[Federal Register Volume 80, Number 244 (Monday, December 21, 2015)]
[Rules and Regulations]
[Pages 79231-79250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31795]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 80, No. 244 / Monday, December 21, 2015 / 
Rules and Regulations  

[[Page 79231]]



DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Part 320

[Docket No. FSIS-2009-0011]
RIN 0583-AD46


Records To Be Kept by Official Establishments and Retail Stores 
That Grind Raw Beef Products

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Food Safety and Inspection Service (FSIS) is amending its 
recordkeeping regulations to require that all official establishments 
and retail stores that grind raw beef products for sale in commerce 
maintain the following records: The establishment numbers of 
establishments supplying material used to prepare each lot of raw 
ground beef product; all supplier lot numbers and production dates; the 
names of the supplied materials, including beef components and any 
materials carried over from one production lot to the next; the date 
and time each lot of raw ground beef product is produced; and the date 
and time when grinding equipment and other related food-contact 
surfaces are cleaned and sanitized. These requirements also apply to 
raw beef products that are ground at an individual customer's request 
when new source materials are used.

DATES: Effective June 20, 2016.

FOR FURTHER INFORMATION CONTACT: Dr. Daniel Engeljohn, Assistant 
Administrator, Office of Policy and Program Development, Food Safety 
and Inspection Service, U.S. Department of Agriculture, Washington, DC 
20250; Telephone: (202) 205-0495; Fax (202) 720-2025.

SUPPLEMENTARY INFORMATION:

Executive Summary

    This rule requires official establishments and retail stores that 
grind raw beef for sale in commerce to maintain specific information 
about their grinding activities. This rule is necessary to improve 
FSIS's ability to accurately trace the source of foodborne illness 
outbreaks involving ground beef and to identify the source materials 
that need to be recalled. The recordkeeping requirements in this final 
rule will greatly assist FSIS in doing so.
    FSIS has often been impeded in its efforts to trace ground beef 
products back to a supplier because of the lack of documentation 
identifying all source materials used in their preparation. On July 22, 
2014, FSIS published a proposed rule (79 FR 42464) to require official 
establishments and retail stores to maintain records concerning their 
suppliers and source materials received. Having reviewed and considered 
all comments received in response to the proposed rule, FSIS is 
finalizing the rule and making several changes in response to comments. 
Most of the proposed requirements are retained in this final rule. This 
final rule requires establishments and retail facilities that grind raw 
beef to keep the following records: The establishment numbers of the 
establishments supplying the materials used to prepare each lot of raw 
ground beef; all supplier lot numbers and production dates; the names 
of the supplied materials, including beef components and any materials 
carried over from one production lot to the next; the date and time 
each lot of raw ground beef is produced; and the date and time when 
grinding equipment and other related food-contact surfaces are cleaned 
and sanitized. These requirements also apply when official 
establishments and retail stores grind new source materials at an 
individual customer's request.
    In response to comments, FSIS is not adopting two proposed 
requirements. First, under this final rule, establishments and retail 
stores that grind raw beef products will not have to maintain records 
concerning the weight of each source component used in a lot of ground 
beef. After considering comments, FSIS concluded that weighing each 
component in a lot of ground beef was time-consuming and offered little 
food safety benefit because contamination in a lot of ground beef is 
not dependent on the weight of any contaminated component. FSIS is also 
not requiring that establishments and stores that grind raw beef 
products maintain records of the names, points of contact, and phone 
numbers of each official establishment supplying source material 
because FSIS already has this information in its Public Health 
Information System (PHIS). Any marginal benefit presented by these two 
proposed requirements would be outweighed by the time burden associated 
with recording the information. In response to comments, this rule also 
differs from the proposed rule in terms of the place where the records 
must be maintained and the retention period. Under the proposed rule, 
based on existing recordkeeping requirements (9 CFR 320.1), 
establishments and retail stores would have been allowed to keep the 
required records at a business headquarters location if the grinding 
activity is conducted at multiple locations. In response to comments, 
however, this rule requires the grinding records to be kept at the 
location where the beef is ground. This change in the final rule will 
save investigators valuable time and will reduce the risk that records 
will be lost or misplaced. Finally, in response to comments, for 
purposes of this rule, FSIS is including the definition of a lot as set 
out in the regulatory text at the end of this document (9 CFR 
320.1(b)(4)(iii)).
    Under the proposed rule, based on existing regulations (9 CFR 
320.3(a)), the required grinding records would have been required to be 
maintained for up to three years. However, in response to comments, 
FSIS concluded that because the records required by this rule are 
needed primarily to investigate foodborne illness outbreaks, their 
utility diminishes over time. FSIS consulted with its investigators and 
public health experts and determined that the records would rarely be 
needed after one year. Considering this fact and comments concerning 
the burden of keeping records on-site, particularly at retail stores, 
FSIS shortened the retention period in the final rule to one year after 
the date of the recorded grinding activity.
    The final rule will result in storage and labor costs to official 
establishments and retail stores that grind raw beef for sale in 
commerce. Benefits will accrue

[[Page 79232]]

in terms of averted foodborne illnesses, less costly outbreaks and 
recalls, and increased consumer confidence when purchasing ground beef. 
These costs and benefits are listed in Table 1.

                    Table 1--Executive Summary Table
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Costs:
    Labor............................  [ssquf] $56.6 million annually
                                        ($45.8 million to $67.4
                                        million).
    Storage..........................  [ssquf] $2.7 million annually.
    Unquantified Costs...............  [ssquf] Non-labor costs
                                        associated with recordkeeping
                                        for customer-requested grinds.
                                       [ssquf] Potential for slight
                                        costs to consumers in the form
                                        of ground beef price increases.
Benefits:
    Unquantified Benefits............  [ssquf] Benefits to consumers in
                                        the form of averted foodborne
                                        illnesses as a result of
                                        contaminated ground beef.
                                       [ssquf] Benefits to retailers and
                                        official establishments grinding
                                        raw beef in the form of less
                                        costly food safety events, such
                                        as outbreaks and recalls.
                                       [ssquf] Benefits to official
                                        establishments supplying ground
                                        beef components in the form of
                                        less costly recalls and
                                        insulation from costly spillover
                                        effects during food safety
                                        events.
------------------------------------------------------------------------

Background

    Under the authority of the Federal Meat Inspection Act (FMIA) and 
its implementing regulations (9 CFR 329.1 and 329.6), FSIS investigates 
reports of consumer foodborne illness associated with FSIS-regulated 
products. FSIS investigators and other public health officials use 
records kept at all levels of the food distribution chain, including 
the retail level, to identify the sources of outbreaks.
    FSIS has often been impeded in these efforts when an outbreak 
involves ground beef because of a lack of documentation identifying all 
source materials used in its preparation (79 FR 42464). In some 
situations, official establishments and retail stores have not kept 
adequate records that would allow effective traceback and traceforward 
activities. Without such records, FSIS cannot conduct timely and 
effective consumer foodborne illness investigations and other public 
health activities throughout the stream of commerce.
    As FSIS also explained in the proposed rule, official 
establishments and retail stores that grind raw beef products for sale 
in commerce must keep records that will fully and correctly disclose 
all transactions involved in their business that are subject to the 
FMIA (see 21 U.S.C. 642) (79 FR 42465). Businesses must also provide 
access to, and permit inspection of, these records by FSIS personnel.
    The proposed rule also explained that under 9 CFR 320.1(a), every 
person, firm, or corporation required by 21 U.S.C. 642 to keep records 
must keep records that will fully and correctly disclose all 
transactions involved in the aspects of their business that are subject 
to the FMIA. Records specifically required to be kept under 9 CFR 
320.1(b) include, but are not limited to, bills of sale, invoices, 
bills of lading, and receiving and shipping papers. With respect to 
each transaction, the records must provide the name or description of 
the livestock or article, the number of outside containers, the name 
and address of the buyer or seller of the livestock or animal, and the 
date and method of shipment.
    The recordkeeping requirements contained in the FMIA and 9 CFR part 
320 are intended to permit FSIS to trace product, including raw ground 
beef product associated with consumer foodborne illness, from the 
consumer, or the place where the consumer purchased the product, back 
through its distribution chain to the establishment that was the source 
of the product. Having this information available will make it easier 
to determine where the contamination occurred. Investigators should 
also be able to conduct effective traceforward investigations so as to 
identify other potentially contaminated product that has been shipped 
from the point of origin of its contamination to other official 
establishments, retail stores, warehouses, distributors, restaurants, 
or other firms. FSIS must be able to carry out these investigations 
using records that should be kept routinely by official establishments 
and retail stores.
    In the proposed rule, FSIS explained past efforts it has made to 
ensure that official establishments and retail stores that produce raw 
ground beef maintain necessary records. For example, the proposal 
explained that in 2002, FSIS published a Federal Register notice that 
listed the data that FSIS intended to collect when any samples of raw 
ground beef produced at an official establishment tested positive for 
E. coli O157:H7 (67 FR 62325, Oct. 7, 2002). FSIS also listed the 
information it intended to gather from retail stores at the time it 
collected a sample of raw ground beef for E. coli O157:H7 testing.
    In the proposed rule in the present rulemaking, FSIS explained that 
shortly after issuing the 2002 Federal Register notice, the Agency 
began collecting the information listed in the Federal Register notice 
from official establishments and retail stores (79 FR 42465).\1\ 
However, as the proposal explained, some retail stores and official 
establishments still did not maintain records sufficient for traceback, 
and some retail stores did not document or maintain supplier 
information at times other than when FSIS collected samples of ground 
raw beef product from the stores for E. coli O157:H7 testing.\2\ As a 
result, FSIS was, and remains, disadvantaged in its foodborne disease 
investigations.
---------------------------------------------------------------------------

    \1\ FSIS Notice 47-02, November 20, 2002, ``FSIS Actions 
Concerning Suppliers that may be Associated with Escherichia coli 
(E. coli) 0157:H7 Positive Raw Ground Beef Product.''
    \2\ On June 4, 2012, FSIS implemented routine verification 
testing for six Shiga toxin-producing E. coli (STEC), in addition to 
E. coli O157:H7, in raw beef manufacturing trimmings. See Shiga 
Toxin-Producing Escherichia coli in Certain Raw Beef Products (77 FR 
31975, May 31, 2012).
---------------------------------------------------------------------------

    In 2009, FSIS provided guidance to a retail industry association, 
which was made available on the FSIS Web site, stating that retail 
stores should keep appropriate records to aid in investigations 
involving FSIS-regulated products associated with foodborne illnesses 
and other food safety incidents.
    To further address the issue, on December 9-10, 2009, the Food and 
Drug Administration (FDA) and FSIS held a public meeting to discuss the 
essential elements of product tracing systems, gaps in then-current 
product tracing systems, and mechanisms to enhance product tracing 
systems for food.\3\ This meeting was followed on

[[Page 79233]]

March 10, 2010, by an FSIS public meeting that discussed its procedures 
for identifying suppliers of source material used to produce raw beef 
product that FSIS found positive for E. coli O157:H7. FSIS sought input 
from meeting participants on ways to improve its procedures for 
identifying product that may be positive for E. coli O157:H7.
---------------------------------------------------------------------------

    \3\ Comments from this hearing are available at: http://www.regulations.gov/#!searchResults;rpp=10;po=0;s=FDA-2009-N-
0523;dct=PS. A transcript of this meeting is available at: http://www.regulations.gov/#!searchResults;rpp=10;po=0;s=FDA-2009-N-
0523;dct=O.
---------------------------------------------------------------------------

    Despite these actions, as explained in the proposed rule, some 
official establishments and retail stores still did not keep and 
maintain the records necessary for effective investigation by FSIS. 
With this history in mind, FSIS conducted a retrospective review of 28 
foodborne disease investigations from October 2007 through September 
2011 in which beef products were ground or re-ground at retail 
stores.\4\ When records were available and complete, enabling FSIS to 
identify specific production in an official establishment, the Agency 
was able to request a recall of product from the supplying 
establishment in six of eleven investigations. In contrast, when 
records were not available or incomplete, FSIS was able to request a 
product recall only two of seventeen times. These results confirmed 
FSIS's experience in specific cases where the presence of records at 
the retail level was often instrumental in identifying the source of an 
outbreak, as well as the implicated products that should be recalled. 
The proposed rule includes a fuller description of this review, 
including specific examples (79 FR 42464).
---------------------------------------------------------------------------

