    In the preamble to the proposed rule, FSIS explained that 
restaurant menus that include ground or chopped products generally do 
not constitute nutrition labeling or fall within the scope of the 
proposed regulations. Similarly, although a restaurant menu would most 
likely not include a major cut of single-ingredient, raw product, if it 
did, the menu would not fall within the scope of the proposed 
regulations. Finally, the preamble explained that, under the proposed 
rule, any ground or chopped product or major cut of single-ingredient, 
raw product represented or purported to be specifically for infants and 
children less than 4 years of age would not be allowed to include 
certain nutrient content declarations, because infants and children 
less than 4 years of age have different nutrition needs than adults and 
children older than 4 years of age (66 FR 4979, January 18, 2001).
    In the 1993 final rule on nutrition labeling, FSIS exempted from 
mandatory nutrition labeling requirements multi-ingredient products 
processed at retail, and ready-to-eat products packaged or portioned at 
retail. The reasons that FSIS provided these exemptions in the 1993 
final rule were that FSIS believed that it would be impractical to 
enforce nutrition labeling requirements on these products prepared or 
served at retail and because the Agency concluded, based on a review of 
National Food Consumption Survey (NFCS) data, that the average person's 
diet consisted of an insignificant proportion of ready-to-eat retail 
packaged products or retail processed products (58 FR 639, January 6, 
1993).
    The proposed rule did not provide an exemption for ready-to-eat 
ground or chopped products packaged or portioned at retail, or multi-
ingredient ground or chopped products that are processed at retail 
because, as FSIS explained in the 2001 nutrition labeling proposed 
rule, there may be a significant amount of multi-ingredient ground beef 
retail processed products or ready-to-eat retail packaged products. 
Also, FSIS explained that the Agency no longer believes enforcement of 
nutrition labeling requirements at retail stores to be impractical 
because FSIS is already conducting testing for Escherichia coli

[[Page 67739]]

(E. coli) O157:H7 at retail (66 FR 4979, January 18, 2001).
    For further explanation of the reasons for the proposed exemptions, 
see 66 FR 4978-4980, January 18, 2001.
    Nonmajor Cuts of Single-Ingredient, Raw Meat and Poultry Products 
That Are Not Ground or Chopped: FSIS did not propose to require 
nutrition information for single-ingredient, raw meat and poultry 
products that are not major cuts and that are not ground or chopped. 
However, FSIS proposed that if nutrition information is provided for 
these products, it must be provided according to the existing 
guidelines for the current voluntary nutrition labeling program. 
Therefore, under the proposed rule, if nutrition information were 
provided for these products, it would be consistent with the nutrition 
information required for the major cuts of single-ingredient, raw 
products. In the preamble to the proposed rule, FSIS explained that the 
Agency could not determine whether it would be beneficial to require 
nutrition labeling for nonmajor cuts that are not ground or chopped 
until it assessed whether adequate nutrition information is being 
provided for these products (66 FR 4974, January 18, 2001).
    Enforcement and Compliance: FSIS conducts sampling and nutrient 
analysis of products that fall under the mandatory nutrition labeling 
program. FSIS proposed that the procedures set forth for FSIS product 
sampling and nutrient analysis in Sec. Sec.  317.309(h)(1) through 
(h)(8) and 381.409(h)(1) through (h)(8) would be applicable to ground 
or chopped meat and to ground or chopped poultry products, 
respectively. FSIS explained that under the proposal, FSIS would sample 
and conduct nutrient analysis of ground or chopped products to verify 
compliance with nutrition labeling requirements, even if nutrition 
labeling on these products is based on the most current representative 
data base values contained in USDA's National Nutrient Data Bank or the 
USDA National Nutrient Database for Standard Reference and there are no 
claims on the labeling. Therefore, FSIS would treat these products as 
it treats other products required to bear nutrition labels (66 FR 4980, 
January 18, 2001).
    FSIS explained that it would treat ground or chopped products in 
this way because the fat content of these products can vary 
significantly. In addition, the preamble to the proposed rule stated 
that FSIS employees cannot visually assess whether nutrition 
information on the label of ground or chopped products accurately 
reflects the labeled products' contents because, in most cases, it is 
not possible to visually assess the level of fat in a ground or chopped 
product (66 FR 4980, January 18, 2001).
    FSIS also proposed that if nutrition labeling of the major cuts of 
single-ingredient, raw products (other than ground beef or ground pork) 
is based on USDA's National Nutrient Data Bank or the USDA's National 
Nutrient Database for Standard Reference, and there are no nutrition 
claims on the labeling, FSIS would not sample and conduct a nutrient 
analysis of the products. The preamble explained that, for the major 
cuts, FSIS personnel can visually identify the particular cut. FSIS 
further explained that, if the nutrition information for these products 
is based on USDA's National Nutrient Data Bank or the USDA National 
Nutrient Database for Standard Reference, and there are no nutrition 
claims on the labeling, it is not necessary for FSIS to verify the 
accuracy of the data because they are USDA data. USDA has already 
evaluated these USDA data and determined that they are valid (66 FR 
4980, January 18, 2001).
    Permitting Percent Lean Statements on labels or in labeling of 
ground or chopped products: FSIS also proposed to permit a statement of 
lean percentage on the label or in labeling of ground or chopped meat 
and poultry products that do not meet the regulatory criteria for ``low 
fat,'' provided that a statement of the fat percentage is also 
displayed on the label or in labeling. FSIS proposed that the required 
statement of fat percentage be contiguous to, in lettering of the same 
color, size, and type as, and on the same color background as, the 
statement of lean percentage. FSIS stated that many consumers have 
become accustomed to this labeling on ground beef products, and that 
FSIS believed this labeling provided a quick, simple, and accurate 
means of comparing all ground or chopped meat and poultry products (66 
FR 4981, January 18, 2001).

Provisions of the Supplemental Proposed Rule

    Major cuts and nonmajor cuts that are not ground or chopped: 
Consistent with the proposal, should this rule become final, FSIS will 
require nutrition information for the major cuts, either on their label 
or at their point-of-purchase. The provisions of the voluntary 
nutrition labeling program will be mandatory for the major cuts. As 
FSIS proposed, ``ground beef regular without added seasonings,'' 
``ground beef about 17% fat,'' and ``ground pork'' will no longer be 
included in the list of major cuts in Sec.  317.344 because FSIS has 
decided to treat ground meat and poultry products differently than 
single cuts of meat for the purposes of this regulation. Should this 
rule become final, ground meat and poultry products will be required to 
bear nutrition labeling on their packages, unless an exemption applies. 
Nutrition information at the point-of-purchase for ground or chopped 
products will not meet the requirements of these regulations.
    FSIS believes that without nutrition information, consumers are not 
able to assess the nutrient content of the major cuts and, thus, cannot 
make educated decisions about these products based on nutrition 
information. FSIS has concluded that the lack of nutrition information 
for the major cuts of single-ingredient, raw products, either on their 
label or at their point-of-purchase, makes these products misbranded 
under 21 U.S.C. 601(n)(1) and 453(h)(1). Although FSIS believes that 
nutrition information on the labels of individual packages of the major 
cuts of single-ingredient, raw products is useful, this final rule 
provides that nutrition information for these products may be provided 
at their point-of-purchase.
    In the 1991 proposed rule and the 1993 final rule on nutrition 
labeling, FSIS stated that if it determined, during any evaluation of 
its voluntary guidelines, that significant participation did not exist, 
it would initiate proposed rulemaking to determine whether it would be 
beneficial to require nutrition labeling on single-ingredient, raw meat 
and poultry products (56 FR 60306, November 27, 1991; 58 FR 640, 
January 5, 1993). Therefore, FSIS initiated rulemaking to propose 
requiring nutrition labeling for the major cuts of single-ingredient, 
raw products. Through this rulemaking, FSIS has determined that because 
nutrition information has not been universally available for the major 
cuts of single-ingredient products, consumers have not been able to 
assess the nutrient content of these products and, thus, cannot make 
educated choices about them, and about the significant portion of their 
diet that these products represent, based on nutrition information. 
Without nutrition information, the labeling of major cuts of single-
ingredient, raw meat and poultry products fails to include material 
facts about the consequences of consuming these products. FSIS has 
concluded that the lack of nutrition information for the major cuts of 
single-ingredient, raw products, either on their label or at their 
point-of-purchase, makes these products misbranded under 21 U.S.C. 
601(n)(1) and 453(h)(1). FSIS has determined that this rule is 
necessary to ensure that consumers obtain nutrition information 
concerning

[[Page 67740]]

these products. Through the supplemental proposed regulatory impact 
analysis (PRIA), FSIS has determined that this rule would result in 
benefits to consumers and net benefits to society.
    Consistent with the proposed rule, this supplemental proposed rule 
will not require nutrition information for nonmajor cuts of single-
ingredient, raw meat and poultry products that are not ground or 
chopped.
    FSIS has determined that it is not appropriate or necessary to 
require nutrition information for nonmajor cuts that are not ground or 
chopped at this time. They do not contribute in a major way to the 
diet. Thus, at this time, the consequences of consuming these products 
cannot be considered to be a material fact. In the future, FSIS will 
reassess the production and consumption volume of nonmajor cuts that 
are not ground or chopped and will determine the levels of consumption 
of these products and whether sufficient nutrition information is being 
made available about them. After FSIS assesses the volume of these 
products and assesses the adequacy of nutrition information provided 
for them, FSIS will determine whether it is necessary to propose 
nutrition labeling requirements for these products, and whether 
nutrition labeling requirements for these products would be beneficial.
    Should this rule become effective, if establishments or retail 
facilities voluntarily provide nutrition information for nonmajor cuts 
of meat and poultry products that are not ground or chopped, they will 
have to provide it according to the nutrition labeling requirements for 
the major cuts. Should establishments or retail facilities choose to 
provide nutrition information for these products, they will have to 
either provide it at the point-of-purchase, in accordance with Sec.  
317.345 or Sec.  381.445, or on their label, in accordance with Sec.  
317.309 or Sec.  381.409. Thus, the nutrition labeling provisions for 
these products will be consistent with those for the voluntary 
nutrition labeling program.
    As proposed, the supplemental proposed rule would allow nutrition 
information for the major cuts and nonmajor cuts of single-ingredient, 
raw products that are not ground or chopped to be declared on either an 
``as packaged'' basis or an ``as consumed'' basis because most of these 
products will not need FSIS compliance scrutiny. If FSIS conducts 
nutrient analysis of products under 317.309(h) or 381.409(h), it does 
so on the packaged product. If nutrition information for these products 
is based on USDA's National Nutrient Database for Standard Reference, 
and there are no claims on the labeling, FSIS will not conduct a 
nutrient analysis of these raw products and, therefore, will not 
evaluate ``as packaged'' nutrition labeling information for these 
products.
    Also consistent with the proposed rule, under this supplemental 
proposed rule, the declaration of the number of servings per container 
would not need to be included on the nutrition label for the major or 
nonmajor cuts of single-ingredient, raw products that are not ground or 
chopped, because these products are typically random weight products. 
Existing regulations do not require the number of servings on the 
nutrition label of random weight products (see Sec. Sec.  
317.309(b)(10)(iii) and 381.409(b)(10)(iii)).
    Ground or Chopped Products: Consistent with the proposed rule, this 
supplemental proposed rule would extend the mandatory nutrition 
labeling requirements to all ground or chopped products, including 
single-ingredient, raw ground or chopped products, unless an exemption 
applies. Should this rule become effective, FSIS will require that 
nutrition labels be provided for all ground or chopped products 
(livestock species) and hamburger, with or without added seasonings, 
unless an exemption applies. This rule would also require that 
nutrition labels be provided for all ground or chopped poultry 
products, with or without added seasonings, unless an exemption 
applies. After analyzing the comments and for the reasons discussed in 
the proposed rule and discussed below in the response to comments 
section, FSIS has concluded that ground or chopped meat and poultry 
products that do not bear nutrition information on their label are 
misbranded under 21 U.S.C. 601(n)(1) and 453(h)(1).
    FSIS recognizes that single-ingredient, raw ground or chopped 
products have not been required to bear nutrition labels. In the 
proposed rule, FSIS explained that, on June 3, 1997, the Center for 
Science in the Public Interest (CSPI) submitted a petition to the 
Agency stating that FSIS should require complete ``Nutrition Facts'' on 
ground beef labels that make nutrient content claims. This petition 
brought many of the issues concerning the need for nutrition labeling 
of ground or chopped products to FSIS's attention. Consistent with 
CSPI's petition, FSIS has determined that nutrition information should 
be required on packages of all ground or chopped meat and poultry 
products, unless an exemption applies. (For more information on the 
petition from CSPI, see 66 FR 4975, January 18, 2001).
    Most industry commenters did not support requiring on-package 
nutrition information for ground or chopped products. Some of these 
commenters supported requiring nutrition labeling for these products at 
their point-of-purchase. Individuals, consumer organizations, and 
nutrition organizations supported mandatory nutrition labeling on the 
packages of ground or chopped products.
    FSIS requests comments on how retailers or official establishments 
would prepare point-of-purchase materials that would address all 
possible combinations of percent fat and percent lean in ground or 
chopped products. FSIS also requests comments on how point-of-purchase 
materials would convey the nutrient values of ground or chopped 
products that contain AMR product or product from low temperature 
rendering (e.g., finely textured beef or lean finely textured beef). In 
addition, FSIS requests comments on how consumers would identify which 
nutrient values on point-of-purchase materials correspond to specific 
ground or chopped products available in the store, if a statement of 
fat percentage or lean percentage is not required on the product. Such 
statements would not be required under this supplemental proposed rule. 
Finally, FSIS requests surveys, studies, or other data on consumers' 
perception and use of point-of-purchase materials versus nutrition 
labels for ground or chopped products and on consumers' understanding 
of the nutrient content of such products.
    Exemptions: This supplemental proposal would provide all the 
exemptions that it proposed for the major cuts of single-ingredient, 
raw meat and poultry products and for ground or chopped products for 
the reasons set forth in the proposal. Consistent with the proposed 
rule, it does not provide an exemption for ready-to-eat ground or 
chopped products packaged or portioned at retail or multi-ingredient 
ground or chopped products that are processed at retail. As FSIS 
explained in the 2001 nutrition labeling proposed rule, there may be a 
significant amount of multi-ingredient ground beef retail processed 
products or ready-to-eat retail packaged products. Also, as was stated 
in the proposed rule, FSIS no longer believes enforcement of nutrition 
labeling requirements at retail stores to be impractical because FSIS 
is already conducting testing for E. coli O157:H7 at retail.
    In response to comments, the supplemental proposal provides an

[[Page 67741]]

exemption from nutrition labeling requirements for products that are 
ground or chopped at an individual customer's request and that are 
prepared and served or sold at retail, provided that the labels or 
labeling of these products bear no nutrition claims or nutrition 
information.
    Enforcement and Compliance: Consistent with the proposed rule and 
the reasons discussed in it, under this supplemental proposed rule, 
FSIS would sample and conduct nutrient analysis of ground or chopped 
products to verify compliance with nutrition labeling requirements, 
even if nutrition labeling on these products is based on the most 
current representative database values contained in USDA's National 
Nutrient Data Bank or the USDA National Nutrient Database for Standard 
Reference and there are no claims on the labeling. Also consistent with 
the proposed rule, for the major cuts that are not ground or chopped, 
if nutrition labeling of these products is based on USDA's National 
Nutrient Data Bank or the USDA's National Nutrient Database for 
Standard Reference, and there are no nutrition claims on the labeling, 
FSIS would not sample and conduct a nutrient analysis of these 
products.
    Permitting Percent Lean Statements on labels or in labeling of 
ground or chopped products: Consistent with the proposed rule, the 
supplemental proposed rule would permit a statement of lean percentage 
on the label or in labeling of ground or chopped meat and poultry 
products that do not meet the regulatory criteria for ``low fat,'' as 
long as a statement of fat percentage is contiguous to, in lettering of 
the same color, size, and type as, and on the same color background as, 
the statement of lean percentage. Because the percent fat statement 
must be contiguous to the percent lean statement and must be in 
lettering of the same color, size, and type as, and on the same color 
background as, the lean percentage statement, FSIS believes that the 
percent lean statements will not mislead consumers.
    Under the proposed rule, if small businesses produced ground or 
chopped product and included a statement of lean percentage and fat 
percentage on the product's label or in labeling, the business would 
have been required to include nutrition information on the product 
label. Based on the National Cattleman's Beef Association (NCBA) 
National Meat Case Study in 2004, 93 percent of ground beef packages 
had statements of lean or fat percentages. Sixty-eight percent of 
packages with such statements had nutrition facts panels and 25 percent 
did not. Because 25 percent of ground beef packages in the NCBA study 
had statements of lean or fat percentages but did not have nutrition 
facts panels, FSIS found it reasonable to conclude that many small 
businesses may include a statement of the lean percentage on the label 
of ground products but may not include nutrition facts panels on the 
product label. On this basis, FSIS concluded that requiring small 
businesses that use the lean percentage statement on the label of 
ground products to also include nutrition information on the label of 
such products may result in significant expenses for small businesses. 
Therefore, in this supplemental proposed rule, small businesses that 
use statements of percent fat and percent lean on the label or in 
labeling of ground products would be exempt from nutrition labeling 
requirements, provided they include no other nutrition claims or 
nutrition information on the product labels or labeling.
    The majority of industry associations supported the use of a 
statement of lean percentage on the label or in labeling of ground 
products that do not meet the regulatory criteria for ``low fat.'' 
Because of the longstanding use of the statements of percent fat and 
percent lean on the label or in labeling of ground beef and hamburger 
products, FSIS has concluded that such statements on the label or in 
labeling of ground products produced by small businesses will not 
mislead consumers, even if the small businesses do not include 
nutrition information on the products' labels.
    However, individuals and consumer and nutrition organizations 
generally did not support the use of statements of lean percentages on 
the label or in labeling of ground or chopped products that do not meet 
the regulatory criteria for ``low fat.'' Therefore, FSIS requests 
comments on whether such statements should be prohibited on the label 
or in labeling of ground or chopped products that do not meet the 
regulatory criteria for ``low fat.'' FSIS requests comments on whether 
lean percentage statements are inherently misleading to consumers on 
the label or in labeling of ground or chopped product that does not 
meet the regulatory criteria for ``low fat'' when contiguous to fat 
percentage statements, as the rule would require. FSIS also requests 
comments on whether lean percentage statements are redundant on the 
label or in labeling of such products when contiguous to fat percentage 
statements. If commenters believe the regulations should prohibit lean 
percentage statements on the label or in labeling of ground or chopped 
products that do not meet the ``low fat'' criteria, FSIS requests 
comments on whether a fat percentage statement on the label or in 
labeling of such products would be useful. If commenters believe such a 
statement would be useful, do they believe it should be required on the 
label or in labeling for these products?
    FSIS also requests comments on whether the final rule should allow 
a lean percentage statement and fat percentage statement on the label 
or in labeling of ground or chopped products produced by small 
businesses if such product does not include nutrition information on 
the product label. If commenters believe that nutrition information 
should be required on labels of any ground or chopped product for which 
a lean percentage and fat percentage statement is provided on the label 
or in labeling, FSIS requests comment on the costs of this requirement 
for small businesses.
    FSIS requests copies of surveys, studies, or other data on 
consumers' use and understanding of lean percentage and fat percentage 
statements on ground or chopped products.

Effective Date

    Should this rule become final, FSIS intends that the requirements 
for ground or chopped products would become effective on January 1, 
2012. FSIS issued final regulations to establish this date as the 
uniform compliance date for new food labeling regulations that are 
issued between January 1, 2009, and December 31, 2010 (73 FR 75564; 
December 12, 2008). As is discussed in the response to comments below, 
FSIS issued the uniform compliance regulations to minimize costs 
associated with on-package labels. Because this supplemental proposed 
rule would allow for the presentation of nutrition information for the 
major cuts of single-ingredient, raw meat and poultry products at their 
point-of-purchase, FSIS intends to make the labeling requirements for 
the major cuts effective one year from the date of publication of the 
final rule. FSIS requests comments on these two planned effective 
dates.

Availability of Nutrition Information

    FSIS intends to make available nutrition labeling materials that 
can be used at the point-of-purchase of the major cuts at the following 
Internet address: http://www.fsis.usda.gov. Also, the Food Marketing 
Institute (FMI) has made available materials that can be used at the 
point-of-purchase of the major cuts at the following Internet address: 
http://www.fmi.org/consumer/nutrifacts/.

[[Page 67742]]

    The USDA National Nutrient Database for Standard Reference is 
developed and maintained by the Agricultural Research Service (ARS) and 
can be found on the Internet at the following address: http://www.ars.usda.gov\nutrientdata. Information is available at this site 
for ground beef products containing 5%, 10%, 15%, 20%, 25%, and 30% 
fat. In addition, ARS has included a calculator on the Internet, with 
the Database. Parties can enter the amount of fat (5% to 30% percent 
fat) or lean (70% to 95% lean) in a particular raw ground beef product, 
and the calculator will calculate the nutrient values for the product 
based on the fat value entered.
    The USDA National Nutrient Database for Standard Reference also 
includes a set of tables with nutrient values for ground pork with fat 
levels from 4 to 28%, in one percent increments. ARS did not develop a 
calculator because, at this time, labeling for ground pork at retail 
does not include statements of percentage fat or percentage lean. The 
USDA Nutrient Database also includes nutrient values for raw and cooked 
ground chicken but does not include nutrient values for such product at 
varying fat levels. Ground chicken is not typically produced over a 
wide range of fat levels. ARS also has nutrient data for three types of 
commonly marketed ground turkey products. Nutrient values for these 
products are not yet in the database. However, ARS expects that the 
nutrient values for these ground turkey products will be available in 
the database by August 2010. Most ground poultry products are produced 
and labeled at Federal establishments rather than at retail.
    FSIS requests comments on whether provision of nutritional tables 
will be sufficient for retailers and establishments to provide 
nutrition labels for ground pork. FSIS also requests comments on 
whether the available data for ground chicken and ground turkey in the 
USDA Nutrient Database will be sufficient for retailers and 
establishments.
    Below are examples of nutrition labels for ground or chopped 
products that would meet the requirements of the supplemental proposed 
rule. Should this rule become final, FSIS will make additional examples 
of acceptable nutrition labels for ground or chopped products available 
on the Agency's Web site.
BILLING CODE 3410-DM-P

[[Page 67743]]

[GRAPHIC] [TIFF OMITTED] TP18DE09.421


[[Page 67744]]


[GRAPHIC] [TIFF OMITTED] TP18DE09.422

BILLING CODE 3410-DM-C

Summary of and Response to Comments

    FSIS received approximately 5,000 comments on the proposed rule 
from individuals, consumer advocacy organizations, academia, trade and 
professional associations, health and nutrition organizations, two 
county health departments, meat and poultry producers, and food 
retailers. The majority of the comments (approximately 3,500) were 
generated from a letter writing campaign initiated by a consumer 
organization. In addition, there were approximately 450 form letters 
that expressed consumers' concerns and did not identify an affiliation 
with any organization, approximately 60 form letters from a consumer 
co-op organization, and two sets of form letters from relatively small 
retail chains (approximately 10 letters in each set).
    A summary of issues raised by commenters and the Agency responses 
follows.

Nutrition Labeling for the Major Cuts of Single-Ingredient, Raw Meat 
and Poultry Products

    Comment: The majority of letters from individuals, consumer groups, 
and health organizations stated that FSIS should require on-package 
nutrition labeling for all single-ingredient, raw meat and poultry 
products (major and nonmajor cuts). They stated that point-of-purchase 
materials fail to convey effectively the nutrition information for 
specific fresh meat or poultry products because the materials are 
difficult to find and difficult to read. Some of these commenters also 
stated that nutrition labels are particularly important for meat and 
poultry products because they are a major source of fat, saturated 
fatty acids, and calories.
    A health organization stated that because the same cut of meat can 
be labeled by different names, consumers would be better served by 
nutrition information on the labels of the products. Several commenters 
stated that an advantage of including nutrition information on the 
label is that consumers could review the nutrient content once the 
product is taken home, and others, besides the primary food purchaser, 
would have better access to the nutrition information. A nutrition 
association stated that if FSIS permits point-of-purchase information 
for fresh meat and poultry packages, the Agency should require on-
package messages directing consumers to point-of-purchase labeling at 
another location in the store.
    One consumer association noted that a recent telephone survey 
showed an overwhelming percentage (78%) of the respondents said that it 
was ``more useful'' to provide nutrition information about raw meat and 
poultry products on package labels than on posters or brochures.
    Comments from a coalition of health and consumer organizations 
suggested that the nutrient content for ground products often has less 
variance than the nutrient content of specific cuts. Thus, the 
coalition believes that it is more important to provide nutrition 
information on the labeling of major cuts than on ground products. The 
coalition also stated that the reasons provided by the Agency for 
mandating nutrition labeling on the packaging of ground products would 
be the reasons for mandating nutrition labeling on

[[Page 67745]]

packaging of the major cuts of meat or poultry (see 66 FR 4977). This 
coalition also stated that there are more major cuts than there are 
ground products, and it would be difficult for producers or retailers 
to develop point-of-purchase materials to address the different 
formulations and trim levels of the major cuts; and it would be 
difficult for consumers to locate the appropriate information for a 
particular cut on the point-of-purchase materials.
    One health group stated that although on-package labeling may be a 
more effective approach for conveying nutrition information than point-
of-purchase materials, the organization has historically supported the 
use of point-of-purchase materials as an acceptable means of nutrition 
labeling. This commenter also stated that for single-ingredient, raw 
products, other than ground or chopped products, the use of 
standardized averages is likely to be the most effective way to provide 
nutrition information, either on the package or at point-of-purchase. 
An individual also stated that for many major cuts, having the 
nutrition label next to the product would be sufficient.
    A consumer organization did not believe that consumers have 
reasonable expectations as to the nutrient content, including the fat, 
of raw meat and poultry products. The organization referenced a 
consumer telephone survey in which most respondents were unable to 
identify which cut of meat had the highest fat content among four 
choices. One medical organization stated that although it may be true 
that the nutrient content of the major cuts is relatively uniform, 
consumers generally have no idea of the nutrient content of these 
foods.
    The majority of industry and industry associations supported the 
continued use of point-of-purchase nutrition information materials for 
the major cuts, rather than nutrition labels on the packages of these 
products. Two of these groups presented results of focus group research 
demonstrating that consumers currently understand and use point-of-
purchase materials in numbers comparable to the number of consumers who 
read and use the nutrition information on the labeling of products 
subject to the requirements of the mandatory nutrition labeling 
program. Additionally, according to the commenters, the focus group 
research demonstrates that consumers are generally satisfied with the 
current nutrition information provided for fresh meats.
    One industry association stated that the use of individual 
nutrition labels may result in consumers' viewing a smaller portion of 
the product and paying a higher amount for the product, because of the 
cost associated with maintaining a vast number of labels to be placed 
on the package. Additionally, according to this commenter, if the 
consumer intends to trim the fat from meat or remove the skin from 
poultry products, the nutrition information on the label would not 
adequately represent the product's nutrition information after fat had 
been trimmed from it or skin from it had been removed.
    One industry commenter stated that it is extremely difficult to 
provide accurate nutrition information for each major muscle cut 
because nutrient content varies depending on the breed and quality of 
each animal. Another industry commenter stated that although 
``average'' numbers from the USDA database are appropriate for point-
of-purchase materials, because of the potential variations in specific 
individual cuts, trims and grades, the average numbers are not 
appropriate for on-package labeling, where consumers justifiably expect 
a label to accurately define the exact nutrient content of what is in 
that package.
    Two industry commenters stated that according to the Agency's own 
survey, 62.7% of men and 57.9% of women rarely or never use the 
nutrition information provided on raw meat, poultry or fish (see 66 FR 
4982, January 18, 2001). They speculated that this low usage may in 
part be explained by the fact that consumers already have reasonable 
expectations regarding the nutrient values of these products as a 
result of industry's voluntary efforts to provide this information. 
Similarly, one retail association stated that consumers have reasonable 
expectations as to the nutrient content of major cuts, and that the 
nutrient content of a given major cut is relatively uniform across the 
market. An industry commenter stated that, unlike ground meat, 
consumers can see and remove the fat from whole muscle meat.
    Another industry organization stated that single-ingredient, raw 
meat and poultry products have a unique quality: the structure of the 
cut, including the amount of fat, is visible both on the exterior and 
within the muscle cut. As a result, consumers can visibly discern which 
products are leanest. However, the commenter also believed that 
consumers would benefit from additional nutrition information because 
consumers cannot discern the quantitative nutrient content of single-
ingredient, meat and poultry products without the nutrition information 
provided on point-of-purchase materials.
    Response: As FSIS proposed, should this rule become final, it will 
require that nutrition information be provided for the major cuts of 
single-ingredient, raw meat and poultry products, either on the label 
or at the point-of-purchase. Although FSIS continues to agree with the 
commenters who stated that nutrition labels on the major cuts of 
single-ingredient, raw products are useful, FSIS believes that 
consumers have reasonable expectations as to the nutrient content of 
these products and can make comparative judgments about the fat content 
of the various cuts. While consumers' expectations for these products 
may not be perfect, they are significantly more aware of the 
nutritional content of single cuts of meat than the nutritional content 
of ground meat. Thus, the rule allows an alternative way of providing 
nutrition information for major cuts of single-ingredient, raw 
products. As is discussed above, even though FSIS believes that 
consumers have reasonable expectations concerning the nutrient content 
of the major cuts, without nutrition information for these products, 
consumers cannot assess specific nutrient levels in them and cannot 
make educated choices about consuming them. These educated choices are 
significant to a consumer's effort to construct a healthy diet.
    FSIS does not believe that the telephone survey results used by a 
consumer organization in support of their belief that most consumers do 
not have reasonable expectations of the nutrient content of raw meat 
and poultry demonstrate that consumers do not have reasonable 
expectations concerning the major cuts. FSIS does not believe it is 
reasonable to expect consumers in a telephone survey to be able to 
identify which individual cuts of meat or poultry have the highest fat 
levels. However, if shown pictures of the various cuts (that are not 
ground or chopped), FSIS believes that most consumers could identify 
the cut with the most fat, by its internal marbling and external fat 
cover. The medical organization commenter that stated that consumers 
generally have no idea of the nutrient content of the major cuts 
provided no data to substantiate this statement.
    Although individuals, and consumer organization commenters, stated 
that point-of-purchase materials are difficult to read, they provided 
no explanation for their assertion that these materials are difficult 
to read. Their other concern about the difficulty of finding point-of-
purchase materials will be taken care of

[[Page 67746]]

by this rule. Should it become final, the rule will require that point-
of-purchase materials be made available in close proximity to the food 
(Sec.  317.345(a)(3) and Sec.  381.445(a)(3)).
    Regarding the health organization's comment that the same cut of 
meat can be labeled by different names, and thus consumers would be 
better informed by nutrition information on a product's label, FSIS is 
not aware that consumers are confused about the names of the major cuts 
of single-ingredient, raw products listed on point-of-purchase 
materials. FMI was involved in developing these materials, and that 
organization has the most current names used to designate the major 
cuts. However, if necessary, retail facilities and establishments can 
include multiple names for a major cut on point-of-purchase materials. 
In addition, if FSIS is informed of specific cuts that are identified 
by different names, FSIS will revise the point-of-purchase materials 
that it is making available on the Internet.
    After the comment period for the proposed rule ended, FSIS received 
correspondence from industry stating that the list of major cuts in the 
regulations should be changed to reflect more accurately the most 
popular cuts in the market. This correspondence recommended removing 
certain cuts and adding others. Because FSIS did not propose to amend 
the codified list of major cuts in the regulations and did not provide 
an opportunity for the public to comment on proposed changes to the 
list, FSIS is not amending the list of major cuts in the regulations at 
this time. However, FSIS will review this issue, and if the Agency 
determines that a change in the list of major cuts is warranted to 
accurately represent the market, FSIS will pursue future rulemaking.
    Regarding the comments that noted that an advantage of including 
nutrition information on the label is that consumers can review the 
nutrient content of the product once the product is taken home, and 
others besides the primary food purchaser would have better access to 
this information, surveys, including the Diet and Health Knowledge 
Survey (DHKS), show that a majority of individuals report using labels 
while buying foods. Although the DHKS shows that adults who are not 
main household shoppers use labels, the survey shows that the main 
shoppers use labels at a higher rate than those who are not main 
household shoppers. Also, FSIS assumes that if individuals in a 
household have certain nutrition practices and needs, the person who 
purchases food for the household would take other household members' 
needs and preferences into account. In addition, FSIS assumes that 
purchased food would typically be consumed by members of the household 
and not thrown away.
    In response to the comment that the nutrient content of the major 
cuts may be more variable than that of ground products, FSIS recognizes 
that there is significant variability in the nutrient content of the 
major cuts depending on the grade of the product and the levels of 
exterior fat on the products. However, the point-of-purchase materials 
that FSIS and FMI have developed to convey nutrition information for 
the major cuts take into account this variability and reflect average 
nutrition information for these products. The information on the point-
of-purchase materials is meaningful and accurate for the major cuts. 
Consumers can view the point-of-purchase materials to make educated 
choices based on nutrition information among the different major cuts. 
In addition, to further distinguish among different packages of the 
same major cut, consumers can make comparisons based on levels of 
visible fat on the product.
    This coalition's other concern that it would be difficult for 
producers or retailers to develop point-of-purchase materials to 
address the different formulations and trim levels of the major cuts 
need not be a concern. FSIS and FMI have made available nutrition 
information that can be displayed at the point-of-purchase of the major 
cuts of single-ingredient, raw meat and poultry products. These point-
of-purchase materials will meet the nutrition labeling requirements of 
this rule, should it become final. Furthermore, requiring that all 
major cuts of single-ingredient, raw meat and poultry products bear 
nutrition labels would be a significant cost to the industry based on 
FSIS's supplemental proposed cost analysis.
    Comment: Two industry commenters stated that it was appropriate for 
FSIS to provide point-of-purchase materials via the Internet. They 
believed that this would lessen the burden on retailers unable to 
develop appropriate customized nutrition information. One of these 
commenters also stated that the Agency should develop point-of-purchase 
materials so that the nutrition information supplied would be accurate 
and consistent.
    With regard to the type of point-of-purchase materials used to 
display nutrition information, several commenters stated that easy to 
understand charts that convey the information would be more helpful and 
informative to consumers than a collection of individual labels on 
display. One industry organization commenter, however, stated that each 
option of the display of nutrition information on charts or on 
individual display panels had advantages. This industry organization 
believed that the presentation of information in charts which have 
vertical and horizontal columns, that cover multiple products, would 
allow consumers to make comparisons and would consume less space than 
individual labels. This organization also stated that charts are 
readily available to retailers. However, this organization felt that 
consumers might be more familiar with single nutrition panels than with 
nutrition charts covering multiple products. Nevertheless, this 
organization believed that the provision of nutrition panels for every 
major cut at their point-of-purchase would be costly and would consume 
a significant amount of space in retail settings. Thus, the 
organization concluded that retailers should have the freedom to 
present nutrition information in any way that suits customer needs, so 
long as it is not misleading. Accordingly, the commenter suggested that 
USDA conduct research to determine the best method of presenting such 
information.
    Several industry commenters stated that the Agency should describe 
the information required but should not prescribe a specific format or 
presentation of the information so that retailers that want to develop 
customized point-of-purchase materials can develop customized 
materials. These commenters believed it was important to provide as 
much flexibility in the development of nutrition materials as possible. 
One of these commenters also stated that the Agency should only 
prescribe the specific required presentation of the nutrition 
information after significant consumer testing.
    Response: The Agency will provide nutrition information for the 
major cuts of single-ingredient, raw products that retailers can use at 
point-of-purchase at the following Internet address: http://www.fsis.usda.gov. Point-of-purchase materials are also available from 
FMI at the following Internet address: http://www.fmi.org. At this 
time, FSIS intends to provide information on charts with columns that 
cover multiple products, rather than providing a compilation of 
individual nutrition facts panels. The Agency does not intend to 
conduct consumer surveys or additional research to determine whether 
individual nutrition labels or charts covering multiple products would 
best address

[[Page 67747]]

consumer needs because most comments received on this issue supported 
the use of charts covering multiple products.
    The Agency agrees with commenters that it is important to provide 
as much flexibility as possible in the presentation of nutrition 
information on point-of-purchase materials for the major cuts of 
single-ingredient, raw products. Therefore, should this rule become 
final, FSIS will allow point-of-purchase nutrition information for the 
major cuts to be presented through a variety of means, including signs, 
brochures, notebooks, or leaflets in close proximity to the food. The 
nutrition labeling information may also be supplemented by a video, 
live demonstration, or other media. Furthermore, if there is no 
nutrition claim made on the point-of-purchase materials, they will not 
be subject to any of the format requirements applicable to on-package 
nutrition labels. However, if a nutrition claim is made on the point-
of-purchase materials, all of the format and content requirements 
applicable to on-package nutrition labels in Sec. Sec.  317.309 and 
381.409 will apply.
    Consistent with existing voluntary and mandatory nutrition labeling 
program regulations, should this rule become final, the Agency will 
provide more flexibility for the presentation of nutrition information 
for the major cuts at the point-of-purchase than for the presentation 
of nutrition information on labels. FSIS believes this is appropriate 
and necessary because there is no small business exemption from 
nutrition labeling requirements for the major cuts. Also, FSIS does not 
want to impose any burden on retailers that are following the voluntary 
guidelines for voluntary nutrition labeling.
    Comment: One animal protection organization supported allowing 
nutrition information for the major cuts of single-ingredient, raw 
products to be provided on an ``as packaged'' basis, as opposed to an 
``as consumed'' basis, because there are numerous cooking methods, and 
the cooking method used could affect the nutrient content of the 
product. In addition, one industry association supported allowing 
nutrition information to be provided on an ``as consumed'' basis for 
the major cuts of single-ingredient, raw products.
    Response: As proposed, for the major cuts and nonmajor cuts of 
single-ingredient, raw products, should this rule become final, it will 
allow nutrition information on the label or on point-of-purchase 
materials to be declared on either an ``as packaged'' basis or ``as 
consumed'' basis because, as noted in the proposed rule, most of the 
major cuts of single-ingredient, raw meat and poultry products will not 
need FSIS compliance scrutiny (66 FR 4974, January 18, 2001). If 
nutrition information for these products is based on USDA's National 
Nutrient Database for Standard Reference, and there are no claims on 
the labeling, FSIS will not conduct a nutrient analysis of these raw 
products and, therefore, will not evaluate ``as packaged'' nutrition 
labeling information for these products. Consistent with the provisions 
in the voluntary nutrition labeling program, when nutrition information 
is presented on an ``as consumed'' basis, retailers or manufacturers 
will be required to specify a method of cooking that will not add 
nutrients from other ingredients such as flour, breading, and salt 
(Sec. Sec.  317.345(d) and 381.445(d)). FSIS welcomes further comment 
on this issue.
    Comment: An industry association and animal protection organization 
agreed that it was unrealistic to state the ``servings per container'' 
on the nutrition labels of the major cuts of single-ingredient, raw 
products because the majority of these products are random weight 
items.
    Response: FSIS agrees that the number of serving per container is 
not necessary information on the nutrition labels of the major cuts or 
nonmajor cuts of single-ingredient, raw products, because these 
products are typically random weight products. For multi-ingredient and 
heat-processed products that must bear nutrition labels, the number of 
servings is not required on random weight products (Sec. Sec.  
317.309(b)(10)(iii) and 381.409(b)(10)(iii)).
    Comment: Several industry groups believed that the voluntary 
nutrition labeling program should remain in place, and that FSIS should 
not require nutrition labeling of the major cuts of single-ingredient, 
raw products. One retail association stated that FSIS could improve 
voluntary compliance with nutrition labeling guidelines without 
requiring nutrition labeling for the major cuts by making the same free 
information available that it plans to make available under the new 
regulations. Similarly, a form letter that multiple retailers submitted 
stated that FSIS could increase compliance with the voluntary 
guidelines at less cost to consumers than the regulations would 
generate by providing free and updated information to retailers. 
Several individuals stated that the USDA should not establish new 
labeling requirements for meat products because they believed that 
current labeling on these products is sufficient.
    As noted above, two commenters stated that according to the 
Agency's own data, 62.7% of men and 57.9% of women rarely or never use 
nutrition information on raw meat, poultry or fish. Given such low 
usage, the commenters stated that FSIS should not require nutrition 
labeling for the major cuts of single-ingredient, raw products but 
should be more flexible in encouraging greater participation in the 
voluntary program.
    Two industry commenters questioned the accuracy of the USDA surveys 
that did not find significant participation in the voluntary nutrition 
labeling program. They stated that the USDA surveys in 1996 and in 1999 
checked only for the presence of the ``new'' formatted nutrition 
information; one of these commenters stated that FSIS did not announce 
in the Federal Register that only ``new'' materials would be 
considered.
    These commenters also noted that FSIS determined whether 
significant participation in the voluntary nutrition labeling program 
existed based on the number of stores found to be in compliance. 
However, these commenters stated that equal consideration should have 
been given to the volume of product for which nutrition information was 
provided and the numbers of shoppers given access to the information. 
These commenters noted that volume-weighted participation would have 
represented 60 percent participation in the voluntary nutrition 
labeling program.
    One of the commenters that questioned the accuracy of the surveys 
also stated that the surveys were not conducted every two years; it is 
not clear that every chain company was included; neither the 1996 nor 
the 1999 survey reported on nutrition information that was applied in 
label form directly to the package; and the surveys may have included 
stores that the organization believes should be exempt from the 
nutrition labeling guidelines. The other commenter that questioned the 
accuracy of the surveys stated that, given a variance factor of 4% (a 
conservative margin of error based on 2,000 stores, according to the 
survey reports), store participation could have been 70.5% in 1995, 
61.5% in 1996, and 58.5% in 1999. In other words, FSIS could have found 
significant participation existed in two of the surveys.
    Response: FSIS continues to believe that nutrition information for 
the major cuts of single-ingredient, raw products is important and 
necessary. In addition, FSIS believes that requiring nutrition labeling 
of the major cuts of single-

