[Federal Register Volume 74, Number 178 (Wednesday, September 16, 2009)]
[Proposed Rules]
[Pages 47648-47669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-21952]



[[Page 47647]]

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Part II





Department of Agriculture





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Food Safety and Inspection Service



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9 CFR Parts 321, 332, and 381



Cooperative Inspection Programs: Interstate Shipment of Meat and 
Poultry Products; Proposed Rule

Federal Register / Vol. 74, No. 178 / Wednesday, September 16, 2009 / 
Proposed Rules

[[Page 47648]]


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DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 321, 332, and 381

[Docket No. FSIS-2008-0039]
RIN 0583-AD37


Cooperative Inspection Programs: Interstate Shipment of Meat and 
Poultry Products

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing 
regulations to implement a new voluntary cooperative program under 
which State-inspected establishments with 25 or fewer employees will be 
eligible to ship meat and poultry products in interstate commerce. In 
participating States, State-inspected establishments selected to take 
part in this program will be required to comply with all Federal 
standards under the Federal Meat Inspection Act (FMIA) and the Poultry 
Products Inspection Act (PPIA), as well as with all State standards. 
These establishments will receive inspection services from State 
inspection personnel that have been trained in the enforcement of the 
FMIA and PPIA. Meat and poultry products produced under the program 
that have been inspected and passed by designated State personnel will 
bear an official Federal mark of inspection and will be permitted to be 
distributed in interstate commerce. FSIS will provide oversight and 
enforcement of the program.
    FSIS is proposing these regulations in response to the Food, 
Conservation, and Energy Act, enacted on June 18, 2008. Section 11015 
of the law amended the FMIA and PPIA to provide for these cooperative 
programs.

DATES: Submit comments on or before November 16, 2009.

ADDRESSES: FSIS invites interested persons to submit comments on this 
proposed rule. Comments may be submitted by either of the following 
methods:
    Federal eRulemaking Portal: Go to http://www.regulations.gov and 
follow the online instructions at that site for submitting comments.
    Mail, including floppy disks or CD-ROM's, and hand- or courier-
delivered items: Send to Docket Clerk, U.S. Department of Agriculture, 
Food Safety and Inspection Service, Room 2-2127 George Washington 
Carver Center, 5601 Sunnyside Avenue, Beltsville, MD 20705.
    Instructions: All items submitted by mail or electronic mail must 
include the Agency name and docket number FSIS-2008-0039. Comments 
received in response to this docket will be made available for public 
inspection and posted without change, including any personal 
information, to: http://www.regulations.gov.
    Docket: For access to background documents or comments received, go 
to the FSIS Docket Room at the address listed above between 8:30 a.m. 
and 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Philip Derfler, Assistant 
Administrator, Office of Policy and Program Development, Room 350-E, 
Jamie L. Whitten Building, 1400 Independence Avenue, SW., Washington, 
DC 20250; Telephone (202) 720-2709, Fax (202) 720-2025.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Federal-State Cooperative Inspection Programs

    FSIS has been delegated the authority to carry out the functions of 
the Secretary of Agriculture as provided in the Federal Meat Inspection 
Act (FMIA) (21 U.S.C. 601, et seq.) and the Poultry Products Inspection 
Act (PPIA) (21 U.S.C. 451, et seq.). These statutes mandate that FSIS 
protect the public by ensuring that meat and poultry products are safe, 
wholesome, unadulterated, and properly labeled and packaged.
    The FMIA and the PPIA (``the Acts'') provide for FSIS to cooperate 
with State agencies in developing and administering their own meat or 
poultry inspection programs (21 U.S.C. 661 and 454). The FMIA and the 
PPIA restrict each cooperative State meat or poultry products 
inspection program to the inspection and regulation of products that 
are produced and sold within the State (21 U.S.C. 661(a)(1) and 
454(a)(1)). Under section 661 of the FMIA and section 454 of the PPIA, 
cooperative State inspection programs are required to operate in a 
manner and with authorities ``at least equal to'' the provisions set 
out in the Acts (21 U.S.C. 661(a)(1) and 454(a)(1)).
    The Acts provide for FSIS to contribute up to 50 percent of the 
cost of the cooperative State inspection programs, as long as the State 
programs are effectively enforcing requirements that are ``at least 
equal to'' the Federal program (21 U.S.C. 661(a)(3) and 454(a)(3)). 
States that have enacted a mandatory State meat or poultry inspection 
law must apply to FSIS to enter into a cooperative State inspection 
program agreement with the Agency.
    If a State is unable or unwilling to continue to operate a 
cooperative State inspection program on an ``at least equal to'' basis, 
FSIS designates the State as not having an ``at least equal to'' 
program by publishing this designation in the Federal Register. After 
the expiration of thirty days of such publication, the State 
establishments are subject to Federal inspection (21 U.S.C. 661(c)(1) 
and 454(c)(1)).
    The Talmadge-Aiken Act authorizes the Secretary of Agriculture to 
enter into cooperative arrangements with State departments of 
agriculture and other State agencies to assist the Secretary in the 
enforcement of relevant Federal laws and regulations to the extent and 
in the manner appropriate to the public interest (7 U.S.C. 450). 
Pursuant to the Talmadge-Aiken Act, FSIS enters into a separate 
agreement with a State agency for the State program to conduct meat, 
poultry, or egg products inspection or other regulatory activities on 
behalf of FSIS. FSIS provides 50 percent funding to the State programs 
for these services.

B. The Food, Conservation, and Energy Act of 2008

    On June 18, 2008, Congress enacted The Food, Conservation, and 
Energy Act of 2008 (also referred to as ``the 2008 Farm Bill'') (Pub. 
L. 110-246, 112 Stat. 1651). Section 11015 of Title XI of the 2008 Farm 
bill amended the FMIA to add a new title V--``Inspections by Federal 
and State Agencies,'' which contains a new section 501, ``Interstate 
Shipment of Meat Inspected by Federal and State Agencies for Certain 
Small Establishments (122 Stat. 2124; codified at 21 U.S.C. 683). 
Section 11015 also amended the PPIA to add a new section 31, 
``Interstate Shipment of Poultry Inspected by Federal and State 
Agencies for Certain Small Establishments'' (122 Stat. 2127; codified 
at 21 U.S.C. 472). These new sections supplement the existing 
cooperative State meat and poultry inspection programs by establishing 
a new cooperative program under which certain State-inspected 
establishments would be permitted to ship meat and poultry products in 
interstate commerce.
    The new law provides that the Secretary of Agriculture, ``in 
coordination with the appropriate State agency of the State in which 
the establishment is located,'' may select State-inspected 
establishments with 25 or fewer employees to ship meat and poultry 
products interstate (Sec. 501(b) and Sec. 31(b)). Inspection services 
for these establishments must be provided by State inspection personnel 
that have

[[Page 47649]]

``undergone all necessary inspection training and certification to 
assist the Secretary with the administration and enforcement of [the 
FMIA or PPIA]'' (Sec. 501(a)(2) and Sec. 31(a)(2)). Meat and poultry 
products inspected and passed by these State inspection personnel would 
bear a ``Federal mark, stamp, tag, or label of inspection'' (Sec. 
501(b)(1) and Sec. 31(b)(1)). The law provides for the Secretary to 
``designate an employee of the Federal government'' to ``provide 
oversight and enforcement'' of the program (Sec. 501(d)(1) and Sec. 
31(d)(1)).
    The law is to take effect ``on the date on which the Secretary * * 
* promulgates final regulations to carry out [section 11015]'' (Sec. 
501(j)(1) and Sec. 31(i)(1)). The law requires that the Secretary 
promulgate final regulations ``not later than 18 months after the date 
of enactment'' (Sec. 501(j)(2) and Sec. 31(i)(2)).
    FSIS is issuing this proposed rule to implement section 11015 of 
the 2008 Farm Bill. Following is a summary of the provisions of section 
11015 that are addressed in this proposed rule.
    Selected establishments. The law applies to certain establishments 
that are already operating under a cooperative State meat or poultry 
inspection program. The law defines an ``eligible establishment'' as 
``an establishment that is in compliance with * * * the State 
inspection program of the State in which the establishment is located'' 
and the Acts, including the rules and regulations issued under the Acts 
(Sec. 501(a)(3) and Sec. 31(a)(3)). A ``selected establishment'' is 
defined as ``an establishment that is authorized by the Secretary, in 
coordination with * * * the appropriate State agency of the State in 
which the establishment is located * * * to ship [meat or poultry] 
items in interstate commerce'' (Sec. 501(a)(5) and Sec. 31(a)(5)).
    The law prohibits the Secretary from selecting an establishment for 
interstate shipment that ``on average, employs more than 25 employees 
(including supervisory and nonsupervisory employees), as defined by the 
Secretary'' (Sec. 501(b)(2)(A) and Sec. 31(b)(2)(A)). The law also 
prohibits the selection of establishments that currently ship 
interstate, as well as certain former and future Federal establishments 
(Sec. 501(b)(2)(B), Sec. 501(b)(2)(C), Sec. 31(b)(2)(B), and Sec. 
31(b)(2)(C)).
    Transition to a Federal establishment. The law permits the 
Secretary to select establishments with ``more than 25 employees but 
less than 35 employees'' to participate in the program (Sec. 
501(b)(3)(B)(i) and Sec. 31(b)(3)(B)(i)). However, if selected, these 
establishments must transition to Federal establishments ``beginning on 
the date that is 3 years after the effective date'' if they 
consistently employ, on average, more than 25 employees (Sec. 
501(b)(3)(B)(ii) and Sec. 31(b)(3)(B)(ii)). The law authorizes the 
Secretary to develop a procedure to transition certain selected 
establishments to a Federal establishment (Sec. 501(b)(3)(A) and Sec. 
31(b)(3)(A)). The law also requires that ``[a]ny selected establishment 
that the Secretary determines to be in violation of any requirement of 
the Act, be transitioned to a Federal establishment'' (Sec. 501(h) and 
Sec. 31(g)).
    Federal-State coordination. Under the law, the Secretary is 
authorized to designate a Federal employee as ``State coordinator'' for 
each State to ``provide oversight and enforcement'' of the interstate 
shipment program and to ``oversee the training and inspection 
activities'' of the State personnel providing inspection services to 
selected establishments (Sec. 501(d)(1) and Sec. 31(d)(1)). The law 
provides that if the State coordinator determines that a selected 
establishment under the State coordinator's jurisdiction is in 
violation of the Acts, the State coordinator must ``immediately notify 
the Secretary of the violation'' and ``deselect the selected 
establishment or suspend inspection at the selected establishment'' 
(Sec. 501(d)(3)(C) and Sec. 31(d)(3(C)).
    This proposed rule refers to the ``State coordinator'' established 
in section 11015 of the 2008 Farm Bill as the FSIS ``selected 
establishment coordinator'' to maintain consistency with the other 
terminology in this proposed rule and to make clear that the ``State 
coordinator'' is a Federal employee. The term ``State coordinator'' is 
often used to refer to a State employee under the Talmadge-Aiken 
program, so FSIS has tentatively decided not to use this term in these 
proposed regulations.
    Federal reimbursement of State costs. The law requires that the 
Secretary ``reimburse a State for costs related to the inspection of 
selected establishments * * * in an amount of not less than 60 percent 
of eligible State costs'' (Sec. 501(c) and Sec. 31(c)).
    Inspection training division. The law amended the FMIA to provide 
that not later than 180 days after the effective date of section 11015 
of the 2008 Farm Bill, the Secretary shall establish in FSIS an 
inspection training division to provide outreach, education, and 
training to, and provide grants to appropriate State agencies to 
provide outreach, technical assistance, education, and training to 
small and very small establishments (as defined by the Secretary) (Sec. 
501(f)). FSIS implemented this provision by establishing an Office of 
Outreach, Education and Training. A substantive part of the program's 
function is to provide training, education, and outreach services to 
small and very small plants.
    Transition grants. The law permits the Secretary to provide grants 
to States to assist them in helping establishments operating under a 
cooperative State meat or poultry inspection program transition to 
selected establishments (Sec. 501(g) and Sec. 31(f)).