    \4\ Ihry, T., White, P., Green, A., and Duryea, P. Review of the 
Adequacy of Ground Beef Production Records at Retail Markets for 
Traceback Activities During Foodborne Disease Investigations. Poster 
presented at: Annual Conference of the Council of State and 
Territorial Epidemiologists; 2012, June 4-6; Omaha, NE. A copy of 
this document is available at: http://www.fsis.usda.gov/wps/wcm/connect/87caa3f9-0c76-45c7-be4e-84d73151ed9e/RD-2009-0011-072114.pdf?MOD=AJPERES.
---------------------------------------------------------------------------

    Since the review in the proposed rule, FSIS has completed nine 
ground beef outbreak investigations. Of these nine investigations, 
grinding records were available and complete in four of them and 
incomplete or not available in five. When records were available and 
complete, FSIS was able to request a recall of product from the 
supplying establishment in one of four investigations. For the 
remaining three, two led to store level recalls. For these two, FSIS 
did not request recalls at supplier establishments because in one 
investigation, the trim for retail product had over ten suppliers, and 
in the other, FSIS was not able to narrow down the list of suppliers 
because the retailer did not clean up in between grinding different 
products. FSIS did not request a recall for the third case in which 
records were available and complete because there were multiple 
products and multiple federal establishments involved, and FSIS was not 
able to identify the product associated with the illnesses or the 
supplying establishment. In the five investigations where records were 
not available or incomplete, FSIS was unable to request a recall from a 
supplying establishment.
    The investigations reviewed in the proposed rule, and those 
reviewed since the proposed rule, confirm the Agency's findings that 
the records kept by official establishments and retail stores vary in 
type and quality and are often incomplete or inaccurate. Overall, FSIS 
has concluded that voluntary recordkeeping by retail stores that grind 
raw beef has been insufficient, as evidenced by continuing outbreaks 
linked to pathogens in raw ground beef that FSIS cannot trace back to 
the source. The lack of specific information about supplier lot 
numbers, product codes, production dates, and the cleaning and 
sanitizing of grinding equipment has prevented or delayed FSIS in 
identifying the source of outbreaks, as well as other product that 
might be adulterated. The cleaning and sanitizing of equipment used to 
grind raw beef is important because it prevents the transfer of E. coli 
O157:H7 and other bacteria from one lot of product to another.

Proposed Rule

    On July 22, 2014 (79 FR 42464), FSIS proposed to amend the Federal 
meat inspection regulations to require that all official establishments 
and retail stores that grind raw beef for sale keep records disclosing 
the following: The names, points of contact, phone numbers, and 
establishment numbers of suppliers of source materials used in the 
preparation of each lot of raw ground beef; the names of each source 
material, including any components carried over from one production lot 
to the next; the supplier lot numbers and production dates; the weight 
of each beef component used in each lot (in pounds); the date and time 
each lot was produced; and the date and time when grinding equipment 
and other related food-contact surfaces were cleaned and sanitized. 
FSIS also proposed that official establishments and retail stores would 
have to comply with these requirements with respect to raw beef 
products ground at an individual customer's request when new source 
materials are used.
    FSIS posted the sample grinding log record below (Table 2) on its 
Web site in late 2011 and included it with the 2009 guidance and the 
proposed rule. FSIS proposed requiring the items in the sample record 
marked with asterisks. The proposed rule specifically stated that the 
information under the other column headings would not be required, but 
that some official establishments and retail stores might choose to 
keep and maintain this information.

[[Page 79234]]

[GRAPHIC] [TIFF OMITTED] TR21DE15.000


[[Page 79235]]



Final Rule

    As stated above, the final rule is mostly consistent with the 
proposed rule. It requires official establishments and retail stores 
that grind raw beef products to maintain the following records: The 
establishment numbers of the establishments supplying the material used 
to prepare each lot of raw ground beef; all supplier lot numbers and 
production dates; the names of the supplied materials, including beef 
components and any materials carried over from one production to the 
next; the date and time each lot is produced; and the date and time 
when grinding equipment and other related food-contact surfaces are 
cleaned and sanitized. These requirements also apply to raw ground beef 
products that are prepared at an individual customer's request when new 
source materials are used. If new source materials are not used, there 
is no reason to record the customer-requested grind separately.
    The final rule will not require records concerning the names, 
points of contact, and phone numbers of each official establishment 
supplying source material or the weight of each source component. In 
consideration of comments that it received, FSIS has concluded that the 
records concerning the names, points of contact, and phone numbers of 
each official establishment supplying source material were unnecessary 
given that FSIS already possesses this information through the 
establishment profiles in PHIS. In addition, FSIS concluded, in 
response to the comments submitted, that weighing each component in a 
lot of ground beef was time-consuming and offered little food safety 
benefit. Contamination occurs in a lot of ground beef regardless of the 
weight of the contaminated component.
    In conformance with these changes, FSIS has updated its sample 
grinding log as pictured in Table 3 below to reflect the requirements 
of this final rule.

[[Page 79236]]

[GRAPHIC] [TIFF OMITTED] TR21DE15.001

    The final rule also differs from the proposed rule with respect to 
the place of maintenance and the retention period of the required 
records. Based on 9 CFR 320.2, the proposed rule would have required 
records to be kept at the place

[[Page 79237]]

where the business, in this case the grinding activity, is conducted, 
unless the business is conducted at multiple locations, in which case 
the proposal would have allowed the records to be maintained at a 
business's headquarters office. In response to comments, FSIS has 
concluded that keeping the required information at the location where 
the beef is ground will save investigators time and reduce the risk 
that records are misplaced when they are moved. This rule, therefore, 
establishes a new 9 CFR 320.2(b), which requires that all the 
information required by this final rule be kept at the location where 
the beef is ground.
    Based on 9 CFR 320.3(a), the proposed rule would have required that 
the proposed grinding records be retained for a period of two years 
after December 31 of the year in which the transaction giving rise to 
the record (grinding) occurred. In response to comments discussed 
below, FSIS concluded that because the vast majority of ground beef is 
consumed within several months of its production, a one-year retention 
period is adequate to trace the source of any foodborne disease 
outbreak involving raw ground beef. Accordingly, this final rule 
creates a 9 CFR 320.3(c) which requires that official establishments 
and retail stores covered by this rule retain the required records for 
one year.
    The final rule also makes technical changes to 9 CFR 320.2 and 
320.3 to improve readability.

Summary of Comments and Responses

    FSIS received 40 comments on the proposed rule from individuals, 
retailers, beef producers and processors, beef industry and retail 
trade groups, consumer advocacy groups, an organization representing 
food and drug officials, a State department of agricultural and rural 
development, a food technology company, and two members of Congress. 
Most of the commenters supported the proposed rule. Industry groups 
supported recording information for effective investigation in the 
event of a foodborne illness outbreak but stated that the costs of 
compliance were higher than estimated, and that several pieces of 
information were unnecessary or overly burdensome. A summary of the 
relevant issues raised by the commenters and the Agency's responses 
follows.

1. Covered Entities

    Comment: Consumer and retail trade groups stated that the rule 
should apply to supermarkets, grocery stores, meat markets, warehouse 
clubs, cooperatives, supercenters, convenience stores, wholesalers, and 
restaurants.
    Response: This final rule applies to all official establishments 
and retail stores that grind raw beef products for sale to consumers in 
normal retail quantities. The rule covers supermarkets and other 
grocery stores, meat markets, warehouse clubs, cooperatives, 
supercenters, convenience stores, and wholesalers, if they grind raw 
beef product.
    FSIS is not applying this final rule to restaurants. Only a small 
percentage of all raw beef grinding occurs at restaurants and only on a 
very small scale. It is thus likely that any outbreak traced to a 
restaurant that grinds its own raw beef will be traceable to a specific 
supplier.

2. Content of Records

    Comment: Retail organizations, a food technology company, and a 
beef brand recommended reducing costs by removing from the proposed 
rule the requirement to weigh each source component. These commenters 
stated that the proposed requirement was time-consuming, disruptive to 
workflow, unfeasible with current equipment, and offered no public 
health benefit.
    Response: FSIS agrees that the requirement to weigh each source 
component is not necessary. If a foodborne illness outbreak occurs, the 
weight of a source component in a lot of ground beef is not significant 
in tracing the material back to the suppliers. Also, any amount of 
adulterated source material in a lot of ground beef would adulterate 
the product. Accordingly, FSIS has removed this provision from the 
final rule and has adjusted the paperwork burden estimates and costs 
accordingly.
    Comment: An independent grocers' trade group suggested removing the 
requirement to record supplier lot numbers and production dates.
    Response: Supplier lot numbers and production dates are necessary 
to identify product at a supplier's location that may be associated 
with an outbreak. By including supplier lot numbers and production 
dates, investigators can more easily and quickly determine the source 
of a foodborne illness outbreak and limit the amount of product 
recalled.
    Comment: Industry groups generally opposed recordkeeping for 
customer-requested grinds. They stated that it was impractical to clean 
grinding equipment between customer requests, meat case items usually 
lack supplier information, and public health benefits from logging 
these grinds would be limited. One meat industry trade group suggested 
only requiring the proposed recordkeeping provisions for customer-
requested grinds over thirty pounds. A retail trade group recommended 
that its members perform customer-requested grinds at the end of the 
day or during a clear production cycle break.
    Response: Customer-requested grinds present the same food safety 
risk as other raw ground beef. Retailers should keep customer-requested 
grinds separate and must record the information required in this rule 
when new source materials are used for customer-requested grinds. It is 
also in the store's interest to perform a clean up before and after 
customer-requested grinds. If the source is not clear, or if there is 
no clean up, traceback to the supplier will be impossible. The retailer 
would have produced the product associated with the outbreak, and in 
such circumstances, FSIS will have to request that the retailer recall 
product. Also, if the source is not clear, FSIS will likely have to 
request that the retailer recall more product than would be necessary 
if the retailer had recorded the necessary information.
    FSIS agrees that customer-requested grinds present unique 
challenges but estimates that the benefits of being able to rapidly 
identify a customer-grind associated with an outbreak outweigh the 
recordkeeping and clean-up costs.
    Comment: Two food-safety non-profits, a grocery store chain, and a 
consumer group stated that the name of the retail product should be 
recorded to assist in identifying product subject to recall. One 
individual and a food-safety non-profit stated that retail products 
should include specific day or production lot codes to assist in 
tracing products back to specific grinding lots.
    Response: FSIS does not believe that including retail product names 
on records listing source materials used to produce those products is 
practical. Products from different source materials may have the same 
name, e.g., 80/20 Ground Chuck. In addition, products from the same 
source materials may be marketed differently. For example, packages of 
``Bob's Ground Beef'' and ``Jan's Ground Beef'' may originate from the 
same lot of source materials, despite bearing different retail names.
    FSIS is also not requiring official establishments and retail 
stores to label retail products with timestamps or production lot codes 
to identify them with the specific lot or lots of ground beef from 
which they were produced. Retail ground beef products can usually be 
traced back to their specific grinding lots through stores' inventory 
data, the product's date and time of sale, and information stored on 
customers' shopper cards. Once a retail product is traced back to the 
grinding lot or lots,

[[Page 79238]]

the records required by this final rule will enable FSIS investigators 
to identify the source materials, suppliers, and production lots from 
which the product was produced.
    Comment: Industry groups opposed recording the names, points of 
contact, and phone numbers of suppliers because FSIS already has this 
information through PHIS.
    Response: FSIS agrees that the names, points of contact, and phone 
numbers of official establishments supplying source materials are 
already located in the establishment profiles within PHIS. Therefore, 
the establishment numbers of suppliers provide sufficient information 
to FSIS, and FSIS has removed those pieces of information from the 
recordkeeping requirements, leaving the requirement that official 
establishments and retail stores keep the establishment number of their 
suppliers of source materials. FSIS has updated its paperwork burden 
and costs estimates to reflect this change.