[[Page 67748]]

ingredient, raw meat and poultry products will result in benefits. FSIS 
did encourage participation in the voluntary nutrition labeling program 
through meetings with industry. Further, nutrition labeling materials 
for the major cuts have been available on FMI's Web site for several 
years (http://www.fmi.org). Despite this and FSIS's encouragement of 
the use of such materials, the 1999 voluntary nutrition labeling survey 
found a lower rate of participation than the 1996 survey found. Thus, 
the fact that nutrition information was available was insufficient to 
ensure consumers received the necessary nutrition information. By 
making the guidelines currently in place for the voluntary nutrition 
labeling program mandatory, FSIS will ensure that consumers are 
provided with necessary nutrition information concerning the major 
cuts.
    To determine how much of a behavioral response and change in 
dietary intake might result from providing more nutrition information 
on meat and poultry products in the proposed rule's benefits analysis, 
FSIS assumed that when labels and other sources of nutrition 
information were provided for raw meat and poultry products, the usage 
rates would rise to match nutrition label usage rates for food products 
as a whole (66 FR 4990, January 18, 2001). As FSIS noted, although some 
information was being provided for some single-ingredient, raw meat and 
poultry products, nutrition information for these products was not 
required. FSIS noted it could be reasonably assumed that when nutrition 
information becomes mandatory, more consumers will use the nutrition 
information for the major cuts of single-ingredient, raw products.
    FSIS does not believe that the surveys conducted to determine 
whether there was significant participation in the voluntary nutrition 
labeling program were inaccurate because they were not conducted 
precisely every two years or because of the manner in which FSIS 
determined whether there was significant participation. FSIS's 
regulations provide that the Agency would evaluate significant 
participation every 2 years (Sec. Sec.  317.343(e) and 381.443(e)). 
However, the timing of these surveys did not make them invalid. 
Although FSIS did not conduct the surveys precisely 2 years apart, the 
Agency conducted the surveys approximately every two years.
    Further, the survey conducted in June 1995 included as participants 
in the voluntary nutrition labeling program those retailers who 
displayed at point-of-purchase either materials that were developed 
before or after issuance of the 1993 final rule on nutrition labeling. 
The older nutrition information materials, which were developed in 
1992, did not comply entirely with the voluntary nutrition labeling 
program provisions in the 1993 final rule. For example, the older 
materials did not include the required percent daily values for certain 
nutrients. Therefore, the results of the 1995 survey may have actually 
overestimated participation in the voluntary nutrition labeling 
program.
    Additionally, the 1996 and 1999 surveys correctly only counted a 
store as providing voluntary nutrition information for meat and poultry 
products if it displayed point-of-purchase materials that were 
developed after the final rule was published. FSIS program officials 
had decided that by 1996 retailers had had enough time to obtain the 
updated nutrition labeling materials for display in their stores. FSIS 
did not announce in the Federal Register that only ``new'' materials 
would be considered to meet the voluntary nutrition labeling program 
guidelines. However, FSIS met with industry organizations and informed 
them that, in the 1996 survey, the Agency would only consider ``new'' 
materials to meet the voluntary nutrition labeling program guidelines. 
It could reasonably be expected that stores that were participating in 
the program would replace the materials over the course of three years.
    Moreover, consistent with its stated intention to sample all chain 
companies (58 FR 640, January 6, 1993), the contractor that conducted 
the surveys on behalf of FSIS used various sources to sample all 
chains, including Retail Diagnostics, Inc.'s listing of supermarkets, 
Progressive Grocer Marketing Guidebook, Progressive Grocer MarketScope, 
Chain Store Guide Directory of Supermarkets & Convenience Store Chains, 
and the latest U.S. Economic Census. Moreover, although the surveys do 
not report the number of stores found to be providing nutrition 
information on package labels, the surveys did take this into account. 
Retailers were considered to be participating in the voluntary program 
when they provided nutrition information on nutrition labels or on 
point-of-purchase materials, in accordance with program guidelines, for 
at least 90 percent of the major cuts sold at the facility.
    FSIS correctly did not make a determination of whether there was 
significant participation in the voluntary nutrition labeling program 
based on the volume of product for which nutrition information was 
provided and the number of shoppers given access to the information. 
FSIS regulations clearly provide that a determination of whether 
significant participation in the voluntary nutrition labeling program 
existed was to be based on the percentage of companies evaluated that 
were participating in accordance with the guidelines. Significant 
participation would exist if at least 60 percent of all companies that 
were evaluated were participating in accordance with the guidelines. As 
is explained above, the term ``companies,'' as used in the regulations, 
refers to individual stores. The preamble to the 1993 nutrition 
labeling rule stated, ``FSIS will use a representative sample of stores 
to obtain the information necessary to assess participation'' (58 FR 
640, January 6, 1993). FSIS developed these regulations through notice 
and comment rulemaking, and FSIS conducted the surveys consistent with 
the regulations and the 1993 preamble statement. No comments received 
in response to the November 27, 1991, proposed rule on nutrition 
labeling stated that significant participation should be based on the 
volume of product covered and the number of shoppers given access to 
this information.
    In addition, as FSIS explained in the preamble to its final 
nutrition labeling regulations in 1993, it is important to provide 
nutrition information to consumers and, to the extent possible, to 
harmonize with FDA's voluntary program for raw fruit, raw vegetables, 
and raw fish (58 FR 640, January 6, 1993). Consistent with FSIS's 
regulations, FDA's regulations provide that substantial compliance 
exists with the guidelines for the voluntary nutrition labeling for raw 
fruits, vegetables, and fish when at least 60 percent of all stores 
that are evaluated are in compliance (21 CFR 101.43(c)).
    The 1995 survey found that 66.5% of stores were participating in 
the voluntary nutrition labeling program; the 1996 survey found that 
57.5% of stores were participating; and the 1999 survey found that 
54.5% of stores were participating. Based on the regulations, stores 
were found to be participating in the voluntary nutrition labeling 
program if they provided nutrition information for 90% of the major 
cuts in their stores.
    FSIS recognizes that, given a variance factor of plus or minus 4%, 
store participation could have been 70.5% in 1995, 61.5% in 1996, and 
58.5% in 1999. However, even assuming a plus 4% margin of error, the 
1999 survey showed that significant participation did not exist. 
Furthermore, given a

[[Page 67749]]

variance factor of 4%, store participation also could have been 62.5% 
in 1995, 53.7% in 1996, and 50.8% in 1999. Significantly, the 1999 
participation rate was lower than the 1996 participation rate. As a 
result, FSIS concluded that it had an obligation under its regulations 
to institute this rulemaking. The Agency did not survey again after 
1999.
    Consistent with the regulations, the surveys assessed whether 
stores provided nutrition information for 90% of major cuts stocked in 
their stores (Sec.  317.343(b) and Sec.  381.443.(b)). In addition, the 
surveys assessed whether stores provided nutrition information for a 
lower percentage of such products. The 1996 survey found that 59.4% of 
stores provided nutrition information, according to voluntary 
guidelines, for 70% to 90% or more of their major cuts. Thus, based on 
the 1996 survey, even if FSIS includes stores that provided nutrition 
information according to the voluntary guidelines for only 70% of their 
major cuts, this percentage of stores is not quite 60% and, thus, still 
does not meet the ``significant participation'' criteria in the 
regulations.
    In the 1999 survey, 58.3% of stores provided nutrition information, 
according to the voluntary guidelines, for 50% to 90% or more of their 
major cuts. Again, this percentage of stores is still not quite 60% and 
does not meet the ``significant participation'' criteria in the 
regulations. Based on the 1999 survey, even if FSIS includes stores 
that provided nutrition information according to the voluntary 
guidelines for only 50% of their major cuts, FSIS still would not find 
60% participation. (See Table 7 of the surveys on the FSIS Web site: 
http://www.fsis.usda.gov/Frame/FrameRedirect.asp?main=http://www.fsis.usda.gov/OPPDE/rdad/FRPubs/Docs_98-005P.htm).
    Comment: One retail industry association stated that, unamended by 
a legislative vehicle comparable to the Nutrition Labeling and 
Education Act, the meat and poultry Acts do not give USDA the statutory 
authority to mandate nutrition labeling regulations for single-
ingredient, raw meat and poultry products.
    Response: FSIS believes that without nutrition information, the 
labeling of major cuts of single-ingredient, raw meat and poultry 
products fails to include material facts about the consequences of 
consuming these products. This information is necessary for consumers 
to have if they are to make educated choices that are necessary in 
structuring a healthy diet. FSIS has concluded that the lack of this 
information on the labeling of the major cuts causes the labeling of 
these products to be misleading. The FMIA and PPIA provide that a 
product is misbranded if its labeling is false or misleading in any 
particular (21 U.S.C. 601(n)(1) and 453(h)(1)). Without the nutrition 
information for the major cuts of single-ingredient, raw products that 
would be provided if significant participation in the voluntary 
nutrition labeling program existed, the Agency has concluded that these 
products would be misbranded under the FMIA and the PPIA (21 U.S.C. 
601(n)(1) and 453 (h)(1)).

Mandatory Nutrition Labeling for Ground or Chopped Products

    Comment: Many individuals, consumer organizations, and nutrition 
organizations supported mandatory nutrition labeling on the package for 
ground or chopped products. Several industry associations also 
supported these requirements and stated that these requirements were 
feasible and reasonable. One of these associations also stated that 
because ground meat products are formulated to have greater consistency 
and uniformity in their composition than other cuts, retailers can 
create a standard, on-package label that provides accurate, reliable 
nutrition information.
    Consumer groups noted that several supermarket chains already 
include full nutrition facts labels on their ground beef products. 
These commenters believed that required nutrition labels for ground or 
chopped meat and poultry products would create the most informative and 
clear information for consumers.
    Consumer and industry commenters stated that consumers cannot 
visually detect the fat content of ground beef products, and without 
on-package labeling, consumers cannot easily determine what nutrition 
information provided on point-of-purchase materials would apply to 
individual packages of ground products. However, one of the industry 
commenters that supported on-package nutrition labeling had concerns 
regarding the economic impact of this labeling.
    Most industry trade associations and grocer associations did not 
support on-package nutrition labeling information for ground or chopped 
products. One industry association stated that the FMIA and PPIA do not 
support on-pack nutrition labels for ground or chopped products. 
Another industry association stated that consumer education regarding 
the nutritional qualities of meat and poultry products, in conjunction 
with mandatory point-of-purchase labeling, would provide consumers with 
sufficient information for ground or chopped meat and poultry products. 
Similarly, a third industry association supported mandatory nutrition 
labeling for ground or chopped products, provided it could be provided 
at their point-of-purchase.
    Industry commenters stated that there is not room on the label of 
ground products for a nutrition facts panel. Two commenters stated that 
nutrition labels for ground or chopped products should be exempt from 
the current type size requirements or the labels will be too large; 
alternatively, these commenters suggested that FSIS should allow use of 
the linear label format.
    Two industry commenters stated that results from surveys conducted 
in March 2001 indicated that the majority of their members routinely 
test for fat in ground beef. However, they believe that few retailers 
can determine nutrient or fat content of ground product blended at the 
store. Similarly, several other industry commenters stated that few 
retailers have, or could afford, equipment to determine the nutritional 
content, including fat, for the products they grind. Therefore, 
according to these commenters, mandating nutrition information on 
labeling may constrain small operations, limit the variety of ground 
products, and dissuade the practice of grinding at the request of the 
customer. An individual also stated that the proposed requirements for 
ground or chopped products would not be feasible for small grocers.
    One retail industry association stated that, although retailers can 
readily measure the fat content of ground product, establishing the 
exact nutrient profiles on a daily basis would not be feasible. 
According to this commenter, if products were analyzed, they would no 
longer be salable by the time analytical results became available. 
Another retail industry association stated that some retail stores have 
access to fat content by using a fat analyzer when doing in-store 
grinding of meat or poultry products; however, testing for additional 
nutrient content would require the use of a laboratory and would prove 
costly. Another industry commenter stated that large, centrally 
processed ground products can be formulated to precise fat contents, 
but many ground products produced in retail settings cannot.
    Two industry associations supported the required nutrition labels 
on ground or chopped products that are ``case-ready'' but not for 
products prepared and packaged at retail. Like other industry 
commenters summarized above, these commenters stated that retailers do 
not have the equipment

[[Page 67750]]

necessary to determine the finished product's nutrient content.
    Two associations stated that most consumers purchase ground 
products based on percent lean, the cut, or the cost of product, rather 
than based on the other nutrient content information. Another 
association stated that according to survey data, 45% of consumers 
choose ground beef based on price, 23% based on cut, and 9% based on 
fat content.
    Response: Should this rule become final, FSIS will require on-
package nutrition information for these products rather than allowing 
nutrition information to be provided at their point-of-purchase for the 
reasons stated in the proposed rule. Because there are numerous 
formulations of ground or chopped products, it would be difficult for 
producers or retailers to develop point-of-purchase materials that 
would address all the different formulations that exist for these 
products. Furthermore, it would be difficult for consumers to find the 
correct information for a specific ground or chopped product on point-
of-purchase materials that include information concerning numerous 
formulations of these products (66 FR 4977, January 18, 2001). If a 
statement of the fat percentage and lean percentage is not included on 
a package of ground product, consumers would not know which nutrient 
data concerning ground product on point-of-purchase materials would 
apply to that particular ground product. Establishments and retailers 
are not currently required to provide such a statement and will not be 
required to provide such a statement when this rule becomes effective.
    The FMIA and PPIA do support on-package nutrition labels for ground 
or chopped products. The FMIA and PPIA provide that a product is 
misbranded if its labeling is false or misleading in any particular. 
FSIS has concluded that ground or chopped meat and poultry products 
that do not bear nutrition information would be misbranded under 21 
U.S.C. 601(n)(1) and 453(h)(1). Information concerning the nutritional 
qualities of ground or chopped meat and poultry products is 
particularly important because these products, especially ground beef, 
are widely consumed. Pertinent nutritional information is integral to 
consumer purchase decisions because use of this information may result 
in the prevention of health problems and the reduction of health risks 
for some consumers. Additional information about the nutrient values of 
ground or chopped meat and poultry products would enable consumers to 
make informed decisions about including these products in their diets 
and will, therefore, help consumers to construct healthy diets.
    Thus, consistent with the recommendations from individuals, 
consumer organizations, and some industry comments, should it become 
final, this rule will require nutrition labels on all ground or chopped 
meat and poultry products, with or without added seasonings, unless an 
exemption applies. The rule will also require nutrition labels on 
packages of single-ingredient, raw ground or chopped products, rather 
than at their point-of- purchase. These products are similar to multi-
ingredient products in the mandatory nutrition labeling program (which 
requires nutrition information to be on the label of individual 
packages). Just as producers can control the incoming ingredients and 
levels of such ingredients in multi-ingredient products, producers can 
precisely control the fat content of ground or chopped products to 
obtain the desired product. In addition, just as consumers cannot often 
see all the ingredients in multi-ingredient products, consumers cannot 
easily see the fat in ground or chopped products. The fat is uniformly 
distributed throughout the product and is not clearly distinguishable 
on the surface of the product. Therefore, consumers cannot estimate the 
fat levels in these products and cannot compare the fat levels in these 
products to those in other products. Thus, it is difficult for 
consumers to have a reasonable expectation of the nutritional quality 
of these products.
    Many grocers and manufacturers currently provide nutrition facts 
panels on ground beef products; therefore, FSIS questions why certain 
commenters stated that there is not sufficient room on the label of 
these products for nutrition information. In addition, FSIS continues 
to believe that, unlike other single-ingredient, raw products, 
producers are able to formulate precisely the fat content of ground or 
chopped products. If, as some commenters suggested, grocers cannot 
determine the fat percentage in ground or chopped beef produced at 
retail, FSIS questions how they can be certain they produce product 
that meets the standard of identity for ground or chopped beef, which 
requires that the product not exceed 30 percent fat (see Sec.  319.15).
    Information on ground beef products containing 5%, 10%, 15%, 20%, 
and 25% fat is available through ARS at the following Internet address: 
http://www.ars.usda.gov\nutrientdata. In addition, ARS has included a 
calculator on the Internet, with the Database, that allows parties to 
enter the amount of fat (5% to 30% fat) or lean (70% to 95% lean) in a 
raw ground beef product. The calculator will calculate the nutrient 
values for the product based on the fat or lean value entered. If 
retailers are able to determine the fat content, as two industry 
commenters suggested they could, they can use the ARS nutrient database 
to obtain the information necessary to help them determine other 
nutrient values in the product.
    Additionally, the nutrition labeling requirements for ground or 
chopped products should not be particularly difficult for small 
operations, since ground or chopped product produced by retail 
establishments and Federal establishments that meet specific small 
business criteria will be exempt from nutrition labeling requirements 
(Sec. Sec.  317.400(a)(1) and 381.500(a)(1)).
    Moreover, a new exemption from the nutrition labeling requirements, 
that is provided in this supplemental proposed rule, should alleviate 
any concerns that nutrition labeling requirements will discourage 
retailers from grinding product based on customers' requests. Should it 
become final, the rule will provide an exemption from nutrition 
labeling requirements for ground or chopped products that are ground or 
chopped at an individual customer's request and that are prepared and 
served or sold at retail, provided that the labels or labeling of these 
products bear no nutrition claims or nutrition information.
    If an individual customer selects an intact product for purchase 
and requests that the product be ground at the retail facility, FSIS 
has determined that nutrition information on the package of the ground 
product would not be necessary. In this instance, the customer has made 
the decision to purchase the product before it was ground. The customer 
is not selecting the product from among various, formulated, ground or 
chopped product, and thus the reasons for requiring a nutrition label 
on such a product would not be applicable here.
    Comment: One animal protection organization stated that the 
nutrition information should be presented on an ``as packaged'' basis 
for ground or chopped meat and poultry products, and that ``as 
consumed'' information should be in addition to, not instead of, ``as 
packaged'' information. No commenters suggested that ``as consumed'' 
information alone was adequate.
    Response: FSIS agrees with the commenter. Should it become final, 
the rule will require, as proposed, that nutrition information on the 
labels of

[[Page 67751]]

ground or chopped products be presented on an ``as packaged'' or 
``raw'' basis. Although not required, a second column can be added to 
show nutrition information on the product on an ``as consumed'' or 
``cooked'' basis. The regulations provide that if a product is commonly 
combined with other ingredients or cooked before eating, and directions 
for such combinations or preparations are provided, another column with 
nutrition information may be used (9 CFR Sec. Sec.  317.309(b)(15) and 
(e) and 381.409(b)(15) and (e). Therefore, the nutrition information 
required on packages of ground or chopped products will be consistent 
with the information required on multi-ingredient and heat processed 
products. FSIS requests further comment on this issue.
    Comment: FSIS did not receive any comments on how much meat derived 
from advanced meat/bone separation and recovery (AMR) systems or how 
much low temperature rendered product is currently being used in ground 
or chopped products. However, an industry organization stated that the 
use of product from AMR systems in ground beef products would not cause 
a dramatic change in the nutrient content of the product such that it 
would be misleading to consumers. The commenter noted that, based on 
the data FSIS presented (see 66 FR 4976, January 18, 2001), the level 
of cholesterol in product containing meat from AMR systems is slightly 
elevated, and the level of iron in the product is above 20 percent of 
the value of iron product not containing meat from AMR systems. 
However, according to the commenter, the studies were not performed in 
a compliance context, and FSIS did not provide information concerning 
the historical levels of iron or other information that would shed 
light on whether the difference accords with good manufacturing 
practices.
    Response: FSIS presented information concerning ground beef with 
AMR product for illustrative purposes only. The data show an increase 
in the level of calcium over what would occur if good manufacturing 
practices were used. Similarly, iron levels in ground beef that 
includes AMR product may be higher than those in ground beef that does 
not include AMR product.
    In meetings with FSIS, representatives of the meat industry have 
stated that the percentage of ground beef with AMR product and the 
level of AMR product in ground beef is higher than FSIS previously 
thought. FSIS continues to believe that one of the reasons nutrition 
information on the labels of ground or chopped meat products is 
important is because producers may use product from AMR systems in some 
of these products, and the use of AMR product can affect the nutrient 
values of these products. Finally, even though FSIS issued an interim 
final rule on AMR that provides specific restrictions on the levels of 
calcium and iron in AMR product (69 FR 1874, January 12, 2004), 
nutrition labeling of ground products that may contain AMR product is 
necessary to understand the nutritional profile of the food.
    Comment: FSIS received few comments regarding consumer expectations 
of the fat content of ground products. One industry commenter stated 
that consumers do not have reasonable expectations of the nutrient 
content of ground products given the wide variation of fat and lean 
content.
    Response: FSIS agrees that consumers do not have reasonable 
expectations of the nutrient content of ground or chopped products. 
Unlike whole muscle product, most consumers cannot visually discern 
which ground or chopped products have less fat, and which products have 
more fat, because the fat is ground in with the lean portion. In 
addition, producers may use meat from AMR systems and low temperature 
rendering in ground or chopped beef and pork products, which may affect 
the variability of these products.

No Requirements for Nonmajor Cuts

    Comment: Several industry groups supported the proposal not to 
require nutrition labeling on nonmajor cuts that are not ground or 
chopped (e.g., pork jowls, pigs feet, pork leg, pork shoulder picnic, 
and beef round rump) and did not believe such labeling was needed in 
the future. Two industry commenters stated that when grades and trim 
levels are considered, there are over 3300 cuts of red meat products, 
and it would be impossible to provide information on this number of 
products.
    One industry group also indicated that the major cuts identified by 
the nutrition labeling regulations are still relevant today as 
representing the greatest share of fresh meat consumption, thus 
suggesting that it is more important that nutrition information be 
provided for these products than for the nonmajor cuts of single-
ingredient, raw products.
    As discussed above, the majority of comments from individuals, 
consumer groups, and health organizations stated that FSIS should 
require on-package nutrition labeling for all single ingredient, raw 
meat and poultry products (major and nonmajor cuts). An animal 
protection organization recommended that FSIS take no more than 24 
months to investigate whether required nutrition labeling for single-
ingredient, nonmajor cuts that are not ground or chopped is warranted.
    Response: At this time, FSIS does not intend to require that 
nutrition information be provided for nonmajor cuts of single-
ingredient, raw products that are not ground or chopped. FSIS has 
determined that it is not appropriate or necessary to require nutrition 
information for nonmajor cuts that are not ground or chopped at this 
time. They do not contribute in a major way to the diet. FSIS stated in 
the proposed rule that it intended to examine the current state of 
nutrition labeling for single-ingredient, raw products that are not 
ground or chopped and that are not major cuts (66 FR 4974, January 18, 
2001). FSIS still intends to conduct this assessment but has not yet 
been able to do so because of competing priorities. Should this rule 
become effective, FSIS will examine and assess the adequacy of the 
nutrition information provided for the major cuts and will also 
determine whether sufficient nutrition information is being made 
available for the nonmajor cuts.

Permitting Percent Lean Statements on Labels or in Labeling of Ground 
or Chopped Products

    Comment: Individuals and consumer and nutrition organizations 
generally did not support the use of statements of lean percentages on 
the label or in labeling of ground or chopped products that do not meet 
the regulatory criteria for ``low fat.'' A coalition of consumer and 
health and nutrition organizations stated that permitting such claims 
on packages of ground meat and poultry is inherently deceptive and will 
confuse consumers about the healthfulness of fresh ground meat and 
poultry products compared to other fresh meat, processed meat, and 
other foods. This coalition and an individual stated that a statement 
of fat percentage without a statement of lean percentage would be an 
effective means of allowing consumer comparison of ground products. 
Similarly, a medical school stated that, instead of a statement of 
``lean'' on ground or chopped products, labeling of ground or chopped 
products should list the actual amount of fat in terms of ``x% fat or 
less.''
    One medical organization suggested that instead of a statement of 
lean percentage as a quick reference, FSIS should allow a ``percent 
calories from fat'' statement on labeling of ground or chopped 
products. According to this commenter, this statement would allow 
comparisons among ground products and would also allow a comparison of

[[Page 67752]]

the amount of fat in the product to the daily amount of fat recommended 
in USDA dietary guidelines and the daily amount of fat recommended by 
other health associations.
    One animal protection organization suggested that the use of 
percent lean statements is highly misleading since ``percent lean'' 
refers to percent by weight not percent of calories.
    As a better means to compare ground products than a statement of 
the percentage fat and percentage lean in the product, one consumer 
organization noted that many packages of ground meat or poultry would 
meet the regulatory criteria for ``reduced fat,'' ``light,'' and 
``lower fat'' nutrient content claims. This organization stated that 
such claims are now familiar to consumers, and that the use of such 
claims would ensure uniformity across product categories and reduce 
consumer confusion.
    In contrast, an industry association did not support ``reduced 
fat'' labeling on ground products because, according to the commenter, 
it would penalize retailers who offer only the leanest products and do 
not offer those with higher fat content. In addition, the commenter 
believed that ``reduced fat'' labeling would be confusing to consumers 
who understand and have come to rely on the percentage fat and lean 
statements that are currently in use.
    Two poultry industry associations did not support the provision for 
statements of lean percentages on ground or chopped products that do 
not meet the regulatory criteria for ``low fat.'' These associations 
stated that allowing the use of a statement of lean percentage on 
ground product that does not meet the regulatory criteria for ``low 
fat'' would be misleading, and that there is no basis for exempting 
ground product from the regulatory criteria for ``low fat'' that 
normally applies to product labeled ``lean'' (see Sec. Sec.  
317.362(e)(1) and (2) and 381.462(e)(1) and (2)).
    The majority of industry associations supported the use of a 
statement of lean percentage on the label or in labeling of ground 
products that do not meet the regulatory criteria for ``low fat.'' They 
believed that the statement of lean percentage on ground beef products 
is not misleading and is a useful tool for consumers. Several 
commenters discussed telephone surveys whose findings indicated that 
the statement of lean percentage does not mislead consumers. The 
commenters stated that these surveys indicated that many consumers use 
the statements of lean and fat percentages as a basis for selecting 
ground beef products, and that most consumers understand that the 
statement of fat percentage indicates the percentage of fat in the 
product, not the grams of fat, percent Daily Value, or percent of 
calories from fat. Several industry associations stated that the 
percent lean and percent fat statements, in combination with the 
nutrition facts panel, will benefit consumers and allow consumers to 
quickly differentiate among ground products and determine how a serving 
of ground product fits into their overall diet.
    One industry group recommended that FSIS consider allowing 
retailers to make a statement such as ``not more than 25% fat'' for a 
75% lean/25% fat ground beef product, and one industry commenter 
recommended a tolerance for percentage content statements comparable to 
the tolerance allowed for nutrient value variations.
    Response: The supplemental proposed regulations would permit a 
statement of lean percentage on the label or in labeling of ground or 
chopped meat and poultry products that do not meet the regulatory 
criteria for ``low fat.'' The regulations would require that a 
statement of fat percentage be contiguous to, in lettering of the same 
color, size, and type as, and on the same color background as, the 
statement of lean percentage.
    Although individuals, consumer commenters and nutrition 
organizations generally did not support this provision, most industry 
commenters did. Industry commenters presented information from consumer 
surveys that showed that consumers understood the meaning of statements 
of lean and fat percentages on ground beef. Based on the survey 
information provided, interested consumers use this information as a 
quick way to compare ground beef products and as a means for ensuring 
the desired product is purchased. Additionally, based on the survey 
information discussed in the comments, consumers appear to understand 
that the percent lean statements simply indicate the percentage of lean 
versus fat in the products and do not interpret the information as a 
percent daily value (%DV) or percent of calories from fat in the 
product.
    Producers, according to industry, have been using lean percentage 
statements on the labeling of ground beef and hamburger products for 
over 20 years (59 FR 26917, May 24, 1994). Because the percent fat 
statement must be contiguous to the percent lean statement and must be 
in lettering of the same color, size, and type as, and on the same 
color background as, the lean percentage statement, FSIS believes that 
the percent lean statements will not mislead consumers.
    As the coalition and individual commenter suggested, producers may 
include a percent fat statement on the label or in labeling of ground 
products without including a percent lean statement, because a percent 
fat statement is factual information. A percent fat statement on ground 
or chopped products would be an acceptable alternative to a statement 
of lean and fat percentage. However, because of the longstanding use of 
the statements of percent fat and percent lean on the label or in 
labeling of ground beef and hamburger products, FSIS believes such 
statements on the label or in labeling of ground products will not 
mislead consumers.
    As the consumer organization noted, ground or chopped products may 
meet the regulatory criteria for ``reduced fat'' or for ``light.'' The 
provisions for the statement of percent fat and percent lean in ground 
or chopped products will not preclude producers from using ``reduced 
fat,'' ``light,'' and other nutrient content claims.
    In response to the suggestion that FSIS allow a ``percent calories 
from fat,'' FSIS already allows such a statement because it is factual 
information.
    The current regulations do not preclude the use of the phrases ``x% 
fat or less'' or ``not more than x% fat'' on the labeling of ground or 
chopped product. The problem with the suggested alternative of listing 
the actual amount of fat in terms of ``x% fat or less'' or allowing 
statements such as ``not more than 25% fat,'' is that these statements 
are implied claims as defined by Sec.  317.369 for red meat and Sec.  
381.469 for poultry products. In order to use the implied claim, ground 
products would need to meet one of the definitions for a nutrient 
content claim for fat content in Sec.  317.362(b)(2) or (4) or Sec.  
381.462(b)(2) or (4). According to these regulations, to use such 
phrases, the product would have to be ``low fat,'' and most ground beef 
and hamburger do not qualify as ``low fat.'' Alternatively, the product 
would have to qualify as having ``reduced fat'' and would need to meet 
a 25% reduction in fat compared to a similar product.
    Finally, in response to the industry suggestion that FSIS provide a 
tolerance for percentage content statements comparable to the tolerance 
allowed for nutrient value variations, the same tolerances allowed for 
nutrient value variations (317.309(h)(5) and (6) and 381.409(h)(5) and 
(6)) would apply to the statements of the percentages of lean and fat 
in the product, because these statements are based on information in 
the nutrition facts panel.

[[Page 67753]]

Exemptions for Nutrition Labeling

    Comment: Two industry organizations stated that there should be a 
small business exemption from the nutrition labeling requirements for 
the major cuts. They argued that the Agency's stated rationale for not 
providing a small business exemption for these products (i.e., that 
FSIS intends to make point-of-purchase materials available over the 
Internet free of charge) shows a lack of understanding of the 
challenges faced by small businesses and the economic hardships that 
the regulation imposes. These commenters stated that many small 
businesses do not have Internet access. Additionally, according to 
these commenters, small stores may not have space available to post the 
point-of-purchase materials.
    Response: If retailers cannot obtain the point-of-purchase 
materials over the Internet, should this rule become final, FSIS 
personnel will have copies of the information to provide to retailers. 
Furthermore, the regulations will provide flexibility in regard to the 
manner in which the required presentation and posting of nutrition 
information for the major cuts must be done, so that all retailers 
should be able to post the information or have it available to 
consumers without using much space. For example, posters with nutrition 
information could be on walls near the products, or brochures or 
leaflets could be placed in a box near the products.
    Comment: One animal protection organization did not support the 
small business exemption from nutrition labeling requirements for 
ground or chopped products. This commenter stated that the exemption 
could create a significant information gap in small towns and rural 
areas where large chain retail and grocery stores do not have a 
presence. Similarly, an individual stated that there should be no 
exemptions from the nutrition labeling requirements.
    One industry group stated that ground or chopped products with or 
without seasonings, processed or packaged at retail must continue to be 
exempt from nutrition labeling requirements. This commenter stated that 
the quantity of ground products actually prepared at retail represents 
a small portion of the average diet.
    Two industry commenters stated that FSIS should allow an exemption 
for ground or chopped products that are custom processed. They stated 
that when a retailer is only providing a service, not a food product, 
the retailer should not be expected to bear the cost of providing 
nutrition information, especially in rural areas where families raise 
their own animals and have a local meat market or supermarket provide 
the cutting and grinding service.
    Response: FSIS believes that a small business exemption from 
nutrition labeling requirements is necessary for ground products, with 
or without seasoning. As explained in the proposed rule, small 
businesses should be exempt from mandatory nutrition labeling 
requirements for ground or chopped products because these requirements 
would create undue economic hardship for small businesses and would 
create disincentives for these small businesses to develop more 
nutritious food products (66 FR 4978, January 18, 2001). Therefore, 
should this rule become final, it will provide a small business 
exemption for ground or chopped products produced by retail facilities 
or official establishments that qualify for the exemption.
    Should this rule become final, to qualify for the exemption, a 
retail store will either need to be a single retail store that employs 
500 or fewer people or a multi-retail store operation that employs 500 
or fewer people and will need to produce no more than 100,000 pounds of 
each ground product per year. For an official establishment to qualify 
for the exemption, it will need to be either a single-plant facility 
that employs 500 or fewer people, or a multi-plant company/firm that 
employs 500 or fewer people and will need to produce no more than 
100,000 pounds per year of each ground product. As explained in the 
preamble to the proposed rule, ground or chopped products formulated to 
have different levels of fat would be considered different food 
products for the purposes of the small business exemption (66 FR 4978, 
January 18, 2001).
    Should this rule become final, ready-to-eat ground or chopped 
products packaged or portioned at retail stores and similar retail-type 
establishments, and multi-ingredient ground or chopped products 
processed at retail stores and similar retail-type establishments, will 
be required to bear nutrition labels, unless the retail store or 
similar retail-type establishment qualifies for the small business 
exemption. Because a significant amount of ground beef is processed at 
retail, the Agency believes that there may be a significant amount of 
multi-ingredient ground beef retail processed products or ready-to-eat 
retail packaged products.
    The Economics Research Service determined that ground beef 
accounted for 42 percent of all beef (boneless, trimmed-weight 
equivalent) consumed in 1996 (Putnam, Judy and Gerrior, Shirly, 
``Americans Consuming More Grains and Vegetables, Less Saturated Fat, 
Food Review, Sept.-Dec., 1997, Vol. 20, Issue 3, pp. 2-12), and, as 
explained in the preamble to the proposed rule, most ground beef, 
traditionally, has been ground and packaged at retail (66 FR 4978, 
January 18, 2001). Therefore, ground beef products actually prepared at 
retail may represent a significant portion of beef consumed in the 
average diet.
    When butchers custom grind product for customers, this product is 
considered a custom prepared product, and as such, this product will 
continue to qualify for an exemption from nutrition labeling 
requirements, should this rule become final.
    Comment: One retail association and one consultant believed that 
the small business exemption for ground or chopped products should be 
phased in, in a manner similar to the way the small business exemption 
was phased in for nutrition labeling requirements in the 1993 FSIS 
final rule on nutrition labeling.
    Response: FSIS disagrees with these commenters. Should this rule 
become final, the nutrition labeling requirements for ground or chopped 
meat and poultry products will apply to a much smaller number of 
products than the number of products subject to the 1993 final 
regulations on nutrition labeling. At this time, many businesses are 
familiar with nutrition labeling requirements; that was not the case in 
1993. Therefore, as explained in the supplemental PRIA cost analysis, 
FSIS believes that it will not be costly for companies to add nutrition 
labels to packages of ground or chopped products.
    Furthermore, many of the suppliers of coarse ground products that 
are then ground and packaged at retail have supplied, or can supply, 
the nutrition facts panels for the retailers. Most retailers offer a 
limited selection of ground beef products. Thus, dozens of different 
nutrition labels for each retailer will not be necessary. In addition, 
information for ground beef and other products is available through the 
National Nutrient Database for Standard Reference. In addition, should 
this rule become effective, the requirements for on-package nutrition 
labeling for ground or chopped products will not be effective until 
January 1, 2012.
    Comment: Two industry commenters supported the continued exemption 
for multi-ingredient sausage products produced at retail. They stated 
that retail constraints in determining nutrient content support the 
continuation of the exemption. One

[[Page 67754]]

commenter asserted that the final regulation should specify that the 
provisions for ground or chopped products apply to product labeled as 
``hamburger, (species or kind) burger or ground or chopped (species or 
kind)'' in order to differentiate such products from sausage products 
(ground meat with seasonings). This commenter stated that some parties 
might believe that the provisions for ground product apply to sausage 
products manufactured at retail.
    Response: Nutrition information for sausage products are not 
covered by this regulation. Nutrition labeling requirements for these 
products were previously addressed in the 1993 nutrition labeling rule. 
Sausage, meat loaf, or beef patty mix are typically multi-ingredient 
products that are required to bear nutrition labeling, unless they 
qualify for an exemption, and multi-ingredient sausage products 
processed at retail will continue to be exempt from nutrition labeling 
requirements under Sec.  317.400(a)(7)(ii) and Sec.  381.500(b)(7)(ii). 
Because there is a standard of composition for ground or chopped beef 
(Sec.  319.15) and distinct standards of identity for sausage products, 
industry generally understands which products are referred to and 
labeled ``ground or chopped products'' and which products are referred 
to and labeled ``sausage products.''
    In the 1993 final rule on nutrition labeling, FSIS exempted from 
mandatory nutrition labeling requirements multi-ingredient products 
processed at retail and ready-to-eat products packaged or portioned at 
retail. Therefore, multi-ingredient sausages processed at retail and 
ready-to-eat sausages packaged or portioned at retail are exempt from 
nutrition labeling requirements. The reasons that FSIS provided these 
exemptions in the 1993 final rule were that FSIS believed that it would 
be impractical to enforce nutrition labeling requirements on these 
products prepared or served at retail and because the Agency concluded, 
based on a review of National Food Consumption Survey (NFCS) data, that 
the average person's diet consisted of an insignificant proportion of 
ready-to-eat retail packaged products or retail processed products (58 
FR 639, January 6, 1993).
    Should this rule become final, FSIS will not exempt ready-to-eat 
ground or chopped products packaged or portioned at retail or multi-
ingredient ground or chopped products that are processed at retail 
because, as FSIS explained in the 2001 nutrition labeling proposed 
rule, there may be a significant amount of multi-ingredient ground beef 
retail processed products or ready-to-eat retail packaged products. 
Also, FSIS no longer believes enforcement of nutrition labeling 
requirements at retail stores to be impractical because FSIS is already 
conducting testing for Escherichia coli O157:H7 at retail (66 FR 4979, 
January 18, 2001).

Enforcement & Compliance

    Comment: One retail association stated that FSIS should include in 
the regulations provisions comparable to those in the Nutrition and 
Labeling Education Act (NLEA) such that retailers would not be subject 
to substantial civil and criminal penalties for violations of the 
nutrition labeling requirements. This commenter was concerned that, if 
the USDA requires nutrition labeling for the major cuts, retailers 
could be penalized for minor violations of these regulations. For 
example, the commenter suggested that if a poster providing nutrition 
labeling information falls down, the retailer could suffer substantial 
penalties.
    This commenter also asserted that, with regard to FSIS product 
sampling and nutrient analysis, FSIS should continue to treat single-
ingredient, raw ground products in the same manner it treats other 
single-ingredient, raw products. Therefore, the commenter stated, FSIS 
should not sample raw, ground products for which USDA data are used as 
the basis for the nutrition information on the label. Further, the 
commenter stated that if FSIS conducts sampling of ground products at 
retail for nutrient analysis, the ground products should only be 
analyzed for fat content. According to this commenter, once FSIS 
verifies the fat content of ground products, products labeled with 
corresponding USDA data values should not be subject to further 
compliance and enforcement.
    An animal protection organization stated that ground products 
should be subject to nutrient analysis. This commenter stated that the 
USDA National Nutrient Database for Standard Reference includes only a 
limited number of ground products, and there are many others available 
on the market. According to this commenter, FSIS employees cannot, and 
should not be expected to, visually assess the product and compare it 
against its label.
    Response: Products under FSIS jurisdiction are not subject to the 
NLEA. Nonetheless, FSIS does not consider it likely that substantial 
criminal penalties could be imposed for significant violations of the 
nutrition labeling requirements. FSIS stated in the preamble to the 
final January 6, 1993, nutrition labeling rule that it is not the 
Agency's intent to proceed in a punitive manner when problems surface 
during compliance monitoring (58 FR 657, January 6, 1993). Should this 
rule become final, FSIS will likely seek criminal penalties for 
violations of the nutrition labeling requirements in the same types of 
circumstances as it would for other labeling violations of the FMIA and 
PPIA. Consistent with its approach to enforcing existing nutrition 
labeling requirements, under this rule, if FSIS finds nutrition 
information on product labels that, based on FSIS or USDA data, is 
inaccurate, FSIS would contact the company and request that it either 
correct the information on the label or provide adequate justification 
to support the information. If the company failed to do so, FSIS would 
likely issue a letter of warning.
    FSIS is authorized to issue letters of warning in lieu of seeking 
criminal penalties when the Secretary of Agriculture determines the 
public interest will be adequately served by a letter of warning. If 
the company continued to use the inaccurate label, FSIS could institute 
an administrative process to rescind the label approval under 9 CFR 
Sec.  500.8 and could seize any product in commerce because it is 
misbranded. However, FSIS considers it highly unlikely that companies 
will continue to use inaccurate labels after FSIS has contacted them 
because introducing misbranded product in commerce is a prohibited act 
under 21 U.S.C. 610 and 458. FSIS is not authorized to impose civil 
penalties under the FMIA or PPIA.
    With regard to FSIS product sampling and nutrient analysis of 
ground products, as FSIS stated in the preamble to the proposal, the 
fat content of different ground or chopped products can vary 
significantly, depending upon the level of fat in the product being 
ground and depending on whether product from AMR systems is used (66 FR 
4980, January 18, 2001). Therefore, the procedures set forth for FSIS 
product sampling and nutrient analysis in Sec. Sec.  317.309(h)(1)-(8) 
and 381.409(h)(1)-(8) would be applicable to ground or chopped meat and 
to ground or chopped poultry products, respectively. Should this rule 
become final, FSIS will not analyze ground or chopped products for fat 
only, because if the ground product includes AMR product or product 
from low temperature rendering (e.g., finely textured beef or lean 
finely textured beef), the use of these materials could affect the 
nutrient values in the product.