II. The Proposed Rule

A. General

    FSIS is proposing to amend 9 CFR part 321 of the Federal meat 
inspection regulations and 9 CFR part 381, subpart R, of the poultry 
products inspection regulations to add new sections that describe the 
cooperative interstate shipment program established in section 11015 of 
the 2008 Farm Bill. FSIS is also proposing to add a new 9 CFR part 332 
to the Federal meat inspection regulations and a new 9 CFR part 381, 
subpart Z, to the poultry products inspection regulations that 
prescribe the conditions under which States and establishments 
operating under a State-inspection program will be permitted to 
participate in a cooperative interstate shipment program.
    When FSIS completes the rulemaking process and issues a final rule, 
the Federal meat and poultry products regulations will provide for 
three separate cooperative State meat and poultry products inspection 
programs: (1) Cooperative State meat or poultry products inspection 
programs under the FMIA and PPIA; (2) cooperative agreements for State 
programs to conduct meat or poultry products inspection or other 
regulatory activities on behalf of the Agency under the Talmadge-Aiken 
Act; and (3) cooperative programs for the interstate shipment of State-
inspected meat and poultry products under the FMIA and PPIA as amended 
by section 11015 of the 2008 Farm Bill.
    The proposed regulations to implement section 11015 are described 
in detail below.

B. Description of Cooperative Programs--9 CFR Part 321 and 9 CFR Part 
381, Subpart R

    9 CFR part 321 of the Federal meat inspection regulations and 9 CFR 
part 381, subpart R, of the poultry products inspection regulations 
describe

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cooperative meat and poultry products inspection programs authorized 
under the FMIA, PPIA, and the Talmadge-Aiken Act. These regulations 
reference the legal authority for each cooperative inspection program 
and provide a general description of each program. FSIS is proposing to 
amend part 321 and part 381, subpart R, to add a new Sec.  321.3 and a 
new Sec.  381.187 to describe the cooperative interstate shipment 
program established under section 11015 of the 2008 Farm Bill.
    The amendments to the FMIA in section 501 of section 11015 of the 
2008 Farm Bill have been codified at 21 U.S.C. 683, and the amendments 
to the PPIA in section 31 have been codified at 21 U.S.C. 472 (122 
Stat. 2124, 2127). Therefore, proposed Sec.  321.3(a) provides that 
under 21 U.S.C. 683(b), FSIS is authorized to coordinate with States 
that have cooperative State meat inspection programs to select certain 
establishments operating under these programs to ship carcasses, parts 
of carcasses, meat, and meat food products in interstate commerce. 
Similarly, proposed Sec.  381.187(a) provides that under 21 U.S.C. 
472(b), FSIS is authorized to coordinate with States that have 
cooperative State poultry products inspection programs to select 
certain establishments operating under these programs to ship poultry 
products in interstate commerce. Proposed Sec. Sec.  321.3(a) and 
381.187(a) both explain that this type of cooperative program is called 
a ``cooperative interstate shipment program.''
    Proposed Sec. Sec.  321.3(b) and 381.187(b) contain a general 
description of the cooperative interstate shipment program and make 
clear that the Federal contribution for inspection services provided by 
States that have entered into such a program will be at least 60 
percent of eligible State costs. Under the FMIA and PPIA, FSIS is 
required to contribute up to 50 percent of the cost of a cooperative 
State meat or poultry products inspection program (21 U.S.C. 661(a)(3) 
and 454(a)(3)). Thus, States that participate in the new cooperative 
interstate shipment program will receive additional reimbursement for 
costs related to inspection of selected establishments in the State.
    As required under the statute, the Federal contribution for 
inspection services provided by States that enter into a cooperative 
interstate shipment program under this proposal will be at least 60 
percent of eligible State costs. When the program is implemented, FSIS 
does not intend to reimburse States for more than 60 percent of their 
eligible costs unless Congress directs it, and provides the money for 
it, to do so.
    To be reimbursed under this proposed rule, States will be expected 
to submit their budgets for their cooperative interstate shipment 
programs to FSIS for approval prior to receiving Federal funds. States 
will also be expected to submit a separate justification for any costs 
related to the cooperative interstate shipment program that were not 
included in their initial budget request. FSIS will also need to 
approve a State's request for additional funds before the Agency will 
reimburse the State for not less than 60% of the cost. FSIS has 
tentatively decided that, for purposes of this proposed rule, eligible 
State costs will be those costs that a State has justified and FSIS has 
approved as necessary for the State to provide inspection services to 
selected establishments in the State. The Agency requests comments on 
whether the final rule resulting from this proposal should codify this 
definition or any other requirements related to State reimbursement for 
eligible costs related to inspection of selected establishments.
    Proposed Sec. Sec.  321.3(c) and 381.187(c) identify 9 CFR part 332 
and 9 CFR part 381, subpart Z, as the regulations that prescribe 
conditions under which States and establishments may participate in the 
cooperative interstate shipment program. Proposed Sec. Sec.  321.3(d) 
and 381.187(d) provide that the Administrator will terminate an 
agreement for a cooperative interstate shipment program with a State if 
the Administrator determines that the State is not conducting 
inspection at selected establishments in a manner that complies with 
the Acts and their implementing regulations.

C. Requirements for a Cooperative Interstate Shipment Program--9 CFR 
Part 332 and 9 CFR 381 Subpart Z

1. General
    FSIS is proposing to amend title 9, Chapter III, Subchapter A of 
the Code of Federal Regulations (CFR) to add a new part 332 titled 
``Selected Establishments; Cooperative Program for Interstate Shipment 
of Carcasses, Parts of Carcasses, Meat, and Meat Food Products,'' and 
to add to part 381 a new subpart Z titled ``Selected Establishments; 
Cooperative Program for Interstate Shipment of Poultry Products.'' The 
regulations in the proposed new part 332 and the proposed new subpart Z 
prescribe the requirements for a cooperative interstate shipment 
program.
2. Definitions and Purpose
    Proposed Sec. Sec.  332.1 and 381.511 define the terms 
``cooperative interstate shipment program,'' ``cooperative State meat 
inspection program,'' ``cooperative State poultry products inspection 
program,'' ``selected establishment,'' and ``designated personnel.'' 
Terms used in the proposed regulations that are defined in 9 CFR 301.2 
and 9 CFR 381.1 retain their same meaning.
    Under proposed Sec. Sec.  332.1 and 381.511, ``cooperative 
interstate shipment program,'' ``cooperative State meat inspection 
program,'' and ``cooperative poultry products inspection program'' are 
defined by providing a cross-reference to the description of these 
cooperative programs in 9 CFR part 321 and 9 CFR part 381 subpart R, 
described above. Under this proposal, ``selected establishment'' is 
defined as ``an establishment operating under a State cooperative [meat 
or poultry products] inspection program that has been selected by the 
Administrator, in coordination with the State where the establishment 
is located, to participate in a cooperative interstate shipment 
program.''
    FSIS is proposing to define ``designated personnel'' as ``State 
inspection personnel that have been trained in the enforcement of the 
Acts and any additional State program requirements in order to provide 
inspection services to selected establishments.''
    In addition to proposing new definitions, proposed Sec. Sec.  332.1 
and 381.511 make clear that the term ``interstate commerce,'' as used 
in the proposed regulations has the same meaning as ``commerce'' under 
9 CFR 301.2 and 381.1. The regulations in 9 CFR 301.2 and 381.1 define 
``commerce'' as ``[c]ommerce between any State, any Territory, or the 
District of Columbia, and any place outside thereof * * *.'' Thus, 
under this proposal, State-inspected establishments that are selected 
to participate in a cooperative interstate shipment program will be 
permitted to distribute and sell meat or poultry products across State 
lines and to export these products to foreign countries.
    Proposed Sec. Sec.  332.2 and 381.512 state that the purpose of 
part 332 and part 381, subpart Z, is to prescribe the conditions under 
which States that administer cooperative State meat or poultry products 
inspection programs and establishments that operate under such programs 
may participate in a cooperative interstate shipment program.
3. Requirements for Establishments
    The proposed regulations in Sec. Sec.  332.3 and 381.513 prescribe 
conditions that establishments operating under a