3. Use of Sample Grinding Log

    Comment: A consumer group recommended that FSIS provide a sample 
grinding log containing all of the required information. A grocery 
store chain and retail trade group stated that grinders should be able 
to create their own logs, so long as all required information is 
included. A retail trade group questioned whether grinders would be 
required to use the sample log shown above.
    Response: While FSIS has provided a sample grinding log that is 
depicted above, FSIS is not specifying in the final rule how official 
establishments and retail stores must record the required information. 
Entities may record the required information as they see fit, so long 
as the records of the required information are maintained in accordance 
with 9 CFR 320.2 and 320.3.

4. Imports

    Comment: One individual stated that the proposed rule should apply 
to imported beef.
    Response: FSIS' regulations do not apply directly to establishments 
in foreign countries, and retail stores in foreign countries are not 
eligible to export product to the United States. To be eligible to 
export raw beef product to the United States, countries must maintain 
an equivalent inspection system for beef. Therefore, in the event of 
Salmonella or shiga-toxin producing E. coli (STEC) outbreaks, countries 
that ship beef to the United States will need to have traceback and 
traceforward systems for beef products that allow the country to 
identify the source of contamination. Countries that export beef to the 
United States may choose to establish recordkeeping requirements 
consistent with this rule. However, they may also have other means to 
track the necessary information.

5. Other Species

    Comment: Individual commenters and food safety groups believed that 
the rule should apply to ground product produced from swine, poultry, 
lamb, and turkey.
    Response: FSIS issued the proposed rule to address deficiencies in 
recordkeeping that hampered investigations into foodborne illness 
investigations involving raw ground beef. Between 2007 and 2013, FSIS 
investigated 130 outbreaks of human illness. Of those, 31 (24 percent) 
were linked to beef ground at a retail venue. FSIS did not propose that 
new records be maintained for ground products other than beef because 
the Agency is most often impeded in its efforts to trace back and 
identify sources of human illness when beef ground in retail stores is 
the vehicle for those illnesses. FSIS considers the comments requesting 
similar requirements for other ground product to be outside the scope 
of this rule.

6. Consumer Education

    Comment: A meat processor, a meat products company, and two 
individuals stated that more outreach was needed to educate consumers 
on how to properly handle and cook meats.
    Response: FSIS promotes consumer awareness of food safety issues 
and encourages proper food preparation practices. For example, FSIS 
posts consumer food safety information on its Web page.\5\ The posted 
information includes the kind of bacteria that can be found in ground 
beef, specific information as to why the E. coli O157:H7 bacterium is 
of special concern in ground beef, and the best way to handle raw 
ground beef when shopping and when at home. This Web page also contains 
the Food Safe Families Campaign guidelines to keep food safe, which 
tells consumers to cook ground beef to a safe minimum internal 
temperature of 160 [deg]F (71.1 [deg]C) as measured with a food 
thermometer. FSIS also provides food safety education in other forms 
(e.g., FSIS has continued to work with the Ad Council to launch food 
safety public service announcements, and FSIS staff provide in-person 
food safety education through the mobile Food Safety Discovery Zone).
---------------------------------------------------------------------------

    \5\ FSIS food safety guidance for meat preparation, available 
at: http://www.fsis.usda.gov/wps/portal/fsis/topics/food-safety-education/get-answers/food-safety-fact-sheets/meat-preparation.
---------------------------------------------------------------------------

    Nonetheless, recordkeeping by retail establishments will more 
quickly and efficiently address the concerns (i.e., traceback and 
identifying sources of human illness when beef ground in retail stores 
is the vehicle for those illnesses) raised in this final rule.

7. Supplier Process Control Actions

    Comment: One individual urged official establishments to improve 
contamination control at slaughter. A meat products company that did 
not support the rule believed that suppliers cannot control E. coli, 
but that the answer is not more recordkeeping because that does not 
address the core problem, which is the interdependent relationship 
between animals and E. coli.
    Response: FSIS is continuing to address process control actions 
that should be taken by beef suppliers to control E. coli. For example, 
FSIS made available updated guidance on testing and high event periods 
\6\ in 2013 and implemented new traceback activities in 2014.\7\ 
However, while better process control may reduce the incidence of E. 
coli O157:H7-adulterated ground beef, it will not address the issue of 
official establishments and retail stores not keeping adequate records 
that allow effective traceback and traceforward activities. Without the 
records required by this final rule, FSIS cannot conduct timely and 
effective consumer foodborne illness investigations and other public 
health activities through the stream of commerce.
---------------------------------------------------------------------------

    \6\ Compliance Guideline for Establishments Sampling Beef 
Trimmings for Shiga Toxin-Producing Escherichia coli (STEC) 
Organisms or Virulence Markers, available at: http://www.fsis.usda.gov/wps/wcm/connect/e0f06d97-9026-4e1e-a0c2-1ac60b836fa6/Compliance-Guide-Est-Sampling-STEC.pdf?MOD=AJPERES.
    \7\ FSIS Directive 10,010.3, Traceback Methodology for 
Escherichia Coli (E. Coli) 0157:H7 in Raw Ground Beef Products and 
Bench Trim, available at: http://www.fsis.usda.gov/wps/wcm/connect/ae5e81d0-c636-4de1-93f3-7a30d142ae69/10010.3.pdf?MOD=AJPERES.
---------------------------------------------------------------------------

8. Implementation

    Comment: An independent grocers' trade group recommended a two-year 
delayed effective date for small businesses to comply with the rule. 
Alternatively, the commenter stated that small businesses should be 
exempt from the rule's requirements altogether. Similarly, a retail 
trade group believed that small retailers would need more time for 
outreach and training and that implementation would take longer than 
anticipated by the proposed rule

[[Page 79239]]

because of the need to create or modify records forms.
    Response: FSIS has provided sample grinding logs in this rule and 
the proposed rule. Small businesses may use these logs, or any other 
recordkeeping system they wish, to record the required information. 
FSIS believes that the recordkeeping requirements are straightforward 
and do not require extensive training or guidance materials. FSIS has 
also not adopted the proposed requirements that grinders record and 
maintain records of the weight of each source material used in a 
grinding lot, and the names, points of contact, and phone numbers of 
each official establishment supplying source material.
    In addition, as is discussed above, FSIS has advised official 
establishments and retailers to maintain these types of records since 
2002. Nonetheless, in response to comments, this final rule provides 
that retailers and official establishments will have 180 days from the 
date of publication of this final rule to comply with its requirements. 
This effective date should provide industry sufficient time to comply 
with the requirements because FSIS has simplified the requirements 
originally proposed, and FSIS will ensure that establishments and 
retailers are aware of the new requirements through the outreach 
activities discussed below and through partnering with the States and 
other organizations, such as retail organizations.

9. Training

    Comment: One consumer group recommended face-to-face contact by 
FSIS with entities that grind raw beef to explain the rule's 
requirements. A beef producers' trade group encouraged FSIS to conduct 
outreach through webinars and by attending industry meetings. One 
individual stated that operators should be trained to understand the 
risks of E. coli in grinding. Another individual suggested more 
training on keeping logs, proper attire, and hand-washing. A State 
agriculture department believed it would incur costs associated with 
responding to questions from grinders and training State personnel to 
field such questions appropriately.
    Response: As noted above, the recordkeeping requirements in the 
final rule are straightforward and do not require extensive training or 
guidance materials. FSIS will update its Sanitation Guidance for Beef 
Grinders,\8\ which includes sample grinding logs and instructions, and 
will hold webinars to explain the requirements of this final rule and 
answer questions from official establishments, retailers, and other 
organizations. FSIS will also provide guidance to small businesses 
through its Small Plant Help Desk and Small Plant News newsletter, and 
at industry conferences, exhibitions and workshops.
---------------------------------------------------------------------------

    \8\ Available at: http://www.fsis.usda.gov/shared/PDF/Sanitation_Guidance_Beef_Grinders.pdf.
---------------------------------------------------------------------------

10. Retention and Maintenance of Records

    Comment: A food-safety non-profit organization suggested that 
records required under this rule be retained for at least ninety days. 
A grocery store chain believed six-to-twelve months would be adequate. 
A retail trade group believed six months was appropriate. The latter 
two commenters mentioned that frozen beef should be consumed within 
three to four months.
    Response: While ground beef is safe indefinitely if kept frozen, it 
will lose quality over time. FSIS recommends consuming fresh ground 
beef within two days and frozen ground beef within four months.\9\ 
These recommendations suggest that records documenting the grinding of 
raw beef need only be kept for a short period of time. However, the 
Agency is aware that consumers do not always follow such 
recommendations, sometimes keeping ground beef in their freezers for up 
to a year, for example. FSIS is therefore requiring in the final rule 
that official establishments and retailers maintain the prescribed 
records for one year (9 CFR 320.3).
---------------------------------------------------------------------------

    \9\ FSIS Ground Beef and Food Safety, available at: http://www.fsis.usda.gov/wps/portal/fsis/topics/food-safety-education/get-answers/food-safety-fact-sheets/meat-preparation/ground-beef-and-food-safety/CT_Index.
---------------------------------------------------------------------------

    Comment: A trade group representing food safety officials stated 
that records should always be maintained at the location where the beef 
was ground.
    Response: This final rule amends 9 CFR 320.2 to require that 
official establishments and retail stores maintain the required records 
at the place where the raw beef is ground. This approach, along with 
the shorter record retention period being required in 9 CFR 320.3, 
balances the burden on retailers of storing records for the necessary 
period of time with the needs of investigators to have such records 
available at the grinding location.

11. Enforcement

    Comment: Three individuals stated that FSIS should assess 
additional fines or penalties to enforce the final rule's requirements. 
A consumer group recommended FSIS perform verification checks at 
retailers to monitor compliance. A trade group representing food safety 
officials asked how FSIS would enforce the rule and urged FSIS to work 
more cooperatively with State and local food safety agencies. The 
commenter also recommended that local officials have access to the new 
records, as they are often involved at the earliest stages of an 
outbreak.
    Response: The FMIA provides FSIS with authority to require 
specified persons, firms, and corporations to keep records that will 
fully and correctly disclose all transactions involved in their 
businesses subject to the FMIA and to provide access to facilities, 
inventory, and records (21 U.S.C. 642). If official establishments do 
not maintain the required records, FSIS will issue noncompliance 
records. FSIS may also take any regulatory control actions as defined 
in 9 CFR 500.1(a), including the tagging of product, equipment, or 
areas.
    FSIS personnel conduct in-commerce surveillance related to 
wholesomeness, adulteration, misbranding, sanitation, and 
recordkeeping.\10\ When this rule becomes final, FSIS compliance 
investigators will verify that retail grinders meet the recordkeeping 
requirements. If compliance investigators find they do not, they may 
issue a Notice of Warning to the retail store.
---------------------------------------------------------------------------

    \10\ FSIS Directive 8080.1, Rev. 4, Methodology for Conducting 
In-Commerce Surveillance Activities, April 24, 2014.
---------------------------------------------------------------------------

    If FSIS personnel find noncompliance at an official establishment, 
the Agency could issue non-compliance reports, letters of warning, or 
request the Department of Justice to initiate a civil proceeding in 
Federal court to enjoin the defendant from further violations of the 
applicable laws and regulations. If FSIS personnel find noncompliance 
at a retail facility, the Agency may issue notices of warning or 
request the Department of Justice to initiate a civil proceeding to 
enjoin the defendant from further violations of the applicable laws and 
regulations.
    States with their own meat and poultry inspection (MPI) programs 
will need to be aware of the requirements of this rule and are required 
to enforce requirements ``at least equal to'' the Federal inspection 
program. Therefore, they will need to require that establishments under 
State inspection maintain records consistent with what FSIS is 
requiring.
    FSIS will also explore ways to partner with States, with or without 
MPI programs, so that State employees can provide information about the 
recordkeeping requirements to grocery stores, help them to keep logs in 
the most efficient and effective way

[[Page 79240]]

possible, and provide other information that will enhance the 
efficiency and effectiveness of store efforts. FSIS intends to provide 
information to State officials about the grinding logs requirement 
during regular monthly Webinars that FSIS conducts for State MPI 
Directors and State HACCP Contacts and Coordinators.
    FSIS also routinely cooperates with State and local authorities to 
conduct effective foodborne illness investigations, including by 
sharing epidemiological data, records, and investigative resources. 
FSIS intends to provide information to State and local authorities 
during the course of these illness investigations about the role that 
grinding logs can play in facilitating these investigations.