[[Page 67755]]

    With regard to FSIS product sampling and nutrient analysis, FSIS 
will not treat single-ingredient, raw ground or chopped products in the 
same manner that it treats other single-ingredient, raw products 
primarily because, as explained in the proposed rule, FSIS program 
employees cannot visually assess whether nutrition information on the 
label of ground or chopped products accurately reflects the labeled 
products' content. In most cases, it is not possible to visually assess 
the level of fat in a ground product. For example, FSIS program 
employees cannot visually determine whether product that is labeled 17 
percent fat ground beef is actually 17 percent fat ground beef as 
opposed to 27 percent fat (or another percentage of fat) ground beef 
(66 FR 4980, January 18, 2001). Therefore, should this rule become 
final, FSIS will sample and conduct nutrient analysis of ground or 
chopped products to verify compliance with nutrition labeling 
requirements, even if nutrition labeling on these products is based on 
the most current representative data base values contained in USDA's 
National Nutrient Data Bank or the USDA National Nutrient Database for 
Standard Reference and there are no claims on the labeling. Therefore, 
FSIS will treat ground or chopped products as it treats all other 
products for which the regulations require nutrition information on 
their package. In the event that FSIS samples and conducts nutrient 
analysis of ground or chopped beef, if producers know the fat content 
of their product and have used USDA database values on the nutrition 
labels, FSIS would find the product's label in compliance with 
nutrition labeling requirements, provided the product's source 
materials did not include AMR product or product from low temperature 
rendering.

Costs and Benefits

    Comment: Many commenters stated that the proposed rule would result 
in increased label costs. For example, one individual stated that it 
would cost a little more for production but did not think that it would 
affect the profit of major meat companies. Another individual stated 
that the rule would increase the final price of the product and require 
a change in packaging.
    A small retailer who carries 26 different packages of ground meat 
in their stores and packages 6,000 packages per week stated that it 
would cost the company more than $22,600 a year in added costs due to 
labor and the additional labels that would be needed. Another small 
retailer estimated that the cost would approach $10,000 annually for 
adding a new poster and taking into account the necessary packaging, 
labor, and machinery modifications for ground or chopped products.
    A beef producer believed that FSIS's cost estimates for requiring 
nutrition labeling for ground or chopped products are too low. This 
commenter stated that for those producers that must supply their own 
labels, the cost would be prohibitive. According to this commenter, if 
retail stores were to provide the information, the costs would be as 
calculated in the proposed rule. This commenter also believed that FSIS 
could still achieve its goal of having a large percent of compliance by 
making information on the label optional for certain groups that would 
be financially burdened. This commenter noted that FSIS estimated that 
the average weight of packages of ground or chopped products is 2 
pounds and stated that the average weight of a package of pasture fed 
ground beef is between one and 1.5 pounds.
    An animal protection organization contacted a major commercial 
laboratory that conducts nutrient analysis. This commenter stated that 
the laboratory charges $130 for a single sample analysis for total fat 
and saturated fat and $85 for cholesterol. The laboratory gives volume 
discounts for multiple samples.
    According to an industry association commenter, the majority of 
retailers do not have equipment, such as a Fat-O-Meter or CEM analyzer, 
to determine the exact nutritional content, including the percentage of 
fat for their products. It is unlikely, according to this commenter, 
that retailers will be able to afford this type of equipment because it 
costs nearly $40,000.
    A retail industry organization stated that according to Hobart, the 
company that manufacturers a large proportion of the scales used by 
retailers, 50 to 60 percent of supermarkets would need to upgrade their 
current printers, which represents $45 to $75 million in costs. Also, 
40 to 50 percent of supermarkets would be required to replace their 
entire scale systems at the store level, which Hobart estimates would 
cost $54 to $90 million. In addition, according to this commenter, 
substantially more sophisticated and more expensive analytical 
equipment or laboratory testing will be needed to measure the nutrient 
profiles in ground products, which are likely to vary significantly in 
the context of USDA's compliance and enforcement standards.
    Another retail industry association stated that a distributing 
company supplying 200 supermarkets estimated that the labeling 
requirement for ground or chopped products would affect over 20 million 
packages annually. Using the FSIS estimate of .005 cents per label, the 
labels alone would cost $100,000 per year. In addition, this commenter 
stated that although retail stores may be able to assess fat content by 
using a fat analyzer when doing in-store grinding, testing for nutrient 
content would require the use of a laboratory and prove costly. The 
commenter stated that these costs would cause many retailers that 
provide on-site custom service to increase prices or sell case-ready 
meat only, to the detriment of consumer choice.
    Two individuals were concerned that the proposed rule would 
increase the price of meat; one stated that if people wanted nutrition 
information for meat and poultry products, stores would already provide 
the information on the packages.
    In terms of the overall costs and benefits of compliance, an animal 
protection organization stated that, if the analyses and costs 
estimated by FSIS are accurate, it is evident that consumers need more 
information than they are currently getting. The commenter further 
stated that the costs to industry are negligible when compared to the 
benefits to the consumer.
    An industry association stated that FSIS will also incur costs. 
According to this commenter, if the Agency requires on-package labeling 
for ground product, to verify compliance, it will be diverting a 
significant portion of its resources to the chemical analysis of 
numerous ground products produced at retail levels across the United 
States. The commenter also stated that, while FSIS has increased its 
level of sampling at the retail level for the purpose of 
microbiological sampling of E. coli O157:H7, it should also be able to 
collect additional samples for chemical analysis simultaneously. 
However, the commenter stated that FSIS would also be incurring new 
costs associated with sending samples to the laboratories as well as 
the actual cost of the analyses.
    Response: FSIS recognized that the proposal, like many regulations 
promulgated by various government entities, would result in increased 
costs to various affected parties, so it is not surprising to FSIS that 
commenters would indicate that they would incur increased compliance 
costs. The commenter who stated that the rule would cost it $22,464 
annually also stated that it produces 6,000 packages of ground beef per 
week or 312,000 packages per year. This equates to a per label cost of 
7.2 cents. Another

[[Page 67756]]

commenter who said it would cost them $10,000 annually also said that 
they sell 100,000 packages annually. This equates to a per label cost 
of ten cents. Both estimates are significantly higher than any estimate 
prepared by FSIS. The Agency does not doubt that these retailers may 
incur higher labeling costs should this rule become final, but FSIS is 
unsure how their estimates were prepared. For example, FSIS is unsure 
as to whether these estimates include certain costs that should or 
should not be attributed to the proposal. At this time, the Agency is 
not in the position to accept these estimates as being comparable (in 
methodology or assumptions) to the costs presented by FSIS. As 
explained in the supplemental PRIA, FSIS estimates that retailers would 
incur the costs of upgrading store scales and printers to include 
nutrition information, redesigning larger store labels, providing 
nutrition analysis for each product, and using larger labels.
    The Agency has reviewed the concerns of the beef producer but, with 
the limited supporting information provided, finds that the commenter's 
concerns are unconvincing. At no time does the commenter indicate what 
its costs might be, so it is difficult to determine how burdensome the 
requirements are for this producer.
    The beef producer stated that the average weight of a package of 
pasture fed ground beef is between one and 1.5 pounds. However, in the 
supplemental PRIA cost analysis, FSIS estimates that the average weight 
of a retail package is 2.7 pounds (ranging from 1.7 pounds at the 5th 
percentile, to 4.35 at the 95th percentile). This estimate is from the 
National Cattlemen's Beef Association (NCBA), and FSIS believes this 
estimate better reflects the average weight of a retail package of 
ground product than the figure the commenter provided for pasture fed 
ground beef. NCBA's source is the Meat Purchase Diary, which is a 
survey. Although FSIS believes that NCBA data provide a sound estimate 
of the average weight of a retail package of ground product, there is 
some uncertainty in this estimate, because NCBA does not release any 
detailed data from its survey.
    With regard to the comments on the cost of samples and nutrient 
analysis, the supplemental PRIA cost analysis includes costs of 
nutrition analysis ranging from $599 to $787 per modified label. These 
are costs required to create a nutrition facts panel. As explained in 
the cost analysis below, FSIS does not believe that the cost of a fat 
analyzer should be attributed to this rule. Stores may receive product 
for which a fat analysis has been performed and labeled accordingly. 
Also, as explained above, retailers currently must have a means of 
knowing that their product meets the standard of identity for ground 
beef.
    With regard to the comment on the costs of upgrading scale 
printers, FSIS's supplemental PRIA cost analysis estimates the cost of 
updating scale printers at $2,400 per store or $56.35 million total. 
FSIS also estimated annual scale maintenance costs at $144 every year 
after the first year the scale has been purchased. Therefore, the 
supplemental PRIA analysis is consistent with the comment on updating 
scale printers.
    In response to the comment that costs would cause many retailers 
that provide on-site custom service to increase prices, products that 
are ground or chopped at an individual customer's request and that are 
prepared or sold at retail are exempt from nutrition labeling 
requirements, provided the labels or labeling of those products bear no 
nutrition claim or nutrition information.
    In response to the comments from individuals concerned that the 
rule would increase the price of meat, as explained in the supplemental 
PRIA cost analysis, the cost of this rule is not likely to be excessive 
relative to the volume of input of ground or chopped meat and poultry 
products sold at retail. The estimated cost of the rule on a per pound 
basis is $.0053. This increase in cost should not affect consumer 
purchases.
    In response to the statement that nutrition information would be 
available if people wanted it, market forces have not been great enough 
to ensure significant participation in the voluntary nutrition labeling 
program. This fact could be evidence that consumers are not willing to 
pay for this information. Nonetheless, as is explained above, FSIS 
believes that consumers have reasonable expectations concerning the 
nutrient content of the major cuts of meat and poultry products, but 
they need precise information about the nutrient content of the major 
cuts in order to make a fully informed comparative judgment about the 
various cuts. In addition, the extent that such information conveys a 
negative credence attribute would limit its availability, if retailers 
were not required to disclose it. Without nutrition information for the 
major cuts of single-ingredient products and ground or chopped 
products, consumers do not have necessary and sufficient information to 
make informed purchasing decisions.
    As far as the overall costs and benefits of compliance, the Agency 
believes that it has done a reasonable job in estimating the costs and 
benefits of the proposal.
    In terms of cost to FSIS, in the Paperwork Reduction Act analysis, 
FSIS estimated that the costs of label and records review will total 
$300,000 annually. Other costs the Agency incurs as a result of this 
rule will be negligible. The rule will not increase inspection 
activities substantially. Similarly, it will not increase substantially 
the laboratory costs associated with FSIS sampling and testing for 
nutrient analysis. FSIS will conduct inspection and testing activities 
under this rule concurrent with existing inspection and testing 
activities.
    Comment: A consumer organization asserted that FSIS overestimated 
the cost of the proposed rule by assuming that 20 percent of 
establishments would have to install new machinery for stamping, 
printing, or affixing nutrition labels for ground and chopped meat. The 
commenter believed that the 20 percent estimate is too high. FSIS's own 
1999 survey showed that 97 percent of large chains, 91 percent of large 
independent retailers, and 84 percent of medium and small independents 
already complied with the label requirements of the final rule for 
Mandatory Safe Handling Statements on Labeling of Raw Meat and Poultry 
products. In addition, the commenter noted that small firms are exempt 
from the proposed rule.
    Response: After the proposed rule was published, FSIS contracted 
with RTI International to assist the Agency in data collection and 
revising the cost analysis for the supplemental PRIA. Among the several 
changes based upon RTI's review, FSIS revised the label cost estimates. 
The supplemental PRIA assumes that retail facilities and official 
establishments have not yet incurred any costs for nutrition labeling 
of ground or chopped products or major cuts. However, the supplemental 
PRIA also estimates the current levels of nutrition labeling and 
adjusts cost and benefit estimates to reflect current levels of 
nutrition labeling.
    Comment: According to a retail industry association, provisions 
requiring labels on individual packages of ground meat and poultry 
products will impose most costs and burdens upon independent retailers 
that offer custom service rather than pre-packaged case-ready meat. The 
commenter further alleged that the proposal would disproportionately 
affect independent operators and their customers, coercing retailers 
into increasing prices to cover increased costs or eliminating custom 
service because of the need to provide labeling for nutritional content 
of products ground in retail stores.

[[Page 67757]]

    One individual stated that the proposed requirements would 
adversely affect small businesses. Also, a small producer stated that 
providing nutrition information on the labels of ground products would 
be difficult and costly for the small farmer or producer selling beef 
wholesale to stores.
    Response: When Federal Agencies like FSIS issue rules, they are to 
make sure that the rules are fair to those being regulated. The 
Regulatory Flexibility Act requires Federal Agencies to consider the 
affect of regulations on small entities in developing regulations (see 
the Regulatory Flexibility Act Analysis below).
    To minimize the burden on small businesses, should it become final, 
the rule will provide a small business exemption. In addition, the rule 
will provide an exemption from nutrition labeling requirements for 
ground or chopped products that are ground or chopped at an individual 
customer's request and that are prepared and served or sold at retail, 
provided that the labels or labeling of these products bear no 
nutrition claims or nutrition information. FSIS also intends to provide 
nutrition labeling materials for the major cuts of single-ingredient, 
raw products and for ground or chopped products on a free basis through 
its Web site. Retailers can display these materials at the point-of-
purchase for the major cuts. Also, retailers and official 
establishments can obtain nutrition information for ground or chopped 
products at the following Web site: http://www.ars.usda.gov.
    Comment: A consumer organization argued that FSIS underestimated 
the benefits of the rule by ignoring both the impact of meat and 
poultry consumption on non-fatal cases of heart disease and cancer and 
the impact on obesity and its consequences.
    According to the commenter, FSIS limited its estimates of the 
benefits to the reduction in annual deaths from breast cancer, prostate 
cancer, colorectal cancer, and coronary heart disease. The commenter 
stated that this approach ignores the benefits to consumers in reducing 
the number of non-fatal cases of these four diseases. For example, 
according to the commenter, when FDA evaluated the benefits of its 
proposed rule on trans fatty acids in foods, the Agency estimated that 
only one-third of heart attack cases due to coronary heart disease are 
fatal. For non-fatal cases, FDA estimated the discounted value of the 
reduction in functional disability and pain and suffering of the 
patient and the reduction in medical costs at $282,000 per case (or 
33.5 percent of the FDA's estimated value of $840,000 per fatal case). 
According to the commenter, as there are two non-fatal cases of 
coronary heart disease for every fatal case, FSIS should increase its 
benefits from the proposed rule by 67 percent. At a seven percent 
discount rate, this would increase the benefits over 20 years from a 
reduction in coronary heart disease from FSIS's current estimate of 
$752 million to $1.256 billion.
    The commenter also stated that similar adjustments could be made to 
account for the reductions in the non-fatal cases of three types of 
cancer that FSIS considered. About 42 percent of colorectal cancer 
cases are fatal, about 16 percent of prostate cancer cases are fatal, 
and about 21 percent of breast cancer cases are fatal. The commenter 
believed that one could assume that the ratio of the benefits of 
reducing these non-fatal cases to the benefits of reducing the fatal 
ones is the same for these three types of cancer as FDA used for 
coronary heart disease, i.e., 33.5 percent. Using a seven percent 
discount rate, the commenter estimated that including the reduction in 
non-fatal cases would increase the benefits over 20 years from a 
reduction in these three types of cancer from FSIS's current estimate 
of $167 million to $316 million.
    In sum, including the impact of the proposed rule on non-fatal 
cases of the four diseases FSIS considered increases the total benefits 
(using a seven percent discount rate over 20 years) from $918 million 
to $1.572 billion.
    When the commenter looked at the impact of the rule as it related 
to total fat, saturated fat, and cholesterol, the commenter thought 
that the proposal might help lead to a reduction in weight, which, in 
turn, could lead to a reduction in both mortality and morbidity from 
various diseases. According to the commenter, recent studies placed the 
cost of obesity in the United States at $39 billion in direct medical 
costs and $48 billion in indirect loss of output because of both 
morbidity and mortality. Reducing these $87 billion in annual costs by 
even 0.15 percent through the provisions of this rule would mean 
additional annual benefits of $13.05 million, which (at a 7 percent 
discount rate) means additional benefits over 20 years of about $138 
million.
    In summary, the benefits of the proposed rule over 20 years 
(discounted at 7 percent)--taking account of morbidity and obesity--
could well be $1.71 billion rather than the $918 million estimated in 
the proposed rule based on FSIS's examining only mortality.
    Conversely, a meat industry organization cautioned FSIS against 
making the mortality assumptions included in the proposed rule's 
benefits analysis. This commenter stated that FSIS's assumptions were 
based on only one part of meat's nutrient content. The commenter stated 
that, while diets high in saturated fat and cholesterol have been 
associated with risk of chronic disease, meat has never been shown to 
cause such diseases.
    A farmer/rancher believed that the new nutrition labeling 
requirements could potentially encourage consumers to eat more meat, 
which would increase her profits.
    Response: In response to the comment concerning non-fatal cases of 
heart disease and cancer, FSIS has reviewed all of the information 
provided by this commenter and believes that the information provided 
on coronary heart disease is potentially useful to the FSIS analysis. 
The information on the relationship between fatal cases and non-fatal 
cases of coronary heart disease is reliable in that FDA looked at the 
relevant literature and medical statistics to determine the annual 
number of heart attack cases of coronary heart disease that occur and 
the percent of those (occurring each year) that are fatal. This allows 
for a total, in a given year, of the number of heart attack cases that 
are not fatal, based just on new heart attack cases. FSIS agrees that a 
reduction in non-fatal cases of chronic heart disease would result in a 
significant benefit to society. The methods for estimating both the 
number of non-fatal cases avoided annually, and the value of non-fatal 
cases avoided annually are unsettled and further research is needed to 
improve the reliability of this information.
    The information on colorectal, prostate, and breast cancer is not 
as reliable as that on non-fatal cases of coronary heart disease. 
Specifically, the information reported by the American Cancer Society 
represents the annual number of new cases, but the annual number of 
deaths includes deaths from both old cases and new cases of disease. In 
other words, the annual number of deaths also represents deaths from 
cases that were reported as new cases in previous years. Therefore, if 
FSIS were to adopt the information suggested by this commenter, then 
the denominator used to calculate the percent of fatal cases to all 
cases would be too small and the percent of fatal cases would be too 
high. Consequently, the benefits estimates associated with the 
reduction of non-fatal cases would be greater than the actual value of 
benefits. It should be noted however, that to ignore the

[[Page 67758]]

benefits associated with the reduction of non-fatal cases is also 
incorrect because, in fact, some benefits exist even though methods are 
not available to provide reliable estimates. At this time, it is not 
possible to provide a quantitative estimate of the benefits associated 
with reducing the non-fatal cases of colorectal, prostate, breast 
cancer, and coronary heart diseases.
    Although the consumer organization recommended that FSIS revise the 
benefits estimate to include specific benefits associated with weight 
loss, FSIS did not account for these benefits in the final analysis. 
FSIS does not have the data necessary to estimate these benefits, and 
the commenter did not provide the data.
    With regard to the industry comment that cautioned against making 
the benefits assumptions included in the preliminary benefits analysis, 
the supplemental PRIA benefits analysis is consistent with the 
preliminary benefits analysis. Therefore, the supplemental PRIA 
benefits analysis estimates the value of potential changes from intake 
of fat, saturated fat, and cholesterol that could occur as consumers 
respond to newly available nutrition information. The supplemental PRIA 
analysis uses changes in serum cholesterol to estimate health outcomes, 
which are reductions in the number of cases and mortality from three 
cancers and coronary heart disease. FSIS used survey data and a model 
developed by Zarkin, et al. to conduct the benefit analysis. The 
industry commenter did not provide data that would allow FSIS to 
conduct an alternative benefit analysis.
    With regard to the comment that new nutrition labeling requirements 
could encourage consumers to eat more meat, FSIS does not have data 
that indicate that consumers will consume more meat as a consequence of 
new nutrition labeling requirements. Therefore, the supplemental PRIA 
benefits analysis does not include increased profits to producers.
    Comment: One individual stated that there are benefits to 
individuals in keeping track of their nutritional intake. This 
commenter believed that he would find it valuable to know the levels of 
the different nutrients in meat and poultry products.
    Response: FSIS concurs that there are benefits to keeping track of 
an individual's nutritional intake. The level of benefits associated 
with nutrition labeling depends on the extent to which consumers change 
their food consumption in favor of products that are more nutritious. 
To accomplish this, a consumer needs to keep track of his or her 
nutritional intake.
    Comment: One individual stated that nutrition labeling on raw meat 
and poultry products could potentially lead to some decreases in the 
sale of red meat. The commenter also stated that poultry and fish will 
become more popular. The commenter did not anticipate a big overall 
change in sales.
    An animal protection organization also stated that the net effect 
of the rule may be a decrease in the overall consumption of meat.
    Response: Should this rule become final, the impact of the rule 
will depend upon the extent to which consumers change their food 
consumption in favor of products that they believe are more consistent 
with a healthy diet. Therefore, it is possible, as the commenters 
stated, that nutrition labeling on raw meat and poultry products could 
lead to some decreases in the sale or consumption of red meat as well 
as some increases in the sale of poultry and fish. FSIS has no 
information that would allow the Agency to measure such impact. 
Therefore, the supplemental PRIA does not reflect any anticipated 
changes in the volume of meat and poultry products consumed annually.
    Comment: A consumer organization stated that there are significant 
differences between African Americans and Caucasions in the incidence 
of the four diseases that the FSIS examined in determining the benefits 
of the proposed rule. According to this commenter, African Americans 
are 50 percent more likely than Caucasians to die of heart disease, 43 
percent more likely to die of colorectal cancer, 153 percent more 
likely to die of prostate cancer, and 38 percent more likely to die of 
breast cancer. African Americans are also 140 percent more likely than 
Caucasians to die of diabetes, a disease linked to obesity.
    Response: The benefits analysis that was prepared for this 
rulemaking does not estimate benefits attributable to specific groups 
(e.g., Caucasians or different minority groups). However, the benefits 
analysis does measure the impact to all affected parties. Therefore, no 
group of individuals has been excluded. Assuming that the information 
provided by this commenter is correct, then the rule may have a greater 
positive impact on minorities than on Caucasians.

Other Comments

    Comments: Two industry organizations suggested that other 
nutrients, e.g., zinc, and B-vitamins, should be required nutrients in 
nutrition labeling of meat and poultry products. One producer suggested 
that USDA provide information on omega 3 fatty acids and Conjugated 
Linoleic Acid (CLA) in the nutrient data base. One commenter suggested 
the addition of a warning label on meat products stating, ``Meat 
consumption has been linked in research to a higher risk for heart 
disease, cancer, hypertension, diabetes, and other serious diseases.''
    Response: These comments are beyond the scope of the regulation.
    Comment: One industry commenter suggested that what was needed most 
was more consumer education on understanding and interpreting nutrition 
facts panels.
    Response: FSIS's requirements for nutrition facts panels are 
consistent with FDA's requirements for nutrition facts panels. FSIS has 
no information indicating that consumers are confused regarding the 
information displayed on nutrition facts panels. However, if FSIS 
receives information indicating that consumers need more education 
concerning the information on nutrition facts panels, the Agency will 
consider developing consumer education materials to aid consumers in 
understanding the nutrition facts panels.
    Comment: One commenter suggested that a uniform compliance date 
should be provided for meat and poultry labeling requirements.
    Response: FSIS has published a final rule that establishes January 
1, 2012, as the uniform compliance date for new food labeling 
regulations that are issued between January 1, 2009, and December 31, 
2010 (73 FR 75564). FSIS issued these regulations to enhance the 
industry's ability to make orderly adjustments to new labeling 
requirements without unduly exposing consumers to outdated labels and 
to minimize the economic impact of labeling changes. Should this rule 
become final, the January 1, 2012, effective date will apply to the 
nutrition labeling requirements for ground or chopped products because 
nutrition labels will be required on ground or chopped products, unless 
an exemption applies. Should it become final, this rule will allow 
nutrition information for the major cuts of single-ingredient, raw meat 
and poultry products at their point-of-purchase, not on the product. 
Therefore, FSIS intends to make the labeling requirements for the major 
cuts effective one year from the date of publication of the final rule.
    Comment: One commenter stated that it had heard that the data in 
the USDA National Nutrient Database for Standard Reference are not 
current, and that USDA is undertaking nutrient analyses of additional 
fat/lean combinations (e.g.,

[[Page 67759]]

93/7; 90/10; 85/15) of ground beef. This commenter recommended that 
USDA forestall promulgation or implementation of these nutrition 
labeling regulations until all of the necessary information is 
available. Should FSIS finalize the rule, the commenter recommended 
that FSIS adopt an 18-month implementation period for the regulations.
    Response: As noted above, the USDA National Nutrient Database for 
Standard Reference includes nutrient values for ground beef product 
containing 5%, 10%, 15%, 20%, and 25% fat. In addition, ARS has 
included a calculator on the Internet that will calculate the nutrient 
values of a particular ground beef product based on the fat or lean 
value entered.
    Should it become final, the effective date for the nutrition 
labeling requirements for ground or chopped products will be January 1, 
2012. Therefore, the affected industry will likely have more than 18 
months prior to FSIS's implementation of the rule for ground or chopped 
products.

Section II. Executive Order 12866--Supplemental Proposed Rule 
Regulatory Impact Analysis (PRIA)

    This action has been reviewed for compliance with Executive Order 
12866. As this action is determined ``economically significant'' for 
purposes of Executive Order 12866, the Office of Management and Budget 
(OMB) has reviewed it.
    This supplemental PRIA differs from the PRIA that was published for 
the proposed rule. The Food Safety and Inspection Service (FSIS), after 
reviewing public comments, has concluded that further analysis of the 
costs and benefits of the rule was required. RTI, International 
performed an in-depth analysis responding to those comments (RTI, 
International, 2003) that formed the basis for the revisions to the 
cost analysis. FSIS incorporated the RTI findings with minor changes 
into this final analysis. FSIS, among other revisions, has also added a 
discussion comparing the costs of regulatory alternatives, revised the 
analysis of benefits, and added a new section examining the cost 
effectiveness of the rule.
    This economic analysis uses the most current data available to the 
Agency. It relies on the U.S. economic census data from 2002, released 
in a report dated November 2005. Even though the data collection for 
the ``U.S. Bureau of the Census--2007 Economic Census'' has been 
completed, because the detailed reporting on the retail firms and 
establishments that would likely be affected by the final rule is not 
scheduled to be available to the Agency until about October 2010, FSIS 
was unable to use that data. Thus, Tables 3, 4, and 5 (below), which 
rely on the 2002 census data, have the most current information on 
these retail firms and establishments available. Further, the Agency 
used data from the FSIS Performance Based Inspection System (PBIS), 
April 2006, to estimate the number of Federally- and State-inspected 
meat and poultry slaughter and processing establishments that would 
likely be affected by the final rule. These are the most representative 
data available to the Agency on the time period around the 2002 
economic census data. In addition, the Agency used 2005 costs because 
they are the most representative data available to the Agency, for the 
time period reflected in the 2002 economic census data.
    The Agency requested that the Interagency Economic Peer Review 
Group coordinate a peer review of the final regulatory impact analysis. 
The peer reviews conducted by two economists from Federal agencies and 
the FSIS responses to their comments are available in the FSIS docket 
room and on the FSIS Web page with the supplemental proposed rule.
    FSIS is proposing to amend the Federal meat and poultry products 
inspection regulations to require nutrition labeling of the major cuts 
of single-ingredient, raw meat and poultry products, unless an 
exemption applies. Should this rule become effective, the guidelines 
for voluntary nutrition labeling will become mandatory for these 
products.
    FSIS is also proposing to amend its regulations to require on-
package nutrition labels for ground or chopped meat and poultry 
products. The Agency has determined that single-ingredient, raw ground 
or chopped meat and poultry products are different from other single-
ingredient, raw meat and poultry products in several important 
respects, and that these products are similar to products in the 
current mandatory program that are required to bear nutrition labels. 
Thus, under this rule, the nutrition labeling requirements for all 
ground or chopped meat and poultry products will be consistent with the 
nutrition labeling requirements for multi-ingredient and heat processed 
products.
    The supplementary proposed rule provides for a number of 
exemptions, including a small business exemption. Should the rule 
become final, small businesses will be exempt from the requirement for 
nutrition labeling of single-ingredient, raw ground or chopped 
products. Small businesses are those with 500 or fewer employees, are 
owned by companies with 500 or fewer employees, and produce 100,000 
pounds or less annually of each ground product affected by the rule.\1\
---------------------------------------------------------------------------

    \1\ It is possible that some very small establishments could 
potentially be affected by the requirements if they are owned by 
companies with more than 500 employees and they produce more than 
100,000 pounds of any ground product.
---------------------------------------------------------------------------

A. Need for the Rule

    FSIS believes that less than the optimal amount of nutrition 
information is being provided because consumers cannot independently 
determine the nutritional qualities of the meat and poultry products 
affected by the rule, thus leading to insufficient incentives for 
processors and retailers to reveal the nutrient content of these 
products. To the extent that consumers purchase these products to 
achieve a nutritional objective, information about the nutritional 
characteristics of these products has value. Some consumers may 
purchase or otherwise obtain such information at a cost. However, such 
information may be costly to obtain for most consumers, and such 
information may change in value with the development of new products 
with different nutritional characteristics.
    The association between consumption of fat, saturated fat, and 
cholesterol with three types of cancer and coronary heart disease is 
discussed in the proposed rule (66 FR 4969, January 18, 2001) and the 
Supplemental PRIA Benefits Analysis of this section. In 2003, there 
were about 39,800 deaths in the United States from breast cancer, 
29,800 deaths from prostate cancer, and 57,100 deaths from colorectal 
cancer. There were about 515,200 deaths from coronary heart disease in 
2000. Consequently, a decline in the percentage of calories from fat, 
saturated fat, and cholesterol can lead to a potentially significant 
number of deaths averted.
    A substantial amount of theoretical and applied research has been 
conducted on the economics of consumer information since first 
discussed by Stigler, and subsequently by Lancaster and Rosen. Economic 
theory now treats information on the characteristics of a good along 
with information on the price of the product as major determinants of 
consumer choice.
    A basis for required labeling exists when the market does not 
supply enough information to allow consumers to make consumption 
choices that reflect their individual preferences. Under conditions of 
asymmetric information, social costs and benefits

[[Page 67760]]

may suggest a different labeling outcome than the one resulting from a 
private firm's labeling decision (Golan, et al.). Asymmetric 
information may particularly be a problem in markets for foods with 
negative credence attributes \2\ as is discussed below regarding 
products subject to the rule.
---------------------------------------------------------------------------

    \2\ Credence attributes are characteristics of the quality of a 
product that the consumer cannot determine even after consumption 
(nutritional value, medical expertise). Credence characteristics 
will always require the consumer to acquire information, such as 
nutritional information, from the seller or third parties, whose 
credibility will vary.
---------------------------------------------------------------------------

    In their examination of food consumption patterns before and after 
the general availability of information about nutritional 
characteristics, diet-disease connections, and health claims, a number 
of authors have confirmed the role of nutrition information in 
enhancing the ability of consumers to make healthier food choices (Kim 
et al., Neuhouser et al., Tiesl, et al. (1997, 2001), Moorman, and 
Ippolito and Mathios (1990b, 1991, 1995, 1998). The results of these 
studies are discussed in the Benefits Analysis.
    Ground or chopped meat and poultry products are formulated by 
processors and the nutritional characteristics of these products may 
vary.\3\ In addition, without nutrition information for the major cuts, 
consumers cannot assess precise levels of fat and cannot know the 
levels of specific nutrients in these products.\4\ Major cuts are 
generally considered by consumers to be largely undifferentiated 
products in terms of nutrient content. If one supplier of major cuts 
provides the nutrient information, and such information is the same 
regardless of supplier, there is no incentive for other suppliers to 
incur the cost of providing the information. The extent that such 
information conveys a negative credence attribute would further limit 
its availability.
---------------------------------------------------------------------------

    \3\ Single-ingredient, raw ground or chopped meat and poultry 
products is one of the two major product categories addressed in the 
rule. As the definition of this product does not change in the 
analysis, it will be referred to as ``ground or chopped products''.
    \4\ Major and nonmajor cuts of single-ingredient, raw meat and 
poultry products is one of the two major product categories 
addressed in the rule. The category of products will be referred to 
as ``major and nonmajor cuts''. In the case where only major cuts of 
single-ingredient, raw meat and products are considered, they will 
be referred to as ``major cuts''. Nonmajor cuts of single-
ingredient, raw meat and poultry products will be referred to as 
``nonmajor cuts''.
---------------------------------------------------------------------------

    As is explained above, FSIS believes that consumers have reasonable 
expectations as to the nutrient content of the major cuts. Competitive 
pressures among processors could over time increase the supply and 
accuracy of such information (Ippolito and Mathios, 1991). However, the 
comparison between foods necessary to construct a healthy diet is made 
difficult if precise information about nutrient content is not 
provided, significantly different formats are used to provide nutrition 
information, or the information is difficult to interpret. Thus, the 
point-of-purchase (POP) nutrition information requirement and 
enforcement of accuracy will facilitate consumer efforts to construct a 
healthy diet and facilitate consumer understanding of the information 
provided.
    There is not uniform agreement that nutrition labeling is always an 
effective policy measure, even if government intervention were 
warranted on the basis of informational needs and social welfare. 
Variyam, Blaylock, and Smallwood, 1995 and 1997, found that labels are 
not an effective means for educating consumers and changing consumption 
behavior. However, these papers emphasize format and context of the 
information as important factors affecting the influence of the 
information on the audience. For example, consumers are more likely to 
read and understand labels that are clear and concise (Hadden; Magat 
and Viscusi; Noah). Some of the studies cited above (Tiesl and Levy, 
1997, and Ippolito and Mathios, 1995) have found that the effectiveness 
of nutrition labels are augmented within the context of broader 
nutrition education programs about diet-health linkages.
    Golan, et al., summarize research showing when nutrition labeling 
is the most appropriate policy tool. Conditions when labeling may be 
appropriate include:
     Consumer preferences differ. Labeling may be preferable if 
consumer preferences differ widely with respect to product 
characteristics, in this case total fat, cholesterol, saturated fat, 
calcium, and iron for example. As is the case for high sodium foods, 
consumers show significantly different attitudes to fat content.
     Information is clear and concise. To be effective, the 
information on the label is clear, concise, and informative. FSIS 
believes that this criterion will be achieved for both nutrition labels 
and POP information.
    FSIS concludes that these conditions exist for the products subject 
to the rule or would be accomplished by the rule. FSIS also concludes 
that nutrition labels and POP information are superior to other tools 
such as food bans, taxes on fat content, and consumer education 
programs.
    Ippolito and Mathios (1990a) argued that competition among food 
suppliers and consumer skepticism about suppliers' claims for their 
foods often leads to well-informed consumers. If, for example, 
consumers were concerned about dietary intake of sodium, a supplier 
with a product low in sodium would advertise that attribute. If 
consumers were also concerned about fat, a supplier with a low-sodium 
and low-fat product would advertise both attributes. Consumers would 
know that the low-sodium product that does not make a low-fat claim is 
likely a higher-fat product. And any product that is silent on both 
attributes is higher in sodium and fat.
    But Ippolito and Mathios also argued there could be conditions 
under which unfolding of information fails to occur and consumers are 
not informed about important product attributes. Unfolding might not 
occur when similar products share a negative attribute, like having a 
high fat content when consumers are concerned about the fat content of 
foods. If all competing foods share a high fat content, all suppliers 
have products embodying a negative attribute, and no supplier would 
have an incentive to advertise fat content. In that case, mandatory 
nutrition labels might provide consumers with information they want and 
did not have.
    From a statutory perspective, the lack of nutrition information on 
the labeling of the major cuts and on ground or chopped products is 
misleading because material facts or attributes about these products 
are not disclosed to the public. The FMIA and PPIA provide that product 
is misbranded if its labeling is false or misleading in any particular 
way (21 U.S.C. Sec. Sec.  601(n)(1) and 453(h)(1)). Therefore, without 
nutrition information for the major cuts and for ground or chopped 
products, FSIS has concluded that these products would be misbranded 
under section 1(n) of the FMIA or section 4(h) of the PPIA (66 FR 4974, 
January 18, 2001).
    FSIS believes that the nutrition labeling requirements, when 
implemented, will provide consumers with valuable information, leading 
to improved dietary decisions. By increasing consumer awareness of the 
levels of total fat, saturated fat, and cholesterol in meat and poultry 
products affected by the rule, nutrition labeling may serve as a 
further incentive to food retailers and official establishments to 
provide products with reduced levels of these nutrients. FSIS has 
concluded that further action is necessary in order to provide 
consumers with adequate nutrition information.

[[Page 67761]]

B. Baseline

    The rule would affect Federal establishments and may affect State 
establishments \5\ that produce ground or chopped meat and poultry 
products. The rule would also affect retail food establishments such as 
supermarkets, grocery stores, meat markets, warehouse clubs, and 
superstores. To be conservative, FSIS has included State establishments 
in this analysis. The Agency used its Performance Based Inspection 
System (PBIS) database of April 2006 to determine the number of active 
Federally-inspected establishments producing ground or chopped products 
affected by the rule (Table 1).
---------------------------------------------------------------------------

    \5\ Unless stated otherwise, when discussing meat and poultry 
processing establishments, Federally-inspected establishments will 
be referred to as ``establishments''. State-inspected establishments 
will be referred to as ``State inspected establishments''.

Table 1--Size Distribution of Federal Establishments Producing Ground or
                            Chopped Products
------------------------------------------------------------------------
                         Size                                Number
------------------------------------------------------------------------
Very Small (9 or fewer employees or less than $2.5                 1,433
 million in sales annually)..........................
Small (10 to 499 employees)..........................                858
Large (500 or more employees)........................                109
                                                      ------------------
    Total............................................              2,400
------------------------------------------------------------------------
Source: FSIS Performance Based Inspection System (PBIS), April 2006.

    For purposes of this analysis, very small establishments, defined 
as those with 9 or fewer employees or less than $2.5 million in annual 
sales are exempt from the requirement for nutrition labeling of single-
ingredient, raw ground or chopped products because they have 500 or 
fewer employees, are owned by companies with 500 or fewer employees, 
and FSIS assumes they produce 100,000 pounds or less annually of each 
ground product.\6\ Some small establishments may also be exempt from 
the regulation for the same reasons that some very small establishments 
are exempt.\7\
---------------------------------------------------------------------------

    \6\ It is possible that some very small establishments could 
potentially be affected by the requirements if they are owned by 
companies with more than 500 employees and they produce more than 
100,000 pounds of any ground product. However, FSIS has concluded 
that this is a reasonable criterion for defining very small 
establishments that would be exempt from certain provisions of the 
rule. FSIS has not received public comment objecting to the use of 
this criterion and does not believe that establishments would alter 
their operations to meet this criterion.
    \7\ The PBIS does not include data on the size of the owning 
company or on processed food volumes. Therefore, it is not possible 
to determine whether some of these establishments qualify for the 
small business exemption.
---------------------------------------------------------------------------

    Nutrition labels are designed for company-wide use. FSIS estimated 
the number of affected companies by dividing the number of small and 
large Federal establishments in Table 1 by three. Based on research, 
multi-establishment firms own an average of three establishments (Muth, 
2003, RTI, 2003). That is, 858 small establishments + 109 large 
establishments /3 = 322 small and large firms. Some of these Federal 
establishments may be independent and may not be part of a multi-
establishment firm. Similarly, some very small establishments may be 
part of a multi-establishment firm. Therefore, this is an area of 
uncertainty in the analysis. However, FSIS believes its assumptions are 
reasonable for purposes of estimating costs.
    In addition, the Agency used the PBIS to estimate the number of 
active State establishments producing single-ingredient, raw ground or 
chopped meat and poultry products that would be affected by the rule 
(Table 2). The information in PBIS on State establishments may not be 
complete. Thus, the Agency may be underestimating the number of State 
establishments, or the total number of these establishments that would 
be affected by the rule.

 Table 2--Size Distribution of State Establishments Producing Ground or
                            Chopped Products
------------------------------------------------------------------------
                                                           Number of
                         Size                            establishments
------------------------------------------------------------------------
Very Small (9 or fewer employees or less than $2.5                   632
 million in sales annually)..........................
Small (10 to 499 employees)..........................                 41
Large (500 or more employees)........................                  0
                                                      ------------------
    Total............................................                673
------------------------------------------------------------------------
Source: FSIS Performance Based Inspection System (PBIS), April 2006.