[[Page 47651]]

cooperative State meat or poultry products inspection program must 
comply with in order to apply to participate in a cooperative 
interstate shipment program. Proposed Sec. Sec.  332.3 and 381.513 also 
describe establishments that are ineligible to be selected for such a 
program.
    Number of employees. Under proposed Sec. Sec.  332.3(a)(1) and 
381.513(a)(1), an establishment operating under a cooperative State 
meat or poultry products inspection program may apply to participate in 
a cooperative interstate shipment program if the establishment employs, 
on average, no more than 25 employees. Standards for determining the 
average number of employees for purposes of this proposal are described 
in proposed Sec. Sec.  332.3(b) and 381.513(b) below.
    Under proposed Sec. Sec.  332.3(a)(2) and 381.513(a)(2), 
establishments that employed more than 25 but fewer than 35 employees 
as of June 18, 2008, are also permitted to apply for a cooperative 
interstate shipment program. However, Sec. Sec.  332.3(a)(2) and 
381.513(a)(2) provide, reflecting the amended FMIA and PPIA, that if 
selected, these establishments must employ, on average, 25 or fewer 
employees as of the date three years from the date that the final rule 
resulting from this proposal becomes effective. If they do not, 
proposed Sec. Sec.  332.3(a)(2) and 381.513(a)(2) require that they be 
deselected from the program and transition to become official 
establishments.
    Standards for determining number of employees. Proposed Sec. Sec.  
332.3(b) and 381.513(b) establish standards for determining whether an 
establishment employs, on average, 25 or fewer employees for purposes 
of this proposed rule. FSIS developed these proposed standards to carry 
out Congress' intent that ``[t]he term `average' should be interpreted 
to provide some flexibility to these selected establishments that 
require seasonal employees for certain parts of the year, as long as 
the increase in employees are [sic] manageable by the establishment and 
the increase * * * does not undermine food safety standards'' (S. Rep. 
No. 220, 110th Cong., 1st Sess., at 211 (2007)).
    For the most part, the proposed standards in Sec. Sec.  332.3(b) 
and 381.513(b) reflect applicable methods used by the Small Business 
Administration (SBA) to calculate the number of employees of a business 
concern where the size standard is number of employees (13 CFR 121.105 
and 121.106). In addition, as explained below, FSIS is also proposing 
to limit the total number of employees at any given time to 35 
individuals. Under this proposal, the standards developed by FSIS will 
apply to the employees of an individual establishment. The proposed 
standards are as follows:
    <bullet> All individuals, both supervisory and non-supervisory, 
employed by the establishment on a full-time, part-time, or temporary 
basis are to be counted when calculating the total number of employees;
    <bullet> All individuals employed from a temporary employee agency, 
professional employee organization, or leasing concern are to be 
counted;
    <bullet> The average number of employees is calculated for each of 
the pay periods for the preceding calendar year;
    <bullet> Part-time and temporary employees are to be counted the 
same as full-time employees;
    <bullet> If an establishment has not been in business for 12 
months, the average number of employees is calculated for the pay 
periods in which the establishment has been in business;
    <bullet> Volunteers who receive no compensation are not considered 
employees; and
    <bullet> The total number of employees can never exceed 35 
individuals at any given time, regardless of the average number of 
employees.
    As noted above, the standard that limits the total number of 
employees on any given day to 35 individuals is not derived from SBA's 
methods for calculating the number of employees. FSIS is proposing to 
limit the number of individuals employed by a selected establishment at 
any given time to carry out Congress' intent that any increase in the 
number of employees be ``manageable by the selected establishment'' and 
that the increase ``does not undermine food safety standards.'' FSIS is 
proposing that this number never exceed 35 because section 11015 of the 
2008 Farm Bill permits the Agency to select certain establishments that 
employ as many as 35 employees to participate in a cooperative 
interstate shipment program (Sec. 501(b)(3)(i) and Sec. 31(b)(3)(i)). 
Therefore, FSIS believes that a temporary increase in the number of 
employees of up to 35 individuals is likely to be considered 
``manageable'' under the law, provided that the average number of 
employees remains at 25 or fewer.
    FSIS requests comments on the proposed standards for determining an 
establishment's average number of employees. The Agency specifically 
requests comment on whether part-time and temporary employees should be 
counted the same as full-time employees.
    Ineligible establishments. Proposed Sec. Sec.  332.3(c) and 
381.513(c) describe establishments that are ineligible to participate 
in a cooperative interstate shipment program. For the most part, these 
establishments reflect the ``prohibited establishments'' described in 
section 11015 of the 2008 Farm Bill (Sec. 501(b)(2) and 31(b)(2)). 
These establishments include:
    <bullet> Establishments that employ more than 25 employees on 
average, with a limited exception for establishments that had between 
25 and 35 employees as of June 18, 2008 and that have 25 or fewer 
employees as of the date three years from the date that the final rule 
resulting from this rule becomes effective;
    <bullet> Establishments operating under a cooperative inspection 
program under the Talmadge-Aiken Act;
    <bullet> Official establishments;
    <bullet> Establishments that were official establishments as of 
June 18, 2008, but that were reorganized on a later date by the person 
that controlled the establishment as of June 18, 2008;
    <bullet> State-inspected establishments that employed more than 35 
employees as of June 18, 2008, but that were later reorganized by the 
person that controlled the establishment as of June 18, 2008;
    <bullet> Establishments that are transitioning to become official 
establishments;
    <bullet> Establishments that are in violation of the FMIA or PPIA; 
and
    <bullet> Establishments located in a State without a cooperative 
meat or poultry products inspection program.
    In addition, the proposed regulations also include among the 
establishments ineligible to participate in a cooperative interstate 
shipment programs, establishments located in a State whose agreement 
for an interstate shipment program was terminated by the Administrator.
    Proposed Sec. Sec.  332.3(d) and 381.513(d) provide that an 
eligible establishment may apply for selection into a cooperative 
interstate shipment program through the State where the establishment 
is located. FSIS is proposing that establishments apply for selection 
into a cooperative interstate shipment program through the State 
because the State will be responsible for providing inspection services 
to the establishment if the establishment is selected for the program. 
Thus, establishment participation in the cooperative interstate 
shipment program will depend on whether the State is able, and willing, 
to provide the necessary inspection services to the establishment. 
However, if a State enters into an agreement with FSIS for a 
cooperative interstate shipment

[[Page 47652]]

program, FSIS, in coordination with the State, will make the final 
determination on whether to select an establishment to participate in 
the program.
4. State Request for a Cooperative Interstate Shipment Program
    Under this proposed rule, a State that does not have a cooperative 
interstate shipment program, but that is interested in establishing 
one, may submit a request for such a program to FSIS. Proposed 
Sec. Sec.  332.4 and 381.514 prescribe the procedures for States to 
request an agreement for a cooperative interstate shipment program. 
Under this proposal, a State will submit the request through the FSIS 
District Office that covers the State. Proposed Sec. Sec.  332.4(a) and 
381.514(a) make clear that State participation in a cooperative 
interstate shipment program is limited to States that have cooperative 
State meat or poultry products inspection programs.
    Required information. Proposed Sec. Sec.  332.4(b) and 381.514(b) 
describe the information that States will need to include in their 
requests for an agreement for a cooperative interstate shipment 
program. Because a cooperative interstate shipment program requires 
participation from both States and establishments, the State's request 
for an agreement for a cooperative interstate shipment program must 
identify establishments in the State that have requested to be selected 
and that the State recommends for initial selection into the program 
(proposed Sec. Sec.  332.4(b)(1) and 381.514(b)(1)). If FSIS and the 
State enter into an agreement for a cooperative interstate shipment 
program under this proposal, these establishments will be the first to 
be considered for the program. Other establishments operating under the 
State's meat or poultry products inspection program may apply to become 
selected establishments after the cooperative interstate shipment 
program has been implemented within the State.
    A State's request for a cooperative interstate shipment program 
must also include documentation to demonstrate that the State is able 
to provide necessary inspection services to selected establishments in 
the State and conduct any related activities that would be required 
under a cooperative interstate shipment program (proposed Sec. Sec.  
332.4(b)(2) and 381.514(b)(2)). Under this proposal, this documentation 
would be similar to the documentation that States provide when they 
request an agreement for a cooperative State meat or poultry products 
inspection program. However, instead of demonstrating that the State's 
inspection program is ``at least equal to'' the Federal inspection 
program, the statute requires that the State demonstrate that 
inspection services provided to selected establishments will be ``the 
same as'' the inspection services provided under the Federal program.
    Thus, to qualify for a cooperative interstate shipment program 
under this proposal, States will need to demonstrate, among other 
things, that they have the authority under State law to provide the 
same inspection services to selected establishments in the State as the 
inspection services that FSIS provides to official Federal 
establishments. States will also need to demonstrate that they have 
staffing sufficient to conduct the same inspection activities in 
selected establishments that FSIS conducts in official Federal 
establishments, and that designated personnel have been properly 
trained in Federal inspection methodology. FSIS currently offers 
training courses in Federal inspection methodology to State inspection 
personnel. Under this proposal, States that are interested in 
participating in a cooperative interstate shipment program will be 
responsible for making arrangements for their inspection personnel to 
attend these courses. FSIS will also expect States to demonstrate that 
they can provide the necessary equipment for State personnel to provide 
the same inspection services to selected establishments that FSIS 
provides to official Federal establishments, including computers and 
supplies for collecting product samples.
    Because the statute requires compliance with all Federal standards, 
meat and poultry products produced in selected establishments will be 
subject to the same regulatory sampling programs as those established 
in the Federal inspection program. Thus, to be eligible to participate 
in a cooperative interstate shipment program, States will need to 
demonstrate that State personnel will collect the same number and type 
of regulatory product samples from selected establishments as are 
collected under FSIS's inspection sampling program.
    In addition, the State will need to demonstrate that the laboratory 
services that it intends to use to analyze product samples from 
selected establishments are capable of conducting the same chemical, 
microbiological, physical, and pathology testing as are required under 
the Federal meat and poultry products inspection programs. FSIS's 
Office of Public Health Science will provide audit assistance to the 
State to verify that the methodologies used by a State's laboratory 
services to analyze samples from selected establishments are capable of 
producing the same results as the methodologies used by FSIS 
laboratories. FSIS will not enter into an agreement for a cooperative 
interstate shipment program with a State that does not meet the 
conditions described above.
    Additional conditions. Proposed Sec. Sec.  332.4(b)(3) and 
381.514(b)(3) prescribe additional conditions that States applying for 
a cooperative interstate shipment program must agree to in order to 
qualify for the program. These proposed regulations provide that when a 
State submits a request to establish a cooperative interstate shipment 
program, the State must agree that, if it enters into an agreement with 
FSIS for such a program, that the State will:
    <bullet> Provide FSIS with access to the results of all laboratory 
analyses conducted on product samples from selected establishments in 
the State;
    <bullet> Notify the selected establishment coordinator (SEC) for 
the State of the results of any laboratory analyses that indicate that 
a product prepared or processed in a selected establishment may be 
adulterated or may otherwise present a food safety concern; and
    <bullet> If necessary, cooperate with FSIS to transition selected 
establishments in the State that have been deselected from a 
cooperative interstate shipment program to become official 
establishments. FSIS will not enter into an agreement for a cooperative 
interstate shipment program if a State does not agree to these terms.
    Qualified States. Under this proposal, after a State submits a 
request for a cooperative interstate shipment program, the FSIS 
Administrator will review the request and determine whether the State 
qualifies for such a program. If, based on the information submitted in 
the request the Administrator determines that a State is eligible to 
enter into a cooperative agreement for an interstate shipment program, 
the Administrator and the State will sign a cooperative agreement that 
sets forth the terms and conditions under which each party will 
cooperate to provide inspection services to selected establishments in 
the State (proposed Sec. Sec.  331.4(c) and 381.514(c)). After the 
Administrator and a State have signed an agreement for a cooperative 
interstate shipment program, the Administrator will: (1) Appoint an 
FSIS employee as the selected establishment coordinator (SEC) for the 
State and (2) coordinate with the State to select the establishments 
that will participate in the program (proposed Sec. Sec.  332.4(d) and 
381.514(d)).