12. Grinding Frequency and Time Burden

    Comment: To reduce costs, a grocers' trade group stated that FSIS 
should require records only for all source materials used in grinds 
during a single production day, requiring a new log for production that 
would begin only after the end-of-day full cleaning of the grinding 
equipment. Several commenters also stated that many retail stores grind 
several times per day and may use several different suppliers, 
significantly increasing recordkeeping costs.
    Response: In the proposed rule, FSIS considered requiring 
documentation of information on a weekly basis, but rejected this 
approach because it would be difficult to differentiate between lots 
ground from different suppliers throughout the week (79 FR 42469). The 
same holds true for daily logs. In either situation, investigators 
would be unable to effectively conduct traceback and traceforward 
activities in the event of an outbreak because of limited detail. FSIS 
is not dictating how often the required information must be physically 
recorded. Under the final rule, the required information must be 
recorded whenever any of the information required for the lot of 
product being ground changes. For example, if an entity uses the same 
source material for multiple grinds throughout the day, it would only 
need to record the source material information (9 CFR 
320.1(b)(4)(i)(A)-(C)) once but would need to record the date and time 
of each grind (9 CFR 320.1(b)(4)(i)(D)). However, if a store or 
establishment were to start using a different supplier or lot number 
during the day, it would need to document that change (9 CFR 
320.1(b)(4)(i)(B)). This approach minimizes the recordkeeping burden 
but preserves the information needed by investigators.
    Comment: A grocery store chain disagreed with FSIS's estimates of 
grinds per day and average number of suppliers at retail, suggesting 
that beef is ground every day, several times per day as needed, and 
with several different cases of raw material. A retail trade group 
estimated more average grinds at retail per day than FSIS's estimate, 
stating that its average member grinds four times per day. A State 
agriculture department and a beef producers' trade group urged further 
study of the economic impact of the rule on small businesses, including 
feedback from industry. A retail trade group estimated that the time 
needed for the proposed recordkeeping is much higher per respondent per 
year than estimated by FSIS, suggesting that a conservative estimate 
would be 214 hours per year.
    Response: FSIS has taken into account comments on the amount of 
time required for recordkeeping and made adjustments to its cost 
estimate. For the final estimates, FSIS adjusted the average number of 
recordkeeping tasks per day at official establishments and retail 
stores from one to a range of four-to-five-and-a-half, plus an 
additional task if an entity conducts a grind composed of only trim. 
FSIS also adjusted the assumed time required to complete a record at 
official establishments and retail stores to account for multiple 
source materials, from 30-to-90 seconds to one minute for grinds not 
including trim, two minutes for grinds including trim and other ground 
beef components, and six-to-ten minutes for trim-only grinds. Trim-only 
grinds are usually composed of trim from different suppliers and 
production lots. Therefore, more time is needed to document the 
required information as compared to other grinding activities. In 
updating these estimates, FSIS has taken into account, in addition to 
the comments, the changes in the final rule concerning required 
records. Specifically, FSIS is using the low end of time estimates from 
the comments because, for the final rule, FSIS has significantly 
reduced the information required to be kept compared to the proposed 
rule.

13. Waste

    Comment: Two individuals and an independent grocers' trade group 
stated that retailers would simply throw out bench trim to avoid the 
recordkeeping requirements.
    Response: In its proposed rule, FSIS considered a 2008 study that 
found that recording grinding information is already prevalent among 
official establishments and retail stores that grind raw beef. The 2008 
study found that 74 percent of chain retail stores and 12 percent of 
independent retail stores kept grinding logs. Of the stores that kept 
grinding logs, the study reported that 78 percent of those logs were 
incomplete (79 FR 42471). Although insufficient voluntary recording is 
one impetus for this rule, FSIS is not aware of any instance when 
official establishments and retail stores that were keeping necessary 
records discarded source material in lieu of recording necessary 
records. Therefore, FSIS concludes that the costs of recordkeeping will 
rarely be greater than the costs of discarding bench trim, and that the 
amount of product discarded as a result of the rule should be 
negligible.

14. Effect on Small Businesses

    Comment: An independent grocers' trade group stated that the 
proposed rule would have a significant economic impact on a substantial 
number of small entities, and, therefore, FSIS must conduct an initial 
regulatory flexibility analysis.
    Response: While the rule will affect a substantial number of small 
businesses, the cost of complying with the proposed regulations will be 
relatively small on a per firm basis. FSIS has provided guidance and a 
sample grinding log, which FSIS will update as appropriate. Similar 
guidance is available from other providers, including industry 
associations.\11\ Entities can use these materials to minimize the 
costs of their recordkeeping programs. In addition, as is discussed 
above, FSIS will hold webinars to provide small businesses additional 
information on the rule and will publish information through its Small 
Plant Help Desk and Small Plant News newsletter. The fact that a number 
of small firms already maintain adequate grinding records suggests that 
the cost of the practice is not prohibitive to doing business.
---------------------------------------------------------------------------

    \11\ Food Marketing Institute, Comprehensive Guide Meat Ground 
at Retail Recordkeeping and Sanitation, available at: http://www.fmi.org/docs/default-source/food-safety-best-practice-guides/meat-ground-at-retail-comprehensive-guide.pdf?sfvrsn=6. Conference 
for Food Protection, Guidance Document for the Production of Raw 
Ground Beef at Various Types of Retail Food Establishments, 
available at: http://www.foodprotect.org/media/guide/CFP%20Beef%20Grinding%20Log%20Template%20Guidance%20Document%20-%208-8-2014.pdf.
---------------------------------------------------------------------------

15. Definition of a Lot of Ground Beef

    Comment: A beef industry trade group commented that some ground 
beef producers have different definitions for ``lots'' or ``batches'' 
of ground beef.

[[Page 79241]]

    Response: FSIS did not propose a definition for a ``lot'' of ground 
beef in the proposed rule. In response to this comment, and for the 
sake of consistency in implementing this final rule, FSIS has added a 
new 9 CFR 320.1(b)(4)(iii), which defines a lot.

Implementation

    All retailers and official establishments will have 180 days from 
the date of publication of this final rule to comply with its 
requirements.
    As is discussed above, this rule does not prescribe the method by 
which official establishments and retail stores must keep the required 
information but does require that the information be kept at the 
location where the beef is ground. The records must be retained for one 
year after the transaction giving rise to the record (grinding) 
occurred. FSIS will update its Sanitation Guidance for Beef 
Grinders,\12\ which currently includes sample grinding logs and 
instructions, and hold webinars to explain the requirements of the 
final rule and answer questions from official establishments, 
retailers, and other organizations. FSIS will also provide information 
to small businesses through its Small Plant Help Desk and Small Plant 
News newsletter. FSIS will provide guidance to State MPI programs on 
the requirements of this rule and seek to partner with States to ensure 
that the requirements of this rule are communicated to official 
establishments inspected by State MPI programs and to retail stores 
that grind raw beef. FSIS will also work with States and universities 
around the nation to conduct outreach workshops targeted to retailers 
and official establishments to explain the requirements of the rule. 
Records of the required information must be made available to 
authorized USDA officials upon request (9 CFR 300.6(a)(2)). These 
officials may examine and copy such records (9 CFR 320.4). At official 
establishments, FSIS inspection personnel will verify compliance. As is 
discussed above, if FSIS personnel find noncompliance at an official 
establishment, the Agency could issue non-compliance reports, letters 
of warning, or request the Department of Justice to initiate a civil 
proceeding in Federal court to enjoin the defendant from further 
violations of the applicable laws and regulations. At retail stores, 
FSIS compliance investigators will verify that retail grinders meet the 
recordkeeping requirements. If compliance investigators find they do 
not, the Agency may issue notices of warning or request the Department 
of Justice to initiate a civil proceeding to enjoin the defendant from 
further violations of the applicable laws and regulations.
---------------------------------------------------------------------------

    \12\ Available at: http://www.fsis.usda.gov/shared/PDF/Sanitation_Guidance_Beef_Grinders.pdf.
---------------------------------------------------------------------------

Executive Orders 12866 and 13563 and Regulatory Flexibility Act

    Executive Orders 12866 and 13563 direct agencies to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has been designated a ``non-significant regulatory action'' 
under section 3(f) of Executive Order 12866. Accordingly, this rule has 
not been reviewed by the Office of Management and Budget.
    In updating the preliminary regulatory impact analysis of the 
proposed rule, FSIS has made several changes in response to public 
comments and newly available information. Specifically, FSIS has made 
the following changes in the final regulatory impact analysis:
    [ssquf] Increased the number of retail firms in the baseline using 
new U.S. Census Bureau data;
    [ssquf] Added assumptions about the percentage of retail firms that 
grind raw beef;
    [ssquf] Incorporated new distributions relating to source materials 
used to reflect the complexity of grinding operations;
    [ssquf] Adjusted the time estimates for recordkeeping activities, 
the frequency of recordkeeping tasks, and the number of active grinding 
days per week based on comments received;
    [ssquf] Added estimates of labor to incorporate recordkeeping for 
grinds, including pieces of trim and customer-requested grinds;
    [ssquf] Updated the wage rate and benefits factor for firm 
employees that record or maintain required records based on the newest 
available information;
    [ssquf] Added discussion about unquantified costs associated with 
maintaining records for customer-requested grinds; and
    [ssquf] Expanded the benefits discussion to include benefits not 
previously addressed, such as the mitigation of costly spillover 
effects from foodborne illness outbreaks, and the incentive 
traceability provides to produce safe product.

Need for the Rule

    During investigations of foodborne illness outbreaks attributed to 
ground beef, grinding records are an important part of the traceback 
and traceforward processes. Without accurate records, it is difficult 
to identify where ground beef components originated. If investigators 
cannot identify a source, it is likely that adulterated product will 
remain in commerce and more consumers will eat the product and become 
ill. Delays in identifying the source of contamination can also 
negatively affect sales of ground beef due to loss in consumer 
confidence. Despite efforts by FSIS, industry associations, and other 
regulators to provide retailers and official processing establishments 
with guidance and examples of best practices, the current level of 
recordkeeping is still less than what is needed for timely and accurate 
traceability investigations.
    Traceability systems are a potential way to lessen the costs of 
foodborne illness outbreaks and other food safety events. In the case 
of private regulation, each firm will ultimately decide what level of 
traceability to implement on the basis of costs and potential benefits, 
such as smaller losses of reputation and reduced liability costs during 
foodborne illness outbreaks.\13\ Some firms may decide not to invest at 
all. Insufficient traceability, however, is not optimal for the 
industry as a whole.\14\ In some cases industry associations and third 
parties can influence firms to adopt traceability measures, but in the 
case of grinding records, these efforts have not achieved an acceptable 
level.\15\
---------------------------------------------------------------------------

    \13\ Hobbs, Jill E., (2004) ``Information Asymmetry and the Role 
of Traceability Systems,'' Agribusiness, Vol. 20 (4), 397-415, 
available at: http://onlinelibrary.wiley.com/doi/10.1002/agr.20020/pdf.
    \14\ McEvoy, David M. and Souza-Monteiro, Diogo M., (2008) ``Can 
an Industry Voluntary Agreement on Food Traceability Minimize the 
Cost of Food Safety Incidents?'' 12th Congress of the European 
Association of Agricultural Economists, Gent, Belgium, July 26-29, 
available at: http://ageconsearch.umn.edu/bitstream/43860/2/397.pdf.
    \15\ Gould, Hannah L. et al. (2011) ``Recordkeeping Practices of 
Beef Grinding Activities at Retail Establishments,'' Journal of Food 
Protection, Vol. 74 (6), 1022-1024, available at: http://www.ncbi.nlm.nih.gov/pubmed/21669085.
---------------------------------------------------------------------------