    Most, if not all, of these State establishments may be independent 
and may not be part of a multi-establishment firm. Very small State 
establishments are exempt from the requirement for nutrition labeling 
of ground or chopped products because they have 500 or fewer employees, 
and the agency has assumed that they are owned by companies with fewer 
than 500 employees and produce 100,000 pounds or less annually of each 
ground product. Some small State establishments may also be exempt from 
the regulation for the same reasons that some very small Federal 
establishments are exempt. Nutrition labels are designed for company-
wide use. Thus, for purposes of the analysis the number of small State 
establishments and firms are the same.
    The total estimated number of meat and poultry processing firms is 
363 firms (322 firms with establishments + 41 firms with State 
establishments) that would be producing ground or chopped meat and 
poultry products that would be affected by the rule.
    Based on the U.S. Economic Census for 2002, there are 47,688 retail 
firms and 74,910 retail establishments that would be affected by the 
POP requirements for the major cuts of meat and poultry (Table 3). 
Despite FSIS encouragement of retailers' use of (POP) materials for the 
major cuts, the October 1999 voluntary nutrition labeling survey

[[Page 67762]]

(USDA, 1999) found a lower rate (54.7 percent of retail stores) of 
participation than the December 1996 survey (USDA, 1996) found (57.7 
percent of retail stores). The effect of existing compliance reduces 
the cost impacts of the rule are shown in Appendices C and D and are 
discussed below.\8\
---------------------------------------------------------------------------

    \8\ The appendices supporting the economic analysis are 
available from the FSIS docket room and at http://www.fsis.usda.gov/regulations_&_policies/2009_Proposed_Rules_Index/index.asp.

   Table 3--Number of Retail Firms and Establishments Affected by POP
  Nutrition Information Requirements for Major Cuts of Meat and Poultry
------------------------------------------------------------------------
                          NAICS
    NAICS code         description          Firms        Establishments
------------------------------------------------------------------------
445110............  Supermarket and             42,318            66,150
                     other grocery
                     (except
                     convenience
                     stores).
445210............  Meat markets....             5,354             5,848
452910............  Warehouse clubs                 16             2,912
                     and superstores.
                   -----------------------------------------------------
    Total.........  ................            47,688            74,910
------------------------------------------------------------------------
Note: NAICS is North American Industry Classification. A ``firm'' refers
  to the parent company and an ``establishment'' refers to the retail
  facility.
Source: U.S. Department of Commerce, U.S. Bureau of the Census--2002
  Economic Census, November 2005. ``Establishment and Firm Size: Retail
  Trade.'' EC02-44SS-SZ. Washington, DC: U.S. Department of Commerce.

    Table 4 shows the number of large retail firms and establishments 
affected by nutrition labeling requirements for ground or chopped 
products. About 23,479 retail establishments are owned by about 266 
companies that have 500 or more employees. Table 5 shows the estimated 
number of small retail firms and establishments that would be affected 
by nutrition labeling requirements for ground or chopped products, if 
there were no waiver related to the use of a ``percentage-lean/
percentage-fat'' statement. About 51,431 retail establishments are 
owned by the 47,422 firms that have less than 500 employees. This 
policy is discussed below.

   Table 4--Estimated Number of Large Retail Firms and Establishments
 Affected by Nutrition Labeling Requirements for Ground or Chopped Meat
                          and Poultry Products
------------------------------------------------------------------------
                          NAICS
    NAICS code         description          Firms        Establishments
------------------------------------------------------------------------
445110............  Supermarket and                253            20,434
                     other grocery
                     store (except
                     convenience
                     stores).
445210............  Meat markets....                 2               142
452910............  Warehouse clubs                 11             2,903
                     and superstores.
                   -----------------------------------------------------
    Total.........  ................               266            23,479
------------------------------------------------------------------------
Note: NAIC is North American Industry Classification. A ``firm'' refers
  to the parent company and an ``establishment'' refers to the retail
  facility.
Source: U.S. Department of Commerce, U.S. Bureau of the Census--2002
  Economic Census, November 2005. ``Establishment and Firm Size: Retail
  Trade.'' EC02-44SS-SZ. Washington, DC: U.S. Department of Commerce.


   Table 5--Estimated Number of Small Retail Firms and Establishments
 Affected by Nutrition Labeling Requirements for Ground or Chopped Meat
 and Poultry Products, When the ``Percent-Lean/Percent-Fat'' Label Is No
                    Longer Waived for These Products
------------------------------------------------------------------------
                          NAICS
    NAICS code         description          Firms        Establishments
------------------------------------------------------------------------
445110............  Supermarket and             42,065            45,716
                     other grocery
                     store (except
                     convenience
                     stores).
445210............  Meat markets....             5,352             5,706
452910............  Warehouse clubs                  5                 9
                     and superstores.
                   -----------------------------------------------------
    Total.........  ................            47,422            51,431
------------------------------------------------------------------------
Note: NAIC is North American Industry Classification. A ``firm'' refers
  to the parent company and an ``establishment'' refers to the retail
  facility.
Source: U.S. Department of Commerce, U.S. Bureau of the Census--2002
  Economic Census, November 2005. ``Establishment and Firm Size: Retail
  Trade.'' EC02-44SS-SZ. Washington, DC: U.S. Department of Commerce.

    Should it become final, the rule would affect an estimated 21.6 
billion pounds of meat and poultry products. Of this amount, 16.7 
billion pounds are major cuts of single-ingredient, raw products and 
4.9 billion pounds are ground or chopped meat and poultry products. The 
amount of ground or chopped product subject to the provisions by the 
rule is reduced from an estimated 6.2 billion pounds as a result of 
exemptions to small businesses. There are approximately 2.9 billion 
pounds of nonmajor cuts. These products are not affected by the final 
rule; however they are affected by the requirements of Alternatives 2 
and 5 discussed in the following section. The source and derivation of 
these estimates are provided in Appendix A, Tables 1-4 and discussed in 
the Cost Effectiveness Analysis.
    These estimates, however, do not take into account the level of 
voluntary compliance with the nutrition labeling requirements for 
ground or chopped products that currently exists. Consequently, the 
estimated amounts of ground or chopped products and major cuts that 
would be impacted by the final rule are overstated. However, in the 
analysis that follows we take into account the 68 percent compliance 
rate

[[Page 67763]]

(NCBA, 2004) of voluntary nutrition labeling of ground or chopped 
products and 54.8 percent level of voluntary compliance (USDA, 1999) of 
stores that provide nutrition labeling for major cuts.
    FSIS used data from USDA's Continuing Survey of Food Intake by 
Individuals (CSFII), and the associated Diet and Health Knowledge 
Survey (DHKS) to establish a baseline for fat, saturated fat, and 
cholesterol intake. The CSFII collects data on food intakes by 
individuals. USDA conducted three separate one-year surveys for 1994-96 
(USDA, 1994-1996). These surveys recorded two nonconsecutive days of 
food consumption and collected information on what and how much 
individuals ate, and where the food was obtained. This information was 
used to develop estimates of nutrient intake for each individual 
respondent. The DHKS gathered data on consumers' knowledge of issues 
related to diet and health, and contained several questions relating to 
the use of nutrition information labels and nutrition information for 
food products. Linking information from the two surveys allowed FSIS to 
correlate use of nutrition information from the DHKS with nutrient 
intake data from the CSFII. The Agency focused here on two key 
questions pertaining to nutrition information use on all food products 
and on meat and poultry in particular: Q: When you buy foods, do you 
use the nutrition panel that tells the amount of calories, protein, 
fat, and such [e.g., sodium, total carbohydrate] in the serving of a 
food: Often (always), sometimes, rarely, or never? (Question 16-c, 
DKHS) Q: When you buy raw meat, poultry, or fish, do you look for 
nutrition information: Often (always), sometimes, rarely, or never? 
(Question 17-I, DHKS). Using data from the CSFII and the DHKS, FSIS 
estimated rates of nutrition information usage, based on these two 
questions. The results are presented in Benefits Analysis (Table 15) 
where they are used to establish a baseline for intake of fat, 
saturated fat, and cholesterol. Additional information is then used to 
estimate the impacts of label usage on dietary intakes of these 
nutrients, and the resulting human health effects.

C. Regulatory Alternatives

    FSIS considered several regulatory alternatives:
     Alternative 1: Continuing with the existing voluntary 
program;
     Alternative 2: Making the voluntary program mandatory;
     Alternative 3 (the supplemental proposed rule): Requiring 
nutrition information on labels of all ground or chopped products and 
making the voluntary program mandatory for the major cuts;
     Alternative 4: Requiring nutrition information on labels 
of the major cuts and on all ground or chopped products; and
     Alternative 5: Requiring nutrition information on labels 
of major and nonmajor cuts and all ground or chopped products.
    The provisions for the regulatory alternatives are summarized in 
the following table.

                     Table 6--Nutrition Labeling Requirements under Regulatory Alternatives
----------------------------------------------------------------------------------------------------------------
                                                 Type of product
-----------------------------------------------------------------------------------------------------------------
                                                                  Major cuts of single   Nonmajor cuts of single-
        Regulatory alternative            Ground or chopped         ingredient, raw          ingredient, raw
                                               products                 products                 products
----------------------------------------------------------------------------------------------------------------
Alternative 1; (Status quo/current     On-package nutrition     Voluntary program:       Voluntary program:
 requirements).                         labeling is not          nutrition information    nutrition information
                                        required for ground or   can be on package or     for these products is
                                        chopped products that    at point of purchase.    not required. However,
                                        are raw, single-                                  if nutrition
                                        ingredient.                                       information is
                                                                                          voluntarily provided
                                                                                          for these products, it
                                                                                          must be consistent
                                                                                          with the nutrition
                                                                                          information required
                                                                                          for the major cuts of
                                                                                          single-ingredient, raw
                                                                                          products.
Alternative 2........................  Mandatory nutrition      Mandatory nutrition      Mandatory nutrition
                                        labeling requirements.   labeling requirements.   labeling requirements.
                                        Nutrition information    Nutrition information    Nutrition information
                                        must be provided on      is provided on package   is provided on package
                                        package or at the        or at the point of       or at the point of
                                        point of purchase. The   purchase. The analysis   purchase. The analysis
                                        analysis assumes that    assumes that a           assumes that a
                                        a reference manual is    reference manual is      reference manual is
                                        provided at the point    provided at the point    provided at the point
                                        of purchase which        of purchase which        of purchase which
                                        contains the required    contains the required    contains the required
                                        nutrition information.   nutrition information.   nutrition information.
Alternative 3 (Supplemental Proposed   On-package nutrition     Mandatory nutrition      Nutrition information
 Rule provisions).                      labeling is mandatory    labeling requirements.   for these products is
                                        for all ground or        Nutrition information    not required. However,
                                        chopped products,        must be provided on      if nutrition
                                        including those that     package or at the        information is
                                        are single ingredient,   point of purchase. The   voluntarily provided
                                        raw products.            analysis assumes that    for these products, it
                                                                 placards conveying the   must be consistent
                                                                 required nutrition       with the nutrition
                                                                 information will be      information required
                                                                 located at the point     for the major cuts of
                                                                 of purchase.             single-ingredient, raw
                                                                                          products.
Alternative 4........................  Same as Alternative 3..  On-package nutrition     Nutrition information
                                                                 labeling is mandatory    for these products is
                                                                 for these products.      not required.
                                                                                          Nutrition information
                                                                                          can be provided on the
                                                                                          label or by POP.
Alternative 5........................  Same as Alternative 3..  Same as Alternative 4..  On-package nutrition
                                                                                          labeling is mandatory
                                                                                          for these products.
----------------------------------------------------------------------------------------------------------------


[[Page 67764]]

    Uncertainty analyses are conducted to estimate cost distributions 
for each of the alternatives and the supplemental proposed rule. The 
stochastic cost model uses @RISK (Version 4.5, Palisades Corp.) to 
examine the effects of uncertainty. The model, statistical properties, 
assumptions, documentation, and results are presented in the tables of 
Appendix B and Appendix D, Tables 2 and 3.\9\
---------------------------------------------------------------------------

    \9\ The stochastic model structure or framework, equation 
specification, statistical properties, assumptions, documentation, 
and results are presented in the tables of Appendix B and in 
Appendix D, Tables 2 and 3. In most cases, the minimum (low), 
maximum (high), and most-likely or mid-points values are to be found 
in the tables of Appendix B. In general, the values used represent 
information collected by RTI for the FDA Labeling Model, or other 
studies such as the NCBA surveys. Other values were assumed to be 
around a point-value that was collected by RTI, NCBA, or other 
referenced studies. Assumptions are made and tested for their effect 
on average cost of the alternatives considered. The results are in 
tables of Appendix B, and in Appendix D, Table 1 that has the 
summary of additional costs by alternative. In addition, Appendix D, 
Tables 2 and 3, have the detailed stochastic model framework of the 
economic analysis, and results of the preferred Alternative 3.
---------------------------------------------------------------------------

Alternative 1: Continuing With the Voluntary Program
    FSIS considered continuing with the existing voluntary program and 
attempting to increase participation by providing additional assistance 
to the non-participants. FSIS considered providing nutrition 
information or POP materials directly to retail stores to encourage 
their participation in the voluntary nutrition labeling program and 
providing POP material files on the FSIS Web site that retailers could 
print and place in their stores.
    Under this alternative, retail establishments would continue to 
provide, on a voluntary basis, nutrition labeling for all single-
ingredient, raw meat and poultry products, including major cuts 
identified in Sec. Sec.  317.344 and 381.444 (including ground beef, 
ground pork) and cuts that are not identified as major cuts (including 
ground or chopped products not covered in Sec. Sec.  317.344 and 
381.444). This information could be provided at the point of purchase 
or on the label of the product.
    FSIS's efforts to provide nutrition information or POP materials to 
retail stores to encourage their participation in the voluntary 
nutrition labeling program and to provide POP material files on the 
FSIS Web site could lead to additional participation in the voluntary 
nutrition labeling program. However, FSIS did not choose this 
alternative because, even though its cost is relatively low, the 
benefits of the alternative are also relatively low. This option would 
not ensure that nutrition information is provided for the major cuts of 
single-ingredient, raw meat and poultry products. In addition, FSIS did 
not choose this alternative because the Agency has determined that 
ground or chopped products that do not bear nutrition information would 
be misbranded under section 1(n)(1) of the FMIA and section 4(h)(1) of 
the PPIA. Therefore, POP materials would not be adequate to provide 
nutrition information for these products.
Alternative 2: Make the Voluntary Program Mandatory
    FSIS considered making the voluntary program mandatory by requiring 
nutrition information, either on labels or at the point of purchase, 
for all single-ingredient, raw meat and poultry products, including the 
major cuts and the nonmajor cuts of single-ingredient, raw meat and 
poultry products. Under this alternative, FSIS would assume that most 
retailers would display POP information for these products rather than 
nutrition labels, because this is a low-cost means of providing 
nutrition information for multiple products.
    FSIS believes the vehicle chosen by retail establishments for 
displaying nutrition information at the point of purchase for all major 
and nonmajor cuts of single-ingredient, raw meat and poultry products 
would be a reference manual, because placards covering all the major 
and nonmajor cuts would take up product display space and result in 
visual clutter. In addition, a manual may be easier for consumers to 
use than numerous placards covering all major and nonmajor cuts, and 
all the numerous formulations of ground or chopped meat and poultry 
products. A manual about the size of the Uniform Retail Meat and 
Identity Standards publication could include nutrition information for 
all the major and nonmajor cuts, including nutrition information for 
numerous formulations of ground or chopped products. The Uniform Retail 
Meat and Identity Standards publication is approximately 100 pages, 
with a page size of 8\1/2\x11, in a three-ring binder. The publication 
provides meat identification standards for all cuts. However, the 
publication does not provide nutrition information or information on 
poultry cuts. Such information would have to be assembled from other 
sources for inclusion in the manual.
    This publication, including shipping and handling costs, is 
available for purchase through the National Cattleman's Beef 
Association for a minimum cost of $97.50; most-likely cost of $100.00; 
or a maximum cost of $102.50. In the cost analysis of the alternative 
chosen, FSIS estimated there are about 74,910 retail establishments 
(Table 3). FSIS assumed that the manual would be replaced annually. 
FSIS estimated the labor cost of displaying POP information for the 
major cuts at $21.11 per hour.\10\ The time to obtain and make 
available POP information for the major cuts per store, an average of 
0.5 hour, is the same as that used to estimate the cost of Alternative 
3, the supplemental proposed rule. Based on these estimates, the annual 
costs of this alternative is estimated to be $8,281,675.\11\ This 
estimate is comprised of $790,675 for labor costs (74,910 
establishments x $21.11/hour x .5 hours) and $7,491,000 for the cost of 
the reference manual (74,910 x $100.00/establishment). The average 
present value of this cost is estimated at $87.74 million\12\ when 
discounted at 7 percent over 20 years.\13\
---------------------------------------------------------------------------

    \10\ Department of Labor, 2002. This wage represents an 
appropriate wage for a combination of managerial and regular staff 
that would be making available POP materials for major cuts and 
includes wages of $15.62 and fringe benefits of $5.49 per hour.
    \11\ This average annual cost has a range of variability of 
$8.03 million at the 5th percentile and 8.53 at the 95th percentile 
(see Appendix B, Table 10 and Appendix D, Table 1).
    \12\ This average annual cost has a range of variability of 
$85.10 million at the 5th percentile and $90.83 million at the 95th 
percentile (see Appendix B, Table 10 and Appendix D, Table 1).
    \13\ All present value calculations in the analysis of both 
costs and benefits use a 20-year time horizon.
---------------------------------------------------------------------------

    This alternative would be less expensive than the alternative 
chosen by the Agency. As explained in the preamble to the proposed 
rule, FSIS is unable to distinguish between the benefits that would 
accrue from requiring nutrition labels on products versus nutrition 
information on POP materials (66 FR 4984-4985, January 18, 2001). 
Research is not available to differentiate the benefits of nutrition 
information on labels versus nutrition information on displays. This is 
a significant area of uncertainty in analyzing benefits of the 
regulatory alternatives.
    The benefits of this alternative may be comparable to the benefits 
of the alternative chosen if POP nutrition information and on-package 
labels have roughly the same amount of success \14\

[[Page 67765]]

in leading to dietary change.\15\ However, because there are numerous 
formulations of ground or chopped products, it would be difficult for 
producers or retailers to develop POP materials that would address all 
the different formulations that exist for these products. Furthermore, 
it would be difficult for consumers to find the correct information for 
a specific ground or chopped product on POP materials that include 
information concerning numerous formulations of these products (66 FR 
4977, January 18, 2001). To use POP materials only, without nutrition 
labels, consumers would have to find the nutrition information for a 
specific fat and lean formulation among multiple formulations. If a 
statement of the fat percentage is not included on a package of ground 
products, consumers would not know which nutrient data concerning 
ground product on POP materials would apply to that particular ground 
product. Therefore, because this option may not result in benefits 
associated with the consumption of ground or chopped products, this 
option would likely result in lower benefits compared to the option 
chosen. In addition, FSIS did not choose this alternative because it 
does not allow for any distinction between major and nonmajor cuts. 
FSIS has determined that it is not appropriate or necessary to require 
nutrition information for nonmajor cuts that are not ground or chopped 
at this time.
---------------------------------------------------------------------------

    \14\ The term ``success'' or ``successful'' is used to aid the 
discussion in the cost effectiveness analysis where the 
effectiveness of the regulatory alternatives is discussed under 
scenarios where the impact (``success'') of POP nutrition 
information is varied relative to that of on-package nutrition 
labels in leading to dietary change. The use of the same term to 
refer to two different types of comparisons is intended to clarify 
the discussion.
    \15\ As the success of point-of-purchase information declines 
relative to on-package nutrition labels, there is a proportional 
decline in dietary changes and consequently a proportional decline 
in lives saved associated with that measure, given the differences 
in that amount of product affected.
---------------------------------------------------------------------------

Alternative 3 (Supplemental Proposed Rule): Require Nutrition 
Information on Labels of All Ground or Chopped Products and Make the 
Voluntary Program Mandatory for the Major Cuts (Other Than Ground Beef, 
Ground Pork)
    Should this rule become final, it will require nutrition 
information on the labels of all ground or chopped products and 
requires nutrition information, either on their labels or at their POP, 
for the major cuts of single-ingredient, raw products, unless such 
products qualify for an exemption. Under this alternative, retail 
establishments and processors of meat and poultry products could 
continue to voluntarily provide nutrition information for nonmajor cuts 
of single-ingredient, raw meat and poultry products that are not ground 
or chopped. This approach allows for a distinction between ground or 
chopped products and other cuts. It also allows for a distinction 
between major and nonmajor cuts.
    Consistent with the regulations, the most recent voluntary 
nutrition labeling survey (USDA, 1999) only assessed whether retail 
stores provided nutrition labeling for the major cuts of single-
ingredient, raw meat and poultry products. Until some assessment is 
made of whether adequate information is being provided for the nonmajor 
cuts of single-ingredient, raw products that are not ground or chopped, 
FSIS cannot determine whether it would be beneficial to require 
nutrition information for these products.
    The derivations of the costs of Alternative 3 are shown in the 
section, Supplemental PRIA Cost Analysis. The average total present 
value of the costs of this alternative is $348.06 million, assuming 
retailers select the lower cost compliance option (Table 14). The 
average annualized cost associated with this alternative is $32.85 
million. As is shown in the section, Supplemental PRIA Benefits 
Analysis, the present value of the benefits of this alternative is $2.2 
billion if POP nutrition information for the major cuts is as 
successful as on-package labels in leading to dietary changes. The 
annualized benefit associated with this alternative is $205.5 million. 
These estimates are not adjusted to account for current compliance, 
thus over estimate costs and benefits from saved lives.
Alternative 4: Require Nutrition Information on Labels of the Major 
Cuts and on All Ground or Chopped Products
    FSIS considered requiring nutrition information only on labels of 
the major cuts and on all other ground or chopped products not covered 
in Sec. Sec.  317.344 and 381.444.\16\ As in Alternative 3, 
establishments could voluntarily provide nutrition information, either 
at the POP or on the label, for the nonmajor cuts that are not ground 
or chopped. This approach allows for a distinction between major cuts 
and nonmajor cuts that are not ground or chopped.
---------------------------------------------------------------------------

    \16\ Ground or chopped products or not covered in Sec. Sec.  
317.344 and 381.444 will be referred to as ``ground or chopped 
products'' in the remainder of the final regulatory impact analysis.
---------------------------------------------------------------------------

    FSIS estimates that packages of single-ingredient, raw major cuts, 
including ground beef and ground pork, represent at a minimum 80 
percent, most-likely 85 percent, and at a maximum 90 percent of all 
packages of single-ingredient, raw meat and poultry products sold 
through retail stores. Therefore, FSIS estimates the minimum, most-
likely, and maximum costs of this alternative would be the same as 
these percentages of the costs of Alternative 5, which requires 
nutrition information on the package labels of all major and nonmajor 
cuts sold through retail stores. FSIS has based these percentages on a 
previous determination by FSIS that the major cuts are representative 
of the market (56 FR 60307, November 27, 1991) and are the most popular 
cuts (56 FR 60320). Comments on the 1991 nutrition labeling proposal 
generally supported the list of major cuts (58 FR 640, January 6, 
1993). Similarly, one comment to the January 18, 2001, proposed rule on 
nutrition labeling stated that the major cuts represent the greatest 
share of fresh meat consumption. The cost analysis of Alternative 5 
follows this discussion.
    FSIS estimates the average present value of the costs of this 
alternative to be $812.99 million ($956.5 million, the average present 
value cost of Alternative 5, x .85). The average annualized cost 
associated with this alternative is estimated at $90.28 million.
    The benefits of this alternative would be similar to those of the 
selected alternative if POP nutrition information and on-package labels 
are equally successful at leading to dietary change. The pounds of 
product requiring nutrition labeling are the same for both Alternatives 
3 and 4. However, this alternative would be significantly more costly 
than the alternative chosen, because this alternative would require on-
package nutrition labels on a large volume of product that are not 
required to bear labels under Alternative 3.
    These estimates are not adjusted to account for current compliance, 
thus over estimate costs and benefits from saved lives.
Alternative 5: Require Nutrition Labels on All Single-Ingredient, Raw 
Meat and Poultry Products and on All Ground or Chopped Products
    FSIS considered requiring nutrition information on labels of major 
cuts and nonmajor cuts of single-ingredient, raw meat and poultry 
products, and on labels of ground or chopped products, unless an 
exemption applied.
    The supplemental PRIA cost analysis for the alternative chosen 
calculated the costs of requiring nutrition labels on all ground or 
chopped products. FSIS calculated the costs of requiring labels on all 
other major and nonmajor cuts of single-ingredient, raw products that 
are not ground or chopped. The same method for estimating the labeling 
cost for all ground and chopped products under the alternative chosen 
was used to estimate the labeling costs for major

[[Page 67766]]

and nonmajor cuts of single-ingredient, raw products under Alternative 
5.
    Table 7 shows the number of Federal establishments producing major 
or nonmajor cuts that are not ground products. Many of these 
establishments have a mix of operations that fabricate a variety of 
cuts derived from multiple species in the same establishment. This is 
especially prevalent in small and very small sized establishments. 
Thus, the totals of the columns or the rows in this table do not 
represent the total number of establishments under Federal inspection 
due to double counting.

       Table 7--Federal Establishments That Fabricate Major or Nonmajor Cuts That are Not-Ground Products
----------------------------------------------------------------------------------------------------------------
                                                                               Size
                     Product                     ---------------------------------------------------------------
                                                       Large           Small        Very small        Unknown
----------------------------------------------------------------------------------------------------------------
Meat:
    Beef........................................              52             886            1303              28
    Pork........................................              56             750            1155              23
    Lamb........................................               0             319             575              11
    Other meat..................................               3             186             338               4
Poultry:
    Chicken.....................................             158             611             698              15
    Turkey......................................              38             210             264               5
    Other poultry...............................               0               0               2               0
----------------------------------------------------------------------------------------------------------------
Note: Data is from the Performance Based Inspection System (PBIS) April 2006.

    Consistent with the supplemental PRIA cost analysis for the 
selected alternative, FSIS estimates that very small establishments 
would be exempt from nutrition labeling requirements because they have 
500 or fewer employees, are owned by companies with 500 or fewer 
employees, and FSIS assumes they produce 100,000 pounds or less 
annually of each product. Also, FSIS assumes that all ``small'' 
establishments are owned by large, multi-establishment firms and would 
not qualify for this exemption. Nutrition labels are designed for 
company-wide use. FSIS estimated the number of affected companies by 
dividing the number of small and large establishments in the table 
above by three, the number of establishments owned on average by multi-
establishment firms (Muth, 2003; RTI, 2003). FSIS assumed 
establishments of unknown size are either large or small, to ensure 
that the Agency did not underestimate the number of affected 
establishments.
    In addition, there are about 41 State establishments that are small 
that would likely be affected by this rule. Little information is 
available to the Agency about the number of firms that represent the 41 
State establishments. However, it is likely that the 41 State 
establishments are owned by 41 firms. There are no State establishments 
that are large. The analysis assumes that State establishments that are 
small would be affected. Furthermore, the Agency does not have data for 
these 41 State establishments on the fabrication of major or nonmajor 
cuts of single-ingredient, raw products. Therefore, the Agency may be 
underestimating the number of affected firms that own small or large 
processing establishments that fabricate major and nonmajor cuts.
    Thus, the final estimates of the number of affected firms that own 
small or large processing establishments that fabricate major and 
nonmajor cuts that are not ground are: 322 beef firms; 276 pork firms; 
110 lamb firms; 64 ``other'' meat firms, including goat processors; 261 
chicken firms; and 84 turkey firms.\17\
---------------------------------------------------------------------------

    \17\ The number of firms affected is derived by summing the 
number of large establishments, small establishments, and 
establishments of unknown size for each type of species in Table 7 
and dividing by 3, the average number of establishments owned by a 
firm.
---------------------------------------------------------------------------

    To estimate the average number of cut products fabricated per firm, 
FSIS estimated that all firms would fabricate all the major cuts 
(except the ground major cuts, because FSIS has already accounted for 
those) and an additional 3 nonmajor cuts. FSIS estimated that beef 
firms would typically fabricate 12 major products; pork firms, 9; lamb 
firms, 6; chicken firms, 5; and turkey firms, 5 major products. 
Therefore, the total number of major and nonmajor products fabricated 
by beef firms is 15 products; pork firms, 12; lamb firms, 9; chicken 
firms, 8; and turkey firms, 8. FSIS then assumed processors of 
``other'' meat products would fabricate 12 products (similar to the 
number of beef or pork products). In the table above, the PBIS figures 
for beef processors include veal processors. For purposes of this 
analysis, FSIS considered the number of major beef cuts rather than 
veal cuts, because beef is more widely produced and consumed than veal.
    FSIS estimated the average, one-time cost to modify on-package 
labels for prepackaged meat and poultry product by multiplying the 
average per label modification cost ($2,274 as shown in the 
Supplemental PRIA Cost Analysis) by the number of affected firms and by 
the number of products per firm. Based on this formula and the numbers 
of firms and products shown above, the estimated average label 
modification costs are: beef and veal firms, $10.85 million ($33,700/
firm); pork firms, $7.44 million ($27,000/firm); lamb firms, $2.22 
million ($20,000/firm); other meat firms, 1.73 million ($27,000/firm); 
chicken firms, $4.69 million ($18,000/firm); and turkey firms, $1.51 
million ($18,000/firm). The total, one-time average costs of designing 
labels would be $28.45 million.
    In addition to the one-time average costs of designing labels, 
companies will also incur costs for providing larger labels with 
nutrition information. To calculate this cost, FSIS estimated that 
there are 11.25 billion packages (15 billion \18\ retail packages of 
all raw meat and poultry x 75 percent \19\ that are single-ingredient, 
raw packages) of major and nonmajor cuts sold through retail 
establishments.
---------------------------------------------------------------------------

    \18\ The safe handling rule estimated that there were 15 billion 
retail packages of raw meat and poultry products (58 FR 58925).
    \19\ Based on information from the July 2004 National Conference 
on Weights and Measures held in Pittsburgh, PA, FSIS estimates that 
25 percent of retail packages of meat and poultry are products with 
added solutions. Therefore, FSIS estimates that 25 percent of retail 
packages of fresh meat and poultry products are multi-ingredient 
products for which nutrition labeling information is already 
required, unless an exemption applies. Thus, 75 percent (100 percent 
minus 25 percent) of retail packages of raw meat and poultry 
products are single-ingredient products for which nutrition labeling 
information is now required, unless an exemption applies.
---------------------------------------------------------------------------

    Furthermore, in the supplemental PRIA cost analysis for the 
alternative

[[Page 67767]]

chosen, FSIS estimated that there are 2.267 billion packages of ground 
or chopped products (see Appendix B Table 8). Therefore, FSIS estimates 
that there are 8.983 billion packages (11.25 billion packages of all 
meat and poultry minus 2.267 billion packages of ground or chopped 
products) of major and nonmajor cuts that are not ground or chopped 
sold through retail establishments.
    FSIS estimates that 25 percent of 8.893 billion packages of single-
ingredient, raw major and nonmajor cuts that are not ground or chopped 
are packaged by processing establishments, or 2.246 billion packages 
(8.893 billion packages x 25 percent). Based on information collected 
by RTI, a blank label is assumed to have a minimum cost of $0.002; 
most-likely cost of $0.005; and a maximum cost of $0.008. Multiplying 
2.246 billion packages by the annual added average cost of $0.005 per 
label results in an average cost of approximately $11.23 million (2,246 
billion packages x $0.005 per label) annually. Total first-year costs 
(one-time and annual recurring) to processing establishments would be 
$39.68 million ($28.45 million for one-time cost + $11.23 million 
annual recurring cost).
    Only retail establishments that have 500 or more employees will be 
affected by nutrition labeling requirements for major and nonmajor cuts 
because it is not likely that others would produce 100,000 pounds per 
single-ingredient, raw product. Table 4 shows that 23,479 retail 
facilities are owned by companies that have 500 or more employees. The 
stores are owned by 266 firms.
    Retail establishments subject to the requirements of the rule could 
comply by either incorporating nutrition information on the label 
printed by store scale printer systems (option 1) or by applying an 
additional preprinted label with nutrition information (option 2).\20\ 
The supplemental PRIA cost analysis for the Alternative chosen shows 
that option 1 is the less expensive option. Therefore, FSIS assumes 
stores would choose this option under Alternative 5 as well. FSIS also 
assumes that, on average, the estimated total cost to upgrade printer 
scales to provide store-printed labels is $56.35 million (23,479 retail 
establishments x $2,400 per establishment). The analysis assumes that 
scales with the added features for making store-printed labels are 
replaced every five years. The annual maintenance costs for the 
upgraded scale printer is estimated to be 6 percent of $2,400 or $144 
every year after a scale printer has been purchased equal to $3.38 
million (23,479 retail establishments x $144 per establishment). FSIS 
is including these costs here, in addition to the costs for nutrition 
labeling of ground or chopped products, because FSIS assumes that 
retail stores would need to have additional scale printers to apply 
labels to major and nonmajor cuts that are not ground or chopped.
---------------------------------------------------------------------------

    \20\ Options 1 and 2 are described in the Final Rule Cost 
Analysis.
---------------------------------------------------------------------------

    The supplemental PRIA cost analysis shows that for retail stores 
the average one-time cost estimates for redesigning labels is $0.414 
million (Appendix B, Table 3). FSIS is including this cost here and in 
the ground or chopped products labeling costs to ensure that FSIS does 
not underestimate the costs of this alternative.
    The supplemental PRIA cost analysis estimates that each processor 
company produces an average of 6.6 unique ground or chopped products 
(see Appendix B, Table 2), that each retail firm and meat market firm 
offers an average of 4.6 unique ground or chopped products (4.6/6.6 or 
69 percent of the number of ground or chopped products produced by 
processors), and that each warehouse club firm offers an average of 
1.33 unique ground or chopped products (1.3/6.6 or 20 percent of the 
number of ground or chopped products sold by processors, (Appendix B, 
Table 9).
    Excluding ground or chopped products, FSIS estimates that retail 
and meat market firms package 69 percent of the total number or major 
and nonmajor cuts produced by establishments. Consequently, these firms 
would package on average 10.35 beef products, 8.28 pork products, 6.21 
lamb products, 5.52 chicken products, 5.52 turkey products; and 8.28 
other meat products. Excluding ground or chopped products, FSIS 
estimates that warehouse club firms package 20 percent of the total 
number of major and nonmajor cuts by processors. Consequently, these 
firms would package an average of 3 beef products, 2.4 pork products 
1.8 lamb products, 1.6 chicken products, 1.6 turkey products, and 2.4 
other meat products. Therefore, FSIS estimates that each retail and 
meat market firm packages an average of 44.16 unique major and nonmajor 
cuts. FSIS also estimates that each warehouse club firm packages an 
average of 12.8 unique major and nonmajor cuts.
    Therefore, an average of 11,402 unique major and nonmajor cuts will 
require nutrition labels applied in retail facilities ((44.16 products 
x 255 supermarket, grocery store and meat market firms) + (12.8 
products x 11 warehouse club and superstore firms)).
    Consistent with the cost analysis of the chosen alternative, the 
average one-time cost to retailers affected by the rule for the 
nutrition analyses of major and nonmajor cuts\21\ is $7.87 million 
(11,402 unique products x $690 average cost of a nutrition analysis, 
Appendix B, Table 3).
---------------------------------------------------------------------------

    \21\ A nutrition analysis is required to create a Nutrition 
Facts panel. Nutrition information is available from FSIS and other 
sources for many ground or chopped products, and major and nonmajor 
cuts of meat and poultry products.
---------------------------------------------------------------------------

    The use of larger labels is another cost that retail stores may 
incur. If retail stores package 75 percent of total single-ingredient, 
major and nonmajor cuts that are not ground or chopped, then an average 
of 6.737 billion packages (8.983 billion packages x 75 percent) are 
packaged by retail stores annually. If the added average cost of each 
label is $0.005 (as assumed in the cost analysis for the alternative 
chosen), then retailers affected by the rule will incur an added 
average annual cost of about $33.68 million.
    A summary of the frequency of various labeling costs for single-
ingredient, raw products for Alternative 5 are shown in Table 8. A 
summary of the costs for Alternative 5 are shown in Table 9 and in 
Appendix D.
    Alternative 5 is the most expensive alternative that FSIS 
considered. This alternative would require labels on a larger volume of 
product than would Alternative 4. As with Alternative 4, this 
alternative would require labels on a large volume of product not 
currently required to bear labels.

[[Page 67768]]



  Table 8--Frequency of Labeling Costs for Single-Ingredient, Raw Meat and Poultry Products, Excluding Cost for
                                           Ground and Chopped Products
----------------------------------------------------------------------------------------------------------------
                                                                        Frequency of cost *
                                                 ---------------------------------------------------------------
                                                     One-time                        Recurring
                      Item                       ---------------------------------------------------------------
                                                                                    1st year &
                                                   1st year only      Annual       once/5 years      Other **
----------------------------------------------------------------------------------------------------------------
                                                                             $ Million
----------------------------------------------------------------------------------------------------------------
Processing:
    Modify Labels...............................          28.45   ..............  ..............  ..............
    Use larger labels...........................  ..............           11.23  ..............  ..............
Retail:
    Upgrade printer scales......................  ..............  ..............           56.35  ..............
    Printer Maintenance.........................  ..............  ..............  ..............            3.38
    Redesign larger labels......................           0.414  ..............  ..............  ..............
    Use larger labels...........................  ..............           33.68  ..............  ..............
    Nutrition analysis..........................           7.87   ..............  ..............  ..............
----------------------------------------------------------------------------------------------------------------
* All costs are average costs as derived in Appendix B.
** Costs for printer maintenance occur annually, except for years in which a printer is purchased.


                     Table 9--Average Present Value and Annualized Costs * for Alternative 5
----------------------------------------------------------------------------------------------------------------
                                                   Present value   Present value
                                                        3%              7%         Annualized 3%   Annualized 7%
----------------------------------------------------------------------------------------------------------------
                                                                             $ Million
----------------------------------------------------------------------------------------------------------------
Ground and chopped product:
    Processing..................................           47.70           35.28            3.21            3.33
    Retail......................................          381.71          281.70           25.66           26.59
                                                 ---------------------------------------------------------------
        Total ground and chopped................          429.41          316.98           28.86           29.92
                                                 ===============================================================
Raw, single-ingredient cuts:
    Processing..................................          217.33          159.87           14.61           15.09
    Retail......................................          652.00          479.62           48.82           45.27
                                                 ---------------------------------------------------------------
        Total raw, single-ingredient cuts.......          869.33          639.49           58.44           60.36
                                                 ===============================================================
            Total, All Products.................        1,298.82          956.54           87.20           90.28
----------------------------------------------------------------------------------------------------------------
* These estimates are not adjusted to account for current compliance, thus over estimate costs.

    The benefits of this alternative are comparable to the alternative 
chosen after taking into account the amount of nonmajor cuts covered by 
this alternative and on the condition that POP nutrition information is 
equally as successful as on-package labels in leading to dietary 
change.
Summary Comparison of Regulatory Alternatives
    The Analysis of Alternatives section provides an in-depth 
comparison of the regulatory alternatives, including a cost-
effectiveness analysis. This comparison takes into account the relative 
success of POP nutrition information compared to on-package nutrition 
information labels, and the cost of each measure (form in which 
nutrition information is provided) for the products affected. The 
discussion of cost-effectiveness centers on Tables 26-29.