[[Page 47653]]

    Summary of actions needed to establish a cooperative interstate 
shipment program under the proposed regulations.
    The proposed regulations discussed above describe conditions that 
both establishments and States must meet to participate in a 
cooperative interstate shipment program. If FSIS adopts these proposed 
regulations in a final rule, the steps for establishing a new 
cooperative interstate shipment program will be the following.
    <bullet> An establishment that is eligible for the interstate 
shipment program, and that is interested in participating in the 
program, will apply for the program through the State agency that 
administers the State meat and poultry products inspection program 
under which the establishment operates. States will develop their own 
application procedures.
    <bullet> The State will then evaluate the establishment's 
application to determine whether the State will recommend the 
establishment for selection into the cooperative interstate shipment 
program.
    <bullet> If the State determines that an establishment qualifies 
for selection into the program, and the State is able, and willing, to 
provide the necessary inspection services to the establishment, the 
State will recommend the establishment for selection into the program. 
The State will need to submit its recommendation through the FSIS 
District Office whose jurisdiction includes the State.
    <bullet> If the State has not entered into an agreement with FSIS 
for a cooperative interstate shipment program, but is qualified to 
participate in such a program, it will need to submit a request for a 
cooperative agreement for the program to the FSIS District Office that 
covers the State.
    <bullet> In its request for a cooperative interstate shipment 
program, a State will need to: (1) Identify those establishments that 
have submitted a request for, and that the States recommends for, 
initial selection into the program and (2) demonstrate that it is able 
to provide the necessary inspection services to these establishments if 
they are selected for the program. The State will also need to agree to 
comply with certain conditions associated with FSIS oversight and 
enforcement of the program.
    <bullet> After a State submits a request for a cooperative 
interstate shipment program, the FSIS Administrator will evaluate the 
request and determine whether the State qualifies for the program.
    <bullet> If the Administrator determines that the State qualifies 
for the cooperative interstate shipment program, the Administrator and 
the State will sign a cooperative agreement that sets forth the terms 
and conditions under which each party will cooperate to provide 
inspection services to selected establishments in the State.
    <bullet> The Administrator will then appoint an SEC for the State, 
and the Administrator, in coordination with the State, will begin 
selecting establishments for participation in the program.
5. Selection of Establishments
    As discussed above, under this proposal, State-inspected 
establishments that are interested in participating in a cooperative 
interstate shipment program will apply for selection into the program 
through the State agency that administers the State's meat or poultry 
products inspection program. When, and if, an establishment applies to 
participate in a cooperative interstate shipment program, the State 
will evaluate the establishment to determine whether it qualifies to 
become a selected establishment. Proposed Sec. Sec.  332.5(a) and 
381.515(a) provide that a State-inspected establishment will qualify 
for selection into a cooperative interstate shipment program if the 
establishment:
    <bullet> Has submitted a request to the State to be selected for 
the program;
    <bullet> Has the appropriate number of employees;
    <bullet> Is not ineligible for a cooperative interstate shipment;
    <bullet> Is in compliance with all requirements under the State 
inspection program; and
    <bullet> Is in compliance with the all Federal meat or poultry 
products inspection requirements.
    Establishments that do not meet all of these criteria will not 
qualify, and will not be selected, for the program. To participate in a 
cooperative interstate shipment program, an establishment that 
qualifies for such a program must be selected by the Administrator, in 
coordination with the State where the establishment is located 
(proposed Sec. Sec.  332.5(b) and 381.515(b)).
    Thus, under this proposal, if a State determines that an 
establishment operating under the State's meat or poultry products 
inspection program qualifies for selection into a cooperative 
interstate shipment program, and the State is able, and willing, to 
provide the necessary inspection services to the establishment, the 
State is to submit its evaluation of the establishment through the FSIS 
District Office that covers the State. The FSIS Administrator, in 
coordination with the State, will decide whether to select the 
establishment for the program. When deciding whether to select and 
establishment for the program, the Administrator will consider whether 
the establishment meets the criteria needed to qualify for the program 
and whether the Agency has the resources that it needs to provide the 
required oversight of the establishment if it is selected for the 
program.
    As stated above, to qualify to participate in a cooperative 
interstate shipment program, an establishment must be in compliance 
with all Federal inspection requirements under the FMIA, PPIA, and 
their implementing regulations in title 9, chapter III, of the CFR. 
Thus, as part of the selection process, the SEC, in coordination with 
the State, will verify that each establishment that has applied to 
participate in a cooperative interstate shipment program: (1) Meets the 
Federal regulatory performance standards established in 9 CFR 416.1 
through 416.6; (2) has submitted all labeling material to the State for 
approval, and that the materials meet all Federal requirements in 9 CFR 
parts 316, 317, and 319 and Part 381, subparts M, N, and P; (3) has 
obtained the same water source and sewage system approval that FSIS 
requires for official establishments; (4) has developed Sanitation 
Standard Operating Procedures (Sanitation SOPs) that comply with 9 CFR 
416.11-416.17; and (5) has conducted a hazard analysis and developed a 
validated Hazard Analysis and Critical Control Points (HACCP) plan that 
complies with 9 CFR part 417.
    These criteria reflect the standards that meat and poultry products 
establishments are required to meet to obtain a Federal grant of 
inspection under 9 CFR part 304 and 9 CFR part 381. Establishments that 
do not meet all of these requirements are not in compliance with all 
Federal standards and thus will not be selected for the program.
    If an establishment qualifies for, and is selected to participate 
in, a cooperative interstate shipment program under this proposed rule, 
proposed Sec. Sec.  332.5(c) and 381.515(c) provide that the State is 
to assign the establishment an official number that reflects the fact 
that the establishment is a participant in the cooperative interstate 
shipment program. These proposed regulations provide that the State is 
to advise the SEC of the number assigned to each selected establishment 
in the State. Proposed Sec. Sec.  332.5(c) and 381.515(c) go on to 
state that the official numbers

[[Page 47654]]