    Forms of private regulation, such as those currently in place for 
raw beef grinding entities, are vulnerable to firms that do not invest 
their fair share to the detriment of others, commonly referred to as 
the ``free rider'' problem.\16\ In the event of a foodborne illness 
outbreak

[[Page 79242]]

attributed to ground beef, if traceback is conducted at an entity that 
maintains adequate records, there is a strong chance that the source of 
contamination will be identified. When this happens, losses in 
reputation, consumer confidence, and sales are generally limited to the 
firm supplying the adulterated product. Other firms, such as the 
retailers (both those that invest in traceability and those that do 
not), are to some degree insulated from negative spillover effects. In 
this case, free-rider firms--those that do not invest in traceability--
benefit from the investments of others.
---------------------------------------------------------------------------

    \16\ Havinga, Tetty, (2006) ``Private Regulation of Food Safety 
by Supermarkets,'' Law and Policy, Vol. 28 (4), 515-533, available 
at: http://www.ru.nl/publish/pages/552245/havingasupermarketslapo2006.pdf.
---------------------------------------------------------------------------

    If, however, traceback occurs at a firm that does not invest in 
recordkeeping, the chances of investigators successfully tracing 
adulterated product to its source are low. An illness outbreak 
attributed to ground beef in which the source is unidentified will 
negatively affect ground beef producers and retailers indiscriminately. 
In this case, firms that have invested in traceability will bear costs 
that could have been avoided were it not for the free-rider firm. 
Mandatory recordkeeping requirements will help to eliminate 
insufficient traceability systems and therefore mitigate the free rider 
problem.
    Inadequate traceability systems can also contribute to moral 
hazard, which, in the case of ground beef, is a lack of incentives to 
produce a safe product.\17\ Producers of ground beef components 
endeavor to produce safe product because the consequences of producing 
unsafe product are great. However, if adulterated ground beef is often 
unable to be traced back to its source, producers face less risk when 
the components they produce are unsafe. Mandatory recordkeeping 
requirements can help to reduce moral hazard by increasing the chances 
that adulterated product is traced back to its source, thereby 
strengthening the incentives for fabricators of ground beef components 
to supply the safest product that they can produce.
---------------------------------------------------------------------------

    \17\ Starbird, S. A., Amanor-Boadu, V., and Roberts, T. (2008) 
``Traceability, Moral Hazard, and Food Safety,'' 12th Congress of 
the European Association of Agricultural Economists, available at: 
http://ageconsearch.umn.edu/bitstream/43840/2/EAAE_0398.pdf.
---------------------------------------------------------------------------

Industry Baseline

    FSIS has identified four groups of businesses that will be subject 
to the final rule.
    1. Official, federally-inspected establishments that grind beef: 
FSIS used information from PHIS to determine the number of federally 
inspected establishments subject to FSIS sampling of ground beef 
product for E. coli O157:H7 and Salmonella in the past calendar year 
(2014). To ensure that only those establishments that receive ground 
beef components from a supplier are included in the total, FSIS 
excluded those establishments that also slaughtered beef in the past 
calendar year.\18\ Using the Hazard Analysis and Critical Control Point 
(HACCP) size categories available in PHIS, FSIS determined that there 
are 12 large establishments and 1,132 small (including HACCP size small 
and HACCP size very small) establishments that fall into this category.
---------------------------------------------------------------------------

    \18\ If an official establishment slaughters beef, then it is 
likely the only source of components for its own ground beef 
production, and therefore it would not need to keep records 
pertaining to suppliers. While it is possible that some official 
establishments both slaughter beef and receive components from other 
official establishments for grinding, the number of such 
establishments is likely very small.
---------------------------------------------------------------------------

    2. Supermarkets and other grocery stores that grind beef: FSIS used 
data from the U.S. Census Bureau to determine the number of grocery 
stores in the U.S. Specifically, FSIS used the 2012 Statistics of U.S. 
Business (SUSB) data set \19\ to determine the number of stores under 
the North American Industry Classification System (NAICS) code 445110--
Supermarkets and Other Grocery (except Convenience) Stores. FSIS found 
that there are 21,543 stores owned by large firms (>=500 employed), and 
44,504 stores owned by small firms (<500 employed). FSIS is aware that 
not all supermarkets and grocery stores grind beef in store. However, 
for the purposes of the cost estimate, FSIS assumed that 100 percent of 
supermarkets and grocery stores grind beef. While this results in a 
minor overestimate, FSIS lacks the data needed to support a different 
assumption.
---------------------------------------------------------------------------

    \19\ U.S. Census Bureau, (2012), Statistics of U.S. Businesses, 
accessed January 28, 2015, available at: http://www.census.gov/econ/susb/.
---------------------------------------------------------------------------

    3. Meat markets that grind beef: FSIS used the 2012 SUSB Census 
data to determine the number of stores under the NAICS code 445210--
Meat Markets. FSIS found that there are 123 stores owned by large 
firms, and 5,105 stores owned by small firms. The NAICS code for meat 
markets includes six subcategories, three of which do not grind beef, 
including Baked Ham Stores, Frozen Meat Stores, and Poultry Dealers. To 
account for these stores, FSIS assumed that 50 percent of large stores 
and 50 percent of small stores in this category grind beef.
    4. Warehouse clubs and supercenters that grind beef: FSIS used the 
2012 SUSB Census data to determine the number of stores under the NACIS 
code 452910--Warehouse Clubs and Supercenters. FSIS determined that 
there are 5,124 such stores owned by large firms, and 40 stores owned 
by small firms. FSIS is aware that not all warehouse clubs and 
supercenters grind beef in store. To account for this, FSIS assumed 
that 20 percent of large stores and 100 percent of small stores grind 
beef.\20\
---------------------------------------------------------------------------

    \20\ FSIS was able to determine that the majority of large 
stores in this category do not grind beef in store because two large 
firms which account for approximately 80 percent of supercenters 
have ceased this practice. These firms purchase beef pre-ground and 
pre-packaged from federally inspected establishments or have it 
shipped from one of their other branded chains.

                                                          Table 4--Entities That Grind Raw Beef
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Entity type                                Total entities                 Percent grinding                Entities grinding
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Establishment type                          Large           Small           Large           Small           Large           Small
--------------------------------------------------------------------------------------------------------------------------------------------------------
Official Establishments.................................              12           1,132             100             100              12           1,132
Supermarkets and Other Grocery Stores...................          21,543          44,504             100             100          21,543          44,504
Meat Markets............................................             123           5,105              50              50              62           2,553
Warehouse Clubs and Supercenters........................           5,124              40              20             100           1,025              40
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................          26,802          50,781  ..............  ..............          22,641          48,229
--------------------------------------------------------------------------------------------------------------------------------------------------------
Values in Table may not sum to totals because of rounding.


[[Page 79243]]

    To estimate the number of entities that are already maintaining 
adequate records, FSIS used a Centers for Disease Control and 
Prevention (CDC) study of ground beef recordkeeping practices at retail 
stores and applied the distributions in the study to the entities that 
grind raw beef. The study found that 74 percent of chain retail stores 
and 12 percent of independent retail stores kept grinding logs. Of the 
stores that kept grinding logs, the study reported 78 percent of those 
logs as incomplete.\21\ For the purposes of this estimate, FSIS used 
the chain stores surveyed in the study as a proxy for large retailers 
and official establishments, and the independent stores as a proxy for 
small retailers and official establishments. Therefore, the 
recordkeeping distribution of large entities based on the survey 
results is approximately 16 percent complete (74 percent*(1-78 
percent)), 58 percent incomplete (74 percent*78 percent), and 26 
percent no records. For small entities, the distribution is 
approximately 3 percent complete (12 percent*(1-78 percent)), 9 percent 
incomplete (12 percent*78 percent), and 88 percent no records. FSIS 
applied these distributions to the set of all grinding entities in 
Table 4, above. The current recordkeeping practices of beef grinding 
entities are displayed in Table 5.
---------------------------------------------------------------------------

    \21\ See footnote 3.

                    Table 5--Baseline Recordkeeping Practices at Entities That Grind Raw Beef
----------------------------------------------------------------------------------------------------------------
                                                                                   Distribution
                Entity size                             Recordkeeping                (percent)       Entities
----------------------------------------------------------------------------------------------------------------
Large......................................  Complete...........................              16           3,686
                                             Incomplete.........................              58          13,069
                                             No Records.........................              26           5,887
                                                                                 -------------------------------
                                                Total...........................  ..............          22,641
Small......................................  Complete...........................               3           1,273
                                             Incomplete.........................               9           4,514
                                             No Records.........................              88          42,441
                                                                                 -------------------------------
                                                Total...........................  ..............          48,229
----------------------------------------------------------------------------------------------------------------
Values in table may not sum to Totals because of rounding.

Alternative Regulatory Approaches

    FSIS considered a number of alternatives designed to achieve the 
regulatory objective outlined in the Need for the Rule section. The 
final rule was chosen as the least burdensome, technically acceptable 
regulatory approach to ensure that adequate grinding records are 
maintained for the purposes of outbreak investigation and product trace 
back. While some alternatives would result in lesser costs to industry, 
and some alternatives would result in more complete information for 
outbreak investigators, in FSIS's judgment the final rule is the 
alternative that maximizes net benefits. Cost estimates were developed 
for the final rule but not for the rejected alternatives because the 
costs for these alternatives are discernibly higher or lower because of 
the amount of time spent on recordkeeping.

Alternatives Considered

    (1) Encouraging rather than requiring grinding records: FSIS 
provided industry voluntary guidelines (see Table 2) in 2009. As stated 
previously, the Agency has concluded that a policy of voluntary 
guidelines for recordkeeping has not ensured that all official 
establishments and retail stores maintain complete records that will 
ensure quick identification of contaminated product.
    (2) Regulated Daily Recordkeeping Program: FSIS considered 
requiring that retail stores and official establishments maintain 
grinding records such that each producer recorded grinding activities 
once per day, and information on all suppliers that were used during 
that day but not on when during the day those suppliers were used. 
Daily recording may have been sufficient if entities typically cleaned 
their equipment once a day, rarely changed suppliers, and conducted few 
grinds per day, but FSIS has found that the majority of retailers grind 
product and clean their equipment multiple times per day. A single 
daily recordkeeping task is, therefore, insufficient to provide the 
necessary information for traceback and could inhibit FSIS's ability to 
identify suppliers during ongoing outbreaks. In addition, the time 
savings of daily recordkeeping over per-grind recordkeeping is likely 
low since most of the same information will need to be kept. Therefore, 
FSIS rejected this alternative.
    (3) The Final Rule: The chosen alternative requires that retail 
stores and official establishments maintain grinding records such that 
each producer must record the required information whenever any of the 
required information for the lot of product being ground changes. To 
minimize the burden placed on these entities, FSIS has removed certain 
pieces of information from the requirements that were included in the 
proposed rule, ensuring that only the necessary information for 
traceability is maintained. Requiring records that pertain to each 
individual grind guarantees that investigators will be able to identify 
the components included in an adulterated package of ground beef, 
creating a narrower list of potential sources of adulterated product 
and increasing the chances that the source of contamination is 
identified. FSIS has determined that this alternative is the least 
burdensome option that achieves the regulatory objective.
    (4) More Detailed Recordkeeping Program: FSIS also considered 
expanding the proposed recordkeeping requirements to include all fields 
suggested in the 2009 FSIS guidance (all fields in the Table 2 sample 
log). This approach would provide FSIS with more detailed records to 
use during an investigation, which may improve traceability slightly. 
However, the small improvement in the trace back process provided by 
the additional level of detail would place an unnecessarily large 
burden on those entities that grind product and must keep records. Any 
such small improvement would not outweigh the costs incurred for 
keeping the more detailed records. For this reason, FSIS decided to 
require that only the most critical information be recorded. Other 
information, including

[[Page 79244]]

that which appears on the sample log, is voluntary.
    The costs and benefits of the final rule and each regulatory 
alternative are displayed in Table 6.