D. Costs and Benefit of the Supplemental Proposed Rule

1. Supplemental PRIA Cost Analysis
    FSIS analysis of this rule includes many of the same assumptions 
that were used in the proposed rule. In most cases, FSIS believes that 
the initial assumptions are still valid. No new data has been presented 
refining or disputing these original assumptions. However, in other 
cases FSIS and RTI were able, based upon more current information, to 
change and improve the original assumptions.
    PRIA vs. supplemental PRIA: The PRIA estimated the costs of 
nutrition labels based on the cost analysis conducted for the 
``Mandatory Safe Handling Statements on Labeling of Raw Meat and 
Poultry Products'' proposed rule published November 4, 1993 (58 FR 
58922). In the PRIA, FSIS adjusted the costs of the safe handling rule 
to reflect the costs related to the volume of ground or chopped 
products produced. For fixed costs associated with nutrition labeling 
of ground or chopped products, FSIS assumed that 80 percent of the 
estimated fixed costs were already incurred by retailers and 
processors, and only 20 percent of the estimated fixed costs would be 
required for compliance with the proposed rule. Therefore, FSIS 
estimated the fixed costs for the nutrition labeling of ground or 
chopped products would total 20 percent of the estimated fixed safe 
handling labeling costs: $10 million to $20 million for processors and 
$28.8 million to $43.2 million for retailers (66 FR 4986, January 18, 
2001).
    The estimates of operating costs to retail establishments in the 
PRIA are based on the number of packages of ground or chopped products 
that would be sold through small and large retail stores and the 
labeling costs per package based on the safe handling labeling costs. 
FSIS multiplied the estimated

[[Page 67769]]

number of ground or chopped products sold through large retail stores 
by the safe handling label cost for large retail stores to derive an 
estimate of $6 million in annual operating costs for these stores. 
Similarly, FSIS multiplied the estimated number of packages of ground 
or chopped products sold through small retail stores by the safe 
handling label costs for small retail stores to derive an annual 
estimate of $4 million in costs for these establishments (66 FR 4988, 
January 18, 2001). FSIS explained that these operating costs would 
increase by $2 million to $12 million in current prices. FSIS also 
estimated the labor costs of small firms applying a separate nutrition 
label would be $.6 million, based on safe handling label costs (66 FR 
4988, January 18, 2001). FSIS assumed processors would incur no 
additional operating costs associated with nutrition labeling ground or 
chopped products.
    FSIS also estimated one-time paperwork burden costs for nutrition 
labels on ground or chopped products of $8.8 million. These paperwork 
burden costs were the estimated costs of label development, 
recordkeeping, and the costs of submitting label approval applications 
to FSIS (66 FR 4988, January 18, 2001).
    Finally, FSIS estimated that the average time for each retail 
establishment to obtain POP materials that include nutrition 
information for the major cuts of single-ingredient, raw meat and 
poultry products would be 30 minutes. Based on labor costs of $20 per 
hour, FSIS estimated that total retail costs for obtaining these 
materials would be $0.7 million. (66 FR 4985-4986, January 18, 2001). 
The PRIA did not estimate any other costs associated with retailers 
obtaining or maintaining POP materials.
    The revisions in the supplemental PRIA are based on additional 
information available to FSIS, improved analytical methods, and a more 
accurate characterization of the impacts of the rule. FSIS revised the 
supplemental PRIA in response to concerns expressed during the 
Interagency review of the PRIA about data quality and in response to 
final guidelines issued by the Office of Management and Budget (OMB, 
2002) to Federal Agencies after publication of the proposed rule.
    The supplemental PRIA assumes that no establishment or retail 
facility has incurred any costs associated with the requirements of 
this regulation prior to its effective date, even though many firms 
have already been providing the information that is being required.\22\ 
Rather than prorate cost estimates in the safe handling rule based on 
the volume of ground or chopped products, the supplemental PRIA 
includes estimates for itemized costs that pertain specifically to 
nutrition labels. For processing firms, these costs in the supplemental 
PRIA include administrative costs, graphic design costs, prepress 
activities costs, plate engraving costs, nutrition analysis costs, and 
the costs of larger labels.
---------------------------------------------------------------------------

    \22\ The impacts of a 68 percent compliance rate for nutrition 
labeling of ground or chopped products (NCBA, 2004) and a 54.8 
percent compliance rate for major cuts (USDA, 1999) will be 
discussed at the conclusion of this section.
---------------------------------------------------------------------------

    The supplemental PRIA explains that if retail firms choose to use 
store scale-printers to print nutrition labels for ground or chopped 
products, costs to these retailers would include upgrading store 
scales-printers to include nutrition information, redesigning larger 
store labels, providing a nutrition analysis for each product, and 
using larger labels. This method of labeling is referred to as ``Option 
1'' in the analysis. If retail firms choose to apply an additional 
preprinted label with nutrition information to ground or chopped 
products, the cost to these retail stores would include designing a 
one-color nutrition label, conducting a nutrition analysis for each 
product, and purchasing and applying a separate label on packages of 
ground or chopped product at the retail level. This method of labeling 
is referred to as ``Option 2'' in the analysis.
    The supplemental PRIA assumes that labels will be redesigned for 
company-wide use. The supplemental PRIA also assumes that small and 
large plants are owned by large, multi-firm establishments. In 
addition, the supplemental PRIA assumes that retail stores or chains 
with fewer than 500 employees produce 100,000 pounds or less annually 
of each ground or chopped product and are exempt from the nutrition 
labeling requirements for ground or chopped products. In the 
supplemental PRIA, the average material and labor cost for POP placards 
have been revised.
    The benefits analysis is revised from the PRIA to reflect a 
constant value for each premature death prevented by the requirements 
of the rule to update cost to 2002 dollars. The value of preventing a 
premature death varied on the basis of age in the benefits analysis of 
the PRIA. Because of these changes, the benefits in the supplemental 
PRIA are higher than those of the PRIA.

                                Table 10--Average Costs in the Supplemental PRIA
----------------------------------------------------------------------------------------------------------------
                                                                  Total 1st year   Present value   Present value
                       Bases of estimates                              costs            7%              3%
----------------------------------------------------------------------------------------------------------------
                                                                                     $ Million
----------------------------------------------------------------------------------------------------------------
Retail costs, including POP materials: Option 1.................           75.58          312.77          424.53
Retail costs, including POP materials: Option 2.................           50.83          564.36          790.70
Costs to processors only........................................            7.81           35.28           47.70
                                                                 -----------------------------------------------
    Total costs (Option 1)......................................           83.38          384.06          472.23
----------------------------------------------------------------------------------------------------------------


[[Page 67770]]


                              Table 11--Benefits of the PRIA and Supplemental PRIA
----------------------------------------------------------------------------------------------------------------
                                                        Annualized benefits                Present value
                   Rule status                   ---------------------------------------------------------------
                                                        7%              3%              7%              3%
----------------------------------------------------------------------------------------------------------------
                                                                             $ Million
----------------------------------------------------------------------------------------------------------------
Supplemental PRIA...............................           205.5           248.3         2,176.7         3,694.4
PRIA............................................            86.6           145.3           917.8         2,161.0
----------------------------------------------------------------------------------------------------------------

    The supplemental proposed rule would require nutrition labels on 
all ground or chopped products, with or without added seasonings, 
unless an exemption applies, and would make the voluntary nutrition 
labeling program mandatory for major cuts, unless an exemption applies.
    The cost analysis of the requirements for ground or chopped 
products is based on the FDA Labeling Cost Model developed by RTI, the 
Enhanced Facilities Data Base (EFD), Performance Based Inspection 
System (PBIS), the FSIS Performance Based Inspection System database, 
AC Nielsen Purchase Data of 2003, and Information Resources Inc. (IRI). 
The PBIS provides estimates of the number of very small, small, and 
large processing establishments that grind meat and poultry products. 
IRI scanner data and AC Nielsen Purchase Data provide estimates of the 
number of ground or chopped products produced by processing 
establishments.

Supplemental Proposed Rule Cost Estimates for Major Cuts

    For the major cuts, FSIS assumes that retailers will comply by 
using POP placards. The number of retail establishments affected by the 
nutrition labeling requirements for the major cuts is based on 2002 
data from the Bureau of the Census (Table 3).\23\ The Census data are 
consistent with the establishment numbers used in the analysis of 
nutrition labeling of ground or chopped products used in the PRIA. The 
number of retail establishments used in the supplemental PRIA is 74,910 
(owned by 47,688 firms) compared to 69,500 (comprised of supermarkets, 
other stores, and wholesale clubs) used in the PRIA (66 FR 4982, 
January 18, 2001). The use of the 2002 Bureau of Census data instead of 
FMI data (from the PRIA) results in a higher estimated cost of the POP 
requirements in the supplemental proposed rule. The supplemental PRIA's 
estimate is also higher than the PRIA's estimate because in the PRIA, 
FSIS assumed retail facilities would incur labor costs only and would 
not purchase frames and placards.
---------------------------------------------------------------------------

    \23\ November 2005, more of the 2002 Census data was released.
---------------------------------------------------------------------------

    The cost of three nutrition information placards for displaying POP 
information for the major cuts is estimated to be $65.17 per store 
($28.00 for placards and $37.17 for metal frames), based on information 
from the Food Marketing Institute (FMI) and http://www.hubert.com. 
Placards will be replaced every two years because of normal wear and 
tear. The supplemental PRIA estimates that an average of 0.5 hour at 
labor cost of $21.11 per hour, per store is the amount of time 
necessary to obtain and make available the POP materials, insert the 
placards or posters into frames, and post the information in the store. 
The average labor cost is then $10.16 ($21.11 x 0.5). The total average 
cost per store is then $75.73.
    The average total cost of purchasing and installing posters or 
placards will be $5.67 million the first year and every other year 
after that ((74,910 establishments x $21.11 per hour x .5 hours) + 
(74,910 establishments x $65.17 per establishment)). The present value 
of this cost is $31.07 million when discounted at 7 percent over 20 
years.

Supplemental Proposed Rule Cost Estimates for Ground or Chopped Product

    Should this rule become final, both meat and poultry processing 
firms and retail establishments will incur compliance costs associated 
with nutrition labeling of ground or chopped products for such items as 
label redesign, nutrition analysis, larger labels, and upgrading store 
scale-printers. The following discussion presents the costs associated 
with nutrition labeling ground or chopped products for meat and poultry 
processing firms and for retail firms.

Meat and Poultry Processing Firms

    The cost of nutrition labeling of ground or chopped products 
packaged by processing establishments is comprised of costs for 
redesigning preprinted product labels that will include a nutrition 
label (one-time cost), for conducting nutrition analysis on products to 
obtain information for the nutrition label (one-time cost), and for 
using larger labels that would be needed for the former product labels 
(recurring cost).
    Based on an examination of labels applied to ground or chopped 
products that are labeled at processing establishments, the most common 
printing method for these labels is flexography.\24\ Nutrition facts 
are typically printed in one color. The per-label modification 
estimated midpoint cost, in 2005 dollars, for a one-color change using 
the flexography printing method is $2,247. The estimated minimum cost 
is $1,528, and the maximum cost is $3,170. Cost depends upon the 
complexity of the label design (Table 12). These estimates reflect 
administrative, graphic design, prepress activities, plate engraving 
costs, and nutrition analysis. The paperwork costs are included in the 
administrative costs. FSIS assumes that the paperwork costs are about 
14 percent of the midpoint estimate administrative costs. Thus, the 
midpoint estimate of the paperwork burden costs would be $44.66 ($319 x 
14 percent) per label modification. The estimated total per label 
design modification cost ranges from a low of $929 to a high of $2,383 
with a midpoint of $1,557.
---------------------------------------------------------------------------

    \24\ Flexography printing is frequently used for printing on 
plastic foil, acetate film, and other material used in packaging. 
Flexography uses flexible printing plates made of rubber or plastic. 
The inked plates with a slightly raised image are rotated on a 
cylinder which transfers the image to the substrate. Flexography 
uses fast-drying inks, is a high-speed print process, can print on 
many types of absorbent and non-absorbent materials, and can print 
continuous papers such as gift wrap and wallpaper.

[[Page 67771]]



         Table 12--Costs per Label Modification for a One-Color Change Using Flexography Printing Method
----------------------------------------------------------------------------------------------------------------
                          Type of Cost                                  Low          Mid-Point         High
----------------------------------------------------------------------------------------------------------------
                                                                                      Dollars
                                                                 -----------------------------------------------
Administrative\1\...............................................             137             319             502
Graphic design..................................................             342             513             684
Prepress activities.............................................             279             401             627
Plate engraving.................................................             171             323             570
                                                                 -----------------------------------------------
    Total label redesign........................................             929           1,557           2,383
                                                                 ===============================================
Nutrition analysis \2\..........................................             599             690             787
                                                                 -----------------------------------------------
    Total.......................................................           1,528           2,247           3,170
----------------------------------------------------------------------------------------------------------------
\1\ Includes regulatory affair costs that are similar to paperwork burden costs.
\2\ RTI assumed that the cost for nutrition analysis would be the cost associated with analysis required to
  create a Nutrition Facts panel. Source: RTI, 2003, P.7.

    Although nutrition information for some ground products will be 
available from the USDA National Nutrient Database for Standard 
Reference (USDA, Agricultural Research Service, 2005) or other low-cost 
sources, in many cases, the regulations would require that companies 
conduct a separate nutrition analysis for ground or chopped products 
for which the USDA National Nutrient Database for Standard Reference or 
other sources have not provided nutrition information. Because of the 
large variety of ground product formulations, many products will not 
likely be the same or similar enough to the products for which the USDA 
National Nutrient Database for Standard Reference or other sources 
provide nutrition information. Because FSIS could not identify the 
number of ground or chopped products that would require a separate 
nutrition analysis versus the number of products for which the USDA 
National Nutrient Database for Standard Reference or other sources 
supply complete nutrition information, FSIS estimated a one-time 
nutrition analysis cost for all ground or chopped products. The per-
label cost of this analysis is in the range of $599 and $787, with an 
average of $690. On average, the Agency assumed that total label design 
will be $1,557, and a nutrition analysis will be $690.
    Nutrition labels are designed for company-wide use. The number of 
affected companies is estimated by dividing the number of small and 
large establishments in Table 1 by three, the number of establishments 
owned on average by multi-establishment firms (Muth, 2003; See RTI 
analysis). Thus, the final estimate of the number of affected firms 
that own small or large Federal processing establishments that grind 
meat is 322 ((858 small processing establishments + 109 large 
processing establishments)/3). For the purposes of this analysis, very 
small establishments are considered to be exempt from the requirements 
for nutrition labeling of ground or chopped products because FSIS 
assumes they have fewer than 500 employees, are owned by companies with 
fewer than 500 employees, and FSIS assumes they produce 100,000 pounds 
or less annually of each ground product. The PBIS database does not 
include data on size of the owning company or processed product 
volumes. Thus, the total number of establishments affected by the rule 
for this analysis may be overestimated. In addition, this analysis 
includes 41 State establishments/firms that are small-sized. These 
firms were identified in PBIS database as having grinding operations 
that would produce ground or chopped products.
    AC Nielsen Food Purchase data from 2003 and Information Resources 
Inc. (IRI) were used to identify ground meat and poultry products with 
or without added seasonings. The purchase data include data for frozen 
and fresh, ground or chopped products affected by the final nutrition 
labeling rule. The information shows that an average of 3.3 frozen 
ground meat or poultry products are produced by companies that grind 
meat and poultry. The data were then scaled to account for the total 
number of ground or chopped products by assuming that a typical company 
produces an equal number of fresh and frozen ground meat or poultry 
products. Therefore, multiplying 3.3 x 2 results in an average of 6.6 
products per firm and 2,396 unique meat and poultry products (6.6 x 363 
firms) that are subject to the labeling requirements of the rule.
    The one-time, average cost for meat and poultry establishments to 
modify product labels on prepackaged ground meat and poultry products 
to include nutrition information at processing establishments is 
estimated at $5.38 million ($2,247 mid-point per label modification 
costs x 363 affected companies x 6.6 affected products per company). 
The average present value of this one time cost discounted over 20 
years at 7 percent is $5.03 million.
    In addition to the one-time costs of designing labels, companies 
will also incur costs for providing larger labels. The cost of larger 
labels was obtained by estimating the volume of ground meat and poultry 
products packaged by processors and multiplying the results by the 
incremental cost of larger labels. The cost of applying larger labels 
is assumed to be the same as the cost of applying smaller labels.
    The NCBA's Meat Purchase Diary (RTI, 2003) indicates that an 
average American household purchases 49.3 pounds of raw ground beef 
annually from retail stores. Based on 112.0 million households in the 
United States (U.S. Department of Commerce, 2003), 5.5216 billion 
pounds (49.3 pounds per household x 112 million households) of ground 
beef are purchased from retail stores annually. The American Meat 
Institute estimates that 0.123 pounds of other ground meat and poultry 
products are consumed for every pound of ground beef. Consequently, an 
estimated 6.201 billion pounds of ground or chopped meat and poultry 
(5.5216 billion pounds x 1.123 scale factor) are purchased by consumers 
annually (66 FR 4987, January 18, 2001).
    According to the NCBA, the average weight of a retail package is 
2.735 pounds, with a distribution of 1.17 pounds at the 5th percentile 
and 4.35 pounds at the 95th percentile (McGowan, 2003). Dividing 6.201 
billion pounds by 2.735 pounds per package yields an average of 2.267 
billion packages of ground or chopped products sold at retail stores 
annually.
    To determine the total number of packages sold at ``exempt''

[[Page 67772]]

establishments, the Agency, using U.S. Census 2002 data, FSIS found 
that 79.3 percent of total dollar sales by supermarkets, meat markets, 
and warehouse stores were sold by establishments owned by large retail 
firms and establishments (500 or more employees). These large retail 
firms and establishments (266) represent 0.006 of the total number of 
retail firms and establishments (47,688) affected by the rule as shown 
in Tables 4 and 5 above. Assuming that the percentage of total dollar 
sales is similar to sales for ground meat and poultry products, about 
1.798 billion packages (2.267 billion packages x .793) of ground or 
chopped products are sold each year by nonexempt processing 
establishment and retail establishments.
    Finally, a study conducted by NCBA, found that less than 25 percent 
of ground products are packaged by processing establishment (Dopp, 
2001). Thus the Agency estimates that at most 566.75 million packages 
of ground or chopped products are packaged by processing establishments 
each year (2.267 billion packages x .25).
    The Agency assumes that a larger label will cost an additional 
$0.005 per label, on average. This estimate was based on information 
from the FDA Labeling Cost Model (Muth, et al. 2003), where $0.005 was 
the difference in cost between the low and high cost estimates for 
pressure-sensitive labels. This estimate was evaluated by Hobart, a 
label manufacturer, who believed that it was reasonable (Schuller, 
2003). Multiplying 566.75 million packages by the annual added cost of 
$0.005 per label results in an added cost of approximately $2.83 
million, annually. The present value of these annual costs discounted 
at 7 percent is $30.02 million.

Retail Firms

    The cost of nutrition labeling would also affect retail stores. But 
because of the small business exemption, fewer retail stores are 
affected by the requirements for ground and chopped products than the 
74,910 establishments shown in Table 3. Using U.S. 2002 Census data 
shown earlier in Table 4, a total of 23,479 stores will be affected. 
Table 4 shows the number of retail stores that are owned by companies 
with more than 500 employees. FSIS assumes that stores or chains with 
500 or fewer employees produce 100,000 pounds or less annually of each 
ground or chopped product and are, therefore, exempt from the nutrition 
labeling requirements for ground or chopped products.
    Should the rule become final, retail establishments subject to the 
requirements of the rule may comply by either incorporating nutrition 
information on the label printed by store scale printer systems (Option 
1) or by applying an additional preprinted label with nutrition 
information (Option 2). The cost of store-printed labels includes 
upgrading store scale-printers to include nutrition information, 
redesigning larger store labels, providing a nutrition analysis for 
each product, and using larger labels. Based on information from NCBA 
and FMI (Amstein, 2003) many scale-printers in retail establishments do 
not have the capability to print nutrition information on store-
generated labels without an upgrade of memory capacity and software and 
either new printers or new printer heads. Based on a pilot study 
conducted by King Marketing Services, Inc., for the NCBA, the average 
cost to upgrade a scale-printer system in their study was $1,600 
(Amstein, 2003). FSIS assumes that, on average, retail stores have 1.5 
scales in their meat departments. Thus the total cost for upgrading 
printer-scale systems is assumed to be about $2,400 per store ($1,600 
per printer x 1.5 printers). The total average cost to upgrade printer 
scales to provide store-printed labels for ground or chopped products 
is estimated at $56.35 million (23,749 retail establishments x $2,400 
per establishment). The analysis assumes that scales with the added 
features for making store-printed labels are replaced every five years. 
The annual maintenance costs for an upgraded scale-printer is estimated 
to be 6 percent of $2,400 or $144 ($2,400 x .06) every year after a 
scale-printer has been purchased.25 26
---------------------------------------------------------------------------

    \25\ Based upon a communication between Warranty Department, 
Hobart Corporation, Troy, Ohio, and Gary Becker, USDA, FSIS, 
September 4, 2003, and a second communication between Sales 
Department, Hobart Corporation, Beltsville, Maryland, and Gary 
Becker, USDA, FSIS, September 4, 2003. The suggested retail price 
for a Quantum scale-printer is between $5,500 and $6,000. A one-year 
maintenance agreement would cost about $355. Therefore, it has been 
estimated that operating and maintenance costs would be about six 
percent of the purchase price annually ($355/$5,750 = 6%).
    \26\ It is possible that as new scale-printer systems are 
developed that the cost of including the added feature to new scale-
printer systems may be less than $1,600 per scale. But to assume, as 
RTI reported, that there is no additional cost for these added 
features in the future results in an underestimate of the compliance 
costs.
---------------------------------------------------------------------------

    The cost of redesigning larger store logo labels to be used with 
the scale-printer systems was based upon cost data from the FDA 
Labeling Cost Model and Census data on the number of large companies 
that own retail establishments. As for preprinted labels, flexography 
is the most common printing method for the store logo labels used with 
scale printer systems. The cost to make a one-color label redesign 
change depending on the complexity of the label redesign ranges from a 
minimum of $929, an average of $1,557, and a maximum of $2,383, as 
shown in Table 12.\27\ Because each company will need to redesign only 
one label, the average cost was multiplied by the 266 firms affected by 
the rule. The average one-time cost estimates for redesigning labels is 
$0.414 million ($1,557 per label design x 266 firms). The average one-
time cost estimate for the paperwork costs (average regulatory affairs 
costs of $319 x 14 percent = $44.50) of redesigning labels is $11,837 
($44.50 x 266 firms). As with products packaged by processors, label 
redesign can not simply be incorporated into the normal label redesign 
process because it is a fundamental change in the label format. Once 
the label is redesigned, the costs of subsequent label redesigns will 
not be affected substantially.
---------------------------------------------------------------------------

    \27\ Package redesign varies depending upon what must be changed 
on the current label. Therefore, three estimates have been provided.
---------------------------------------------------------------------------

    To estimate the cost of conducting nutrition analysis for ground or 
chopped products packaged by retailers, the number of unique products 
was estimated. It was assumed that each firm (or parent company) would 
conduct a nutrition analysis once for each unique product, which might 
be sold in some or all of their retail facilities. The number of firms 
shown in Table 4 was multiplied by an average number of store-brand 
products packaged at each store. To estimate the average number of 
ground or chopped products packaged at retail, the number of ground or 
chopped products with store-applied packaging at six different grocery 
stores and three wholesale clubs was counted.\28\ This analysis showed 
that grocery stores sell an average of 4.57 ground or chopped products 
and warehouse stores sell an average of 1.33 ground or chopped products 
packaged at the store. Multiplying 4.57 by the total number of grocery 
store firms and meat market firms and multiplying 1.33 by the total 
number of warehouse club firms in Table 4 results in 1,180 ((4.57 
products x 255 grocery store and meat market firms) + (1.33 x 11 
warehouse club firms))\29\ unique products that will

[[Page 67773]]

require nutrition labels applied in retail stores. FSIS recognizes that 
a survey of six grocery stores and three wholesale clubs in one U.S. 
city is not a nationally representative survey. Because of limited time 
and Agency resources, information from this survey provided the best 
available data for FSIS's estimates. Although this is a significant 
area of uncertainty in the cost analysis, FSIS believes these data 
allow for reasonable estimates of the costs to retailers.
---------------------------------------------------------------------------

    \28\ Each store visited by RTI was owned by a different company 
and included medium and large sized stores. No meat markets were 
visited because RTI believed that no meat markets owned by companies 
large enough to be affected by the labeling requirements are located 
in the Raleigh-Durham area.
    \29\ Numbers are rounded.
---------------------------------------------------------------------------

    Using the cost of a nutrition analysis shown in Table 12 above, and 
the number of unique products that will require nutrition labels 
applied in retail stores the average cost estimate is $2.65 million 
($2,247 x 1,180 unique products).
    The use of larger labels is another cost that retail stores may 
incur should the rule become final. The cost of larger labels is the 
product of the number of packages of ground or chopped products sold in 
retail establishments and the cost of using a larger label. Earlier in 
the analysis, it was estimated that about 25 percent of approximately 
2.267 billion packages or about 566.79 million packages of ground or 
chopped products are packaged by processing establishments each year. 
If the remaining 75 percent of total package volume of ground or 
chopped products is packaged at retail stores, then 1.700 billion 
packages (2.267 billion x .75) are packaged by retail stores annually. 
If the added average cost of each label is $0.005, then retail stores 
will incur an added cost of about $8.5 million (1.7 billion packages x 
$0.005).\30\
---------------------------------------------------------------------------

    \30\ The Agency assumed an average cost of $0.005 per label for 
a larger label because it represents the change in cost between low, 
midpoint, and high cost estimates for pressure-sensitive labels in 
the FDA Labeling Cost Model (Appendix B). The differences in the 
low, midpoint, and high cost estimates derive primarily from the 
differences in the size of labels. Second, a representative from 
Hobart, which manufactures labels, says that $0.005 was a reasonable 
estimate for the added cost of a larger label for including 
nutrition facts.
---------------------------------------------------------------------------

    FSIS estimates that based on the analysis described above, the 
resulting average present value of one-time costs of upgrading scale-
printer systems, added annual operating and maintenance costs for the 
scale-printer systems, one-time costs for redesigning larger store 
labels, one-time costs for conducting nutrition analysis, and present 
value costs for using a larger label will be about $209.43 million 
discounted at 7 percent.
    The cost of the second method of complying with the labeling 
requirements for ground or chopped products at retail stores (Option 2) 
includes designing a one-color nutrition label, conducting a nutrition 
analysis for each product, and purchasing and applying a separate label 
on packages of ground or chopped products applied at the retail level. 
Using the same methodology that was described earlier, it is estimated 
that 1,180 unique products will be required to have nutrition labels 
applied in retail stores. Multiplying the number of unique products by 
the average per-label redesign and nutrition analysis costs (the cost 
of flexography is $2,470), results in a one-time cost estimate of $2.65 
million (1,180 unique products x $2,247 per label design).
    To estimate the cost of purchasing and applying labels to packages 
of ground or chopped products packaged at retail, the per-unit cost 
estimates from the FDA Labeling Cost Model were multiplied by the 
volume of packages described earlier.\31\ FSIS estimates the annual 
cost using the average cost of $0.0293 per label applied. The estimated 
annual cost is $49.77 million ($0.0293 per label and application cost x 
1.452 billion retail packages). All of these costs will be incurred by 
large and small businesses. The present value of these costs is $452.83 
million when discounted at 7 percent.
---------------------------------------------------------------------------

    \31\ The Agency estimated the low, mid-point, and high per-unit 
cost for purchasing and applying one-color pressure-sensitive labels 
in 2005 dollars to be $0.016, $0.0293, and $0.042, respectively.
---------------------------------------------------------------------------

Percentage Lean/Percentage Fat Labeling

    In the PRIA, FSIS assumed that the cost per label to provide 
information regarding percent lean/percent fat would be comparable to 
those costs for nutrition labeling, $0.0025 to $0.05 per label, if that 
information was included as part of the price label and $0.01 per label 
if producers developed separate percent fat/percent lean labels. Based 
on the National Cattleman's Beef Association National Meat Case Study 
in 2004, approximately 25 percent of ground beef package labels 
surveyed had statements of the lean percentage of the packaged products 
but did not have nutrition facts panels. Therefore, FSIS assumed that 
many small businesses may currently include a statement of the lean 
percentage on the label of ground products but may not include 
nutrition facts panels on the product label. Based on this assumption, 
FSIS concluded that requiring small businesses that use the lean 
percentage and fat percentage statement on the label of ground products 
to also include nutrition information on the label of such products may 
result in significant expenses for small businesses. An additional 
47,422 small businesses with an additional 51,431 retail establishments 
(stores) (see Table 5) may be affected. Based on the FSIS cost model 
(see Appendix B), this may increase the present value (7 percent) of 
average expenses for small businesses by about $394.16 million or by 
about $37.21 million when annualized (7 percent). Therefore, in this 
supplemental proposed rule, small businesses that use statements of 
percent fat and percent lean on the label or in labeling of ground 
products will be exempt from nutrition labeling requirements, provided 
they include no other nutrition claims or nutrition information on the 
product labels or labeling. FSIS is taking this action, pursuant to 5 
U.S.C. 604(a)(5), to minimize the significant impact of the regulation 
on small and very small establishments and small retailers. By taking 
this action, many of these small businesses will not be affected by 
this rule at all.

Summary of Cost Estimates

    FSIS estimates that the average present value of the compliance 
costs associated with the provisions of the supplemental proposed rule 
for retail and processing establishments is $348.06 million discounted 
at 7 percent,\32\ or $472.23 million discounted at 3 percent \33\ (see 
tables 13 and 14). The average annualized costs are $32.85 million and 
$31.74 million, based on a 7 percent and 3 percent discount rate, 
respectively. These estimates are based on the assumption that retail 
stores will choose the less costly of the two options which would be to 
upgrade their scale-printer systems, redesign larger store labels, 
conduct a nutrition analysis, and use larger labels. If these retail 
establishments choose the more costly option, the average present value 
cost to retail processing establishments could be as high as $599.64 
million, discounted at 7 percent and $838.40 million, discounted at 3 
percent.
---------------------------------------------------------------------------

    \32\ The FSIS analysis which takes into account the uncertainty 
associated with various cost factors shows that the values at the 
5th and 95th percentiles for this average present value using a 7 
percent discount rate and 20 year time horizon are $282.88 and 
$474.79 million, respectively. See Appendix D, Table 1.
    \33\ The FSIS analysis which takes into account the uncertainty 
associated with various cost factors shows that the values at the 
5th and 95th percentiles for this average present value using a 3 
percent discount rate and 20 year time horizon are $380.76 and 
$650.23 million, respectively. See Appendix D, Table 1.
---------------------------------------------------------------------------

    The average present value cost of the supplemental proposed rule 
for retail establishments under option 1 would be

[[Page 67774]]

$312.77 million using a 7 percent discount rate and $424.53 million 
using a 3 percent rate. However, under Option 2, the average present 
value cost to retail establishments could be $564.36 million discounted 
at 7 percent and $790.70 million discounted at 3 percent.
    Processing establishments will incur the smallest portion of the 
cost increases. FSIS expects average present value costs to processing 
establishments costs to be $35.28 million discounted at 7 percent and 
$47.70 million discounted at 3 percent.

                                           Table 13--Cost Summary of the Supplemental Proposed Rule (Nominal)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Year
                         Measure                          ----------------------------------------------------------------------------------------------
                                                               1           2           3           4           5         6-10        11-20       Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     $ Million
                                                          ----------------------------------------------------------------------------------------------
Retail: Purchase & Install POP Placards..................       5.67        0.0         5.67        0.0         5.67       11.35       28.36       56.73
Processing: Modify Labels on Prepackaged Ground or              5.39        0.0         0.0         0.0         0.0         0.0         0.0         5.39
 Chopped Products........................................
Processing: Larger Labels on Ground or Chopped Products..       2.42        2.42        2.42        2.42        2.42       12.10       24.21       48.41
Retail : (Option 1.......................................      69.91       12.33       12.33       12.33       12.33      118.01      236.03      473.29
Retail: (Option 2).......................................      45.13       42.51       42.51       42.51       42.51      212.55      425.10      852.86
Total Retail: (Option 1 and POP Placards)................      75.58       12.33       18.01       12.33       18.01      129.36      264.39      530.01
Total Retail: (Option 2 and POP Placards)................      50.83       42.51       48.18       42.51       48.18      223.90      453.47      909.58
Total All Processing Plants..............................       7.81        2.42        2.42        2.42        2.42       12.10       24.21       53.80
Total Retail: (Option 1 and POP Placards) and Processing.      83.39       14.75       20.43       14.75       20.43      141.46      288.60      583.81
Total Retail: (Option 2 and POP Placards) and Processing.      58.64       44.93       50.60       44.93       50.60      236.00      477.67      963.38
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                          Table 14--Cost Summary of the Supplemental Proposed Rule (Discounted)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Year
                          Measure                          ---------------------------------------------------------------------------------------------
                                                                1           2           3           4           5         6-10        11-20      Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
7% Discount Rate                                                                                      $ Million
                                                           ---------------------------------------------------------------------------------------------
Retail: Purchase & Install POP Placards...................       5.30        0.0         4.63        0.0         4.04        6.62       10.47      31.07
Processing: Modify Labels on Prepackaged Ground or Chopped       5.04        0.0         0.0         0.0         0.0         0.0         0.0        5.04
 Products.................................................
Processing: Larger Labels on Ground or Chopped Products...       2.26        2.11        1.98        1.85        1.73        8.64        7.08      30.24
Retail: (Option 1)........................................      65.37       10.77       10.06        9.41        8.79       73.58       89.91     281.70
Retail: (Option 2)........................................      42.23       37.11       34.69       32.44       30.31      124.36      151.80     533.29
Total Retail: (Option 1 and POP Placards).................      70.67       10.77       14.69        9.41       12.84       80.20      100.38     312.77
Total Retail: (Option 2 and POP Placards).................      47.53       37.11       39.32       32.44       34.35      130.88      162.28     564.36
Total All Processing Plants...............................       7.71        2.11        1.98        1.85        1.73        7.08        8.64      35.28
Total Retail: (Option 1 and POP Placards) and Processing..      79.60       12.88       16.67       11.26       14.56       87.27      109.03     348.06
Total Retail: (Option 2 and POP Placards) and Processing..      62.34       39.22       41.29       34.28       36.08      137.95      170.92     599.64
                                                           ---------------------------------------------------------------------------------------------
3% Discount Rate                                                                                      $ Million
                                                           ---------------------------------------------------------------------------------------------
Retail: Purchase & Install POP Placards...................       5.51        0.0         5.19        0.0         4.90        8.96       18.27      42.82
Processing: Modify Labels on Prepackaged Ground or Chopped       5.23        0.0         0.0         0.0         0.0         0.0         0.0        5.23
 Products.................................................
Processing: Larger Labels on Ground or Chopped Products...       2.35        2.28        2.21        2.15        2.09        9.56       13.36      42.46
Retail: (Option 1)........................................      67.88       11.63       11.28       10.95       10.64       95.87      154.06     381.72
Retail: (Option 2)........................................      43.85       40.09       38.90       37.75       36.69      167.87      269.77     747.88
Total Retail: (Option 1 and POP Placards).................      73.39       11.63       16.48       10.95       15.54      104.82      172.32     424.53
Total Retail: (Option 2 and POP Placards).................      49.36       40.09       44.09       37.75       41.59      176.83      288.04     790.70

[[Page 67775]]

 
Total All Processing Plants...............................       8.00        2.28        2.21        2.15        2.09        9.56       15.36      47.70
Total Retail: (Option 1 and POP Placards) and Processing..      82.66       13.91       18.69       13.10       17.63      114.38      187.68     472.23
Total Retail: (Option 2 and POP Placards) and Processing..      64.74       42.37       46.30       39.90       43.67      186.39      303.40     838.40
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The average cost increases that FSIS has identified are higher than 
those estimated by RTI in their revised final report to FSIS. RTI had 
estimated the present value cost to be $159.0 million discounted at 7 
percent under Option 1. RTI had also estimated the present value cost 
to be $396.7 million discounted at 7 percent under Option 2. The FSIS 
estimates are higher than the RTI estimates because FSIS believes that 
scale-printers will have to be replaced periodically since they have a 
limited useful life. This equipment will also have to be maintained on 
a periodic basis. In addition, the costs are higher because the costs 
were updated to reflect 2005 costs instead of 2003 costs. Also, the 
U.S. Census 2002 data was used that indicated that there are more 
stores selling food products.

Impacts of Exemptions and Existing Compliance on Costs

    FSIS did not reduce the compliance costs of the supplemental 
proposed rule to take into account the level of voluntary compliance 
with the nutrition labeling requirements for ground or chopped products 
that currently exists. Consequently, the estimated compliance costs for 
providing nutrition labeling of ground or chopped products are 
overstated. However, Appendix C, Tables 1, 2, 3, 4, and 5 show the 
estimated costs which take into account a 68 percent compliance rate 
(NCBA, 2004) of voluntary nutrition labeling of ground or chopped 
products that is currently assumed to exist.
    FSIS estimated the costs to all retailers of obtaining and 
displaying POP information for major cuts. FSIS did not take into 
account the existing level of compliance with the voluntary guidelines 
for nutrition labeling of major cuts. Consequently, the estimated 
compliance costs for providing POP nutrition information are also 
overstated. The impacts of a 54.8 percent level of voluntary compliance 
(USDA, 1999) of stores that provide nutrition labeling for major cuts 
are, however, shown in Appendix C, Tables 1, 2, 3, 4, and 5.
    Appendix D, Table 1 provides a summary of the present value costs 
of the rule after taking into account the levels of voluntary 
compliance that are currently assumed to exist. The average present 
value costs of the rule decline to $115.45 million and $156.72 million 
when using a 7 percent and 3 percent discount rate, respectively.\34\
---------------------------------------------------------------------------

    \34\ The FSIS analysis which takes into account the uncertainty 
associated with various cost factors shows that the values at the 
5th and 95th percentiles for this average present value using a 7 
percent discount rate and 20 year time horizon are $94.72 and 
$155.97 million, respectively. The values at the 5th and 95th 
percentiles of the present value cost distribution using a 3 percent 
discount rate are $127.63 and $213.60 million, respectively. See 
Appendix D, Table 1.
---------------------------------------------------------------------------

Impact on Estimated Costs

    The estimates of the total undiscounted compliance costs of the 
final requirements for ground or chopped product and POP requirements 
for major cuts are $583.81 million under Option 1. The average present 
value cost is $348.06 million at 7 percent, with all but $31.07 million 
attributed to the labeling costs for ground or chopped product. The 
average annualized cost of the supplemental proposed rule for ground or 
chopped product, using the same 7 percent discount rate, is $32.85 
million. This cost is not significant relative to the volume of output 
of ground or chopped products sold at retail. For example, as noted 
earlier, the annual volume of these products sold at retail stores is 
estimated at 6.2 billion pounds. Therefore the annualized cost of the 
supplemental proposed rule per pound of ground or chopped product is 
$0.0053 ($32.85 million/6.2 billion pounds). Viewed another way, it was 
estimated earlier that the average weight of a retail package was 2.735 
pounds. Therefore the annualized average cost of the supplemental 
proposed rule on a per package basis is $0.014 ($0.0053 per pound x 
2.735 pounds per package). This increase compares to a price for ground 
beef that can easily exceed $2.00 per pound or over $5.00 for an 
average-size package.
    Should the rule become final, FSIS believes that the compliance 
costs of the rule largely will be passed on to consumers in the form of 
higher product prices because the demand for meat and poultry products 
is inelastic. Huang (1993) analyzed a group of meats and other animal 
proteins consisting of products including beef and veal, pork, other 
meats, chicken, turkey, fresh and frozen fish, canned and cured fish, 
eggs, and cheese. He concluded that the price elasticity of demand for 
this group of products was (-0.3611), i.e., a one percent increase in 
price for one of these products would reduce demand by only 0.3611 
percent.
    Review of about a dozen recent studies annotated by William Hahn 
(1996) of the Economic Research Service reveals that estimates of price 
elasticity of demand for most beef products (ground beef, steak, chuck 
roast, etc.) is less than one. Consequently, consumers are unlikely to 
reduce their demand for beef, ground meat products, etc., significantly 
when beef prices increase a few pennies per pound. Some consumers may 
demand labeled products, even at a higher cost per pound, given the 
value of the information from a diet/health perspective.
2. Supplemental Proposed Rule Benefit Analysis

Research Findings

    FSIS conducted an extensive search of research on the impacts of 
nutrition labeling and consulted with the Economics Research Service, 
USDA on the estimation of benefits. FSIS has found that there are a 
limited number of nationally representative studies on the effect of 
nutrition label and POP nutrition information use on dietary intakes. 
In these studies, the authors frequently examine consumer behavior 
before and after a significant change in the availability of nutrition 
labeling information (e.g., Nutrition Labeling and Education Act (NLEA) 
implementation and relaxation on the prohibition of health claims). The 
general conclusion of the available research is that there is a 
positive relationship between the availability of nutrition information 
and improvements in diet quality.