assigned to selected establishments need to contain the suffix ``SE'' 
to identify the establishments as selected establishments. FSIS is 
proposing this requirement to ensure that establishments participating 
in the cooperative interstate shipment program can be identified by 
reference to their establishment number. It will also ensure that meat 
and poultry products prepared in selected establishments are identified 
as articles produced under a cooperative interstate shipment program.
    Proposed Sec. Sec.  332.5(c) and 381.515(c) also provide that the 
selected establishment numbers must include, as a suffix, the 
abbreviation for the State in which the establishment is located. In 
addition, proposed Sec.  381.515(c) provides that the suffix of the 
number for a selected poultry products establishments needs to contain 
the letter ``P'' to identify the establishment as one that processes 
poultry products. Thus, under this proposal, an official number for a 
selected establishment in Texas that prepares meat products would 
contain the suffix ``SETX,'' while an official number for an 
establishment in North Dakota that process poultry products would 
contain the suffix ``SEPND.''
    As discussed below, articles that have been inspected and passed in 
a selected establishment will bear an official USDA mark, stamp, tag, 
or label of inspection.
    Finally, proposed Sec. Sec.  332.5(d) and 381.515(d) provide that 
failure of a State to comply with Sec. Sec.  332.5(c) and 381.515(c) 
will disqualify that State from participation in a cooperative 
interstate shipment program. Full compliance by a State with these 
provisions is essential if the program is to succeed.
6. Inspection at Selected Establishments, Official Mark, and Interstate 
Shipment
    Proposed Sec. Sec.  332.6(a) and 381.516(a) provide that a 
cooperative interstate shipment program will commence when the 
Administrator, in coordination with a State that has entered into an 
agreement for a cooperative meat or poultry products inspection 
program, have selected establishments in the State to participate in 
the program.
    Proposed Sec. Sec.  332.6(b) and 381.516(b) provide that inspection 
services for selected establishments participating in a cooperative 
interstate shipment program must be provided by designated personnel, 
who will be under the direct supervision of a State employee. As 
discussed below, the FSIS SEC will oversee the inspection activities of 
the designated personnel.
    Proposed Sec. Sec.  332.6(c) and 381.516(c) provide that articles 
prepared or processed in a selected establishment that have been 
inspected and passed by designated personnel must bear an official USDA 
mark, stamp, tag, or label of inspection as specified in 9 CFR 312.2 or 
9 CFR 381.96. 9 CFR 312.2 and 9 CFR 381.96 are the regulations that 
prescribe the appropriate wording and form for use of the official 
Federal inspection legend on meat or poultry products. In addition, the 
establishment number contained in the Federal mark, stamp, tag, or 
label of inspection must comply with all the conditions proposed in 
Sec. Sec.  332.5(c) or 381.515(c).
    Under proposed Sec. Sec.  332.6(d) and 381.516(d) meat or poultry 
products prepared in selected establishments may be shipped in 
interstate commerce if they have been inspected and by selected State 
personnel and bear the Federal mark of inspection.
7. Federal Oversight of Cooperative Interstate Shipment Programs
    Section 11015 of the 2008 Farm Bill requires that the Secretary 
designate an employee of the Federal government as a ``State 
coordinator'' for each State that has a cooperative State meat or 
poultry products inspection program (Sec. 501(d) and Sec. 31(d)). The 
State coordinator is required to ``provide oversight and enforcement'' 
of the program and ``to oversee the training and inspection 
activities'' of State personnel designated to provide inspection 
services to selected establishments (Sec. 501(d)(1) and Sec. 31(d)(1)). 
As noted above, when, and if, a State qualifies to participate in a 
cooperative interstate shipment program, proposed Sec. Sec.  
332.4(c)(1) and 381.514(c)(1) provide that the Administrator will 
appoint an FSIS employee as the FSIS SEC for the State. The SEC is the 
``State coordinator'' prescribed by the statute.
    FSIS has tentatively decided that the SEC will be an employee of 
the FSIS Office of Field Operations (OFO) and will be assigned to an 
FSIS District Office. The SEC will likely be under the direct 
supervision of an FSIS District Manager. The number of States in an 
FSIS district assigned to an SEC will likely depend on several factors, 
including, but not limited to: (1) The number of States and selected 
establishments, if any, that participate in the cooperative interstate 
shipment program; (2) the location of each selected establishment; (3) 
the number of State inspection personnel providing inspection services 
to selected establishments in a State; (4) the complexity of the 
operations conducted at each selected establishment; and (5) the 
schedule of operations for each selected establishment. The number of 
States assigned to an SEC would also need to be based on consideration 
of the most effective allocation of available Agency resources.
    SEC initial responsibilities. One of the SEC's initial 
responsibilities will be, in conjunction with the District Office, to 
coordinate with the State to select establishments to participate in 
the program. The SEC will coordinate with the State to verify that all 
State personnel selected to provide inspection services to these 
establishments have successfully completed the same training in the 
fundamentals of meat and poultry inspection, covering the Sanitation 
Performance Standards, Sanitation Standard Operating Procedures (SOPs), 
HACCP, and enforcement procedures, that is required for FSIS inspection 
personnel. The SEC will also coordinate with the State to verify that 
designated personnel have successfully completed the appropriate 
customized food safety training required for FSIS inspection personnel 
based on the types of products being produced at the establishments 
where designated personnel are assigned.
    SEC's oversight responsibilities. Proposed Sec. Sec.  332.7 and 
381.517 prescribe how the FSIS SEC is to provide Federal oversight of 
the cooperative interstate shipment program.
    Proposed Sec. Sec.  332.7(a) and 381.517(a) provide that the SEC is 
to visit each selected establishment in the State on a regular basis to 
verify that these establishments are operating in a manner that is 
consistent with the Acts and the implementing regulations in title 9, 
chapter III, of the CFR. The SEC's frequency of visits and oversight 
activities for each selected establishment will need to reflect the 
type of operations conducted by a selected establishment, as well as 
the establishment's production processes. FSIS requests comments on how 
frequently the SEC should visit each establishment under his or her 
jurisdiction. Proposed Sec. Sec.  332.7(a) and 381.517(a) also provide 
that if necessary, the SEC, in consultation with the District Manager 
that covers the State, may designate qualified FSIS personnel to visit 
a selected establishment on behalf of the SEC.
    Under proposed Sec. Sec.  332.7(b) and 381.517(b), the SEC, in 
coordination with the State, will verify that selected establishments 
in the State are receiving the necessary inspection services from

[[Page 47655]]

designated personnel, and that these establishments are eligible, and 
remain eligible, to participate in the cooperative interstate shipment 
program. These proposed regulations provide that the SEC's verification 
activities may include:
    <bullet> Verifying that each selected establishment in the State 
employs, and continues to employ, 25 or fewer employees on average, 
unless the establishment is transitioning to become an official 
establishment;
    <bullet> Verifying that the designated personnel are providing 
inspection services to selected establishments in an manner that 
complies with the Acts and implementing regulations;
    <bullet> Verifying that the State staffing levels for each selected 
establishment are appropriate to carry out the required inspection 
activities; and
    <bullet> Assessing each selected establishment's compliance with 
the Acts and implementing regulations under title 9, chapter III, of 
the CFR.
    To verify that designated personnel are providing inspection 
services in compliance with the Acts, the SEC for the establishment, in 
coordination with the State, will verify that the designated personnel 
are correctly applying Federal inspection methodology, making decisions 
based upon the correct application of this methodology, accurately 
documenting their findings, and, when authorized to do so, implementing 
enforcement actions in accordance with the FSIS Rules of Practice in 9 
CFR part 500.
    To assess each selected establishment's compliance with Federal 
food safety standards, the SEC will observe the condition of the 
establishment, observe establishment employees performing their duties, 
review the establishment's records, and submit product samples for 
analysis to determine that product produced by the establishment meets 
Federal food safety standards.
    The SEC will have discretion to increase the frequency of visits to 
a selected establishment if the SEC, in consultation with the District 
Manager for the State where the selected establishment is located, 
determines that such action is necessary to ensure that the 
establishment is operating in a manner consistent with the Acts. The 
SEC will also be authorized to conduct a comprehensive food safety 
assessment (FSA) for a selected establishment, or to request that an 
FSIS Enforcement, Investigation, and Analysis Officer (EIAO) conduct an 
FSA, if the SEC, in consultation with the District Manager, determines 
that such action would help determine whether the establishment is 
operating in compliance with the Acts. A comprehensive food safety 
assessment is an assessment that considers all the food safety aspects 
that relate to an establishment and all the products the plant 
produces.
    If the SEC determines that designated personnel are not providing 
inspection services to selected establishments in a manner that 
complies with the Acts, proposed Sec. Sec.  332.7(c) and 381.517(c) 
provide that FSIS will provide an opportunity consistent with these 
regulations for the State to develop and implement a corrective action 
plan to address inspection deficiencies identified by the SEC. These 
proposed regulations also provide that if the State fails to develop a 
corrective action plan, or if the SEC determines that the State's 
corrective action plan is inadequate, the Administrator will terminate 
the cooperative agreement with the State.
    As discussed above, selected establishments in a State whose 
agreement for a cooperative interstate shipment program has been 
terminated by the Administrator are among the establishments that are 
ineligible to participate in the program. As such, these establishments 
will be deselected from the program and transitioned to become Federal 
establishments as described below.
    Quarterly reports. As required under section 11015 of the 2008 Farm 
Bill (Sec. 501(d)(3)(b) and Sec. 31(d)(3)(b)), the SEC is to prepare a 
report on a quarterly basis that describes the status of each selected 
establishment under the SEC's jurisdiction (proposed Sec. Sec.  
332.8(a) and 381.518(a)).
    The SEC's quarterly report will include the SEC's assessment of the 
performance of the designated personnel in conducting inspection 
activities (proposed Sec. Sec.  332.8(b)(1) and 381.518(b)(1)). The 
quarterly report will also identify the selected establishments that 
the SEC has verified are in compliance with all Federal requirements, 
those that have been deselected, and those that are transitioning to 
become Federal establishments (proposed Sec. Sec.  332.8(b)(1) and 
381.518(b)(1)). The SEC will submit the report to the Administrator 
through the District Manager for the State in which the selected 
establishments identified in the report are located (proposed 
Sec. Sec.  332.8(c) and 381.518(c)).
    Enforcement. Section 11015 of the 2008 Farm Bill provides that if 
the SEC determines that any selected establishment is in violation of 
any requirement of the Acts, the SEC is required to: (1) Immediately 
notify the Secretary (the FSIS Administrator by delegation) of the 
violation and (2) ``deselect'' the establishment or suspend inspection 
at the establishment (Sec. 501(d)(3)(C) and Sec. 31(d)(3)(C)). In 
adopting this language, Congress intended that the SEC ``* * * shall be 
provided all the tools necessary under the Secretary to prevent or 
control any food safety issue that would harm human health'' (S. Rep. 
No. 220, 110th Cong., 1st Sess., at 211 (2007)).
    Because many of the SEC's verification and enforcement activities 
require that the SEC have access to a selected establishment's records, 
proposed Sec. Sec.  332.9(a) and 381.519(a) provide that to facilitate 
oversight and enforcement of the cooperative interstate shipment 
program, selected establishments must, upon request, give SECs or other 
FSIS officials access to all establishment records required under the 
FMIA, PPIA, and the implementing regulations in title 9, chapter III, 
of the CFR. These proposed regulations go on to state that FSIS will 
move to deselect an establishment that does not comply with this 
requirement.
    Under proposed Sec. Sec.  332.9(b) and 381.519(b), the SEC is 
authorized to initiate any appropriate enforcement action provided for 
in the FSIS rules of practice in 9 CFR part 500 if he or she determines 
that a selected establishment under his or her jurisdiction is 
operating in a manner that is inconsistent with the Acts or their 
implementing regulations. Such actions include, among others, 
regulatory control actions, withholding actions, and suspensions. The 
proposed regulations provide that selected establishments participating 
in a cooperative interstate shipment program are subject to the 
notification and appeal procedures set out in part 500 (proposed 
Sec. Sec.  332.9(b) and 381.519(b)).
    Proposed Sec. Sec.  332.9(c) and 381.519(c) provide that if 
inspection at a selected establishment is suspended for any of the 
reasons specified in 9 CFR 500.3 or 9 CFR 500.4, FSIS will provide an 
opportunity for the establishment to implement corrective actions and 
remain in the cooperative interstate shipment program, or the Agency 
will move to deselect the establishment. The decision to deselect a 
selected establishment under a suspension will be made on a case-by-
case basis (proposed Sec. Sec.  332.9(d) and 381.519(d)). In making 
this decision, the Administrator, in consultation with the State where 
the selected establishment is located, will consider, among other 
factors: (1) The non-compliance that led to the suspension; (2) the 
selected establishment's compliance history, which will be documented 
in non-compliance reports prepared by the designated personnel and the 
SEC's