               Table 6--Regulatory Alternatives Considered
------------------------------------------------------------------------
         Alternative                  Costs               Benefits
------------------------------------------------------------------------
(1) Encouraging Voluntary     No additional costs.  No additional
 Recordkeeping.                                      benefits.
(2) Regulated Daily           Slightly less costly  Improvement over
 Recordkeeping.                alternative to        voluntary
                               industry due to       recordkeeping
                               small time savings    because records are
                               over per-grind        required and must
                               recordkeeping.        be created every
                                                     day of grinding,
                                                     but the records
                                                     will in most cases
                                                     not be detailed
                                                     enough to
                                                     facilitate
                                                     traceability.
                                                     Therefore, any
                                                     benefits that can
                                                     realistically be
                                                     expected will be
                                                     minimal, and the
                                                     objective of
                                                     facilitating
                                                     traceability will
                                                     not be met.
(3) The Final Rule..........  $59.3 million ($48.5  Achievement of
                               million to $70.2      regulatory
                               million) annual       objective resulting
                               costs to the          in benefits to
                               industry, plus        consumers in the
                               additional costs      form of averted
                               associated with       foodborne illness,
                               recording the         to retailers and
                               source of trim and    official
                               customer-requested    establishments
                               grind components.     grinding components
                               Potential slight      from suppliers in
                               costs to consumers.   the form of less
                                                     costly outbreaks
                                                     and recalls, and to
                                                     official
                                                     establishments
                                                     supplying ground
                                                     beef components in
                                                     the form of less
                                                     costly recalls and
                                                     insulation from
                                                     costly spillover
                                                     effects during food
                                                     safety events.
(4) More Detailed             Most costly           Achievement of
 Recordkeeping.                alternative to        regulatory
                               industry.             objective resulting
                                                     in the benefits
                                                     described above.
                                                     Potential for small
                                                     increase in
                                                     traceback speed and
                                                     therefore small
                                                     increase in avoided
                                                     illnesses.
------------------------------------------------------------------------

Expected Costs of the Final Rule

Costs to Industry

    Retailers and official establishments that grind raw beef will 
incur costs to comply with the final rule. These include the labor cost 
of employees who record and maintain the records, storage costs, and 
those costs associated with trim and customer-requested grinds. FSIS 
has attempted to estimate the cost of labor and storage using 
information obtained from industry associations, the U.S. Census 
Bureau, the U.S. Bureau of Labor Statistics, a commercial real estate 
services firm report, and public comments.
    In order to keep adequate records when grinding trim, entities will 
need to keep track of the source of each cut of beef from which the 
trim was separated. If not all of the trim is ground in a single batch, 
then entities will need to record each lot in which the trim is used. 
Similarly, if retail stores grind beef at the request of customers, 
they will need to record the required information for that small grind 
if new source materials are used. How entities choose to deal with the 
requirements will differ, and the costs associated with these 
requirements will vary greatly because of differences in firm size, 
component ordering practices, and grinding practices. FSIS used labor-
time estimates from a grocery store chain's public comments to estimate 
additional costs related to grinding trim. FSIS left additional costs 
related to customer requested grinds unquantified because of the many 
variations in how retail stores will deal with the requirements and the 
relatively small number of customer grinds that take place.
    Entities may incur other costs for training and investment should 
they choose to implement complex recordkeeping systems. Electronic 
recordkeeping options exist, which are likely more expensive than paper 
records but provide additional benefits such as improved accuracy, 
lower labor requirements, useful reporting and recall management tools, 
and supply-side management functions. Firms will decide individually 
whether these systems are suitable to their needs, and the proportion 
of those choosing more complex systems is uncertain. For the purposes 
of the cost estimate, FSIS has only estimated costs and benefits of the 
basic, paper-based system of recordkeeping. FSIS assumes that if firms 
choose to invest more in their recordkeeping systems, they will do so 
because the benefits achieved outweigh the costs.
    Model records are available in the preamble of this final rule, on 
the FSIS Web site,\22\ and on the Web sites of industry associations. 
Best practices and guidance for beef grinders are also available from a 
number of sources.\23\ Therefore, FSIS does not anticipate that 
entities will incur significant costs for the development of records 
and standard operating procedures. FSIS also believes that training for 
recordkeeping can be done informally, on the job, and will therefore 
result in minimal costs. Also, as noted above, FSIS will conduct 
webinars and provide guidance to help inform industry of the new 
requirements, which will help minimize training costs.
---------------------------------------------------------------------------

    \22\ FSIS, (2012) Sanitation Guidance for Beef Grinders, 
available at: http://www.fsis.usda.gov/wps/wcm/connect/b002d979-1e1e-487e-ac0b-f91ebd301121/Sanitation_Guidance_Beef_Grinders.pdf?MOD=AJPERES.
    \23\ Food Marketing Institute, (2013) ``Comprehensive Guide Meat 
Ground at Retail Recordkeeping and Sanitation,'' accessed February 
12, 2015, available at: http://www.fmi.org/docs/default-source/food-safety-best-practice-guides/meat-ground-at-retail-comprehensive-guide.pdf?sfvrsn=6. Beef Industry Food Safety Council, (2005) ``Best 
Practices For Retailer Operations Producing Raw Ground Beef,'' 
accessed February 12, 2015, available at: https://www.bifsco.org/CMDocs/BIFSCO/Best%20Practices/bestpracticesforretail4-05.pdf.
---------------------------------------------------------------------------

    To estimate the labor costs associated with recordkeeping, FSIS 
divided the entities keeping no records and incomplete records into 
categories based on three basic types of grinding activities:
    1. No trim--grinds in which no trim is used, only chubs of ground 
beef;
    2. With trim--grinds in which trim is added to chubs of ground 
beef; and
    3. Trim-only--grinds consisting only of trim.
    Using distributions from the CDC recordkeeping study, FSIS was able 
to estimate the number of official establishments and retail stores 
that do not use trim in their grinds (no trim), that use trim in their 
grinds (with trim), and that use no trim in some grinds and

[[Page 79245]]

only trim in others (trim-only). While there are likely other 
combinations of practices, and not all entities will fall into the 
three defined categories, these categories are sufficient for the 
purposes of the cost estimate. The categorization of entities is 
displayed in Table 7.

                          Table 7--Entities Categorized by Types of Grinding Performed
----------------------------------------------------------------------------------------------------------------
      Size           Recordkeeping        Entities        Trim or no trim       Trim practices       Entities
----------------------------------------------------------------------------------------------------------------
Large..........  Incomplete..........          13,069  Using Trim (91%)....  Trim-Only (90%)....          10,703
                                                                             With Trim (10%)....           1,189
                                                       No Trim (9%)........  ...................           1,176
                 No Records..........           5,887  Using Trim (91%)....  Trim-Only (90%)....           4,821
                                                                             With Trim (10%)....             536
                                                       No Trim (9%)........  ...................             530
Small..........  Incomplete..........           4,514  Using Trim (61%)....  Trim-Only (52%)....           1,432
                                                                             With Trim (48%)....           1,322
                                                       No Trim (39%).......  ...................           1,761
                 No Records..........          42,441  Using Trim (61%)....  Trim-Only (52%)....          13,462
                                                                             With Trim (48%)....          12,427
                                                       No Trim (39%).......  ...................          16,552
----------------------------------------------------------------------------------------------------------------
Values in table may not sum to Totals because of rounding.

    FSIS assigned time estimates for each of the three types of grinds 
based on public comments. For no trim grinds, FSIS assumed that 
recordkeeping would take approximately 1 minute per grind.\24\ For with 
trim grinds, FSIS assumed that the number of components would 
approximately double, and therefore recordkeeping would take about 2 
minutes. For trim-only grinds, FSIS assumed that recordkeeping would 
vary depending on the number of sources and take approximately 6 to 10 
minutes per grind.\25\ If an entity is keeping complete records, FSIS 
assumed that it would not incur any additional costs; if an entity is 
keeping no records, it would incur costs associated with the full labor 
time estimate, and if an establishment is keeping incomplete records, 
FSIS assumed it would incur costs associated with half of the labor 
time estimate.
---------------------------------------------------------------------------

    \24\ ``60 seconds to fill each grind log entry''--Docket ID# 
FSIS-2009-0011-0035, available at: http://www.regulations.gov/#!documentDetail;D=FSIS-2009-0011-0035.
    \25\ ``8 minutes per day to log beef trim,''  2 
minutes to account for varying number of components--Docket ID# 
FSIS-2009-0011-0035, available at: http://www.regulations.gov/#!documentDetail;D=FSIS-2009-0011-0035.
---------------------------------------------------------------------------

    FSIS also relied on public comments to estimate the number of 
grinding activities completed per day. FSIS consequently estimated that 
the average entity grinds 4 to 5.5 times per day,\26\ with the 
exception of those that do trim-only grinding. For those entities, FSIS 
estimated that they would complete no trim grinds 4 to 5.5 times per 
day and then perform an additional trim-only grind (for a total of 5 to 
6.5 per day). Further, FSIS estimated that approximately 90 percent of 
retailers perform customer-requested grinds, and that those grinds make 
up 1 percent of the total grinds.\27\ FSIS estimated that the 
recordkeeping for customer-requested grinds would take about 1 minute. 
Customer-requested grinds were not applied to official establishments. 
Finally, FSIS estimated that the average retailer grinds 6 days per 
week.\28\
---------------------------------------------------------------------------

    \26\ Low estimate: ``Grinds raw beef 4x per day''--Docket ID# 
FSIS-2009-0011-0034, available at: http://www.regulations.gov/#!documentDetail;D=FSIS-2009-0011-0034. High estimate: Midpoint of 
``3-8 batches a day''--Docket ID# FSIS-2009-0011-0040, available at: 
http://www.regulations.gov/#!documentDetail;D=FSIS-2009-0011-0040.
    \27\ ``90 percent of the retailers that grind beef in store 
perform grinds at a consumer's request . . . the figure is 1 percent 
or less''--Docket ID# FSIS-2009-0011-0047, available at: http://www.regulations.gov/#!documentDetail;D=FSIS-2009-0011-0047.
    \28\ ``6x per week''--Docket ID# FSIS-2009-0011-0034, available 
at: http://www.regulations.gov/#!documentDetail;D=FSIS-2009-0011-
0034.
---------------------------------------------------------------------------

    To illustrate the time estimate, FSIS has provided the following 
example of a retail store that does trim-only grinds, performs 
customer-requested grinds, and has incomplete records:
    [ssquf] Low Estimate: [4 grinds per day x 1 min per grind (no trim) 
+ 1 grind per day x 6 min per grind (trim-only) + {5 grinds (no trim + 
trim-only) * 1/99 \29\{time}  grinds per day x 1 min per grind 
(customer request)] x 6 days per week x 50 percent (incomplete records) 
= 30.2 minutes per week.
---------------------------------------------------------------------------

    \29\ (1/99) is the factor used to calculate the number of 
customer-requested grinds as 1 percent of the total grinds.
---------------------------------------------------------------------------

    [ssquf] High Estimate: [5.5 grinds per day x 1 min per grind (no 
trim) + 1 grind per day x 10 min per grind (trim-only) + {6.5 grinds 
(no trim + trim-only) * 1/99{time}  x 1 min per grind (customer 
request)] x 6 days per week x 50 percent (incomplete records) = 46.7 
minutes per week.
    If the store in the example above started with no records, the 50-
percent factor would be removed, increasing the time burden to 60.3 to 
93.4 minutes per week. If instead the store were an official 
establishment, the customer grinds would be removed, resulting in a 
burden of 30 to 46.5 minutes per week.
    Time estimates were calculated for each entity in Table 7 and then 
multiplied by 52 weeks for an annual estimate. To calculate the cost of 
this added labor, FSIS estimated that the recordkeeping would be 
performed by an employee paid at the Bureau of Labor Statistics 
``Butchers and Meat Cutters'' (occupation code 51-3021) mean hourly 
wage rate of $14.40.\30\ To account for benefits paid to these 
employees, such as paid leave and retirement contributions, FSIS 
applied a benefits factor of 1.412 \31\ to the wage rate, resulting in 
a total compensation rate of $20.33 per hour. FSIS then multiplied the 
labor time estimates by the total compensation rate estimate to get the 
total annual cost of labor, displayed in Table 8.
---------------------------------------------------------------------------

    \30\ Bureau of Labor Statistics, May 2013 National Occupational 
Employment and Wage Estimates, accessed February 2, 2015, available 
at: http://www.bls.gov/oes/current/oes_nat.htm.
    \31\ Bureau of Labor Statistics, Employer Costs for Employee 
Compensation, September 2014, accessed February 2, 2015, available 
at: http://www.bls.gov/news.release/ecec.t06.htm. Wages and salaries 
as a percentage of total compensation are estimated at 70.8% for all 
service-providing industries, with total benefits accounting for the 
other 29.2%. To estimate total compensation, FSIS applied a benefits 
factor of (29.2%/70.8% + 1) = 1.412 to the hourly wage rate.