[[Page 67776]]

    Research by Kim, et al. used USDA's Continuing Survey of Food 
Intake by Individuals, 1994-96 (CSFII) and the associated Diet Health 
Knowledge Survey (DHKS) to evaluate the impact of nutrition labels 
required by the NLEA on consumer label use and intake of selected 
nutrients. They used an econometric model to evaluate the effects of 
nutrition label usage by comparing the nutrient intake of label users 
with the expected intake of the label user in the absence of labels. 
For those who use nutrition facts information, the intake of calories 
from total fat, saturated fat, cholesterol, and sodium decreases by 6.9 
percent, 2.1 percent, 67.6 mg, and 29.58 mg respectively.
    However, measuring the effectiveness of nutrition labels on dietary 
intake is complicated by the relationship between label reading and 
other factors that also affect diet. For example, consumers with high 
levels of knowledge and concern about nutrition are likely to eat a 
healthier diet than consumers who are less concerned about nutrition; 
they are also more likely to read labels and use labels to guide their 
diet. A recent study Variyam (2008) uses the same dataset as Kim et al. 
(2000) and finds that the labels increase only fiber and iron intakes 
of label users compared with label nonusers. The author notes that in 
comparison, a model that does not account for self-selection implies 
significant label effects for all but two of the 13 nutrients that are 
listed on the NFP. Below we provide some information from other studies 
that show an association between nutrition label and improved diet. 
However, we note that these studies did not account for the potential 
self-selection problem and may overstate the effectiveness of nutrition 
labeling in improving diet. In addition, none of these studies directly 
assessed the consumer responses to labeling on raw meat products.
    Neuhouser, et al. 1999, analyzed data from a survey of 1,450 adult 
residents in Washington State. The survey assessed nutrition label use, 
fat-related diet habits, fruit and vegetable consumption, diet-related 
psychological factors, health behavior and demographic characteristics. 
They concluded that nutrition label use was significantly associated 
with lower fat intake and, after controlling for all demographic, 
psychosocial, and behavioral variables, nutrition label use explained 6 
percent of the variance in fat intake, with a probability of 99.9 
percent.
    Teisl and Levy in 1997 conducted a 3-year study on the direct 
effects of nutrition shelf label information on consumer purchasing 
behavior. Shelf labels containing nutrition information were found to 
have small but significant effects on consumer dietary patterns. The 
study also found that providing nutrition information may allow 
consumers to more easily switch consumption away from ``unhealthy'' 
products in food categories where differences in other quality 
characteristics, such as taste, are relatively small toward consumption 
of products in food categories where the difference in taste between 
the more and less fatty products may be relatively large. The type and 
format for the nutrition information used in the study, brand specific 
nutrition information provided on the shelf in conjunction with the 
products' unit and item price information, may help to explain the 
results. This research shows that the main effect of the nutrition 
shelf labeling program occurred relatively quickly. The authors 
attribute this response, in part, to ancillary activities efforts, such 
as measures to enhance consumer health education, occurring as part of 
the initial nutrition labeling program being evaluated.
    Related research conducted by Teisl, Bockstael, and Levy in 2001 
found that the provision of nutrition information led consumers to 
change purchase behavior, but may not necessarily lead to their buying 
more ``healthy'' foods. They conclude that consumer responses to 
nutrition labeling may take two forms: a ``health'' effect and a 
``substitution'' effect. The first arises when consumers reduce net 
intake of ``unhealthy'' nutrients and increase purchases of ``healthy'' 
foods. The second effect occurs when consumers increase their level of 
satisfaction by substitution across food categories using nutrition 
information to maintain an overall level of health risk while 
increasing satisfaction from other food attributes, such as flavor. 
They also note that economic analyses that identify the benefits of 
health risk reduction as the costs of foregone illness may understate 
the overall benefits of nutrition labeling. They assert that consumer 
welfare is improved (and, therefore, there is a willingness to pay for 
nutrition information) even if health risks are not reduced because 
consumers make food choices more in line with non-health preferences 
about food attributes.
    Research by Moorman in 1996 examined whether the NLEA increased 
consumers' understanding of nutrition information at the point of sale, 
whether understanding of nutrition information has been promoted 
regardless of individual consumer preferences, and whether 
understanding of nutrition information at the point of sale has 
increased for healthful and non-healthful products. Moorman found 
statistically significant increases in consumers' nutrition information 
acquisition after the NLEA took effect. Motivated consumers acquired 
more information after the law went into effect than before and even 
the less motivated more accurately recalled fat content after the law 
went into effect. The research also found that consumers retained more 
information about higher fat products (defined as those having more 
than 5.5 grams of fat per serving) than they did about lower fat 
products. The author made the assessment that standardized and adequate 
nutrition information, as required by the NLEA, raised awareness of the 
nutritional quality of food products, thereby increasing the focus on 
higher fat products. Consequently, the NLEA may have spurred product 
competition, even among high fat products (Aldrich).
    Ippolito and Mathios (1995) studied the effect of an FDA relaxation 
on a prohibition against health claims. Following the decision to allow 
health claims on labels in 1985, nutrition advertising, a form of 
nutrition education when such advertising contains factual information, 
increased significantly. While they found that fat consumption per 
capita fell prior to the FDA decision to allow health claims on labels, 
it fell at a faster rate after the prohibition was eased. Their 
research also found that prior to when health claims were allowed, fat 
consumption declined among categories of food whose fat or cholesterol 
content was widely communicated: Meat, eggs, and fats and oils. 
However, increases in fat content from other foods largely offset these 
consumption declines. After relaxing the prohibition, people consumed 
less fat across more categories, with less of an increase in 
consumption in other categories. The results suggest that more specific 
information about nutritional content of foods assists consumers in 
making healthier food choices within food categories.
    In related research, Mathios and Ippolito (1998) analyzed the 
effect of nutrition information in advertising and labels on 
consumption of food cereals with fiber content. They divided their 
study into two periods: The period 1974-1984, when the FDA permitted 
printing of fiber content on cereal boxes but did not permit printing 
of any health claims; and the period 1985-1987, when health claims were 
permitted. They concluded that, in concert with an increase in fiber 
intake of cereals in their diets, the average

[[Page 67777]]

intakes of fat, saturated fat, and dietary cholesterol for both men and 
women declined during both the periods, albeit the decline was greater 
during the second period relative to the first. They concluded that the 
increase in fiber and the decrease in fat and cholesterol consumption 
were associated with the consumption of labeled cereals.
    Although the self-selection issue noted above complicates the 
precise measurement of the incremental impact of labeling, the results 
of the studies identified above suggest there may be a positive link 
between nutrition label use and dietary change beyond that resulting 
from healthier eating habits of those who regularly rely on nutrition 
labels.

Consumer Response to Nutrition Labeling

    FSIS consulted with ERS to develop the empirical analysis of the 
benefits of nutrition labeling for the proposed rule (Crutchfield, et 
al., 2001b). The estimated benefits take the form of reductions in the 
incidence of coronary heart disease and three types of cancer that may 
accrue as consumers improve their diet quality through increased use of 
nutrition information generated by the regulation.
    As will be shown, survey data on nutrient intake and label use were 
used to correlate intake of fat, saturated fat, and cholesterol with 
usage of existing nutrition information. The Agency estimated the value 
of the potential changes from intake of fat, saturated fat, and 
cholesterol that could occur as consumers respond to the newly 
available nutrition information. A model developed by Zarkin et al. 
(1991, 1993) links changes in the serum cholesterol rate to changes in 
the percentage of total calories from polyunsaturated fat, saturated 
fat, and dietary cholesterol. Changes in serum cholesterol are then 
used to estimate the health outcomes, which are reductions in the 
number of cases and mortality from three cancers (breast, colorectal, 
and prostate) and coronary heart disease. Finally, the economic value 
to the public health changes were estimated by assuming an implied 
value of life associated with reductions in premature mortality.
    Assumptions were made concerning consumer behavior to determine how 
much of a behavioral response and change in dietary intake may result 
from providing more nutrition information on meat and poultry products. 
For example, when nutrition labels and other sources of nutrition 
information are provided for raw meat and poultry products, FSIS made 
the assumption that nutrition information usage rates will rise to 
match nutrition label usage rates for food products as a whole (Table 
15).

                                Table 15--Consumer Usage of Nutrition Information
----------------------------------------------------------------------------------------------------------------
                                         Often             Sometimes         Rarely/never         Do not buy
                                 -------------------------------------------------------------------------------
                                     Men      Women      Men      Women      Men      Women      Men      Women
----------------------------------------------------------------------------------------------------------------
Use nutrition facts panel.......      26.7      41.7      25.6      32.6      47.7      25.6       n/a       n/a
Look for nutrition information        16.9      22.1      18.2      18.0      62.7      57.9       2.2       2.0
 on raw meat....................
----------------------------------------------------------------------------------------------------------------
Note: Percent of respondents, based on 3 year weighted averages, 1994-1996. Crutchfield, et al., 2001b.


   Table 15b--Consumer Usage of Nutrition Information After Mandatory Labeling for Raw Meat, Poultry, and Fish
----------------------------------------------------------------------------------------------------------------
                                         Often             Sometimes         Rarely/never         Do not buy
                                 -------------------------------------------------------------------------------
                                     Men      Women      Men      Women      Men      Women      Men     Women \
----------------------------------------------------------------------------------------------------------------
Use nutrition facts panel after       26.1      40.9      25.0      31.9      46.7      25.1       2.2       2.0
 mandatory labeling.............
----------------------------------------------------------------------------------------------------------------

    Using the proportions of men (2.2 percent) and women (2.0 percent) 
who report not buying raw meat, poultry or fish, the new assumed label 
use distribution after mandatory labeling is shown in Table 15b. The 
percentage of men who would use the label often to buy raw meat, 
poultry, or fish would be 26.1, which is obtained as 0.267*97.8, where 
.267 is the proportion of men who use label often in Table 15 and 97.8 
is the percentage of men who buy raw meat, poultry, or fish.
    Currently, some nutrition information is provided for some single-
ingredient, raw meat and poultry products, but the information is not 
currently required. Mandatory nutrition labeling rules for the major 
cuts and ground or chopped products would mean that the nutrition 
information provided for these products would be comparable to that 
provided for other food products. The analysis could reasonably assume 
that nutrition information usage rates for raw meat and poultry 
products would then become the same as the nutrition label usage rates 
for all foods taken together. For example, before mandatory nutrition 
information labeling, the data show that about 17 percent of men look 
for nutrition information on meat ``Often'' (Row 2 of Table 15). In 
this analysis, then, it is assumed that after mandatory nutrition 
information labeling, 26.7 percent of men would use the nutrition fact 
panel or POP materials for meat products, which is the nutrition label 
usage rate for all foods (Row 1 of Table 15). Similarly, the Agency 
assumed that the percentage of women using nutrition information on 
meat products ``Sometimes'' would rise from 18 percent to 32.6 percent.
    To assess the impacts on diet quality, the Agency assumed in the 
preliminary regulatory impact analysis that as nutrition information 
usage rates rise for consumers eating meat and poultry, dietary 
patterns will change in a manner consistent with current data. However, 
Crutchfield et al. (2001b) note that this is an ``admittedly strong'' 
assumption. As shown above, there is strong statistical evidence that 
people who use nutrition information to guide their food consumption 
decisions have healthier diets. While other factors may be at work, the 
Agency made the assumption that the provision of additional nutrition 
information and making that information available to more consumers 
will lead to behavioral shifts and improved diet quality. Thus, the 
assumption is made that the effect of providing new nutrition 
information for meat and poultry products would make some (not all) 
consumers who currently do not look for nutrition information on

[[Page 67778]]

meat and poultry products more aware of the dietary implications of 
their food choices. As these consumers see the new nutrition labels on 
packages of meat and poultry products or new POP information, they may 
begin to use the nutrition label or POP information or to use it more 
frequently. Some of these consumers would then choose to consume the 
same mix of products as people who are currently aware of the 
nutritional quality of meat and poultry products because they look for 
such nutrition information as currently is available. For example, men 
who currently do not look for nutrition information on meat in the 
absence of mandatory nutrition information labeling who would begin 
using this information ``Sometimes'' after nutrition labeling is in 
place would see a decrease in fat intake from 96 grams to 92.5 grams 
(Row 1 of Table 16). Women who previously had been using labels 
``Sometimes'' who now use them ``Often'' would see a decrease in 
saturated fat intake from 20.60 grams to 17.39 grams (Row 5 of Table 
16). Similar changes in fat and saturated intakes as a percentage of 
total calories can be assessed from Table 17.
    The Crutchfield et al. (2001b) study simply assumed consistency of 
behavior toward label use and changes in diet quality. Whether the 
assumption leads to overstating or understating health benefits is not 
known.
    Consumers will not use labels to make very significant dietary 
changes. If diet quality associations found with all other labeled 
foods do not hold up for nutrition labels on meat, then health benefits 
in the supplemental PRIA are overestimated. Of course, health benefits 
are only one way in which benefits might be realized. Consumers might 
choose to use nutritional information to enhance enjoyment of food, and 
not to raise their health status. Further, they may be better off than 
if they had raised their health status, since rational consumers will 
use information to their best advantage. If we observe rational, well-
informed consumers selecting a more enjoyable diet, for these consumers 
a more enjoyable diet was worth more than better health. Thus, when we 
restrict benefits estimates to allow only for information to be used to 
advance health status, we are simultaneously restricting estimated 
benefits to a lower level of value to consumers. The FSIS analysis 
imposes that restriction and the resulting benefits estimate must 
therefore be interpreted as an underestimate of overall benefits.

 Table 16--Dietary Intake of Fat, Saturated Fat, and Cholesterol by Usage of Nutrition Information on Raw Meat,
                                                Poultry, or Fish
----------------------------------------------------------------------------------------------------------------
                                       Often         Sometimes     Rarely/ never    Do not buy        Average
----------------------------------------------------------------------------------------------------------------
Men:
    Total fat...................           81.64           92.49           96.09           74.48           92.51
    Saturated fat...............           27.20           31.09           32.44           24.02           31.12
    Cholesterol.................          311.81          321.49          355.14          236.83          339.07
Women:
    Total fat...................           53.90           61.70           62.18           57.23           60.16
    Saturated fat...............           17.39           20.60           21.41           17.27           19.71
    Cholesterol.................          194.32          219.27          216.55          135.89          210.53
----------------------------------------------------------------------------------------------------------------
Note: Fat intake in grams, cholesterol in milligrams. Crutchfield, et al., 2001b.


    Table 17--Percentages of Calories From Fat, Saturated Fat, by Usage of Nutrition Information on Raw Meat,
                                                Poultry, or Fish
----------------------------------------------------------------------------------------------------------------
                                       Often         Sometimes     Rarely/ never    Do not buy        Average
----------------------------------------------------------------------------------------------------------------
Men:
    Total fat...................           31.67           34.03           33.88           26.69           33.44
    Saturated fat...............           10.53           11.36           11.37            9.52           11.19
    Cholesterol.................          311.81          321.49          355.14          236.83          339.07
Women:
    Total fat...................           31.62           32.94           32.87           26.79           32.49
    Saturated fat...............           10.15           10.82           10.82            9.19           10.64
    Cholesterol.................          194.32          219.27          216.55          135.89          210.53
----------------------------------------------------------------------------------------------------------------
Note: Fat and saturated fat values are percentages of total calories; cholesterol in milligrams. Crutchfield, et
  al., 2001b.

    Under these assumptions, then, the Economic Research Service of the 
U.S. Department of Agriculture analyzed how requirements for mandatory 
nutrition information labeling of raw meat and poultry products could 
possibly affect diet quality (Crutchfield, et al., 2001b). Table 18 
shows the estimated intake of fat, saturated fat, and cholesterol, by 
gender, after adjusting for the assumed change in patterns of label 
use. To reach the values shown in Table 18, each cell in Table 16 (the 
dietary intake of fat, saturated fat, and cholesterol) was multiplied 
by the associated percentage of label use (nutrition facts panel use) 
from Table 15. This increased the number of people in the ``often'' and 
``sometimes'' cells, and decreased the number of people in the 
``rarely/never'' cells, so that the distribution of label usage on meat 
and poultry products would reflect the distribution of label usage on 
all products.

[[Page 67779]]



                             Table 18--Change in Intake Due to Increased Label Usage
----------------------------------------------------------------------------------------------------------------
                                                           Intake prior to      Intake after
                                                              mandatory        adjusting for
                                                          labeling for meat   increased label   Decreased intake
                                                              & poultry            usage
----------------------------------------------------------------------------------------------------------------
Men:
    Total fat...........................................              92.51              91.31              1.3%
    Saturated fat.......................................              31.12              30.69             1.37%
    Cholesterol.........................................             339.1              335.0               4.12
Women:
    Total fat...........................................              60.16              58.57             2.65%
    Saturated fat.......................................              19.71              19.45             1.32%
    Cholesterol.........................................             210.5              208.2               2.37
----------------------------------------------------------------------------------------------------------------
Note: Fat intake in grams, cholesterol in milligrams. Fat and saturated fat intake changes are in percentage
  terms, cholesterol intake changes are absolute changes in milligrams. (Crutchfield, et al., 2001b.)

    Applying these new label use percentages of men and women to their 
intakes in Tables 18 and 19, the new estimated changes in intakes, 
after accounting for non-buyers, are reported in Tables 18b and 19b.

  Table 18b--Change in Intake Due to Increased Label Usage, Assuming That the Percentage of Non-Buyers Remains
                                                    Unchanged
----------------------------------------------------------------------------------------------------------------
                                                           Intake prior to      Intake after
                                                              mandatory        adjusting for
                                                          labeling for meat   increased label   Decreased intake
                                                              & poultry            usage
----------------------------------------------------------------------------------------------------------------
Men:
    Total fat...........................................              92.51              90.94              1.7%
    Saturated fat.......................................              31.12              30.55             1.83%
    Cholesterol.........................................             339.1              335.0                4.1
Women:
    Total fat...........................................              60.16              58.54             2.69%
    Saturated fat.......................................              19.71              19.40             1.57%
    Cholesterol.........................................             210.5              210.52             -0.02
----------------------------------------------------------------------------------------------------------------

    Note that the second column in Table 18b is computed as the 
weighted average of intakes from Table 16, using the percentages in 
Table 15 as weights. For example, for the total fat intake of men, 
81.64 *.261 + 92.49 *.25 + 96.09 *.467 + 74.48 *.022 = 90.94.
    Aggregating across categories, a new weighted average intake is 
obtained, which could be seen after the imposition of mandatory 
labeling requirements. Table 19 shows the percentage of calories from 
fat and cholesterol intake that were derived in a similar manner using 
intakes from Table 17.\35\
---------------------------------------------------------------------------

    \35\ The calculations in Tables 18 and 19 ignore the fact that 
2.2% of men and 2% of women report not buying meat, poultry or fish 
(Table 15). If these proportions are assumed to remain unchanged 
after mandatory labeling, then the decrease in intakes estimated in 
Tables 18 and 19 would be slightly different.

     Table 19--Change in Percentage of Calories From Fat and Cholesterol Intake Due to Increased Label Usage
----------------------------------------------------------------------------------------------------------------
                                                           Intake prior to      Intake after
                                                              mandatory        adjusting for       Decrease in
                                                          labeling for meat   increased label        intake
                                                              & poultry            usage
----------------------------------------------------------------------------------------------------------------
Men:
    Total fat...........................................              33.44              33.33              0.11
    Saturated fat.......................................              11.19              11.14              0.04
    Cholesterol.........................................             339.1              335.0               4.12
Women:
    Total fat...........................................              32.49              32.37              0.11
    Saturated fat.......................................              10.64              10.54              0.10
    Cholesterol.........................................             210.5              208.2               2.37
----------------------------------------------------------------------------------------------------------------

    Note in Table 19 that fat intake is in grams, and cholesterol is in 
milligrams. Further, fat and saturated fat intake changes are in 
percentage terms, and cholesterol intake changes are absolute changes 
in milligrams. (Crutchfield, et al., 2001b).

[[Page 67780]]



    Table 19b--Change in Percentage of Calories From Fat and Cholesterol Intake Due to Increased Label Usage,
                          Assuming That the Percentage of Non-Buyers Remains Unchanged
----------------------------------------------------------------------------------------------------------------
                                                          Intake prior to      Intake after
                                                             mandatory        adjusting for       Decrease in
                                                         labeling for meat   increased label         intake
                                                             & poultry            usage
----------------------------------------------------------------------------------------------------------------
Men:
    Total fat..........................................              33.44              33.19               0.25
    Saturated fat......................................              11.19              11.11               0.08
    Cholesterol........................................             339.1              335.0                4.1
Women:
    Total fat..........................................              32.49              32.23               0.26
    Saturated fat......................................              10.64              10.50               0.14
    Cholesterol........................................             210.5              210.52              -0.02
----------------------------------------------------------------------------------------------------------------
Note: Fat and saturated fat intake changes are in percentage terms, cholesterol intake changes are absolute
  changes in milligrams.

Applying these new label use percentages of men and women to their 
intakes in Tables 18 and 19, the new estimated change in intakes, after 
accounting for non-buyers, are reported in Tables 18b and 19b.
    Comparing Table 18b with Table 18 and Table 19b with Table 19, it 
can be seen that when the proportions of non-buyers are assumed to 
remain unchanged, the estimated decrease in intakes of fat and 
saturated fat are higher, decrease in cholesterol is nearly the same 
for men, whereas for women cholesterol intake increases slightly. This 
is because the fat and saturated fat intakes of buyers are higher than 
non-buyers, whereas the cholesterol intakes of women buyers are in 
general lower than women non-buyers. Based on these magnitudes, if the 
new numbers are used in the calculations, the benefits of labeling are 
likely to be even higher.

Evaluation of Health Effects

    Based on epidemiological research, the estimated reductions in 
calories from fat and cholesterol intake (Table 19) were used to 
estimate the decrease in the incidence of major diseases associated 
with consumption of fat and cholesterol. The diseases considered in 
this analysis include three types of cancer and coronary heart disease. 
Epidemiological studies of the relationships between dietary fat and 
cholesterol intake and incidence of cancer and coronary heart disease 
indicate that saturated and polyunsaturated fat and cholesterol are 
converted into serum cholesterol. Serum cholesterol has an impact on 
the incidence rates of these diseases. Zarkin, et al. (1993) developed 
a model which estimated the relationships between dietary intake of fat 
and cholesterol to convert fat contents into the change in fat and 
serum cholesterol:

(1) SC (Mg/) = 2.16S-1.65P + 0.097C

Where SC is serum cholesterol, S is the change in percentage of 
total calories represented by saturated fat, P is the change in 
percentage of total calories represented by polyunsaturated fat, and 
C is the change in dietary cholesterol measured in mg/1,000 
calories.

    Mancino and Kuchler (2009) show that the threat of severe adverse 
health consequences can induce significant improvements in diet quality 
(improvements from the perspective of the public health community, not 
from consumers' perspectives). Cigarette smoking and dietary intake of 
cholesterol, total fat, and saturated fat are lower for those whose 
physicians told them they have high cholesterol, compared to those with 
undiagnosed high cholesterol. But, some also choose to compromise diet 
quality. Mancino and Kuchler found that dietary intake of cholesterol 
is unaffected by the decision to take cholesterol-lowering medication. 
However, for those taking cholesterol-lowering medication, diets are 
higher in total fats and in saturated fats than are diets of those with 
unmedicated high cholesterol. The waist circumference of those on 
medication is also larger, although some of the increase may be 
associated with reduced cigarette consumption. The increased dietary 
intake of fat and saturated fat, along with increased waist size are 
telling evidence of offsetting behavior, as medication lowers the 
health price of unhealthy choices.
    Reductions in serum cholesterol are then converted to reduction in 
risk of coronary heart disease and the three types of cancers. The 
estimated values of percentage changes in saturated fat and cholesterol 
intake from the last column of Table 18 were substituted into the model 
developed by Zarkin, et al. Since separate data for polyunsaturated (P) 
fat were not available, it was assumed that P would be one-third of 
total fats, as was also assumed by Zarkin, et al. The estimates of 
serum cholesterol for male and female consumers and reductions in 
mortality are shown in Table 20.

                        Table 20--Reduction in Serum Cholesterol and Change in Mortality
----------------------------------------------------------------------------------------------------------------
                                     Change in       Change in       Change in      Change  in
                                   calories from   calories from    cholesterol        serum       Reduction in
                                     total fat     saturated fat      intake        cholesterol      mortality
----------------------------------------------------------------------------------------------------------------
                                             % change
                                                                               %
----------------------------------------------------------------------------------------------------------------
Men.............................            0.11            0.04            4.12           0.399          0.0240
Women...........................            0.11            0.10            2.37           0.231          0.0139
----------------------------------------------------------------------------------------------------------------

    The calculated values of SC presented above were used to estimate 
incidence of breast, prostate, colon/rectal cancer, and coronary heart 
disease. Zarkin, et al. (1993) concluded that an increase in serum 
cholesterol by 20 mg/1,000 calories was associated with a 1.2-percent 
increase in the incidence of each of these diseases. This rate was used 
to convert reductions in total fat, saturated fat, and cholesterol in 
Table 18 into SC. It is estimated that the

[[Page 67781]]

reduction in mortality associated with changing dietary pattern 
resulting from mandatory nutrition information labeling are 0.024 
percent for men, and about 0.014 percent for women. However, 
Crutchfield et al. (2001b) note that: ``the link between fat intake, 
serum cholesterol, and cancer risk is less clear than for coronary 
heart disease.''
    The PRIA did not estimate changes in total meat or poultry 
consumption that may result from the rule, because of the assumption 
that consumers would choose different types of meat and poultry to 
reduce fat, saturated fat, and cholesterol. For example, consumers may 
consume more poultry and less red meat, or they may consume more white 
poultry meat and less dark poultry meat in response to the newly 
available nutrition information. Also, in response to the nutrition 
information, consumers may prefer to purchase meat that has been 
trimmed more closely to remove fat.
    The assumption that total consumption of meat or poultry would not 
change in response to the newly available nutrition information is 
consistent with the approach taken by other studies that examine 
consumers' response to health claims. One such study is noted in the 
PRIA (66 FR 4989, January 18, 2001). There is no research available 
that establishes a relationship among nutrition labeling information, 
health effects, and total meat or poultry consumption.
    Table 21 presents data on the annual number of deaths associated 
with the three types of cancer and coronary heart disease for men and 
women in the United States in 1998. Data for the number of deaths came 
from the National Center for Health Statistics (coronary heart disease) 
and the American Cancer Society (cancer). Data on colorectal cancer 
were not available by gender; FSIS assumed the estimated 56,000 cases 
were distributed equally between men and women.

                  Table 21--Reduction in Mortality, Number of Deaths, and Estimated Lives Saved
----------------------------------------------------------------------------------------------------------------
                                               Reduction in      Number of deaths       Number of lives saved
                                               mortality (%)   -------------------------------------------------
                                           --------------------     3         4         5         6         7
                                                1         2    -------------------------------------------------
                                           --------------------
                                               Men      Women      Men      Women      Men      Women     Total
----------------------------------------------------------------------------------------------------------------
Breast Cancer.............................  ........    0.0139  ........    41,200         0         6         6
Prostate Cancer...........................    0.0240  ........    31,900  ........         8         0         8
Colorectal Cancer.........................    0.0240    0.0139    28,000    28,000         7         4        11
Coronary Heart Disease....................    0.0240    0.0139   231,332   228,769        55        32        87
----------------------------------------------------------------------------------------------------------------

    The fact that FSIS's analysis did not estimate changes in total 
meat or poultry consumption may be a limitation of the results, but it 
is not a major concern, because FSIS's analysis assumes that when 
consumers read the new nutrition information, they will use the 
information and choose to consume the same mix of products as consumers 
that are aware of the nutritional quality of meat and poultry. The 
calculations in the PRIA are based on a distribution of nutrition label 
usage on meat and poultry that reflects the distribution of nutrition 
label usage for food products as a whole. FSIS did not receive comments 
on the fact that the PRIA did not estimate changes in total meat or 
poultry consumption. The supplemental PRIA incorporates the PRIA's 
estimates of potential changes from intake of fat, saturated fat, and 
cholesterol that could occur as consumers respond to the newly 
available nutrition information. Finally, the Agency attached an 
economic value to the public health changes by estimating the implied 
value of life associated with reductions in premature mortality.
    Using recent estimates, deaths from breast cancer are estimated at 
39,800, prostate cancer at 29,800 and colorectal cancer at 57,100 in 
2003. Deaths from coronary heart disease are estimated at 515,204 for 
2000. As a result, the estimated lives saved due to dietary changes 
from nutrition labeling are revised from those shown in Table 21. The 
revised estimates are as follows: annual deaths from breast cancer are 
reduced by an estimated 5.5, deaths from prostate cancer by 7.2, deaths 
from colorectal cancer by 10.8, and deaths from coronary heart disease 
by 97.8.\36\ The total annual lives saved due to dietary changes from 
nutrition labeling for all diseases is 121.7.
---------------------------------------------------------------------------

    \36\ These estimates are based upon the rates that were 
calculated for the PRIA.
---------------------------------------------------------------------------

Effect of Nutrition Labeling on Consumer Attitudes About Beef

    As reported by the National Cattlemen's Beef Association (2009) the 
U.S. meat industry trade organizations, namely the National Cattlemen's 
Beef Association (NCBA), the Food Marketing Institute (FMI) and the 
National Pork Board (NPB), conducted research to examine the benefits 
and challenges of implementing on-pack nutrition labeling for meat 
products. This research included qualitative and quanitative studies 
(via focus groups) to explore consumer needs, behavior and preference 
for nutrition labeling on fresh meat products.

Focus Group Key Learnings

    Findings from the focus groups indicated that consumers desire more 
nutrition information, find both on-pack and POP materials useful but 
prefer on-pack, and still want to see the product they are purchasing. 
Additional learnings indicate:

    --Consumers want to see nutrition information for fresh meat and 
they want more information on specific nutritional content.
     Information on fat content, calories per serving, 
cholesterol and proteins are of greatest importance.
     Micronutrients (vitamins and minerals) are also of 
interest.
    --Consumers are generally unaware of the micronutrients found in 
fresh meat products and they want to see all of the nutrient 
information a food provides (but aren't interested in what a food 
doesn't have such as 0 percent for Vitamin C).
    --Consumers currently use on-pack labels most often to learn about 
the nutritional content of meat products because there is higher 
awareness for labels than for posters or take-home brochures.

Beef Checkoff-Funded Research

    Given the beef industry's philosophy that nutrition information 
should be widely available to help people make informed purchase 
decisions, yet understanding the challenges many retailers face in 
providing the information in a simple and easy-to-understand format, 
NCBA embarked on a number of additional nutrition labeling research 
projects. The goal of

[[Page 67782]]

this subsequent research was to further understand appropriate methods 
and vehicles for retailers to share the information with consumers.

Effect of Exemptions on Benefits Estimates

    Under this rule should it become final, all very small 
establishments would be exempt from the requirement for nutrition 
labeling of ground or chopped products because they have 500 or fewer 
employees, are owned by companies with 500 or fewer employees, and 
likely produce 100,000 pounds or less annually of each ground product. 
Finally, retail firms that have 500 or fewer employees would be exempt 
from nutrition labeling requirements for ground or chopped products, 
provided they produce 100,000 or less annually of each ground product. 
This exemption for small businesses will reduce the benefits associated 
with the rule in proportion to the share of ground or chopped products 
affected by the rule that are sold at these establishments.
    FSIS estimates that the number of packages of ground or chopped 
product sold or produced through exempt facilities is approximately 469 
million packages (2.267 billion packages times 20.7 percent, the 
estimated share of packages sold at ``exempt'' establishments as shown 
using U.S. Census 2002 data in the Cost Analysis). At an average of 
2.735 pounds per package, the average amount of ground or chopped 
product sold at these establishments is about 1.283 billion pounds (469 
million packages x 2.735 pounds per package). FSIS estimates that of 
the total of 6.201 billion pounds of ground or chopped meat and poultry 
products consumed annually, 4.918 billion pounds will be affected by 
the labeling requirements of the rule.
    As discussed above, the rule would provide numerous exemptions from 
nutrition labeling requirements, in addition to the small business 
exemptions, for ground or chopped products sold through retail 
facilities. FSIS reduced costs and benefits to account for the small 
business exemption regarding the labeling of ground or chopped 
products. However, FSIS did not reduce the costs or benefits estimates 
to account for the other exemptions for ground or chopped product 
because the volume of ground or chopped product that would qualify for 
these other exemptions is very low.
    Should it become final, the supplemental proposed rule would not 
provide a small business exemption from the nutrition labeling 
requirements for the major cuts. The rule provides numerous other 
exemptions from nutrition labeling requirements for the major cuts. 
However, FSIS did not reduce the costs or benefits estimates to account 
for the exemptions for major cuts because the volume of major cuts that 
would qualify for these exemptions is very low.
    FSIS estimates that the total amount of major and nonmajor cuts of 
single-ingredient, raw meat and poultry products is 19.6 billion 
pounds.\37\ Of this amount, FSIS estimates that 16.745 billion pounds, 
or 85 percent are major cuts, would be subject to the label 
requirements of the rule as indicated above. The estimate of the total 
amount of single-ingredient, raw meat and poultry products that are not 
ground or chopped is based on recent research conducted by the Economic 
Research Service on beef and pork consumption and on information 
provided by the National Chicken Council and National Turkey Federation 
at their Web sites. The derivation of this estimate is shown in 
Appendix A, Tables 1-4.
---------------------------------------------------------------------------

    \37\ This amount includes nonmajor cuts of single-ingredient, 
raw meat and poultry that are not ground or chopped. The data 
available do not distinguish between major and nonmajor cuts.
---------------------------------------------------------------------------

    Based on these estimates, 16.745 billion pounds of major cuts are 
affected by the supplemental proposed rule. From above, 4.918 billion 
pounds of ground or chopped product are affected by the rule, for a 
total of or 21.663 billion pounds of meat and poultry products. This 
compares to a total of 63 billion pounds of red meat and poultry 
products consumed in the United States in 2003.\38\ The exemption for 
small businesses affects 1.283 billion pounds of ground or chopped 
product, or 5.92 percent of the total amount of meat and poultry 
products affected by the rule. Consequently, the total annual lives 
saved due to dietary changes from nutrition labeling for all diseases 
is reduced accordingly. For example, the maximum number of lives saved 
annually declines from 121.7 to 114.5 (121.7 x (1.0-0.0592)).
---------------------------------------------------------------------------

    \38\ Source: Per capita consumption estimates are found at U.S. 
Department of Agriculture, World Agricultural Supply and Demand 
Estimates and Supporting Materials. Published in Livestock, Dairy, 
and Poultry Outlook, http//www.ers.usda.gov/publications/ldp/. Total 
consumption is based on a total U.S. population of 288.4 million.
---------------------------------------------------------------------------

Estimating the Benefits of Preventing Premature Death

    The benefits of this supplemental proposed rule would be the lives 
saved due to the estimated reductions in mortality rates associated 
with coronary heart disease and selected cancers. The Agency believes 
that there are potential benefits associated with the reductions in 
non-fatal cases of coronary heart disease. However, identifying and 
quantifying the risk reduction of premature death in an economic 
context is difficult. Similarly, it is also complex applying risk 
reductions of non-fatal cases of diseases within an economic 
context.\39\ Given questions concerning data quality and unsettled 
methodological issues in estimating the benefits of a reduction in non-
fatal cases of coronary heart disease, FSIS is restricting its analysis 
of benefits to reductions in premature death.
---------------------------------------------------------------------------

    \39\ For an in-depth analysis of this issue, see Fred Kuchler 
and Elise Golan, 1999.
---------------------------------------------------------------------------

    If food were marketed by risk levels (e.g., probabilities of 
inducing cancer or heart disease), and consumers treated advertised 
risk levels as they do other objectively measurable product 
characteristics (e.g., weight or volume), there would be little 
difficulty in valuing diet-related food safety risk factors. Product 
prices could be statistically associated with risk levels, yielding the 
risk-dollar trade-off consumers make. That is, one could measure, based 
on consumer purchases, the dollar value consumers attach to particular 
types of risk reduction. However, there is no ``market'' for reducing 
diet-related fatal risks and these values can not be measured.
    There is no price that can be tabulated from commercial 
transactions that reflects the value of reducing diet-related fatal 
risks. Actions that individuals might take to reduce these risks do not 
leave a behavioral trail for analysts to follow. This informational 
void makes it difficult to evaluate programs that might reduce diet-
related risks. In particular, there is no obvious dollar value to 
assign to the major benefit of such programs, namely lives saved and 
reductions in cases of non-fatal diseases.
    Ultimately, FSIS wanted to monetize the benefits of diet-related 
fatal health risk reduction. The Agency's goal was to find a method of 
transferring market-based risk-dollar trade-off estimates to diet-
related fatal cancer risks.
    The most studied risk choices are those for on-the-job risks of 
accidental injury and death. Analysts have estimated the compensation 
required to induce workers to accept such risks. Many studies of labor 
market behavior have been carried out because the wide range of risk 
levels workers accept and the wide range of wages paid are amenable to 
statistical analysis. Available evidence suggests that workers' 
subjective assessments of risks they face are plausible (Viscusi, 
1992).

[[Page 67783]]

    FSIS is using a range for the value of life of $5.0 million to $6.5 
million with a mean of $5.5 million. The preliminary regulatory impact 
analysis of the rule used a single value of $5.0 million. The value of 
a statistical life is not the value an individual would pay to save his 
own life, but the aggregate value paid by many individuals to reduce a 
small risk of death each faces. To make this transfer, FSIS assumed 
that individuals make consistent risk choices, reducing health risks as 
much as their budgets allow. The Agency assumed individuals focus on 
the likelihood of health outcomes and the gravity of these 
outcomes.\40\
---------------------------------------------------------------------------

    \40\ FSIS revised the method employed in the preliminary 
regulatory impact analysis of the rule to estimate human health 
benefits based on guidance to all Federal agencies concerning the 
estimation of human health benefits. The revised method uses a 
single value for each premature death prevented, regardless of age. 
The revised method results in significantly higher human health 
benefits resulting from the nutrition labeling requirements of the 
rule.
---------------------------------------------------------------------------

    Viscusi (1992) has summarized the empirical work estimating the 
value of risk of premature death. Several studies had estimated the 
risk-dollar trade-off in the labor market by dividing the wage premium 
for high-risk jobs by the risk of a fatal job injury. Drawing on the 
compiled results of these studies, he stated: ``Although the estimates 
of the risk-dollar trade-off vary considerably depending on the 
population exposed to the risk, the nature of the risk, and similar 
factors, most of the reasonable estimates of the value of life are 
clustered in the $3 to $7 million range'' (Ibid., p. 73). Thus, 
compensating wages indicate that, on average, industrial workers value 
a statistical life at $5 million (December 1990 dollars), the midpoint 
of the range. The Economic Research Service, USDA has used a value of 
$5 million per life estimate (adjusted upwards for inflation to 2000 
dollars) to measure the benefits of preventing premature death from 
foodborne diseases caused by microbial pathogens such as E. coli 
O157:H7, Salmonella spp., and Listeria monocytogenes (Crutchfield, et 
al., 2001a). This estimate has been used by other government agencies 
to evaluate the benefits of regulations designed to reduce the risk of 
premature death. For example, the Food and Drug Administration (66 FR 
6137, January 19, 2001) and the Consumer Product Safety Commission 
(Miller, 1997) currently use Viscusi's mid-point value of $5 million 
for each life saved (Kuchler and Golan, 1999, p.25). Finally, the Food 
and Drug Administration (68 FR 41434, July 11, 2003, and 69 FR 56824, 
September 22, 2004) use both $5.0 million and $6.5 million as the value 
of a statistical life. FSIS believes that the value for a statistical 
life used in the analysis is consistent with current practices, OMB 
guidance, and research.
    It should be noted that the calculations used to estimate present 
value explicitly account for the time factor associated with delayed 
health impacts of dietary change. Decreases in intake of saturated fat, 
fat, and cholesterol will reduce the incidence of heart disease and 
cancer, but not immediately--the reductions in illness and death will 
begin to occur years into the future. To address the uncertainty 
associated with the reduced incidence of heart disease and cancer, FSIS 
identified three plausible scenarios that are intended to encompass the 
actual impact. The scenarios are shown in Table 22. The first scenario 
assumes that there would not be any reduction in mortality in the first 
time period covering the first two years after the effective date of 
the rule. During the second time period covering the third through the 
seventh years following the effective date, 25 percent of the potential 
reduction in human health risk is achieved--28.6 lives saved annually 
as a result of dietary changes. In period 4, covering the last eight 
years of the period of analysis, the full reduction in human health 
risk is achieved--114.5 lives saved annually as a result of dietary 
changes. In scenarios 2 and 3, the benefits of the rule are assumed to 
occur progressively later in the period of analysis.

  Table 22--Human Health Impact for Alternative Scenarios--Annual Percentage Reductions in Mortality and Lives
                                                      Saved
----------------------------------------------------------------------------------------------------------------
                                                                Period 1     Period 2     Period 3     Period 4
                 Percent of Total Reduction                  ---------------------------------------------------
                                                                   0            25           50          100
----------------------------------------------------------------------------------------------------------------
                                                   Scenario 1
----------------------------------------------------------------------------------------------------------------
Years in period following effective date....................          1-2          3-7         8-12        13-20
Lives saved annually........................................            0         28.6         57.3        114.5
----------------------------------------------------------------------------------------------------------------
                                                   Scenario 2
----------------------------------------------------------------------------------------------------------------
Years in period following effective date....................          1-5         6-10        11-15        16-20
Lives saved annually........................................            0         28.6         57.3        114.5
----------------------------------------------------------------------------------------------------------------
                                                   Scenario 3
----------------------------------------------------------------------------------------------------------------
Years in period following effective date....................          1-8         9-13        14-18        19-20
Lives saved annually........................................            0         28.6         57.3        114.5
----------------------------------------------------------------------------------------------------------------

    To arrive at an estimate of the benefits associated with reductions 
in mortality due to changes in fat and cholesterol intake, FSIS 
multiplied the dollar values assigned to each premature death ($5.0, 
$5.5, and $6.5 million) prevented by the number of lives saved annually 
in the three scenarios due to changes in diet quality. The present 
values of the benefits associated with the reductions in mortality 
associated with the scenarios identified in Table 22 are shown in Table 
23. The net present value of the human health benefits of reduced 
mortality for all diseases over 20 years is estimated to be a maximum 
of $5.9 billion under Scenario 1 using a discount rate of 3 percent and 
$6.5 million for each premature death avoided. The lowest present value 
of human health benefits occurs under Scenario 3 using a discount rate 
of 7 percent and $5.0 million for each premature death avoided and is

[[Page 67784]]

estimated to be $1.1 billion. These benefits would be distributed among 
the diseases evaluated in the same share that they represent of total 
lives saved due to dietary changes from nutrition labeling as shown 
above.
    Based on the information shown in Table 22, FSIS constructed a 
composite scenario for all diseases by first computing the average 
number of lives saved annually from the three scenarios. The derivation 
of lives saved for the composite scenario is shown in Appendix A, Table 
5. The annual average for lives saved over the 20 year period under the 
composite scenario was 50.1. This compares with annual averages of 
67.3, 50.1, and 32.9 lives saved under scenarios 1, 2, and 3, 
respectively (Appendix A, Table 5). To estimate an average human health 
benefit over the three scenarios, the annual average number of lives 
saved under the composite scenario is multiplied by each of the three 
values for a statistical life year. The average is then computed for 
each year to derive the annual values of lives saved under the 
composite scenario as is shown in Appendix A, Table 6. Each value was 
weighted equally. The results of the analysis of the composite scenario 
show a net present value for lives saved of $3.694 billion using a 3 
percent discount rate, and $2.177 billion using a 7 percent discount 
rate. The corresponding annualized human health benefits from the 
reduction in all diseases are $248.3 and $205.5 million, respectively. 
The benefits estimates presented here assume POP nutrition information 
to be equally successful as nutrition labels in leading to dietary 
change and consequent reductions in the three cancers studied and 
coronary heart disease. However, this assumption is not realistic. The 
analysis of alternatives section below provides a range of benefits 
estimates using different assumptions about the relative effectiveness 
of the POP nutrition. These annualized values will be used in the cost-
effectiveness analysis.