[[Page 47656]]

quarterly reports; and (3) the corrective actions proposed by the 
establishment (proposed Sec. Sec.  332.9(d) and 381.519(d))
    The Administrator will have the discretion to allow a selected 
establishment that has been suspended to remain in the program if the 
establishment implements corrective actions to address any non-
compliance. The Administrator will consider the criteria described 
above in determining whether to provide an opportunity for corrective 
actions. Establishments that are given an opportunity to take 
corrective actions but that are unable to effectively implement these 
actions will be deselected.
    FSIS will also consider the State's recommendation as to whether a 
selected establishment in the State should be deselected. However, the 
final decision to deselect an establishment for violations of the FMIA 
or PPIA will be made by FSIS. As discussed below, consistent with the 
law, this proposed rule requires that deselected establishments be 
transitioned to become official establishments.
8. Deselection
    There may be circumstances in which an establishment that initially 
qualifies to be selected to participate in a cooperative interstate 
shipment program later acquires characteristics that would cause it to 
become ineligible for the program. For example, an establishment may 
hire additional employees after it has been selected, or, as discussed 
above, FSIS may determine that a selected establishment is in violation 
of the Acts. Therefore, proposed Sec. Sec.  332.10(a) and 381.520(a) 
provide that the Administrator will deselect an establishment that 
becomes ineligible to participate in a cooperative interstate shipment 
program. Proposed Sec. Sec.  332.10(b) and 381.520(b) provide that an 
establishment that has been deselected from a cooperative interstate 
shipment program must be transitioned to become an official 
establishment.
    FSIS is proposing to require that deselected establishments be 
transitioned to become official Federal establishments as provided for 
in the law. Section 11015 of the 2008 Farm Bill allows the Agency to 
establish a procedure to transition selected establishments that 
employ, on average, more than 25 employees to become Federal 
establishments, and it requires that selected establishments that the 
Administrator determines to be in violation of any provision of the 
Acts, be transitioned to Federal establishments in accordance with the 
procedure developed for establishments that employ more than 25 
employees (Sec. 501(b)(3), 501(h), 31(b)(3) and 31(g)).
    Thus, as required by the law, under this proposal, establishments 
that become ineligible to participate in the cooperative interstate 
shipment program because they violated Federal food safety standards 
will not permitted to avoid implementing appropriate corrective actions 
by withdrawing from the cooperative interstate shipment program and 
reverting back to the State inspection program. In addition, requiring 
that deselected establishments transition to become official Federal 
establishments will help to ensure that the resources that FSIS and the 
States provide to establish and maintain a cooperative interstate 
shipment program are used most effectively to provide inspection 
services to establishments that are committed to maintaining Federal 
food safety standards.
9. Transition Procedures for Deselected Establishments
    As discussed above, under the law, FSIS is authorized to develop a 
procedure to transition selected establishments to become official 
establishments if they employ more than 25 employees on average, or if 
the Agency determines that they are in violation of any provision of 
the Acts (Sec 501(b), Sec. 501(h), Sec. 31(b) and Sec. 31(g)). At a 
minimum, a procedure to transition a selected establishment to an 
official establishment would include: (1) Adding the establishment to 
an FSIS circuit within the FSIS District that covers the State where 
the establishment is located; (2) replacing the establishment's State 
establishment number with a Federal establishment number, and (3) 
replacing the designated personnel with FSIS inspection personnel. 
Other actions needed to successfully transition a selected 
establishment to become an official establishment are likely to depend 
on the reason the establishment was deselected. For example, an 
establishment that was deselected from a cooperative interstate 
shipment program for violating provisions of the Acts would likely need 
to develop a corrective action plan as part of its process to 
transition to an official establishment, while an establishment that 
was deselected for hiring additional employees would not.
    Therefore, instead of prescribing a specific procedure to 
transition selected establishments to official establishments, proposed 
Sec. Sec.  332.11 and 381.521 provide that if a selected establishment 
is deselected, FSIS will coordinate with the State where the 
establishment is located to develop and implement a plan to transition 
the establishment to become an official establishment. The SEC with 
jurisdiction over the deselected establishment will likely be charged 
with coordinating with the State and the FSIS District Office to 
develop and implement the transition plan.
10. Technical Assistance Division and Transition Grants
    Section 11015 of the 2008 Farm Bill amended the FMIA to require 
that FSIS establish a ``technical assistance division'' to coordinate 
the initiatives of other USDA agencies to provide ``outreach, 
education, and training to certain small and very small 
establishments'' and to provide ``grants to States to provide outreach, 
technical assistance, education, and training to certain small and very 
small establishments'' (Sec. 501(f)). As noted earlier in this 
document, FSIS fulfilled this requirement by establishing the Office of 
Outreach Employee Education and Training (OOEET).
    OOEET is responsible for directing outreach, education, and 
training programs for FSIS to ensure public health and food safety 
through both inspection and enforcement activities. OOEET is also 
responsible for coordinating with other USDA agencies, such as the 
Rural Development Mission Area and the Cooperative State Research, 
Education, and Extension Service.
    The OOEET State Outreach and Technical Assistance Division promotes 
State programs and activities to achieve national food safety, food 
security, and other consumer protection goals by planning, organizing, 
coordinating, and supporting FSIS cooperative activities with State 
agencies with responsibility for State meat, poultry and egg product 
public health assurance inspection programs. It also provides technical 
expertise, information, and advice to small and very small plant owners 
and operators on the interpretation, application, implementation and 
enforcement of the statutes and regulations that FSIS implements.
    Transition grants. In addition to requiring that FSIS establish a 
``technical assistance division'' to coordinate the initiatives of 
other USDA agencies to provide grants to States, section 11015 of the 
2008 Farm Bill authorizes FSIS to provide ``transition grants'' to 
States to assist the States in helping State-inspected establishments 
transition to selected establishments (Sec. 501(g) and Sec. 31(f)). The 
Agency has tentatively decided to use this authority, subject to the 
availability of funds, to grant funds to States that

[[Page 47657]]

participate in a cooperative interstate shipment program to reimburse 
selected establishments in the State for their costs to train one 
individual in HACCP and associated training in Sanitation SOP 
requirements.
    The regulations that prescribe conditions for receiving Federal 
inspection, which represent the conditions that selected establishments 
must meet to be in compliance with Federal standards, require that an 
establishment develop written Sanitation SOPs as required by 9 CFR part 
416, and that it have conducted a hazard analysis and developed and 
validated a HACCP plan as required in 9 CFR 417.2 and 417.4 (9 CFR 
304.3 and 381.22). Under 9 CFR 417.7 of the HACCP regulations, the 
individual that develops the HACCP plan for an establishment must have 
successfully completed a course of instruction in the application of 
the seven HACCP principles to meat or poultry product processing, 
including a segment on the development of a HACCP plan for a specific 
product and on record review.
    State-inspected establishments that apply to participate in a 
cooperative interstate shipment program will be required to have an 
individual trained in HACCP in order to transition to a selected 
establishment. Therefore, for purposes of this proposed rule, FSIS has 
tentatively concluded that it is appropriate to provide funds to a 
State for the purpose of reimbursing selected establishments for the 
cost of this training. Accordingly, proposed Sec. Sec.  332.12(a) and 
381.522(a) provide that these ``transition grants'' are funds that a 
State participating in a cooperative interstate shipment program must 
use to reimburse selected establishments in the State for the cost to 
train one individual in the HACCP principles applicable to meat or 
poultry processing as required under 9 CFR 417.7 and associated 
training in the development of Sanitation SOPs required under 9 CFR 
part 416.
    Proposed Sec. Sec.  332.12(b) and 381.522(b) make clear that States 
must use transition grants only for this described purpose. Once a 
selected establishment receives such funding from the State, the State 
may not use additional transition grant funds to reimburse that 
establishment's training costs in the future.
    Under this proposal, establishments that train an individual in 
HACCP or Sanitation SOP requirements as part of their transition to 
become selected establishments may request reimbursement for these 
training costs through the State agency that administers the State's 
cooperative interstate shipment program. These selected establishments 
will need to submit a training certificate or other documentation to 
demonstrate that an individual completed the appropriate training. The 
State would then submit the documentation to FSIS, and request a 
``transition grant'' to reimburse the establishment for its training 
costs.
    Executive Order 12866 and Regulatory Flexibility Act:
    This proposed rule has been reviewed under Executive Order 12866. 
It has been determined to be significant, but not economically 
significant for purposes of E.O. 12866 and, therefore, has been 
reviewed by the Office of Management and Budget (OMB).
    Currently, 27 States administer cooperative State meat or poultry 
inspection programs. These States have approximately 1,873 
establishments that would be eligible to apply for selection into the 
new cooperative interstate shipment program. However, because 
participation in the new program will be voluntary, FSIS will not know 
how many States and establishments will apply to participate until 
final implementing regulations become effective and establishments are 
selected for the program. Information obtained through the Agency's 
outreach activities indicates that, as of July 2008, about 170 
establishments in sixteen States have approached the State Meat and 
Poultry programs to indicate that they are interested in the new 
program. These sixteen States have in total 1,133 establishments that 
could potentially be eligible for the new program.
    Expected Benefits of the Proposed Action: State-inspected 
establishments selected to participate in the new cooperative 
interstate shipment program will be permitted to ship and sell their 
meat and poultry products in interstate and foreign commerce. Thus, the 
proposed action would benefit these establishments by opening new 
markets for their products.
    The proposed action would also benefit consumers by generating more 
product choices, as more products can be shipped to new markets. In 
addition, the Federal inspection legend and official State 
establishment inspection number may facilitate traceback of these 
products if such products are ever the subject of an investigation or 
recall.
    States that participate in the program would benefit because FSIS 
would reimburse them for at least 60% of their costs related to 
inspection of selected establishments in the State. FSIS provides up to 
50% of the costs of existing cooperative State inspection programs. The 
Agency has tentatively concluded that most States will benefit from the 
10% increase in reimbursement for the cooperative interstate shipment 
program because, as explained below, for many States, the costs to 
administer the new program are not expected to exceed the costs to 
administer the State meat and poultry inspection programs.
    Expected Costs of the Proposed Action:
    Costs to the participating establishments. To be eligible to 
participate in the cooperative interstate shipment program, a State-
inspected establishment must be in compliance with: (1) The State-
inspection program of the State in which the establishment is located 
and (2) the FMIA or PPIA, and their implementing regulations. Before 
State-inspected establishments can be selected to participate in a 
cooperative interstate shipment program, they will need to apply for 
selection into the program and demonstrate that they comply with both 
State and Federal requirements.
    Thus, an establishment that chooses to apply for selection into the 
program will incur one-time start-up costs associated with filing an 
application, training employees, meeting regulatory performance 
standards, obtaining label approval, and implementing a food safety 
system that complies with all Federal requirements (e.g., Sanitation 
SOP and HACCP requirements).
    In addition, to qualify for a cooperative interstate shipment 
program, some State-inspection establishments may need to invest in 
structural modifications to their facilities in order to comply with 
Federal standards. Based on information obtained through FSIS' outreach 
activities with the States, the Agency estimates that the cost for 
State-inspected establishments to fully comply with Federal standards, 
as required by the law, will range from $1,500 to $50,000. According to 
most State Directors, the cost to very small establishments that do not 
need to make structural modifications to their facilities is likely to 
be in the range of $5,000 to $10,000. On the other hand, if the 
establishments need to make structural modifications or perform new 
construction then the range would be about $15,000 to $30,000.\1\ 
However, because this is a voluntary program, establishments that 
choose to incur the costs associated with participating in the program 
will most likely do so because they anticipate that such