[[Page 79246]]



                                           Table 8--Annual Labor Costs
----------------------------------------------------------------------------------------------------------------
                                                            Low estimate      High estimate    Midpoint estimate
                      Entity size                              ($mil)             ($mil)             ($mil)
----------------------------------------------------------------------------------------------------------------
Large..................................................              12.24              18.70              15.47
Small..................................................              33.54              48.74              41.14
                                                        --------------------------------------------------------
    Total..............................................              45.78              67.44              56.61
----------------------------------------------------------------------------------------------------------------
Values in table may not sum to Totals because of rounding.

    To account for record storage costs, FSIS again used distributions 
of recordkeeping practices from the aforementioned CDC study.\32\ 
According to the study, 36 percent of retailers that maintain records 
keep them for greater than 1 year, 39 percent keep records for 6 months 
to 1 year, and 25 percent keep records for less than 6 months. FSIS 
assumed that grinding records for a full year could be kept in 3 square 
feet of storage space, and that the cost of that storage would be 
approximately $15.50 annually.\33\ FSIS then assumed that those retail 
stores that already kept records, but for less than 6 months, would 
incur $46.50 in costs for a full year of storage (3 sq. ft. x $15.50), 
and those entities that already kept records for 6 months to 1 year 
would pay half the annual cost, or $23.25. Those entities keeping 
records for greater than 1 year would have no additional costs because 
they are already maintaining records at the minimum level.
---------------------------------------------------------------------------

    \32\ See footnote 3.
    \33\ Cassidy Turley, National Retail Review Winter 2014, 
accessed February 3, 2015, available at: http://dtz.cassidyturley.com/DesktopModules/CassidyTurley/Download/Download.ashx?contentId=3926&fileName=Cassidy_Turley_National_Retail_Review_Winter_2014.pdf. FSIS used the national average quoted rate 
for Community/Neighborhood/Strip Shopping Centers (see page 11) to 
approximate the cost of storing records at a retail store.
---------------------------------------------------------------------------

    The distribution from the CDC study was applied to the number of 
retail stores keeping complete or incomplete records, and then 
multiplied by the assumed annual cost of storage. The retail stores 
that do not keep records will incur the $46.50 in costs for a full year 
of storage.
    For official establishments, FSIS assumed that those already 
maintaining records would be keeping those records for at least 2 
years, as required by 9 CFR 320.3(a). For these establishments there 
would be cost savings associated with one year of reduced storage time 
equivalent to $46.50. For official establishments not maintaining 
records, there would be an additional cost of $46.50. FSIS applied the 
cost savings to those official establishments keeping records and the 
additional costs to those official establishments keeping no records, 
and added those costs and savings to the recordkeeping costs estimated 
for retail stores. The results are displayed in Table 9.

                  Table 9--Annual Record Storage Costs
------------------------------------------------------------------------
                                                         Storage costs
            Entity size             Affected entities        ($mil)
------------------------------------------------------------------------
Large.............................             16,613               0.62
Small.............................             46,194               2.08
                                   -------------------------------------
    Total.........................             62,807               2.70
------------------------------------------------------------------------
Values in table may not sum to Totals because of rounding.

    The total cost to industry was calculated as a sum of the 
previously estimated costs. The results of the annual industry cost 
estimate are displayed in Table 10.

                                      Table 10--Total Annual Industry Costs
----------------------------------------------------------------------------------------------------------------
                                                                        Midpoint
            Entity size               Low estimate    High estimate     estimate          Unqualified costs
                                         ($mil)          ($mil)          ($mil)
----------------------------------------------------------------------------------------------------------------
Large..............................           12.86           19.32           16.09  Additional costs associated
Small..............................           35.63           50.83           43.23   with the grinding of trim
                                                                                      and customer requested
                                                                                      grinds.
                                    ------------------------------------------------
    Total..........................           48.48           70.15           59.32
----------------------------------------------------------------------------------------------------------------
Values in table may not sum to Totals because of rounding.

Cost to Consumers

    This rule will not result in any direct costs to consumers. It is 
possible that retailers and official establishments that grind raw beef 
will pass on a portion of the increased cost of grinding to consumers. 
In most cases these costs should be small. In the case of customer-
requested grinds, consumers may end up paying a small fee, as is 
presently customary at some retail stores. While this practice may 
discourage some consumers, the facts that customer-requested grinds are 
so infrequent, and fees are already applied at some locations, suggest 
that fees will not cause major disruptions to ground beef sales. 
Therefore FSIS expects that

[[Page 79247]]

any indirect costs to consumers will be minimal.

Cost to Agency

    FSIS does not anticipate that the Agency or other regulators will 
incur additional costs as a result of this rule. FSIS has provided 
guidance to retailers that grind raw beef and will continue outreach 
efforts to ensure that retailers are aware of the rule and are able to 
comply. FSIS will also hold webinars and provide guidance on the new 
recordkeeping requirements.
    FSIS will conduct a retrospective analysis to quantify what 
effects, if any, the final rule has on Agency resources. To do so, FSIS 
will examine the following:
     Number, length, and outcome of recall effectiveness 
checks.
     Regulatory noncompliance citations at official 
establishments for the proposed revisions to 9 CFR 320.1(b)(4).
    We determined to not examine the overtime hours for enforcement, 
district office, and recall staff on a per-outbreak basis, as suggested 
in the proposed rule. The overtime hours cannot directly link to 
outbreaks.

Expected Benefits of the Final Rule

Public Health Benefits

    Mandatory grinding logs with a minimum level of necessary 
information will improve FSIS investigators' ability to trace 
implicated product to its source, recommend timely and accurate 
recalls, remove adulterated product from commerce, and prevent 
illnesses at later stages of outbreaks.\34\
---------------------------------------------------------------------------

    \34\ For a visual representation of the potential for averted 
illnesses due to quicker investigations and an earlier recall, 
please refer to Figure 1 of the FDA Establishment and Maintenance of 
Records Under the Public Health Security and Bioterrorism 
Preparedness and Response Act of 2002 final rule, available at: 
https://federalregister.gov/a/04-26929/#p-674.
---------------------------------------------------------------------------

    Mandatory grinding logs will increase the likelihood that 
adulterated product is able to be traced back to its source. When FSIS 
identifies official establishments producing adulterated product, it 
takes steps to assess their production processes through comprehensive 
food safety assessments and follow-up evaluations. In doing so, FSIS is 
able to identify poor practices and deficiencies in process control and 
to require changes to resolve these issues. In some cases these 
assessments lead to findings that are valuable to industry as a whole, 
and the lessons learned can be documented and disseminated in the form 
of guidance. Improvements to production practices and process control, 
whether at implicated official establishments or other establishments 
that have benefited from lessons learned, will result in reductions in 
foodborne illness outbreaks.
    Firms that supply ground beef components will have incentives to 
apply the guidance developed as a result of previous outbreak 
investigations and to improve the safety of their product in general. 
As traceability systems improve as a result of better recordkeeping, 
liability for food safety events will be shifted from retailers to 
suppliers. This shift will reduce the prevalence of moral hazard--
explained previously in the Need for the Rule section--thereby 
incentivizing supplier firms to produce safer product through the 
potential for adverse consequences of supplying unsafe product, such as 
reputation loss and litigation.\35\ Therefore, by improving 
traceability through better recordkeeping, this rule has the potential 
to promote a safer supply of ground beef for consumers.
---------------------------------------------------------------------------

    \35\ See footnote 9.
---------------------------------------------------------------------------

Benefits to Retailers and Official Establishments That Grind Raw Beef

    Retailers and official establishments that grind raw beef products 
purchased from a supplier will benefit from mandatory recordkeeping 
because investigators have a better chance of tracing the adulterated 
product back to the supplier. Investigations that end at the retail 
level often result in recalls that are very costly for retailers 
because they bear the burden of product loss and compensating customers 
for returned product. These recalls can also negatively affect the 
brand of the store or chain, resulting in a loss in consumer confidence 
and a loss in sales. In some cases outbreak investigations that end at 
the retail level could result in exposure to legal liability.\36\ 
Accurate records increase the likelihood that contaminated product is 
traced to its source, lessening the impact of recalls on retailers and 
official establishments that purchase ground beef components from 
suppliers.
---------------------------------------------------------------------------

    \36\ See Financial Exposures section of: Grocery Manufacturers 
Association (GMA), Covington & Burling, and Ernst & Young 
``Capturing Recall Costs,'' 2011, accessed January 15, 2015, 
available at: http://www.gmaonline.org/file-manager/images/gmapublications/Capturing_Recall_Costs_GMA_Whitepaper_FINAL.pdf.
---------------------------------------------------------------------------

    For retailers that are already maintaining accurate records, there 
will be benefits from the reduction in free rider firms, as explained 
previously in the Need for the Rule section. Fewer free rider firms 
will decrease the chances that outbreak investigations go unresolved, 
which can greatly reduce the cost to retailers. When a source is not 
identified, an outbreak may indiscriminately affect firms selling and 
producing ground beef. The fresh spinach outbreak in 2006 is a prime 
example of the consequences of an outbreak where the source of 
contamination is in doubt. Bagged spinach was associated with 
infections of E. coli O157:H7, but because no individual processor 
could be identified as having been the source of the outbreak, FDA and 
CDC issued a public alert advising consumers not to eat bagged spinach 
and eventually advised consumers not to eat all fresh spinach. Six 
companies issued voluntary recalls in September 2006. Sales of spinach 
plummeted from $14.3 million in September to $3.7 million in October 
and did not recover fully until January 2008.\37\ An outbreak caused by 
a single firm, which was identified weeks after public warnings and 
recalls took place, ended up causing serious losses to the entire 
industry. Mandatory recordkeeping increases the chances that an 
investigator identifies the source of contamination, thereby increasing 
the chances that an outbreak will have minimal impact on uninvolved 
firms.
---------------------------------------------------------------------------

    \37\ University of Minnesota Food Industry Center, (2009) 
``Natural Selection: 2006 E. coli Recall of Fresh Spinach,'' 
accessed January 20, 2015, available at: http://ageconsearch.umn.edu/bitstream/54784/2/Natural%20Selection.pdf.
---------------------------------------------------------------------------

Benefits to Official Establishments That Supply Ground Beef Components

    Official establishments supplying retail stores and processing 
establishments with ground beef components will also benefit from the 
increased ability of FSIS investigators to identify sources of 
contamination. When individual establishments are found to be suppliers 
of adulterated product, other uninvolved establishments are insulated 
from large spillover effects such as those illustrated in the spinach 
recall described above. Identifying the source establishment will 
likely be even more significant for official establishments because 
ground beef components make up a greater portion of their sales than 
ground beef would at a retail store. Mandatory recordkeeping could help 
to preserve consumer confidence and ground beef sales in the event of a 
foodborne illness outbreak, benefiting all firms that are uninvolved in 
the outbreak, while penalizing the establishment that supplied the 
adulterated product.
    Another potential benefit for official establishments is a 
reduction in the scope of ground beef recalls. All else being equal, 
more accurate grinding records should result in the

[[Page 79248]]

identification of specific lots of implicated product and therefore a 
narrower recall.\38\ Smaller recalls will result in lower costs from 
product loss and reimbursement and recall execution costs such as 
advertising and public relations management. In some cases, smaller 
recalls as a result of better recordkeeping could even minimize sales 
losses, because a recall could be limited to a smaller geographical 
region thereby reducing losses in consumer confidence.
---------------------------------------------------------------------------

    \38\ Resende-Filho, Moises A. and Buhr, Brian L. ``Economics of 
Traceability for Mitigation of Food Recall Costs,'' prepared for 
presentation at the International Association of Agricultural 
Economists (IAAE) Triennial Conference, Foz do Igua[ccedil]u, 
Brazil, 18-24 August, 2012, available at: http://ageconsearch.umn.edu/bitstream/126193/2/IAAE_2012_Paper.pdf. This 
paper presents simulation results of a model that indicated that 
that presence of a traceability system decreased volumes of recalls 
by over 90 percent (see Table 3).
---------------------------------------------------------------------------

    Finally, official establishments will benefit from lessons learned 
during recalls and follow-up assessments at entities linked to 
foodborne illness outbreaks. As recordkeeping practices at retail and 
official processing establishments improve, more outbreaks will be able 
to be traced to their source. This traceback will initiate further 
examination of current practices and could lead to the identification 
of significant issues that, if corrected, would benefit official 
establishments generally.