Table 23--Present Value of Human Health Impacts for Alternative Scenarios Over 20 Years, 3 Percent and 7 Percent
                                                 Discount Rates
----------------------------------------------------------------------------------------------------------------
                                                   Present value   Present value  Average annual  Average annual
      Scenario/ value of a statistical life             3%              7%          benefit 3%      benefit 7%
----------------------------------------------------------------------------------------------------------------
                                                                             $ Million
----------------------------------------------------------------------------------------------------------------
                                                   Scenario 1
----------------------------------------------------------------------------------------------------------------
5.0.............................................         4,502.4         2,776.4           302.6           260.7
5.5.............................................         4,952.7         3,037.5           332.9           286.7
6.5.............................................         5,853.2         3,589.8           393.4           338.8
----------------------------------------------------------------------------------------------------------------
                                                   Scenario 2
----------------------------------------------------------------------------------------------------------------
5.0.............................................         3,223.8         1,865.8           216.7           176.1
5.5.............................................         3,546.1         2,052.4           238.4           193.7
6.5.............................................         4,190.9         2,425.6           281.7           229.0
----------------------------------------------------------------------------------------------------------------
                                                   Scenario 3
----------------------------------------------------------------------------------------------------------------
5.0.............................................         2,053.6         1,134.8           138.0           107.1
5.5.............................................         2,258.9         1,248.3           151.8           117.8
6.5.............................................         2,669.7         1,475.3           179.4           139.3
----------------------------------------------------------------------------------------------------------------
Composite.......................................         3,694.4         2,176.7           248.3           205.5
----------------------------------------------------------------------------------------------------------------

Effects of Current Compliance Levels

    As has been discussed in the Cost Analysis, the level of 
participation in the voluntary nutrition labeling program is 54.8 
percent of stores for major cuts (USDA, 1999). In addition, an 
estimated 68 percent of ground or chopped products bear nutrition 
labels (NCBA, 2004). The analysis of benefits presented above assumes 
no prior compliance. Were these levels of compliance incorporated into 
the amount of meat and poultry product affected by the supplemental 
proposed rule, the amount of product affected would decline from 21.6 
billion pounds to 9.1 billion pounds \41\ (21.6 billion pounds minus 
16.7 billion pounds of major cuts x (1.0-0.548) and 4.9 billion pounds 
ground or chopped product x (1.0-0.68). Since the benefits analysis 
treats the consumption of types of meat and poultry products the same 
in terms of their impacts on human health, the benefits would be 
reduced accordingly. Instead of achieving a maximum number of lives 
saved of 114.5 annually, which is the starting value for the benefits 
analysis, the rule would save at most 42.1 lives annually. Under the 
composite scenario, modified accordingly, the annual number of lives 
saved would be 18.4. The present values of the benefits are $1.358 and 
$.800 billion using 3 and 7 percent discount rates, respectively. The 
corresponding annual benefits are $91.3 million and $75.5 million. The 
estimated benefits under this scenario can be compared with those in 
Table 23 above.
---------------------------------------------------------------------------

    \41\ The estimates amounts of major cuts and ground or chopped 
products are shown in Table 24.
---------------------------------------------------------------------------

3. Minimum Effectiveness of Measures Required by the Supplemental 
Proposed Rule for Benefits To Exceed Costs
    In the cost analysis of the proposed and supplemental proposed 
rules, FSIS assumes that retailers will display POP nutrition 
information for the major cuts rather than apply nutrition labels to 
these products because this is a lower-cost means of providing 
nutrition information for multiple products. The benefits analysis does 
not provide separate estimates of the benefits of nutrition labels and 
POP information as it was not possible to distinguish between the 
behavioral response and change in dietary intake associated with these 
two means of conveying nutrition information to the consumer.
    The Agency assumes that when labels and other sources of nutrition 
information are provided for raw meat

[[Page 67785]]

and poultry products that nutrition information usage rates will rise 
to match label usage rates for food products as a whole, and that 
dietary patterns will change in a manner consistent with current data. 
Labeling, as used in the surveys matching its usage and dietary 
changes, has generally been interpreted to mean on-package labels 
rather than POP labeling. Consequently, the discussion of the benefits 
of the rule has implicitly focused on on-package labels.
    In the analysis below, we first estimate the reduction in risk 
associated with POP nutrition information sufficient to equate its 
benefits and costs. Then we estimate remaining benefits of the rule 
that must be attributed to on-package nutrition labels for benefits to 
exceed costs.
    The estimated cost of providing POP nutrition information is $5.67 
million starting the year of the effective date and every other year 
thereafter. The net present values using a discount rate of 3 and 7 
percent for the 20-year period of analysis are discounted costs of 
$42.82 and $31.07 million, respectively. The annualized values for 
these net present values are $2.88 and $2.93 million, respectively 
(Table 25). The net present values for the 20-year costs of on-package 
nutrition labels for ground and chopped products are $429.41 million 
and $316.99 million, using 3 and 7 percent discount rates, 
respectively. The annualized cost associated with net present values 
using 3 and 7 percent discount rates are $28.86 and $29.92 million, 
respectively.\42\ Under the composite scenario discussed in the 
benefits analysis, there is an average of 50.1 lives saved annually as 
a result of the nutrition labeling requirements of the rule.
---------------------------------------------------------------------------

    \42\ Annualized benefits are defined as the average annual 
amounts, when discounted, will provide a present value benefits 
equal to that shown for the selected scenario. It is a means for 
providing a single annual amount for a scenario showing significant 
differences on a year-to-year basis.
---------------------------------------------------------------------------

    The average reduction in risk for the benefits of POP nutrition 
information for major cuts of single ingredient, raw products to equal 
their cost is 0.53 lives saved annually ((2.88+2.93)/2)/5.5) assuming a 
value of life of $5.5 million (Table 25). The reduction in risk for the 
benefits of on-package nutrition labels for ground or chopped products 
to equal their cost is about ten times greater (5.34 lives saved 
annually).
    The estimated total reduction in risk in order for the benefits of 
these combined measures to exceed costs is 5.87 lives saved annually or 
about one-ninth (5.87/50.1) of the estimated 50.1 lives saved annually 
under the composite scenario, using a value of life saved of $5.5 
million.

                    Table 25--Break-Even Analysis of the Supplemental Proposed Rule Measures
----------------------------------------------------------------------------------------------------------------
                                                            Annualized average    Number of lives saved annually
                                                             costs ($million)      for benefits to equal costs
                                                          ------------------------------------------------------
                         Measure                               Discount rate         Value of life ($million)
                                                          ------------------------------------------------------
                                                               3%         7%        5.0        5.5        6.5
----------------------------------------------------------------------------------------------------------------
POP nutrition information for major cuts of single              2.88       2.93        .58        .53        .45
 ingredient, raw products................................
On-package nutrition labels for ground or chopped              28.86      29.92       5.88       5.34       4.52
 products \1\............................................
                                                          ------------------------------------------------------
    Total................................................      31.74      32.85       6.46       5.87       5.97
----------------------------------------------------------------------------------------------------------------
\1\ The costs of on-package labels include all costs that are not directly attributable to providing POP
  nutrition information as identified in Table 13.

E. Analysis of Alternatives

    The previous discussion of regulatory alternatives provided a 
description of the regulatory alternative considered and information on 
the likely costs of the alternatives. The analysis that follows 
provides a quantification of the potential effectiveness of the 
alternatives as well as a comparison of cost-effectiveness and 
potential net benefits.
    The regulatory alternatives considered by the Agency employ one or 
both of the following measures: POP nutrition information and on-
package nutrition labels. The combination of measures and the products 
subject to these measures differ among the regulatory alternatives 
considered. In the supplemental proposed rule (Alternative 3), on-
package nutrition labels are required for ground or chopped meat and 
poultry products (unless an exemption applies), and on-package 
nutrition labels or POP nutrition information are required for the 
major cuts of single ingredient, raw meat and poultry products (unless 
an exemption applies). It is assumed for the purpose of estimating 
compliance costs that, given the option, retail establishments will 
provide POP information in the form of placards to convey nutrition 
information for major cuts of single ingredient, raw meat and poultry 
products. Alternative 2 stipulates POP nutrition information for ground 
or chopped product and for major and nonmajor cuts of single 
ingredient, raw products. It is assumed for purposes of estimating the 
cost of this alternative that retail establishments will use a 
reference manual to convey nutrition information for the products 
covered. Retailers may employ other methods, however. Alternative 4 
requires on-package nutrition labels for ground or chopped products and 
major cuts. Alternative 5 stipulates on-package nutrition labels for 
ground or chopped product, and both major and nonmajor cuts of single 
ingredient raw products.
Relative Effectiveness in Providing the Necessary Material Facts
    The Agency considered several factors in selecting Alternative 3. 
The factors reflect the significant differences in the two principal 
categories of meat and poultry products-- ground or chopped products 
and major and nonmajor cuts, consumer preferences, and the 
effectiveness with which information about these two categories of 
products is presented in retail establishments.
    Differences in product characteristics, consumer preferences, and 
demand for nutrition information affect the value of nutrition 
information for the two general categories of products. The 
justification for the government action in requiring nutrition 
information differs for the two categories of products, as has been 
argued in the need for the rule. Different approaches to labeling may 
be warranted and what might be an effective approach for

[[Page 67786]]

providing nutrition information for one category may be unsuitable for 
the other. FSIS finds that this is the case, based on the full range of 
evidence available.
    Ground or chopped product are formulated to achieve a specific fat 
content and thus are similar to multi-ingredient and heat processed 
products, which receive on-package nutrition labels. The nutritional 
characteristics of these products can vary significantly. For example, 
the percentage of total fat in ground beef may range from 3 to 30 
percent. Consequently, consumers have a significant number of choices 
concerning type of product and nutritional characteristics. Nutrition 
information enables consumers to match product choices with nutritional 
preferences.
    While the processor formulating the ground or chopped product has 
knowledge of the nutritional characteristics of each product 
formulation, such information is not readily available to the consumer. 
Significant differences in total fat content of ground and chopped 
products may be difficult for the consumer to distinguish. 
Consequently, there is little incentive for processors to provide 
information on ground or chopped products with higher fat content. Yet, 
consumers' information needs are significant, given the differences in 
consumer preferences for high fat and low fat products. Under these 
conditions, readily accessible nutrition information would be highly 
valued by consumers. FSIS has concluded that clear and concise 
information should be available to consumers of ground or chopped 
product in the form of an on-package label. It would be confusing to 
consumers if nutrition information were provided by POP placards for 
all potential formulations of these products. Faced with a large array 
of signage, the potential value of nutrition information could be 
exceeded by the transactions cost for many consumers seeking such 
information.
    Because there are numerous formulations of ground or chopped 
product, it would be difficult for producers or retailers to develop 
POP materials that would address all the different formulations that 
exist for these products. Furthermore, it would be difficult for 
consumers to find the correct information for a specific ground or 
chopped product on POP materials that include information concerning 
numerous formulations of these products (66 FR 4977, January 18, 2001). 
If a statement of the fat percentage and lean percentage were not 
included on a package of ground product, consumers would not know which 
nutrient data concerning ground product on POP materials would apply to 
that particular ground product. Thus, FSIS on-package nutrition labels 
would likely enable consumers to make product comparisons far more 
efficiently because consumers would have more relevant information 
directly attached to the products to inform their choices.
    Major cuts are generally considered by consumers to be largely 
undifferentiated products in terms of nutrient content (Van 
Ravenswaay). The nutritional characteristics of one beef chuck blade 
roast are perceived to be much the same as another. The differences in 
nutritional characteristics for a particular major cut (e.g., chicken 
breasts) vary much less than the nutritional characteristics for a type 
of ground or chopped product (USDA, 2005). This is an important factor 
to consider as consumer preferences are more likely to differ on the 
basis of the type of major cut (e.g., chicken breasts versus pork loin 
chops).
    Based on the similarity of nutritional attributes of any specific 
major cut and the type of information desired by consumers, FSIS has 
concluded that it would be acceptable for retail establishments to 
provide nutrition information via POP placards for major cuts. They are 
an efficient means of providing such information given the relatively 
small number of products sold at retail establishments, their 
relatively large share of total meat and poultry consumption, and 
consumer information needs.
    In developing the regulatory alternatives, the Agency concluded 
that, given the option, retail establishments would most likely not 
choose to provide nutrition information for nonmajor cuts via POP 
placards. There are potentially a large number of such products (350 
products for meat alone according to the National Live Stock Meat 
Board). Using POP placards to convey nutritional information on these 
products could result in excessive signage at retail establishments. 
Excessive signage would not only be a concern for the retail 
establishment, but also would not convey information in a manner that 
would promote its usage by consumers. Retail establishments would be 
more likely to opt for providing nutrition information for nonmajor 
cuts in a reference manual. The following table summarizes factors 
considered by the Agency in its selection of Alternative 3 as the most 
effective in providing the material information to consumers.

Table 24--Comparisons of Methods for Conveying Nutrition Information and
                   Meat and Poultry Product Categories
------------------------------------------------------------------------
                                            Product category
                               -----------------------------------------
            Method                                   Single-ingredient,
                                Ground or chopped           raw
------------------------------------------------------------------------
POP Nutrition Information.....              Nutrient
                                 Information        content of a given
                                 asymmetry is       major cut is
                                 greater than the   relatively uniform
                                 information        across the market,
                                 asymmetry in POP   and these products
                                 nutrition          are not formulated
                                 information for    in the manner of
                                 major cuts and     ground or chopped
                                 nonmajor cuts      products.
                                 that are not       Consumer
                                 ground or          preferences differ
                                 chopped.           on the basis of
                                 Consumer   types of products in
                                 preferences        the category.
                                 differ on the     Placards.
                                 basis of fat       Efficient
                                 content.           means of presenting
                                            nutrition
                                 Nutrition          information for
                                 information on     major cuts--
                                 formulated         relatively small
                                 products (ground   number of products
                                 or chopped         comprising large
                                 products) is       share of meat and
                                 less accessible    poultry consumption.
                                 on POP materials   Ineffective
                                 than it would be   means of information
                                 on product         delivery for
                                 labels.            nonmajor cuts that
                                 Given      are not ground or
                                 the number of      chopped: potentially
                                 product            large number of
                                 formulations, it   products resulting
                                 would be           in excessive
                                 confusing to       signage.
                                 consumers to use   Nonmajor
                                 POP nutrition      cuts account for
                                 information.       small share of
                                                    consumption.
                                                    Reference Manual.

[[Page 67787]]

 
                                                    Reference
                                                    manual is low-cost
                                                    means of information
                                                    delivery. However,
                                                    high search costs
                                                    may greatly reduce
                                                    effectiveness.
                                                    Number of
                                                    nonmajor products is
                                                    large and amounts
                                                    comprise about 15%
                                                    of meat and poultry
                                                    consumption.
                                                    Uniform
                                                    reference manuals
                                                    not likely given
                                                    regional differences
                                                    in names of similar
                                                    nonmajor products.
On-Package Labels.............              Nutrient
                                 Information        content of a given
                                 asymmetry is       major cut is
                                 greatest for       relatively uniform
                                 product category.  across the market,
                                 Consumer   and these products
                                 preferences        are not formulated
                                 differ on the      in the manner of
                                 basis of fat       ground or chopped
                                 content.           products.
                                            Consumer
                                 Information is     preferences differ
                                 clear and          on the basis of
                                 concise..          types of products in
                                 Highly-    the category.
                                 valued            Major cuts.
                                 information for    Consumers
                                 consumers          have reasonable
                                 because consumer   expectations as to
                                 preferences        the nutrient content
                                 differ most for    of these products.
                                 these types of    Nonmajor cuts.
                                 products on the    Consumers
                                 basis of           have limited access
                                 nutritional        to nutrition
                                 content.           information for
                                 Consumer   nonmajor cuts.
                                 search costs are
                                 minimized.
------------------------------------------------------------------------

    A major source of uncertainty in this analysis is the success of 
POP nutrition information relative to on-package nutrition labels. 
Research studies on effectiveness of POP information virtually ended 
with passage of the NLEA. So, most POP research is now quite dated. 
Thus, the research available does not allow FSIS to make a precise 
comparison of the relative success of on-package nutrition labels 
versus POP nutrition information. However, POP nutrition information 
may be a convenient and effective means for consumers to confirm or 
gain new information on the nutritional content of the major or 
nonmajor cuts of single ingredient, raw products. Given these 
uncertainties, in the analysis that follows, FSIS assumes that POP 
nutrition information is 50 percent, 10 percent and 5 percent as 
successful as on-package nutrition labels in causing dietary change to 
illustrate the impacts of those assumptions on the relative cost-
effectiveness as well as net benefits of the alternatives.
Analysis of Cost Effectiveness
    A cost-effectiveness analysis (CEA) provides a means to identify 
alternatives that achieve the most effective use of resources available 
without requiring the monetization of all benefits or costs by 
comparing regulatory alternatives with respect to their ability to 
achieve a specified outcome (e.g., units of human or environmental 
health). Regulatory alternatives employing the same measures are 
ordered on the basis of the increased frequency, scope, lethality, or 
some other criterion. Ideally, a CEA results in comparison of the 
incremental cost per unit of outcome for each regulatory alternative 
when the alternatives are ordered on the basis of an increasing level 
of the specified criterion.
    FSIS agrees that cost effectiveness ratios for regulatory options 
should be calculated incrementally, that is, in terms of the additional 
cost incurred by the next most stringent option to produce an 
additional life saved. However, the data available for the analysis and 
the nature of the regulatory alternatives poses some challenges to 
conducting a meaningful incremental CEA. First, the regulatory 
alternatives stipulate the use of one or two measures that may be 
employed for providing nutrition information for two or three 
categories of products--ground or chopped product and single-ingredient 
raw products (major and nonmajor cuts)--of meat and poultry. The two 
measures are POP nutrition information materials and on-package 
nutrition labels. Second, the effectiveness of POP nutrition 
information relative to on-package nutrition labels is uncertain. The 
greater amount of time required by the consumer to find the relevant 
nutrition information on POP materials relative to finding such 
information on the packaging of the products suggests that POP 
nutrition information may be less successful for some types of products 
in leading to healthier dietary choices. Given the assumptions we make 
in order to model the regulatory provisions given the uncertain 
effectiveness, the result is an incremental cost-effectiveness analysis 
which shows that multiple alternatives are weakly dominated under all 
scenarios. Consequently, the analysis that follows provides a 
comparison of average cost-effectiveness and net-benefits of the 
regulatory alternatives for each alternative, for different levels of 
assumed relative effectiveness of POP information.
Average Cost-Effectiveness of Regulatory Alternatives
    Cost-effectiveness analysis results based on averages can be 
misleading in that the regulatory alternative exhibiting the lowest 
cost-effectiveness ratio may not be the best option. Low ratios are not 
always an accurate indicator of high net social benefits, the desired 
economic objective. The following provides information on the average 
cost effectiveness of the regulatory alternatives and their net 
benefits.
    In order to analyze both the average cost effectiveness of the 
regulatory alternatives and incremental cost effectiveness of the 
measures employed by the regulatory alternatives, the share of the 
reduction in risk associated with the POP nutrition information for 
ground and chopped products and both major and nonmajor cuts are 
estimated. Estimates of the number of products subject to on-package 
nutrition labeling are also provided. The costs corresponding to the 
risk reduction measures are also estimated. Table 26 provides the 
information that was used to allocate the annualized costs and 
reductions in risk.
    The reductions in risk associated with the regulatory alternatives 
reflect the differences in the pounds of product affected. Alternatives 
2 and 5 affect ground and chopped products and the

[[Page 67788]]

major and nonmajor cuts, a total of 24.5 billion pounds (Table 26). 
Alternative 3 (the supplemental proposed rule) requires on-package 
nutrition labels for ground or chopped products and either on-package 
nutrition labels or POP nutrition information for the major cuts, a 
total of 21.6 billion pounds. Alternative 4 affects the same amount of 
product as Alternative 3. The differences in pounds of products 
affected among the regulatory alternatives are reflected in the annual 
number of lives saved. The potential number of lives saved annually for 
Alternatives 2 and 5 are increased proportionately by 13 percent (24.5/
21.6 = 1.1343) to reflect the difference in pounds of product affected. 
Therefore, the maximum number of lives saved annually for Alternatives 
3 and 4 is 50.1. The corresponding value for Alternative 2 and 5 is 
56.8 lives saved annually (50.1 x 1.1343).
    The total cost of Alternative 2, which is exclusively the cost of 
the POP nutrition information manual, is allocated among ground and 
chopped product, and major and nonmajor cuts on the basis of the share 
of products in these categories (CFR Sec. Sec.  317.344 and 381.444, 
National Livestock Meat Board, 1995). The costs associated with 
labeling measures for the product categories (on-package nutrition 
labels for ground and chopped and major cuts, and on-package labels for 
these products plus nonmajor cuts for Alternatives 4 and 5, 
respectively) are allocated on the basis of the relative shares of 
these products at retail establishments.

                                 Table 26--Meat and Poultry Product Information
----------------------------------------------------------------------------------------------------------------
                                                                            Percent
  Meat and poultry product volumes affected by regulatory     Billion     shares for      Percent  shares for
                       alternatives                            pounds    Alternatives     Alternatives  3 & 4
                                                                             2 & 5
----------------------------------------------------------------------------------------------------------------
Major and nonmajor cuts...................................         19.6          80.0                       77.3
Major cuts................................................         16.7          68.2                       77.3
Nonmajor cuts.............................................          2.9          11.8  .........................
Ground or chopped.........................................          4.9          20.0                       22.7
All meat and poultry......................................         24.5         100.0                      100.0


----------------------------------------------------------------------------------------------------------------
                                                                            Percent
                                                              Number of    share for
        Products in POP nutrition information manual           products   Alternative
                                                                               2
----------------------------------------------------------------------------------------------------------------
Ground or chopped..........................................           13          3.0  .........................
Major cuts.................................................           45         11.0  .........................
Nonmajor cuts \1\..........................................          350         86.0  .........................
                                                            ----------------------------------------------------
    Total..................................................          403        100.0  .........................


----------------------------------------------------------------------------------------------------------------
                                                                             Percent          Percent share
 Products at retail establishments with on-package nutrition   Number of      share    -------------------------
                           labels                               products   Alternative
                                                                                5          Alt. 3       Alt. 4
----------------------------------------------------------------------------------------------------------------
Ground or chopped...........................................        12.50         22.0        100.0         28.3
Major cuts..................................................        31.74         56.0  ...........         71.7
Nonmajor cuts...............................................        12.42         22.0  ...........  ...........
                                                             ---------------------------------------------------
    Total...................................................        56.66        100.0        100.0        100.0
----------------------------------------------------------------------------------------------------------------
\1\ A comprehensive listing of nonmajor cuts was provided in the Uniform Retail Meat Identity Standards
  published by the National Livestock and Meat Board. Nonmajor cuts of poultry, of which there are few, are not
  included. Amenable kinds of poultry are not accounted for. Most ducks, geese, squab are sold as carcasses and
  there is only a very small market for ostrich cuts/parts; and rhea and emu are used for byproducts mostly.

    The present value and corresponding annualized costs for the 
regulatory alternatives and their measures are shown in Table 27. There 
are no costs associated with Alternative 1 as it represents the status 
quo. As is reflected in their costs, the alternatives become 
increasingly costly due to the increasing share and number of products 
that receive on-package nutrition labels, which are significantly more 
costly than POP nutrition information. The present value cost of the 
alternatives range from a low of $87.74 million for Alternative 2 to 
$956.48 million for Alternative 5. The present value of the compliance 
costs of the alternative selected by the Agency is $348.06 million. The 
table also shows the compliance costs, both present value and 
annualized, on the basis of the major product categories.

                               Table 27--Average Costs of Regulatory Alternatives
----------------------------------------------------------------------------------------------------------------
                                                                        Present value        Annualized values
                            Alternative                            ---------------------------------------------
                                                                        3%         7%         3%          7%
----------------------------------------------------------------------------------------------------------------
                                                                                      $ million
----------------------------------------------------------------------------------------------------------------
Alternative 2. POP manuals for all products:
Total.............................................................     123.19      87.74        8.28        8.28
    Ground & chopped..............................................       3.93       2.80         .26         .26
    Major cuts....................................................      13.59       9.68         .91         .91
    Nonmajor cuts.................................................     105.68      75.27        7.1         7.1
Alternative 3. On-package labels for ground and chopped, POP
 placards for major cuts:

[[Page 67789]]

 
Total.............................................................     472.23     348.06       31.74       32.85
    Ground & chopped..............................................     429.41     316.98       28.86       29.92
    Major cuts....................................................      42.82      31.07        2.88        2.93
Alternative 4. On-package labels for ground and chopped products
 and major cuts:
Total.............................................................   1,103.90     812.99       74.20       76.75
    Ground & chopped..............................................     429.41     316.98       28.86       29.92
    Major cuts....................................................     674.49     496.00       45.34       46.82
Alternative 5. On-package labels for all products:
Total.............................................................   1,298.74     956.54       87.30       90.28
    Ground & chopped..............................................     429.41     316.99       28.86       29.92
    Major cuts....................................................     674.49     496.00       45.34       46.82
    Nonmajor cuts.................................................     194.84     143.49       13.10       13.54
----------------------------------------------------------------------------------------------------------------
Note: These compliance costs do not take into account the level of voluntary compliance with the labeling
  required under each alternative. Consequently, the estimated compliance costs are overstated.

    The lives saved associated with the nutrition labeling measures for 
ground or chopped products, and major and nonmajor cuts are based on 
the amount of product affected by the measures for each of the 
regulatory alternatives. For example, 16.7 billion pounds of major cuts 
are affected by POP nutrition information placards under Alternative 3 
(Table 26). On-package nutrition labels are required for the 4.9 
billion pounds of ground and chopped meat and poultry products affected 
by Alternative 3. The average annual 30.74 (19.37 + 11.37) lives saved 
as a result of this alternative, assuming POP nutrition information is 
50 percent as successful as on-package nutrition labels in causing 
dietary change, is obtained as follows. The average annual lives saved 
as a result POP nutrition information for major cuts is 19.4 lives as 
shown in Table 28 (16.7/21.6 = 0.77; (0.77 x 50.1) x .5 \43\ = 19.4). 
On-package nutrition labels for ground or chopped products account for 
the remaining 11.4 lives saved annually (4.9/21.6 = .227; .227 x 50.1 = 
11.4).
---------------------------------------------------------------------------

    \43\ This value reflects the relative success of POP nutrition 
information relative to on-package labels. This value will change 
according to the scenario being discussed.
---------------------------------------------------------------------------

    Table 28 shows the cost-effectiveness of the regulatory 
alternatives when POP nutrition information is assumed to be half as 
successful as on-package nutrition labels in bringing about healthier 
diets and reducing coronary heart disease and cancer. This success rate 
is considered to be an upper bound. The cost per life saved for 
Alternative 3 is $1.069 million, when using the composite annual 
average and annualized costs based on a 7 percent discount rate. The 
cost per life saved for on-package nutrition labels for ground or 
chopped products under this alternative is $2.63 million ($29.92 
million from Table 27/11.37 lives saved annually, column 1 of Table 28) 
and $151,000 for POP nutrition information placards under this 
alternative ($2.93 million from Table 27/19.37 lives saved annually).
    As would be expected under this scenario, Alternative 4 and 5 are 
less cost effective than the supplemental proposed rule measures 
because they rely entirely on the relatively more costly measures of 
on-package nutrition labels. Alternative 2 has a lower cost-
effectiveness ratio in this scenario because of the assumed high rate 
of success for POP nutrition information and because it relies entirely 
on a low-cost POP reference manual.\44\ Using an average VSL of $5.5 
million, all alternatives show large average annual benefits relative 
to annual costs with Alternative 5 yielding the highest net benefits.
---------------------------------------------------------------------------

    \44\ The analysis assumes that the manual containing the 
nutrition information as specified for Alternative 2 and the POP 
nutrition information placards specified in Alternative 3 have the 
same impact on consumer dietary patterns. The use of a nutrition 
information reference manual is assumed to be the manner by which 
retail establishments would convey nutrition information under 
Alternative 2.

  Table 28--Average Cost-effectiveness and Net Benefits of Potential Lives Saved--POP Nutrition Information 50
                         Percent as Successful as On-Package Nutrition Label Information
----------------------------------------------------------------------------------------------------------------
                                                     Potential       Cost/life    Value of lives
                  Alternatives                      lives saved      saved 7%          saved      Net benefit 7%
----------------------------------------------------------------------------------------------------------------
                                                  ..............                     $ million
----------------------------------------------------------------------------------------------------------------
Alternative 2. POP manuals for all products:
Total...........................................            28.4            .291           156.3           150.0
    Ground/chopped..............................             5.7            .046            31.3            31.0
    Major cuts..................................            19.4            .047           106.5           105.6
    Nonmajor cuts...............................             3.4           2.112            18.5            11.4
Alternative 3. On-package labels for ground and
 chopped, POP placards for major cuts:
Total...........................................            30.7           1.069           169.0           136.2
    Ground/chopped..............................            11.4           2.633            62.5            32.6
    Major cuts..................................            19.4            .151           106.5           103.6

[[Page 67790]]

 
Alternative 4. On-package labels for ground and
 chopped products and major cuts:
Total...........................................            50.1           1.532           275.6           198.8
    Ground/chopped..............................            11.4           2.633            62.5            32.6
    Major cuts..................................            38.7           1.209           213.4           166.2
Alternative 5. On-package labels for all
 products:
Total...........................................            56.8           1.589           312.6           222.3
    Ground/chopped..............................            11.4           2.633            62.5            32.6
    Major cuts..................................            27.8           1.628           153.1           106.3
    Nonmajor cuts...............................            10.9           1.202            59.9            46.4
----------------------------------------------------------------------------------------------------------------
Note: These estimates do not take into account the level of voluntary compliance with the labeling required
  under each alternative. Consequently, the estimated compliance costs as well as potential lives saved are
  overstated.

    Tables 29 and 30 show the impact on the cost effectiveness of 
Alternatives 2 and 3, and their respective measures, when POP nutrition 
information is 10 and 5 percent as successful, respectively, as on-
package nutrition labels in leading to dietary changes. The cost 
effectiveness of Alternatives 4 and 5 are not affected as they do not 
employ POP nutrition information. Consequently, their effectiveness 
ratios and net benefits are unchanged from Table 28.
    The results show that as the success of POP nutrition information 
declines relative to on-package nutrition labels, the cost-
effectiveness measures for Alternative 2 decline more rapidly than 
those for Alternative 3, given the second alternative's entire reliance 
on POP nutrition information. When POP nutrition information is 10 
percent as successful as on-package nutrition information labels (Table 
29), the average cost-effectiveness for Alternatives 2 through 5 are 
approximately the same (between $1.5 to $2.2 million per life saved). 
While the average cost-effectiveness ratios of the regulatory 
alternatives are approximately the same, the annual net benefits of the 
alternatives differ significantly. This measure ranges from $23 million 
for Alternative 2 to 10 times that amount for Alternative 5 (Table 26). 
It should be noted that the cost per life saved associated with POP 
nutrition information for nonmajor cuts of single ingredient, raw meat 
and poultry products under Alternative 2 exceeds the value of a life 
saved and, consequently, the annual benefits associated with the 
measure are less than the annual costs.

  Table 29--Average Cost-effectiveness and Net Benefits of Potential Lives Saved --POP Nutrition Information 10
                         Percent as Successful as On-Package Nutrition Label Information
----------------------------------------------------------------------------------------------------------------
                                                     Potential       Cost/life    Value of lives
                  Alternatives                      lives saved      saved 7%          saved      Net benefit 7%
----------------------------------------------------------------------------------------------------------------
                                                  ..............                     $ Million
----------------------------------------------------------------------------------------------------------------
Alternative 2. POP manuals for all products:
Total...........................................             5.7           1.457            31.3            23.0
    Ground/chopped..............................             1.1            .232             6.3             6.0
    Major cuts..................................             3.9            .236            21.3            20.4
    Nonmajor cuts...............................             0.7          10.562             3.7            -3.4
Alternative 3. On-package labels for ground and
 chopped, POP placards for major cuts:
Total...........................................            15.2           2.156            83.8            51.0
    Ground/chopped..............................            11.4           2.633            62.5            32.6
Major cuts......................................             3.9            .757            21.3            18.4
----------------------------------------------------------------------------------------------------------------
Note: These estimates do not take into account the level of voluntary compliance with the labeling required
  under each alternative. Consequently, the estimated compliance costs as well as potential lives saved are
  overstated.

    When POP nutrition information is 5 percent as successful as on-
package nutrition information labels (Table 30), the average cost-
effectiveness ratio for Alternative 2 is higher than those for the 
other alternatives and 15 percent higher than that for Alternative 3. 
The annual net benefit of POP nutrition information for ground or 
chopped product under Alternative 2 is declining to marginal levels. 
The annual net benefit for Alternative 3 is nearly $40.3 million, about 
5 times that for Alternative 2.
    Due to the differences in search costs for consumers using a POP 
reference manual versus a POP placard, Alternative 2 is expected to be 
less successful than Alternative 3 in changing dietary patterns. If POP 
manuals were 5 percent as successful as on-package labels and placards 
were 10 percent as effective as on-package labels, a plausible 
scenario, the cost per life saved for Alternative 3 would be about 75 
percent (2.156/2.915) of that for Alternative 2. The number of lives 
saved annually under Alternative 3 would be about 5 times (15.2/2.8) 
that found under Alternative 2. The uncertainty associated with the 
success of a POP reference manual (Alternative 2) is an important 
factor supporting the effectiveness of Alternative 3 and the Agency's 
decision to select this alternative relative to Alternative 2.

[[Page 67791]]



   Table 30--Average Cost-effectiveness and Net Benefits of Potential Lives Saved--POP Nutrition Information 5
                         Percent as Successful as On-Package Nutrition Label Information
----------------------------------------------------------------------------------------------------------------
                                                     Potential       Cost/life    Value of lives
                  Alternatives                      lives saved        saved           saved        Net benefit
----------------------------------------------------------------------------------------------------------------
                                                  ..............                     $ million
----------------------------------------------------------------------------------------------------------------
Alternative 2. POP manuals for all products:
Total...........................................             2.8           2.915           15.63            7.4
    Ground/chopped..............................             0.6            .464            3.13            2.9
    Major cuts..................................             1.9            .472           10.70            9.7
    Nonmajor cuts...............................             0.3          21.125            1.85           -5.3
Alternative 3. On-package labels for ground and
 chopped, POP placards for major cuts:
Total...........................................            13.3           2.470           73.16           40.3
    Ground/chopped..............................            11.4           2.633           62.51           32.59
    Major cuts..................................             1.9           1.514           10.65            7.72
----------------------------------------------------------------------------------------------------------------
Note: These estimates do not take into account the level of voluntary compliance with the labeling required
  under each alternative. Consequently, the estimated compliance costs as well as potential lives saved are
  overstated.

Summary of Analysis of Alternatives
    The analysis shows that the POP information does not need to be 
highly successful for its benefits to exceed its costs, even at low 
levels of success relative to on-package nutrition labels.
    FSIS finds that the measures required in the supplemental proposed 
rule are generally more effective than the other alternatives when all 
the qualitative and quantitative evidence is considered. As has been 
discussed above in this section, FSIS finds that on-package nutrition 
labels for ground or chopped product are more effective than POP 
nutrition information in informing consumers about the nutritional 
characteristics of these products, given the nature of the product, its 
presentation in the retail environment, and consumer behavior. FSIS 
also finds that POP nutrition placards are an effective means for 
informing consumers about the nutritional characteristics of major cuts 
of single ingredient, raw products for these same reasons.

F. Summary of Costs and Benefits of the Final Nutrition Labeling Rule

    FSIS estimates that for the supplemental proposed rule, the 
discounted average present value of benefits over a 20-year period 
using a 7 percent discount rate will be $2.2 billion and using a 3 
percent discount rate will be $3.7 billion, using a composite of three 
scenarios for the effectiveness of nutrition labels and three values 
for reducing a premature death. The corresponding average annual 
benefits are $205.5 million and $248.3 million (See summary Table 30b).
    The discounted average present value costs, over a 20-year period, 
are estimated to be $348.06 million using a 7 percent discount rate and 
$472.23 million using a 3 percent discount rate. The corresponding 
annualized average costs are $32.8 and $31.7 million (See summary table 
30b and Appendix D, Tables 1 and 2).
    After taking into account the current assumed levels of compliance 
with the supplemental proposed rule measures, the average present value 
costs of the rule decline to $115.45 million and $156.72 million when 
using a 7 percent and 3 percent discount rate, respectively. The 
corresponding annualized average costs are $10.9 and $10.5 million. The 
average present values of the benefits are $0.800 billion and $1.358 
billion using 7 and 3 percent discount rates, respectively. The 
corresponding average annual benefits are $75.5 million and $91.3 
million. Table 30c provides a summary of these annualized costs and 
benefits. These estimates suggest that under plausible assumptions, the 
impact of this rule in any given year may be less than $100 million. 
However, given the uncertainties in the analysis, this action is deemed 
``economically significant''.
    Not included in the quantitative analysis were other likely 
benefits to providing nutrition labeling: increased profits received by 
food retailers and manufacturers, and consumers buy products with the 
attributes they want. FSIS believes that the labeling provisions help 
consumers make better food choices and provide incentives to producers 
to continue producing nutritionally-improved products that contribute 
substantially to the health benefits associated with nutrition 
labeling. If diet quality associations found with all other labeled 
foods do not hold up for nutrition labels on meat, then health benefits 
in the FSIS report are overestimated. Of course, health benefits are 
only one way in which benefits might be realized. Consumers might 
choose to use nutritional information to enhance enjoyment of food, and 
not to raise their health status. Further, they may be better off than 
if they had raised their health status since rational consumers will 
use information to their best advantage. If we observe rational, well-
informed consumers selecting a more enjoyable diet, for these consumers 
a more enjoyable diet was worth more than better health. Thus, when we 
restrict benefits estimates to allow only for information to be used to 
advance health status, we are simultaneously restricting estimated 
benefits to a lower level of value to consumers. The FSIS analysis 
imposes that restriction and the resulting benefits estimate must 
therefore be interpreted as an underestimate of overall benefits. The 
estimated costs of the rule's nutrition labeling requirements appear to 
be justified by the estimated benefits.

[[Page 67792]]



  Table 30b--Summary of Annualized Average Net Present Values of Costs and Benefits, Before Accounting for Levels of Current Compliance, $million/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       Units
                                               Primary                                    --------------------------------------------------------------
                 Category                     estimate      Low estimate    High estimate                     Discount
                                                                                            Year dollars      (percent)            Period covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized...........................           205.5           185.6           230.8            2002               7  20 years.
    Monetized* $million/year.............           248.3           228.4           273.6            2002               3  20 years.
Qualitative:                                  Consumers might also choose to use nutritional information to enhance enjoyment of food, and not just to
                                                                                     raise their health status.
                                          --------------------------------------------------------------------------------------------------------------
Costs:
    Annualized...........................            32.8            26.7            44.8            2002               7  20 years.
    Monetized* $million/year.............            31.7            25.6            43.7            2002               3  20 years.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: * Monetized benefits of potential lives saved.
Note: These estimates do not take into account the level of voluntary compliance with the nutrition labeling requirements for ground or chopped products
  that currently exists. Consequently, the estimated amounts of ground or chopped products and major cuts impacted by this supplemental proposed rule
  are overstated. Consequently, the estimated compliance costs as well as the monetized benefits of potential lives saved are overstated.


 Table 30c--Summary of Annualized Average Net Present Values of Costs and Benefits, After Accounting for Assumed Levels of Current Compliance, $million/
                                                                          year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               Units
                                                              Primary                                    -----------------------------------------------
                        Category                             estimate      Low estimate    High estimate                     Discount
                                                                                                           Year dollars      (percent)    Period covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized..........................................            75.5            68.1            84.8            2002               7       20 years.
    Monetized* $million/year............................            91.3            83.9           100.6            2002               3       20 years.
Qualitative:                                               Consumers might also choose to use nutritional information to enhance enjoyment of food, and
                                                                                      not just to raise their health status.
                                                         -----------------------------------------------------------------------------------------------
Costs:
    Annualized..........................................            10.9             8.9            14.7            2002               7       20 years.
    Monetized* $million/year............................            10.5             8.6            14.4            2002               3       20 years.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: * Monetized benefits of potential lives saved.
Note: These estimates take into account the level of voluntary compliance with the nutrition labeling requirements for ground or chopped products that
  currently exists--the 68 percent compliance rate (NCBA, 2004) of voluntary nutrition labeling of ground or chopped products and 54.8 percent level of
  voluntary compliance (USDA, 1999) of stores that provide nutrition labeling for major cuts.