[[Page 47658]]

participation will provide an overall net benefit for them. The Agency 
welcomes comments on these estimates.
---------------------------------------------------------------------------

    \1\ Note that under this proposed rule, establishments selected 
for the program will be eligible to be reimbursed the cost to train 
one employee in HACCP and Sanitation SOPs.
---------------------------------------------------------------------------

    Looking at the potential for the establishments to experience new 
(incremental) burden or expenses due to State inspection under the 
proposed cooperative interstate shipment program, FSIS believes that 
there will be essentially no change. FSIS is aware that the cooperative 
State meat and poultry products inspection programs are not identical 
to Federal inspection, as they must be under the cooperative interstate 
shipment program. So FSIS anticipates that State inspection procedures 
will need to be changed somewhat to comply with the requirements of the 
cooperative interstate shipment program. However, since the State 
programs are required to be equal to the Federal inspection programs 
now, FSIS anticipates that changes will largely be procedural, and 
there will not be any particular increase or decrease in overall State 
effort that would change the burden of the inspection regimen on the 
establishments.
    Costs to the participating States. States that choose to 
participate in the program will be required to pay 40 percent of the 
eligible costs related to inspection of establishments in the State 
that are selected for the program. Under the current cooperative 
program, the States are paying 50 percent of the eligible inspection 
costs. Although the inspection costs under the new program may be 
different from the costs under the existing program, the States' share 
of 40 percent or less is unlikely to be higher than its current share.
    States that choose to participate in the interstate shipment 
program may need to make certain modifications to their State 
inspection programs to provide inspection services to selected 
establishments in a manner that is the same as the Federal inspection 
program. However, most States that have implemented State meat and 
poultry products inspection (MPI) programs have incorporated the 
Federal requirements into their programs.\2\ Thus, State costs to train 
State personnel are likely to be minimal because many State personnel 
have received training in Federal inspection methodology as part of the 
State MPI program.
---------------------------------------------------------------------------

    \2\ Based on Agency's most recent (FY 2008) review of the 27 
States' self-assessment reports (including the State Laboratory 
Activity Tables) by the Federal State Audit Branch, Internal Control 
and Audit Division of the Office of Program Evaluation, Enforcement, 
and Review.
---------------------------------------------------------------------------

    States may incur some costs associated with the processing and 
evaluation of applications submitted by establishments requesting to be 
selected for the cooperative interstate shipment program. However, 
because the States will develop their own application procedures, FSIS 
is unable to estimate these costs with any certainty. The Agency 
requests comments on potential State costs associated with the 
processing and evaluation of these applications.
    FSIS anticipates that State inspection procedures will need to be 
changed somewhat to comply with the requirements of the proposed 
cooperative interstate shipment program. However, since the State 
programs are required to be at least equal to the Federal inspection 
programs now, FSIS anticipates that changes will largely be procedural, 
and there will not be any particular increase or decrease in overall 
State effort or cost. FSIS has no basis on which to assume anything 
else. FSIS requests input from State Program officials that might be 
useful to refine this estimate.
    Expected FSIS Budgetary Effects:
    The new Federal-State cooperative inspection program option which 
section 11015 of the 2008 Farm Bill requires the Secretary to create 
and which we propose to implement via this regulatory action is 
expected to have budgetary effects on FSIS to support about 16 full-
time equivalent new staff. This section discusses the baseline costs 
and activities, i.e., what is happening now before the cooperative 
interstate shipment program option is available, and then lays out the 
incremental effects on FSIS. FSIS staff have worked with the 27 
directors of the Federal-State meat and poultry inspection program to 
gauge the level of interest at the State and establishment level. Their 
input has been incorporated into the assumptions here.
    Baseline:
    Federal-State cooperative inspection programs operated in 27 States 
and 1,873 establishments in FY 2008, the baseline year for this 
analysis. Actual Federal spending for the Federal-State cooperative 
inspection programs was $63,959,709 for FY 2008 as reported in the FY 
2010 President's Budget, which also projected $64,703,000 for FY 2009 
and $65,654,000 for FY 2010. By statute, the States may be reimbursed 
for up to 50 percent of the cost of their State cooperative inspection 
programs. Federal reimbursements to State programs reported in the FY 
2010 budget, included in the above figures, are $49,061,068 for FY 
2008, $50,332,000 for FY 2009, and $50,332,000 for FY 2010. In fact, 
actual total State spending for the Federal-State cooperative 
inspection programs for FY 2008 was $104 million with $49 million of 
that reimbursed by FSIS, as noted above.
    FSIS extends these figures into years 2010 through 2014, see table 
below, the 5-year analysis period for this rule, by assuming that, had 
the cooperative interstate shipment program option not been enacted, 
State cooperative programs operations would continue through the period 
on a generally stable basis. The Agency assumes that the same 27 States 
would continue to participate and the program would inspect about the 
same number of establishments as were inspected in FY 2008, i.e., 
1,873. This appears reasonable because, among the 27 States in the 
program the number of establishments has been relatively stable. Since 
the number of establishments and States is assumed to remain unchanged, 
and no significant changes in program requirements are expected, 
baseline program costs are assumed to change only with the cost of 
inflation.
    Turning to FSIS administrative costs, we note that FSIS staffing 
has been stable in the 28 to 33 person range for the past decade, and 
is expected to remain at 29 for the foreseeable future. Consistent with 
State level activities, since the number of States is expected to 
remain the same with no particular change in the number of 
establishments, and since no significant changes in program 
requirements are expected, FSIS administrative costs are expected to 
change consistent with the cost of inflation, i.e., the Agency 
anticipates no significant increase or decrease in FSIS administrative 
activity during the five years in the baseline scenario (i.e., the 
baseline assumes no cooperative interstate shipment program). FSIS 
spending to administer Federal-State cooperative inspection programs, 
excluding the reimbursement costs, was $14,898,641 for FY 2008 as 
reported in the FY 2010 budget, and is projected at $14,371,000 for FY 
2009 and $15,322,000 for FY 2010. For the years out to 2014, these 
costs would change with inflation and are shown in the following table.

[[Page 47659]]



                        Table 1--Baseline: Cost Federal-State Coop Program With No Change
----------------------------------------------------------------------------------------------------------------
                                   2010                                                                Total 5-
FSIS Level Costs, Fiscal Year    (Budget)        2011          2012          2013          2014          year
----------------------------------------------------------------------------------------------------------------
FSIS costs...................         $15.3         $15.9         $16.5         $17.1         $17.8        $82.5
Reimburs. to States..........          50.3          52.1          54.1          56.2          58.4        271.1
                              ----------------------------------------------------------------------------------
    Total....................          65.7          68.0          70.5          73.3          76.1        353.6
----------------------------------------------------------------------------------------------------------------
FSIS Staff Years.............          29            29            29            29            29    ...........
----------------------------------------------------------------------------------------------------------------


 
----------------------------------------------------------------------------------------------------------------
  State Level Costs, Fiscal        2010                                                                Total 5-
             Year                (Budget)        2011          2012          2013          2014          year
----------------------------------------------------------------------------------------------------------------
Federal reimbursement........         $50.3         $52.1         $54.1         $56.2         $58.4       $271.1
State program spending.......          50.3          52.1          54.1          56.2          58.4        271.1
                              ----------------------------------------------------------------------------------
    Total MPI program........         100.7         104.2         108.1         112.4         116.7        542.1
----------------------------------------------------------------------------------------------------------------
Number of plants.............       1,873         1,873         1,873         1,873         1,873    ...........
----------------------------------------------------------------------------------------------------------------
                                Economic Assumptions From OMB for the 2010 Budget
----------------------------------------------------------------------------------------------------------------
State & Local Exp, %.........           3.1           3.5           3.8           3.9           3.9  ...........
FSIS civilian pay, %.........           5.1           4.1           4.1           4.1           4.1  ...........
Non-Pay Expenditure, %.......           0.8           1.2           1.4           1.6           1.6  ...........
----------------------------------------------------------------------------------------------------------------