Net Benefits of the Final Rule

    The total costs and benefits achieved as a result of the final rule 
are displayed in Table 11.

                Table 11--Net Benefits of the Final Rule
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Costs:                                 .................................
    Labor............................  $56.6 million annually ($45.8
                                        million to $67.4 million).
    Storage..........................  $2.7 million annually.
    Unquantified Costs...............  Non-labor costs associated with
                                        recordkeeping for the grinding
                                        of trim and customer requested
                                        grinds.
                                       Potential slight costs to
                                        consumers in the form of ground
                                        beef price increases.
Benefits:
    Unquantified Benefits............  Benefits to consumers in the form
                                        of averted foodborne illnesses
                                        as a result of contaminated
                                        ground beef.
                                       Benefits to retailers and
                                        official establishments grinding
                                        raw beef in the form of less
                                        costly food safety events, such
                                        as outbreaks and recalls.
                                       Benefits to official
                                        establishments supplying ground
                                        beef components in the form of
                                        less costly recalls and
                                        insulation from costly spillover
                                        effects during food safety
                                        events.
------------------------------------------------------------------------

Regulatory Flexibility Analysis

    The FSIS Administrator certifies that, for the purpose of the 
Regulatory Flexibility Act (5. U.S.C. 601-602), the final rule will not 
have a significant economic impact on a substantial number of small 
entities in the United States. While the rule does affect a large 
number of small businesses, the average per entity annual cost is 
relatively low, at approximately $905 (746 to 1,064). This estimate 
does not include unquantified costs associated with customer-requested 
grinds. These costs will vary by retail store, but the total cost of 
compliance across the industry will be low because of the relatively 
small number of customer requested grinds. Table 12 provides a summary 
of the small entities affected by the final rule and the average annual 
cost.

                     Table 12--Total Costs and Average Cost per Entity for Small Businesses
----------------------------------------------------------------------------------------------------------------
                                                                                   Total annual   Average annual
                           Entity type                               Entities       cost ($mil)      cost ($)
----------------------------------------------------------------------------------------------------------------
Retailer........................................................          46,649           42.22          905.16
Official........................................................           1,132            1.00          885.63
                                                                 -----------------------------------------------
    Total.......................................................          47,781           43.23          904.70
----------------------------------------------------------------------------------------------------------------
Values in table may not sum to Totals because of rounding.

    There is a multitude of guidance already available that small 
businesses can use, and FSIS has provided a sample grinding log in this 
final rule that can be used. These resources will help to keep the cost 
of implementing a new recordkeeping program low. In general, as the 
size of the business and the amount of ground product sold gets 
smaller, so too will the number of suppliers and components used, and 
the number of grinds performed. The smaller scale of production should 
contribute to lower average costs for smaller businesses. Moreover, the 
fact that some small firms are already maintaining adequate records 
shows that the cost of the practice is not prohibitive to doing 
business.

Paperwork Reduction Act

    In accordance with section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the new information collection 
requirements included in this final rule have been submitted for 
approval to the Office of Management and Budget (OMB).
    Title: Records to be Kept by Official Establishments and Retail 
Stores that Grind Raw Beef Products.
    Type of Collection: New.
    Abstract: Under this final rule, all official establishments and 
retail stores that grind raw beef products for sale in commerce, 
including products ground at a customer's request, will have to 
maintain certain records.
    The required records will have to include the following 
information:
    (A) The establishment numbers of the establishments supplying the 
materials used to prepare each lot of raw ground beef product,
    (B) All supplier lot numbers and production dates,
    (C) The names of the supplied materials, including beef components

[[Page 79249]]

and any materials carried over from one production lot to the next,
    (D) The date and time each lot of raw ground beef product is 
produced, and
    (E) The date and time when grinding equipment and other related 
food-contact surfaces are cleaned and sanitized.
    In response to comments, FSIS removed requirements for entities 
covered by this rule to provide names, points of contact, and phone 
numbers for official establishments. Also in response to comments, the 
Agency eliminated the requirement that the weight of each source 
component used in a lot of ground beef be kept. However, in response to 
other public comments, FSIS increased the time estimates for 
recordkeeping activities, the frequency of recordkeeping tasks, and the 
number of active grinding days per week. FSIS also increased the number 
of retail stores that will be affected by the rule. These changes 
resulted in a significant increase in the number of burden hours 
initially estimated in the proposed rule.
    Estimate of Burden: FSIS estimates that it would take a maximum of 
50.33 hours per respondent annually.
    Respondents: Official establishments and retail stores that grind 
raw beef products.
    Estimated Number of Respondents: 65,911.
    Estimated Maximum Annual Number of Responses per Respondent: 1,878.
    Estimated Maximum Total Annual Recordkeeping Burden: 3,317,493 
hours.
    Copies of this information collection assessment can be obtained 
from Gina Kouba, Paperwork Reduction Act Coordinator, Food Safety and 
Inspection Service, USDA, 1400 Independence Ave. SW., Room 6065 South 
Building, Washington, DC 20250-3700; (202) 720- 5627.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under this rule: (1) All State and local laws and 
regulations that are inconsistent with this rule will be preempted; (2) 
no retroactive effect will be given to this rule; and (3) no 
administrative proceedings will be required before parties may file 
suit in court challenging this rule.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments.'' E.O. 13175 requires Federal agencies to consult 
and coordinate with tribes on a government-to-government basis on 
policies that have tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.
    FSIS has assessed the impact of this rule on Indian tribes and 
determined that this rule does not, to our knowledge, have tribal 
implications that require tribal consultation under E.O. 13175. If a 
Tribe requests consultation, the Food Safety and Inspection Service 
will work with the Office of Tribal Relations to ensure meaningful 
consultation is provided where changes, additions, and modifications 
identified herein are not expressly mandated by Congress.

E-Government Act

    FSIS and USDA are committed to achieving the purposes of the E-
Government Act (44 U.S.C. 3601, et seq.) by, among other things, 
promoting the use of the Internet and other information technologies 
and providing 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, FSIS will announce this Federal 
Register publication on-line through the FSIS Web page located at: 
http://www.fsis.usda.gov/federal-register.
    FSIS also will make copies of this 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 our constituents and 
stakeholders. The Update is available on the FSIS Web page. Through the 
Web page, FSIS is able to provide information to a much broader, more 
diverse audience. In addition, FSIS offers an email 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/subscribe. Options range from recalls to export 
information, regulations, directives, and notices. Customers can add or 
delete subscriptions themselves, and have the option to password 
protect their accounts.

USDA Nondiscrimination Statement

    No agency, officer, or employee of the USDA shall, on the grounds 
of race, color, national origin, religion, sex, gender identity, sexual 
orientation, disability, age, marital status, family/parental status, 
income derived from a public assistance program, or political beliefs, 
exclude from participation in, deny the benefits of, or subject to 
discrimination any person in the United States under any program or 
activity conducted by the USDA.

How To File a Complaint of Discrimination

    To file a complaint of discrimination, complete the USDA Program 
Discrimination Complaint Form, which may be accessed online at http://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your 
authorized representative.
    Send your completed complaint form or letter to USDA by mail, fax, 
or email:
    Mail: U.S. Department of Agriculture, Director, Office of 
Adjudication 1400 Independence Avenue SW., Washington, DC 20250-9410
    Fax: (202) 690-7442
    Email: [email protected].
    Persons with disabilities who require alternative means for 
communication (Braille, large print, audiotape, etc.), should contact 
USDA's TARGET Center at (202) 720-2600 (voice and TDD).

List of Subjects in 9 CFR Part 320

    Meat inspection, Reporting and recordkeeping requirements.

    For the reasons discussed in the preamble, FSIS is amending 9 CFR 
part 320, as follows:

PART 320--RECORDS, REGISTRATION, AND REPORTS

0
1. The authority citation for part 320 continues to read as follows:

    Authority:  21 U.S.C. 601-695; 7 CFR 2.7, 2.18, 2.53


0
2. Amend Sec.  320.1 by adding paragraph (b)(4) to read as follows:


Sec.  320.1  Records required to be kept.

* * * * *
    (b) * * *
    (4)(i) In the case of raw ground beef products, official 
establishments and retail stores are required to keep records that 
fully disclose:
    (A) The establishment numbers of the establishments supplying the 
materials used to prepare each lot of raw ground beef product;
    (B) All supplier lot numbers and production dates;

[[Page 79250]]

    (C) The names of the supplied materials, including beef components 
and any materials carried over from one production lot to the next;
    (D) The date and time each lot of raw ground beef product is 
produced; and
    (E) The date and time when grinding equipment and other related 
food-contact surfaces are cleaned and sanitized.
    (ii) Official establishments and retail stores covered by this part 
that prepare ground beef products that are ground at an individual 
customer's request must keep records that comply with paragraph 
(b)(4)(i) of this section.
    (iii) For the purposes of this section of the regulations, a lot is 
the amount of ground raw beef produced during particular dates and 
times, following clean up and until the next clean up, during which the 
same source materials are used.
* * * * *
0
3. Revise Sec.  320.2 to read as follows:


Sec.  320.2  Place of maintenance of records.

    (a) Except as provided in paragraph (b) of this section, any person 
engaged in any business described in Sec.  320.1 and required by this 
part to keep records must maintain such records at the place where such 
business is conducted, except that if such person conducts such 
business at multiple locations, he may maintain such records at his 
headquarters' office. When not in actual use, all such records must be 
kept in a safe place at the prescribed location in accordance with good 
commercial practices.
    (b) Records required to kept under Sec.  320.1(b)(4) must be kept 
at the location where the raw beef was ground.

0
4. Revise Sec.  320.3 to read as follows:


Sec.  320.3  Record retention period.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
every record required to be maintained under this part must be retained 
for a period of 2 years after December 31 of the year in which the 
transaction to which the record relates has occurred and for such 
further period as the Administrator may require for purposes of any 
investigation or litigation under the Act, by written notice to the 
person required to keep such records under this part.
    (b) Records of canning as required in subpart G of part 318 of this 
chapter, must be retained as required in Sec.  318.307(e); except that 
records required by Sec.  318.302(b) and (c) must be retained as 
required by those sections.
    (c) Records required to be maintained under Sec.  320.1(b)(4) must 
be retained for one year.

    Done in Washington, DC, on: December 14, 2015.
Alfred V. Almanza,
Acting Administrator.
[FR Doc. 2015-31795 Filed 12-18-15; 8:45 am]
BILLING CODE 3410-DM-P