Regulatory Flexibility Act (RFA)--Assessment
    Based on the cost analysis above, FSIS has made a tentative 
determination that this rule would not have a significant economic 
impact on a substantial number of small entities, as defined by the 
Regulatory Flexibility Act (5 U.S.C. 601). The supplemental proposed 
rule would affect meat and poultry processing establishments producing 
ground or chopped products (Table 1 and 2) and retail firms and 
establishments (Tables 3 and 4). There are approximately 3,073 
potentially affected Federal and State processing establishments and 
47,688 potentially affected retail firms with 74,910 retail 
establishments. A ``firm'' refers to the parent company and an 
``establishment'' refers to the retail facility. Processing 
establishments that grind or chop meat and poultry will be potentially 
affected. There are 1,433 very small, 858 small, and 109 large Federal 
establishments that produce ground or chopped products, based on PBIS 
(April, 2006). The final regulatory analysis assumes that no small 
processor is independent. That is, all (regardless of their size) are 
part of a larger organization. Table 13 shows the undiscounted costs of 
about $53.80 million for all the affected processing establishments.
    FSIS does not believe that any very small operations will be 
affected by the regulation because very small meat and poultry 
operations employ nine or fewer employees. These establishments would 
find it difficult to produce over 100,000 pounds per ground product 
annually because these employees also process other products. Annual 
revenues associated with 100,000 pounds of annual ground beef total 
approximately $230,000 for 85 percent lean ground beef, based on a 
retail value of $2.30 per pound (Agricultural Marketing Service, Market 
Reports, September 2009). Some small establishments are also likely to 
be exempt from the regulation because they have 500 or fewer employees, 
or are owned by companies with 500 or fewer employees, and FSIS assumes 
they produce less than 100,000 pounds annually of each ground product. 
FSIS researched this issue to better address the number of 
establishments that would be affected but does not have better data on 
corporations that own these individual establishments. However, as 
discussed earlier in the final regulatory analysis, RTI made the 
assumption that Federally-inspected processing establishments generally 
are a part of a larger organization that own, on average, three 
establishments each. In addition, based on PBIS (April 2006), there are 
41 state-inspected processing establishments (Table 2) that are owned 
by 41 firms. Therefore, there are about 899 (858 + 41) small processing 
establishments that are affected by the supplemental proposed rule.
    As part of the Regulatory Flexibility Assessment, FSIS also 
examined the impact of the supplemental proposed rule, by altering 
certain assumptions, to

[[Page 67793]]

determine whether the supplemental proposed rule could have a 
significant impact on a substantial number of small entities. 
Therefore, even though FSIS believes that small processors would find 
it difficult to produce over 100,000 pounds per ground product annually 
because these employees also process other products, FSIS estimated the 
cost to small grinders if they were not exempt from nutrition labeling 
requirements. For purposes of this alternative analysis, it is assumed 
that all 899 small processing firms will be affected by this 
regulation.\45\ Also, based on the analysis for the supplemental 
proposed rule, there are 6.6 frozen or fresh ground meat or chopped 
meat and poultry products produced per company. For this alternative 
analysis, it is assumed that there are 5,933 (899 x 6.6) unique ground 
or chopped products. FSIS estimates that the one-time average costs of 
modifying product labels on prepackaged ground or chopped products to 
include nutrition information at processing establishments will be 
$13.33 million ($2,247 per label modification costs x 896 affected 
companies x 6.6 affected products per company) using average cost 
estimates. The annualized cost over 20 years at 7 percent is $1.26 
million. On a per company basis the annualized cost over 20 years is 
about $1,402 ($1.26 million/896).
---------------------------------------------------------------------------

    \45\ Although RTI, in their analysis stated that all of these 
businesses are large, for this analysis, FSIS is altering the 
assumption in order to determine the impact (measure the 
sensitivity) of a set of alternative assumptions.
---------------------------------------------------------------------------

    In addition to the one-time costs of designing labels, processing 
establishments will also incur added costs of larger labels. Again, it 
is assumed that there are 899 small processing establishments that 
grind or chop meat and poultry, and that all these establishments are 
small businesses. Based on a study conducted by NCBA, 25 percent of 
ground or chopped meat and poultry packages are packaged at processing 
establishments. As explained above, approximately 437.5 million 
packages of ground and chopped meat and poultry products are packed by 
processing establishments each year. There are no data available to 
estimate the number of packages of ground or chopped meat or poultry 
products packaged by these small establishments, but (for purposes of 
this analysis) if 25 percent of all of the packages originate at small 
establishments, then these 899 companies package 109.4 million packages 
annually (437.5 million x .25). Multiplying 109.4 million packages by 
0.5 cents per label (RTI, 2003) results in an annual cost of $547,000 
(109.4 million packages x $0.005) or about $509 per company. In total, 
FSIS estimates that (under the alternative set of assumptions that all 
small entities will be affected by this supplemental proposed rule and 
that they package 25 percent of the total) the cost to these 899 small 
companies (assuming that they package 25 percent of the total) will be 
about $1,616 ($1,107 + $509) per company on an annualized basis using a 
7 percent discount rate.
    If, on the other hand, 50 percent of all packages from processing 
establishments originate at the small establishments, then these 899 
companies package about 219 million packages annually. Multiplying 219 
million packages by $0.005 per label results in an annual cost of 
$1,095,000 or $1,218 per company. In total, FSIS estimates that the 
cost to 899 small companies (under the alternative set of assumptions 
that all small entities will be affected by this supplemental proposed 
rule and that they package 50 percent of the total) will be about 
$2,126 per company ($1,402 + $1,218) on an annualized basis discounted 
at 7 percent.
    Small retail stores will incur the cost of providing POP nutrition 
information for the major cuts. There are 47,422 small retail firms 
that own 51,431 small retail stores that would be required to provide 
POP information for the major cuts of single-ingredient, raw products. 
FSIS estimates that the cost to a retail store for placards will be 
$10.56 for labor plus $65.17 for materials or approximately $75.73 per 
store. The annualized cost, assuming that the placards have to be 
replaced every two years, is about $41.88 using a 7 percent discount 
rate. All retail stores, including small and very small businesses will 
incur these costs. FSIS believes that these costs are not significant--
even for very small businesses.
    Retail stores will also incur costs related to required nutrition 
labels for ground or chopped products. For this analysis, it is assumed 
that they will all comply by following Option 1 (the less costly 
printing method for labels) because it is the least costly. Based upon 
the information contained in the regulatory analysis, a total of 74,910 
establishments owned by 47,688 firms could potentially be affected. 
However, 23,479 establishments owned by 266 firms are considered to be 
large according to the 2002 Economic Census. If they grind or chop over 
100,000 pounds of a particular product annually, then as many as 51,431 
small establishments owned by 47,422 firms could potentially be 
affected.\46\
---------------------------------------------------------------------------

    \46\ RTI believes that all of these businesses will be exempt 
from nutrition labeling requirements. For purposes of conducting a 
sensitivity analysis, this analysis assumes that they are small for 
purposes of the Regulatory Flexibility Act and that they will not 
qualify for the small business exemption.
---------------------------------------------------------------------------

    For these establishments, it is assumed that there would be only 
one scale-printer system instead of the 1.5 scale-printer systems that 
was assumed in the regulatory analysis. Therefore, the average cost of 
upgrading scale-printer systems is estimated at $1,600, and this cost 
would be incurred by these businesses once every five years. FSIS 
estimates that the annualized cost, since scale-printer systems need to 
be replaced every 5 years, is about $390 using a 7 percent discount 
rate. Operating and maintenance costs are estimated at 6 percent (See 
supplemental PRIA for detailed explanation) or $96 annually. Therefore, 
the sum of the annualized maintenance costs at 7 percent is estimated 
at $486 annually per establishment ($390 + $96).
    The average cost of redesigning larger store labels and conducting 
nutrition analysis is estimated at $2,247. However, many firms have 
more than one establishment so the cost per establishment will be much 
lower. Assuming that each establishment had to redesign its store 
labels for 4.6 products and conduct nutrition analysis for each unique 
product, then the added annualized cost over 20 years is estimated at 
$766 using a 7 percent discount rate.
    The use of larger labels is another cost that these retail stores 
will incur. As explained above, an estimated 1.75 billion packages of 
ground or chopped meat or poultry products are sold at large retail 
facilities. Therefore, 460 million packages of ground or chopped 
products are sold at small retail establishments. Given that 51,431 
small retail establishments could be affected, then each small 
establishment (460 million packages/51,431 establishments) sells 8,039 
packages annually. If the added average cost of each label is $0.005, 
then each retail store will incur an added cost of about $40 annually 
($8,039 packages per establishment x .005).
    FSIS estimates that using a 7 percent discount rate the sum of the 
annual/annualized cost to each retail establishment will be $42 for 
nutrition information placards, $486 for upgrading and maintaining 
scale-printer systems, $969 for redesigning larger store logo labels, 
and $40 for using larger labels. The total annual/

[[Page 67794]]

annualized cost using a 7 percent discount rate will be $1,537. FSIS 
also estimates that using a 3 percent discount rate the total annual/
annualized cost using a 3 percent discount rate will be $1,216. In 
summary, FSIS concludes from using an alternate set of assumptions, 
that this supplemental proposed rule would not have a significant 
impact on a substantial number of small entities.
    FSIS is cognizant of the possibility that while exempted 
establishments would not have to incur labeling costs, they also might 
not realize the benefits of increased sales of the nutritionally 
labeled products. This is because if demand for the labeled product 
increases relative to demand for non-labeled products, the exempt 
establishments would lose their market shares to the nonexempt 
establishments producing nutritionally labeled products. Therefore, to 
keep their market shares, these exempt establishments are likely to 
voluntarily include nutrition information on the product label. Such a 
strategy would minimize any adverse impact on these smaller 
establishments. It would, however, also increase their labeling costs. 
Economic theory dictates that these establishments would compare the 
costs of nutrition labels with the benefits of retaining their market 
shares and would decide to label their products if the benefits of 
increasing the market shares exceed the label costs.
    Nutrition labeling would be required, either on the product label 
or on POP materials, for the major cuts. Therefore, if manufacturers do 
not provide nutrition information on the label, retailers would be 
required to provide this information at the POP or on product labels. 
However, as noted above, this requirement should not impose major costs 
or other burdens. The annual/annualized cost to each retail 
establishment will be $42 for nutrition information placards.
    The economic impact on retail stores is likely to be minimal 
because recently there has been consolidation of these stores as a 
consequence of mergers and acquisitions, resulting in an increased 
market share of large retailers relative to small ones. For example, 
several years ago Royal Ahold, the Dutch Conglomerate, bought out Giant 
Food. Also, Ahold announced the pending purchase of Supermarket 
General-II Holdings Corporation, parent of the Pathmark chain. 
Similarly, SUPERVALUE acquired Richfood, Food Lion bought out Hannaford 
Brothers and Scarborough, and Albertson's purchased American Stores. 
(Sean Mehegan, ``Consolidation Changes the Face of the North American 
Supermarket Sector,'' Meat & Poultry (September 1999): 22-25). More 
recently, Wal-Mart through its operation Wal-Mart Puerto Rico agreed to 
acquire Supermercados Amigo, the leading supermarket chain in Puerto 
Rico. These mergers and acquisitions are likely to increase market 
shares of the large retailers at the cost of smaller ones.
    Based on the 2002 Economic Census of the U.S. Department of 
Commerce, meat and poultry processing establishments that are small 
entities had annual revenues from total value of shipments that ranged 
from $0.454 million to $96.038 million. For each processing (grinding) 
establishment, average costs as a percent of revenues range from a 
lower bound of 0.001 percent ($1,402/$96.038 million to an upper bound 
of 0.3 percent ($1,402/$0.454 million). Further, small entity retail 
stores (supermarkets and other grocery (except convenience) stores and 
meat market stores) had annual revenues from sales that ranged from 
$0.343 million to $8.873 million. Also, the companies or firms of the 
small retail stores had annual revenues from sales that ranged from 
$0.343 million to $48.342 million. Costs as a percent of revenues range 
from the lower bound of 0.02 percent ($1,537/$8.873 million) to the 
upper bound of 0.4 percent ($1,537/$0.343 million). Many of these 
retail firms that are small entities own multiple retail stores that 
are small entity supermarkets and other grocery (except convenience) 
stores.
    The following table shows the upfront, first year costs for all 
businesses affected by the rule, compared to the first year, upfront 
costs for small businesses. The table also shows the percent of total 
first year costs of the rule that will be incurred by small businesses. 
Based on the cost estimates for the rule, assuming retailers choose 
Option 1 for labeling ground or chopped products, small businesses will 
incur 10.1 percent of total estimated first year costs.

                                           Table 32--Distribution of First Year Costs--3 Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Option 1    Option 2                                      Option 1    Option 2
                                       Option 1   Option 2  Processing   retail +    retail +    Option 1   Option 2  Processing   retail +    retail +
                                        retail     retail      plant    processing  processing    retail     retail      plant    processing  processing
                                                                           plant       plant                                         plant       plant
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              $ Million
                                                      $ Million--Present value
--------------------------------------------------------------------------------------------------------------------------------------------------------
All entities........................      61.88      39.88        6.00       67.88      45.88       60.09      38.72        5.83       65.91       44.55
Only small entities.................       2.84       2.84        3.98        6.82       6.82        2.76       2.76        3.86        6.62        6.62
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small entitles share of total costs.       4.59       7.12       66.33       10.05      14.86        4.59       7.12       66.33       10.05       14.86
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                           Table 33--Distribution of First Year Costs--7 Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Option 1    Option 2                                      Option 1    Option 2
                                       Option 1   Option 2  Processing   retail +    retail +    Option 1   Option 2  Processing   retail +    retail +
                                        retail     retail      plant    processing  processing    retail     retail      plant    processing  processing
                                                                           plant       plant                                         plant       plant
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              $ Million
                                                      $ Million--Present value
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Entities........................      61.88      39.88        6.00       67.88      45.88       57.86      37.29        5.61       63.47       42.90

[[Page 67795]]

 
Only small entities.................       2.84       2.84        3.98        6.82       6.82        2.66       2.66        3.72        6.38        6.38
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small entitles share of total costs.       4.59       7.12       66.33       10.05      14.86        4.59       7.12       66.33       10.05       14.86
--------------------------------------------------------------------------------------------------------------------------------------------------------

Executive Order 12988
    This supplemental proposed rule has been reviewed under Executive 
Order 12988, Civil Justice Reform. States and local jurisdictions are 
preempted by the Federal Meat Inspection Act (FMIA) and the Poultry 
Products Inspection Act (PPIA) from imposing any marking, labeling, 
packaging, or ingredient requirements on Federally inspected meat and 
poultry products that are in addition to, or different than, those 
imposed under the FMIA or the PPIA. However, States and local 
jurisdictions may exercise concurrent jurisdiction over meat and 
poultry products that are outside official establishments for the 
purpose of preventing the distribution of meat and poultry products 
that are misbranded or adulterated under the FMIA or PPIA, or, in the 
case of imported articles, which are not at such an establishment, 
after their entry into the United States.
    The supplemental proposed rule would not be intended to have 
retroactive effect.
    Administrative proceedings would not be required before parties may 
file suit in court challenging this rule. However, the administrative 
procedures specified in Sec. Sec.  306.5 and 381.35 must be exhausted 
before there is any judicial challenge of the application of the rule, 
if the challenge involves any decision of an FSIS employee relating to 
inspection services provided under FMIA and PPIA.
Paperwork Requirements
    Title: Nutrition labeling of ground or chopped meat and poultry 
products and single-ingredient products.
    Type of Collection: New.
    Abstract: FSIS has reviewed the paperwork and record keeping 
requirements in this supplemental proposed rule in accordance with the 
Paperwork Reduction Act. Should this rule become final, FSIS will 
require several information collection and recordkeeping activities. 
FSIS will requiring nutrition labeling on the major cuts of single-
ingredient, raw meat and poultry products, either on their label or at 
their POP, unless an exemption applies. If the manufacturer provides 
nutrition information on the label of individual packages of the major 
cuts of single-ingredient, raw meat or poultry products, the retailer 
would not be required to provide the information at the POP. However, 
if the manufacturer does not provide the nutrition information on the 
label of these products, the retailer would be required to provide the 
information at their POP. In the estimate of burden below, FSIS is 
calculating that all retailers would display POP information for the 
major cuts of single-ingredient, raw meat and poultry products, because 
this is a low-cost means of providing nutrition information for 
multiple products, and because this rule will not require that 
manufacturers include nutrition labels on the major cuts of single-
ingredient, raw meat and poultry products. FSIS is also requiring 
nutrition labels on all ground or chopped meat and poultry products, 
with or without added seasonings, unless an exemption applies.
    Estimate of burden: FSIS estimates that obtaining POP materials and 
making them available for consumers would take an average of 30 
minutes. FSIS believes that the nutrition information on most POP 
materials will be based on the most current representative database 
values contained in USDA's National Nutrient Data Bank or the USDA 
National Nutrient Database for Standard Reference. FSIS also believes 
it is unlikely that there will be any nutrition claims made on the POP 
materials on the basis of the representative data base values. 
Therefore, these products will not be subject to FSIS compliance 
review, and there will be no recordkeeping requirements based on this 
information.
    FSIS estimates that developing nutrition labels for ground or 
chopped products would take an average of 6 hours. Labels developed at 
official establishments would be submitted to FSIS. FSIS estimates that 
each official establishment that produces ground or chopped product 
would submit 6.6 labels to FSIS for approval. FSIS estimates that it 
would take an average of 1.5 hours to prepare and submit the form for 
prior approval. All ground or chopped product would be subject to FSIS 
compliance review; therefore, producers of ground or chopped product 
would be required to maintain records to support the validity of 
nutrient declarations contained on product labels. FSIS estimates the 
average time for recordkeeping would be 30 minutes.
    Respondents: Meat and poultry establishments and retail stores.
    Estimated number of respondents: 75,539.
    Estimated number of responses per respondent: 18.04.
    Estimated total annual burden on respondents: 66,062 hours
    Copies of this information collection assessment can be obtained 
from John O'Connell, Paperwork Reduction Act Coordinator, Food Safety 
and Inspection Service, USDA, 112 Annex, 300 12th St., Washington, DC 
20250. Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of FSIS's 
functions, including whether the information will have practical 
utility; (b) the accuracy of FSIS's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (c) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (d) ways 
to minimize the burden of the collection of information on those who 
are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques, 
or other forms of information technology. Comments may be sent to both 
John O'Connell, Paperwork Reduction Act Coordinator, at the address 
provided above, and the Desk Officer for Agriculture, Office of 
Information and Regulatory Affairs,

[[Page 67796]]

Office of Management and Budget, Washington, DC 20253.
    To be most effective, comments should be sent to OMB within 60 days 
of the publication date of this supplemental proposed rule.
E-Government Act Compliance
    FSIS is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.
Additional Public Notification
    Public awareness of all segments of rulemaking and policy 
development is important. Consequently, in an effort to ensure that 
minorities, women, and persons with disabilities are aware of this 
supplemental proposed rule, FSIS will announce it on-line through the 
FSIS Web page located at http://www.fsis.usda.gov/regulations_&_policies/2009_Proposed_Rules_Index/index.asp. FSIS also will make 
copies of this Federal Register publication available through the FSIS 
Constituent Update, which is used to provide information regarding FSIS 
policies, procedures, regulations, Federal Register notices, FSIS 
public meetings, and other types of information that could affect or 
would be of interest to constituents and stakeholders. The Update is 
communicated via Listserv, a free electronic mail subscription service 
for industry, trade groups, consumer interest groups, health 
professionals and other individuals who have asked to be included. The 
Update is available on the FSIS Web page. Through the Listserv and the 
Web page, FSIS is able to provide information to a much broader and 
more diverse audience.
    In addition, FSIS offers an e-mail subscription service which 
provides automatic and customized access to selected food safety news 
and information. This service is available at http://www.fsis.usda.gov/news_and_events/email_subscription/. Options range from recalls to 
export information to regulations, directives and notices. Customers 
can add or delete subscriptions themselves, and have the option to 
password protect their accounts.
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Magat, Wewsley, and W. Kip Viscusi. 1992. Informational Approaches 
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Mathios. A.D., and P.M. Ippolito. 1998. Food companies spread 
nutrition information through advertising and labels. Food Review. 
21(2), 38-43.
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communication with Mary Muth, RTI International, Research Triangle 
Park, NC.
Moorman, Christine. 1996 ``A Quasi Experiment to Assess the Consumer 
and Informational Determinants of Nutrition Information Processing 
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Muth, M.K., E.C. Gledhill, and S.A. Karns. January, 2003. ``FDA 
Labeling Cost Model.'' Prepared for the U.S. Food and Drug 
Administration, Center for Food Safety and Applied Nutrition. 
Research Triangle Park, NC. RTI International.
National Cattlemen's Beef Association. 2004. National Meat Case 
Study.
National Cattlemen's Beef Association. 2009. The Journey towards 
Retail Meat Case Nutrition Labeling, A white paper, November 2009. 
http://www.beefretail.org/CMDocs/BeefRetail/nutrition/NutritionLabelingWhitePaper.pdf.
National Livestock and Meat Board. Uniform Retail Meat Identity 
Standards. Chicago, Illinois. 1995.
National Marketing Institute, 2003. The NMI Health and Wellness 
Trends Database. Harleysville, PA. As reported in Food Technology. 
``What, When and Where Americans Eat: 2003. August 2003.
Neuhouser, M.L., Kristal, A.R., and Patterson, R.E. 1999. ``Use of 
food nutrition labels is associated with lower fat intake''. Journal 
of the American Dietetic Association, 99, 45-53.
Noah, Lars. 1994. ``The Imperative to Warn: Disentangling the 
``Right to Know'' from the ``Need to Know'' about Consumer Product 
Hazards'' Yale Journal on Regulation 11(2): 293-400.
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Maximizing the Quality, Objectivity, Utility, and Integrity of 
Information Disseminated by Federal Agencies. 67 FR 8452).
RTI, International. Cost Analysis for Nutrition Labeling of Ground, 
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Products: May 2003, revised final report, May 20, 2003.
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Section III

List of Subjects

9 CFR Part 317

    Food labeling, Food packaging, Meat Inspection, Nutrition, 
Reporting and recordkeeping requirements.

9 CFR Part 381

    Food labeling, Food packaging, Nutrition, Poultry and poultry 
products, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, FSIS is proposing to amend 
9 CFR Chapter III, as follows:

PART 317--LABELING, MARKING DEVICES AND CONTAINERS

    1. The authority citation for part 317 continues to read as 
follows:

    Authority: 21 U.S.C 601-695; 7 CFR 2.18, 2.53.

    2. Section 317.300 is revised to read as follows:


Sec.  317.300  Nutrition labeling of meat and meat food products.

    (a) Unless the product is exempted under Sec.  317.400, nutrition 
labeling must be provided for all meat and meat food products intended 
for human consumption and offered for sale, except single-ingredient, 
raw products that are not ground or chopped products described in Sec.  
317.301 and are not major cuts of single-ingredient, raw meat products 
identified in Sec.  317.344. Nutrition labeling must be provided for 
the major cuts of single-ingredient, raw meat products identified in 
Sec.  317.344, either in accordance with the provisions of Sec.  
317.309 for nutrition labels, or in accordance with the provisions of 
Sec.  317.345 for POP materials, except as exempted under Sec.  
317.400. For all other products for which nutrition labeling is 
required, including ground or chopped meat products described in Sec.  
317.301, nutrition labeling must be provided in accordance with the 
provisions of Sec.  317.309, except as exempted under Sec.  317.400.
    (b) Nutrition labeling may be provided for single-ingredient, raw 
meat products that are not ground or chopped meat products described in 
Sec.  317.301 and that are not major cuts of single-ingredient, raw 
meat products identified in Sec.  317.344, either in accordance with 
the provisions of Sec.  317.309 for nutrition labels, or in accordance 
with the provisions of Sec.  317.345 for point-of-purchase materials.
    3. A new Sec.  317.301 is added to read as follows:


Sec.  317.301  Required nutrition labeling of ground or chopped meat 
products.

    (a) Nutrition labels must be provided for all ground or chopped 
products (livestock species) and hamburger with or without added 
seasonings (including, but not limited to, ground beef, ground beef 
patties, ground sirloin, ground pork, and ground lamb) that are 
intended for human consumption and offered for sale, in accordance with 
the provisions of Sec.  317.309, except as exempted under Sec.  
317.400.(b). [Reserved]
    4. Section 317.309 is amended as follows:
    a. In paragraph (b)(3), the first sentence is amended by adding 
``that are not ground or chopped meat products described in Sec.  
317.301'' after the phrase ``single-ingredient, raw products'', and by 
removing ``as set forth in Sec.  317.345(a)(1)''; the second sentence 
is amended by adding, ``that are not ground or chopped meat products 
described in Sec.  317.301'' after the phrase ``single-ingredient, raw 
products'', and the following new sentence is added after the first 
sentence: ``For single-ingredient, raw products that are not ground or 
chopped meat products described in Sec.  317.301, if data are based on 
the product `as consumed,' the data must be presented in accordance 
with Sec.  317.345(d).''
    b. Paragraph (b)(10) is amended by adding the following new 
sentence at the end of the paragraph: ``The declaration of the number 
of servings per container need not be included in nutrition labeling of 
single-ingredient, raw meat products that are not ground or chopped 
meat products described in Sec.  317.301, including those that have 
been previously frozen.''
    c. Paragraph (b)(11) is amended by adding the phrase ``single-
ingredient, raw products that are not ground or chopped meat products 
described in Sec.  317.301 and'' after ``exception of''.
    d. Paragraph (d)(3)(ii) is amended by removing the period and 
adding ``or on single-ingredient, raw meat products that are not ground 
or chopped meat products described in Sec.  317.301.'' at the end of 
the paragraph.
    e. Paragraph (e)(3) is amended by adding ``, but may be on the 
basis of as consumed for single-ingredient, raw meat products that are 
not ground or chopped meat products described in Sec.  317.301,'' after 
``as packaged''.

[[Page 67798]]

    f. Paragraph (h)(9) is amended by removing the phrase ``(including 
ground beef)'', by adding, ``that are not ground or chopped meat 
products described in Sec.  317.301'' after ``products'', by removing 
the phrase, ``its published form, the Agriculture Handbook No. 8 series 
available from the Government Printing Office'', and by adding, in its 
place, ``its released form, the USDA National Nutrient Database for 
Standard Reference'', and by removing the period and adding the 
following at the end of the paragraph: as provided in Sec.  317.345(e) 
and (f).''


Sec.  317.343  [Amended]

    5. Section 317.343 is removed.
    6. Section 317.344 is amended by removing the phrases ``ground beef 
regular without added seasonings, ground beef about 17% fat,'' and 
``ground pork.''
    7. Section 317.345 is amended as follows:
    a. The section heading and paragraphs (a) and (c) are revised.
    b. Paragraph (d) is amended by removing ``should'' and adding, in 
its place, ``for products covered in paragraphs (a)(1) and (a)(2) 
must''.
    c. Paragraph (e) is amended by removing ``its published form, the 
Agriculture Handbook No. 8 series'' and by adding, in its place, ``its 
released form, the USDA National Nutrient Database for Standard 
Reference'', and by removing ``(including ground beef)''.
    d. Paragraph (f) is amended by adding ``provided'' after 
``nutrition information is''.
    e. Paragraph (g) is amended by removing the phrase ``(including 
ground beef)''.
    The revisions read as follows:


Sec.  317.345  Nutrition labeling of single-ingredient, raw meat 
products that are not ground or chopped products described in Sec.  
317.301.

    (a)(1) Nutrition information on the major cuts of single-
ingredient, raw meat products identified in Sec.  317.344, including 
those that have been previously frozen, is required, either on their 
label or at their point-of-purchase, unless exempted under Sec.  
317.400. If nutrition information is presented on the label, it must be 
provided in accordance with Sec.  317.309. If nutrition information is 
presented at the point-of-purchase, it must be provided in accordance 
with the provisions of this section.
    (2) Nutrition information on single-ingredient, raw meat products 
that are not ground or chopped meat products described in Sec.  317.301 
and are not major cuts of single-ingredient, raw meat products 
identified in Sec.  317.344, including those that have been previously 
frozen, may be provided at their point-of-purchase in accordance with 
the provisions of this section or on their label, in accordance with 
the provisions of Sec.  317.309.
    (3) A retailer may provide nutrition information at the point-of-
purchase by various methods, such as by posting a sign or by making the 
information readily available in brochures, notebooks, or leaflet form 
in close proximity to the food. The nutrition labeling information may 
also be supplemented by a video, live demonstration, or other media. If 
a nutrition claim is made on point-of-purchase materials, all of the 
format and content requirements of Sec.  317.309 apply. However, if 
only nutrition information--and not a nutrition claim--is supplied on 
point-of-purchase materials, the requirements of Sec.  317.309 apply, 
provided, however:
    (i) The listing of percent of Daily Value for the nutrients (except 
vitamins and minerals specified in Sec.  317.309 (c)(8)) and footnote 
required by Sec.  317.309(d)(9) may be omitted; and
    (ii) The point-of-purchase materials are not subject to any of the 
format requirements.
* * * * *
    (c) For the point-of-purchase materials, the declaration of 
nutrition information may be presented in a simplified format as 
specified in Sec.  317.309(f).
* * * * *
    8. Section 317.362 is amended by adding a new paragraph (f) to read 
as follows:


Sec.  317.362  Nutrient content claims for fat, fatty acids, and 
cholesterol content.

* * * * *
    (f) A statement of the lean percentage may be used on the label or 
in labeling of ground or chopped meat products described in Sec.  
317.301 when the product does not meet the criteria for ``low fat,'' 
defined in Sec.  317.362(b)(2), provided that a statement of the fat 
percentage is contiguous to and in lettering of the same color, size, 
type, and on the same color background, as the statement of the lean 
percentage.
    9. Section 317.400 is amended by:
    a. Revise paragraph (a)(1) introductory text.
    b. Paragraph (a)(1)(ii) is amended by adding ``, including a single 
retail store,'' after the phrase ``single-plant facility,'' and by 
adding, ``, including a multi-retail store operation,'' after 
``company/firm''.
    c. Paragraph (a)(7)(i) is amended by removing the semi-colon and 
``and'' and by adding the following at the end of the paragraph: ``, 
provided, however, that this exemption does not apply to ready-to-eat 
ground or chopped meat products described in Sec.  317.301 that are 
packaged or portioned at a retail establishment, unless the 
establishment qualifies for an exemption under (a)(1);''.
    d. Paragraph (a)(7)(ii) is amended by removing the period and by 
adding the following at the end of the paragraph: ``, provided, 
however, that this exemption does not apply to multi-ingredient ground 
or chopped meat products described in Sec.  317.301 that are processed 
at a retail establishment, unless the establishment qualifies for an 
exemption under (a)(1); and''
    e. Add a new paragraph (a)(7)(iii).
    f. Paragraph (d)(1) is amended by removing the period at the end of 
the first sentence, and by adding the following to the end of the first 
sentence: ``, except that this exemption does not apply to the major 
cuts of single-ingredient, raw meat products identified in Sec.  
317.344.''
    The revision and addition read as follows:


Sec.  317.400  Exemption from nutrition labeling.

    (a) * * *
    (1) Food products produced by small businesses, other than the 
major cuts of single-ingredient, raw meat products identified in Sec.  
317.344 produced by small businesses, provided that the labels for 
these products bear no nutrition claims or nutrition information, and 
ground or chopped products described in Sec.  317.301 produced by small 
businesses that bear a statement of the lean percentage and fat 
percentage on the label or in labeling in accordance with Sec.  
317.362(f), provided that labels or labeling for these products bear no 
other nutrition claims or nutrition information,
* * * * *
    (7) * * *
    (iii) Products that are ground or chopped at an individual 
customer's request.
* * * * *

PART 381--POULTRY PRODUCTS INSPECTION REGULATIONS

    10. The authority citation for part 381 continues to read as 
follows:

    Authority: 7 U.S.C. 138f, 450; 21 U.S.C. 451-470; 7 CFR 2.18, 
2.53.

    11. Section 381.400 is revised to read as follows:

[[Page 67799]]

Sec.  381.400  Nutrition labeling of poultry products.

    (a) Unless the product is exempted under Sec.  381.500, nutrition 
labeling must be provided for all poultry products intended for human 
consumption and offered for sale, except single-ingredient, raw 
products that are not ground or chopped products described in Sec.  
381.401 and are not major cuts of single-ingredient, raw poultry 
products identified in Sec.  381.444. Nutrition labeling must be 
provided for the major cuts of single-ingredient, raw poultry products 
identified in Sec.  381.444, either in accordance with the provisions 
of Sec.  381.409 for nutrition labels, or in accordance with the 
provisions of Sec.  381.445 for point-of-purchase materials, except as 
exempted under Sec.  381.500. For all other products that require 
nutrition labeling, including ground or chopped poultry products 
described in Sec.  381.401, nutrition labeling must be provided in 
accordance with the provisions of Sec.  381.409, except as exempted 
under Sec.  381.500.
    (b) Nutrition labeling may be provided for single-ingredient, raw 
poultry products that are not ground or chopped poultry products 
described in Sec.  381.401 and that are not major cuts of single-
ingredient, raw poultry products identified in Sec.  381.444, either in 
accordance with the provisions of Sec.  381.409 for nutrition labels, 
or in accordance with the provisions of Sec.  381.445 for point-of-
purchase materials.
    12. A new Sec.  381.401 is added to read as follows:


Sec.  381.401  Required nutrition labeling of ground or chopped poultry 
products.

    Nutrition labels must be provided for all ground or chopped poultry 
(kind) with or without added seasonings (including, but not limited to, 
ground chicken, ground turkey, and (kind) burgers) that are intended 
for human consumption and offered for sale, in accordance with the 
provisions of Sec.  381.409, except as exempted under Sec.  381.500.
    13. Section 381.409 is amended as follows:
    a. Revise paragraph (b)(3).
    b. Paragraph (b)(10) is amended by adding the following new 
sentence at the end of the paragraph: ``The declaration of the number 
of servings per container need not be included in nutrition labeling of 
single-ingredient, raw poultry products that are not ground or chopped 
poultry products described in Sec.  381.401, including those that have 
been previously frozen.''
    c. Paragraph (b)(11) is amended by adding the phrase ``single-
ingredient, raw products that are not ground or chopped poultry 
products described in Sec.  381.401 and'' after ``exception of''.
    d. Paragraph (d)(3)(ii) is amended by removing the period and 
adding ``or on single-ingredient, raw poultry products that are not 
ground or chopped poultry products described in Sec.  381.401.'' at the 
end of the paragraph.
    e. Paragraph (e)(3) is amended by adding ``, but may be on the 
basis of ``as consumed'' for single-ingredient, raw poultry products 
that are not ground or chopped poultry products described in Sec.  
381.401,'' after ``as packaged''.
    f. Paragraph (h)(9) is amended by adding, ``that are not ground or 
chopped poultry products described in Sec.  381.401'' after 
``products'', by removing the phrase, ``its published form, the 
Agriculture Handbook No. 8 series'', and by adding, in its place, ``its 
released form, the USDA National Nutrient Database for Standard 
Reference'', and by removing the period and adding the following at the 
end of the paragraph: ``, as provided in Sec.  381.445(e) and (f).''
    The revision reads as follows:


Sec.  381.409  Nutrition label content.

* * * * *
    (b) * * *
    (3) The declaration of nutrient and food component content shall be 
on the basis of the product ``as packaged'' for all products, except 
that single-ingredient, raw products that are not ground or chopped 
poultry products as described in Sec.  381.401 may be declared on the 
basis of the product ``as consumed.'' For single-ingredient, raw 
products that are not ground or chopped poultry products described in 
Sec.  381.401, if data are based on the product ``as consumed,'' the 
data must be presented in accordance with Sec.  381.445(d). In addition 
to the required declaration on the basis of ``as packaged'' for 
products other than single ingredient, raw products that are not ground 
or chopped poultry products as described in Sec.  381.401, the 
declaration may also be made on the basis of ``as consumed,'' provided 
that preparation and cooking instructions are clearly stated.
* * * * *


Sec.  381.443  [Removed]

    14. Section 381.443 is removed.
    15. Section 381.445 is amended as follows:
    a. The section heading and paragraph (a) and (c) are revised.
    b. Paragraph (d) is amended by removing ``should'' and adding, in 
its place, ``for products covered in paragraphs (a)(1) and (a)(2) 
must''.
    c. Paragraph (e) is amended by removing ``its published form, the 
Agriculture Handbook No. 8 series'' and by adding, in its place, ``its 
released form, the USDA National Nutrient Database for Standard 
Reference.''
    d. Paragraph (f) is amended by adding ``provided'' after 
``nutrition information is''.
    The revisions read as follows:


Sec.  381.445  Nutrition labeling of single-ingredient, raw poultry 
products that are not ground or chopped products described in Sec.  
381.401.

    (a)(1) Nutrition information on the major cuts of single-
ingredient, raw poultry products identified in Sec.  381.444, including 
those that have been previously frozen, is required, either on their 
label or at their point-of-purchase, unless exempted under Sec.  
381.500. If nutrition information is presented on the label, it must be 
provided in accordance with the provisions of Sec.  381.409. If 
nutrition information is presented at the point-of-purchase, it must be 
provided in accordance with the provisions of this section.
    (2) Nutrition information on single-ingredient, raw poultry 
products that are not ground or chopped poultry products described in 
Sec.  381.401 and are not major cuts of single-ingredient, raw poultry 
products identified in Sec.  381.444, including those that have been 
previously frozen, may be provided at their point-of-purchase in 
accordance with the provisions of this section or on their label, in 
accordance with the provisions of Sec.  381.409.
    (3) A retailer may provide nutrition information at the point-of-
purchase by various methods, such as by posting a sign or by making the 
information readily available in brochures, notebooks, or leaflet form 
in close proximity to the food. The nutrition labeling information may 
also be supplemented by a video, live demonstration, or other media. If 
a nutrition claim is made on point-of-purchase materials, all of the 
format and content requirements of Sec.  381.409 apply. However, if 
only nutrition information--and not a nutrition claim--is supplied on 
point-of-purchase materials, the requirements of Sec.  381.409 apply, 
provided, however:
    (i) The listing of percent of Daily Value for the nutrients (except 
vitamins and minerals specified in Sec.  381.409(c)(8)) and footnote 
required by Sec.  381.409(d)(9) may be omitted; and
    (ii) The point-of-purchase materials are not subject to any of the 
format requirements.
* * * * *

[[Page 67800]]

    (c) For the point-of-purchase materials, the declaration of 
nutrition information may be presented in a simplified format as 
specified in Sec.  381.409(f).
* * * * *
    16. Section 381.462 is amended by adding a new paragraph (f) to 
read as follows:


Sec.  381.462  Nutrient content claims for fat, fatty acids, and 
cholesterol content.

* * * * *
    (f) A statement of the lean percentage may be used on the label or 
in labeling of ground or chopped poultry products described in Sec.  
381.401 when the product does not meet the criteria for ``low fat,'' 
defined in Sec.  381.462(b)(2), provided that a statement of the fat 
percentage is contiguous to and in lettering of the same color, size, 
type, and on the same color background, as the statement of the lean 
percentage.
    17. Section 381.500 is amended by:
    a. Revising paragraph (a)(1) introductory text.
    b. Paragraph (a)(1)(ii) is amended by adding, ``, including a 
single retail store,'' after the phrase ``single-plant facility,'' and 
by adding ``, including a multi-retail store operation'' after 
``company/firm''.
    c. Paragraph (a)(7)(i) is amended by removing the semi-colon and 
``and'' and adding the following at the end of the paragraph: ``, 
provided, however, that this exemption does not apply to ready-to-eat 
ground or chopped poultry products described in Sec.  381.401 that are 
packaged or portioned at a retail establishment, unless the 
establishment qualifies for an exemption under (a)(1);''.
    d. Paragraph (a)(7)(ii) is amended by removing the period and 
adding the following at the end of the paragraph: ``, provided, 
however, that this exemption does not apply to multi-ingredient ground 
or chopped poultry products described in Sec.  381.401 that are 
processed at a retail establishment, unless the establishment qualifies 
for an exemption under (a)(1); and''
    e. Add a new paragraph (a)(7)(iii).
    f. Paragraph (d)(1) is amended by removing the period at the end of 
the sentence, and by adding the following to the end of the sentence: 
``except that this exemption does not apply to the major cuts of 
single-ingredient, raw poultry products identified in Sec.  381.444.''
    The revision and addition reads as follows:


Sec.  381.500  Exemption from nutrition labeling.

    (a) * * *
    (1) Food products produced by small businesses other than the major 
cuts of single-ingredient, raw poultry products identified in Sec.  
381.444 produced by small businesses, provided that the labels for 
these products bear no nutrition claims or nutrition information, and 
ground or chopped products described in Sec.  381.401 produced by small 
businesses that bear a statement of the lean percentage and fat 
percentage on the label or in labeling in accordance with Sec.  
381.462(f), provided that labels or labeling for these products bear no 
other nutrition claims or nutrition information,
* * * * *
    (7) * * *
    (iii) Products that are ground or chopped at an individual 
customer's request.
* * * * *

    Done in Washington, DC, on December 3, 2009.
Alfred V. Almanza,
Administrator.
[FR Doc. E9-29323 Filed 12-17-09; 8:45 am]
BILLING CODE 3410-DM-P