    Interstate Scenario:
    To evaluate this scenario, we must estimate the number of 
establishments and States that will seek to participate and be selected 
for the new cooperative interstate shipment program. Then we will 
discuss the likely incremental changes in activity that could 
reasonably suggest any changes in cost or burden for FSIS, the States, 
or establishments.
    Here is how we determined the number of establishments that are 
likely to participate in the proposed cooperative interstate shipment 
program. The first cut is to look at all establishments and determine 
the number with fewer than 25 employees. The statute limits 
participation to these smaller establishments. Of the total 1,873 
plants in the current Federal-State cooperative inspection program 
there are 1,811 that meet the size criterion for eligibility for the 
cooperative interstate shipment program. However, as noted earlier, 
sixteen States have expressed an interest in the new cooperative 
interstate shipment program, and these States have a total of 1,133 
establishments that could potentially be eligible for the new program. 
The eleven States that have not indicated an interest in the 
cooperative interstate shipment program include all nine States that 
have establishments operating under the Talmadge-Aiken (TA) program. 
The TA States account for the remaining 678 eligible establishments.
    Because participation in the cooperative interstate shipment 
program is voluntary, the Agency cannot estimate with certainty the 
number of eligible establishments that will choose to participate. 
Therefore, for illustration purposes, and to obtain a reasonable range 
of possible budget impacts, given the uncertainty, the Agency estimated 
the costs for three scenarios: 200, 400 and 600 establishments. A five-
year cost estimate was completed covering the FY 2010 through FY 2014. 
We further assume that the participating establishments will be evenly 
distributed among the participating States and, just as the baseline 
assumes, we anticipate no particular change in the numbers of 
establishments in the overall program over the 5 years and no change in 
the cooperative interstate shipment program establishments.
    At this time, we turn to the change in Federal costs for the 
program caused by the new statutory reimbursement level. For the 
cooperative interstate shipment program the law requires that FSIS 
reimburse State for costs related to the inspection of selected 
establishments in an amount not less than 60 percent of eligible State 
costs, as opposed to current law which allows reimbursement of up to 50 
percent of costs for the regular, and continuing, Federal-State 
cooperative inspection program. This analysis projects the effects of 
the different reimbursement rate on FSIS fiscal requirements assuming 
no change in State level activity over the baseline. FSIS assumes that 
States will not change their level of activity associated with selected 
establishments in the cooperative interstate shipment program as 
discussed above. FSIS determined that Agency reimbursements to States 
would increase by about $2.2 million in a fully operational cooperative 
interstate shipment program in FY 2011 (not all plants will be in the 
cooperative interstate shipment program for all of FY 2010).
    In all years, the amount of increase in this component of Federal 
reimbursement would offset State spending by the same amount. (FY 2011 
is used because it is the first, fully operational year, explained 
further below.) To calculate this figure, FSIS estimated average per 
establishment spending for the Federal-State Cooperative Inspection 
Program by States for the 1,873 establishments in the baseline 
scenario. For FY 2011, the average per establishment is $55,626, 
including State and Federal reimbursement. Reviewing the budget for FY 
2008 and 2009, we see that average Federal reimbursement is currently 
running about 50 percent of total State costs. The reimbursement ratio 
is expected to remain stable for the 5-year period both for inspecting 
establishments in the baseline scenario, and for inspecting 
establishments that stay with the existing program, while 400 
establishments seek and are selected to operate with the cooperative 
interstate shipment program. Reimbursement will increase to 60 percent 
for inspection services to the 400 establishments that move into the

[[Page 47660]]

cooperative interstate shipment program option. So, for example, FY 
2011 State reimbursement for inspection of the average Interstate 
establishment would change from the average $27,813 it would receive 
for an establishment continuing in the regular Federal-State 
cooperative inspection programs, to $33,376 per establishment for 
inspection of an Interstate plant, an increase of $5,563 per plant, 
which yields $2.2 million for the 400 establishments. This and 
analogous figures are reflected in the tables below in the ``Total 
grants to States'' line for the 200, 400 and 600 establishment 
scenarios.
    Under section 11015 of the Farm Bill, in addition to the increased 
reimbursement rates that will increase the grants to States for 
inspection of establishments participating in the cooperative 
interstate shipment program, FSIS is required to oversee the State 
inspectors doing the inspections for the cooperative interstate 
shipment program more intensively than the Agency typically does for 
the current, and the continuing MPI program. FSIS also expects to incur 
new costs for outreach and training. This will result in increased 
demand for FSIS staff and resources. In summary, this includes state 
coordinators, Deputy District Managers (DDM), outreach and training 
staff, and lab analysts to certify State laboratories, transition 
grants to hone establishment staff skills with HACCP and SOPs and 
associated operating expenses and travel expenses.
    The statute requires FSIS to appoint a Federal employee to be a 
State Coordinator. As explained earlier in this document, the State 
Coordinator prescribed by the statute is referred to as the ``selected 
establishment coordinator'' (SEC) in this proposed rule. The SEC is 
required by statute to visit selected establishments with a frequency 
that is appropriate to ensure that such establishments are operating in 
a manner that is consistent with the FMIA and PPIA, including 
regulations and policies there under and to: (1) Provide oversight and 
enforcement of the program, and (2) to oversee the training and 
inspection activities of State-personnel designated to provide 
inspection services to the selected establishments. SECs will further 
provide quarterly reports on each selected establishment under his or 
her jurisdiction to document their level of compliance with the 
requirements of the Acts.
    We estimate that a total of 13 full time equivalent FSIS employees 
will be able to perform the SEC functions for the 16 States expected to 
participate in the cooperative interstate shipment program. We 
anticipate that about one-quarter of the total establishments will 
enter the cooperative interstate shipment program each quarter during 
FY 2010, reaching the full complement toward the end of that year. So, 
for example, in the 400 establishment scenario, 100 establishments will 
initiate inspection under a cooperative interstate shipment program 
sometime in the first quarter, another 100 in the second quarter, 
another in the third quarter, and the final group of 100 in the fourth 
quarter. It is expected that early in 2010 SEC time will initially 
focus on outreach and start-up activities (including establishment 
selection) and shift over until it is more completely the oversight 
activities stipulated in the Acts. While there may be one SEC per State 
from the beginning, we believe that contiguous States and 
establishments that are in relative close proximity could make it 
appropriate to have less than 16 full time equivalent SECs. Note that 
if 400 establishments convert into the cooperative interstate shipment 
program in FY 2010 and continue in the following years, each SEC will 
be responsible for 31 establishments in a geographically-limited area. 
This is approximately equal to the number of Federal establishments 
over which frontline FSIS supervisors have oversight responsibilities.
    In the start-up period, in FY 2009 and FY 2010, the first year of 
the cooperative interstate shipment program, in addition to SEC 
outreach efforts, FSIS expects to incur costs for outreach and 
training, and administration from OOEET for the small and very small 
establishments that are considering the cooperative interstate shipment 
program, that decide to apply for the program, and for those who are 
selected to participate in the program. OOEET will conduct face-to-face 
workshops in every State to provide information to establishment owners 
and operators about the requirements of the new cooperative interstate 
shipment program. These workshops will not only educate the interested 
owners and operators about the requirements, they will also help them 
meet the requirements. This allocation will cover the cost of 
developing, printing, and shipping the workshop materials, as well as 
the cost of traveling Agency personnel to conduct the workshops, and 
the cost of meeting space. The cost is reflected in the tables below in 
the ``Training/Outreach'' line. The reason these costs do not change in 
the various scenarios--200, 400 or 600 establishments--is because the 
information will be provided in a classroom. Costs are expected to be 
largely the same whether attendance is high or low. Also note that 
these costs drop sharply for each subsequent year as the cooperative 
interstate shipment program specific effort changes to operating 
training for establishments selected to participate in the program.
    In the start-up period, transition grant authority under 9 CFR 
332.12 and 9 CFR 381.522 will be used to provide States funds to 
reimburse selected establishments in the State for their costs to train 
one individual in HACCP and associated training in Sanitation SOP 
requirements. The Agency estimates that the cost of training each 
establishment specialist will average about $5,000, including staff 
time and travel necessary for the training. Since this is a new expense 
necessary to implement the cooperative interstate shipment program and 
since statute authorizes it without State matching funds, these costs 
will be entirely new costs for FSIS that are part of ``Total grants to 
States'' in FY 2010 in Table 2 below. Thus, the cost to FSIS will total 
about $1 million, $2 million and $3 million for the 200, 400 and 600 
establishment scenarios respectively. This training will only be needed 
in the start-up period and, accordingly, appears only in FY 2010 in 
Table 2.
    SECs are likely to be supervised by Deputy District Managers (DDMs) 
at the equivalent of about 1 DDM per 300 establishments. This is 
similar to the ratio of DDM effort used to manage frontline FSIS 
supervisors in the Federal programs. For the three establishment 
levels, this would mean 1 DDM for 200 establishments and 2 DDMs for 400 
or 600 establishments. This is reflected in the ``DDM'' line of the 
tables below.
    FSIS estimates that two laboratory staff will be needed to complete 
periodic audits of the State inspection program laboratory systems and 
otherwise coordinate with the laboratories to ensure the sampling and 
testing programs are equivalent to the Federal program. It is 
anticipated that the two lab staff will be needed regardless of whether 
200, 400 or 600 establishments eventually participate since the same 
number of State labs will need to be reviewed regardless of the volume 
of work they do under the cooperative interstate shipment program. This 
is reflected in the ``Lab staff'' line of the tables below.
    Travel costs are included on the ``Travel--SC & lab staff'' line in 
the tables below. The SECs will need to travel a fair amount to 
complete their duties and the lab staff will need to travel some. 
Travel for SECs and lab

[[Page 47661]]

staff starts in FY 2010 and will run higher for the first year, after 
which time the start-up effort will diminish. Since we are assuming the 
selected establishments are evenly distributed in the participating 
States, we anticipate that the number of participating establishments 
would only have slight impact on the cost of travel for each SEC. We 
project about $6,150 for training and travel for each SEC in the first 
and $630 for subsequent years.
    For the lab staff we based our trips to the State program 
laboratories on one audit of each laboratory to make an initial 
assessment, so that would be one trip to the labs for each of the 27 
eligible States. Because most of the labs typically have a chemistry 
residue program and a microbiology program, two lab-auditors will go on 
each trip--one chemist and one microbiologist. These labs would also 
need a follow-up the next year and then we would make a judgment as to 
whether there needed to be annual visits after that. The audit will be 
based on the program that FSIS developed several years ago, which is 
similar to the program that the Agency uses to assess the Pasteurized 
Egg Product Recognized Laboratory program. We based the number of 
audits on the figures that we had regarding the number of states that 
will participate, 16. Each trip ran about $1,500 for each auditor.
    Finally, there are the normal operating expenses associated with 
field operations including office space, communications costs, 
information technology costs (such as laptop computers), other 
equipment, office supplies, etc. FSIS estimates $3,500 per new staff 
for laptop, LincPass, Black Berries, etc. These costs are generally 
stable over time, although they inflate and, of course, are a little 
higher in the start-up year. These costs are found in the ``Equipment 
and admin'' line of the tables below.
    Table 2, below, summarizes the incremental costs to FSIS to operate 
the new cooperative interstate shipment program in the three scenarios 
200, 400 and 600 establishments, with the 400 establishment level 
assumed to be the likely level.

                                    Table 2--Cooperative Interstate Shipment Program Cost Estimates--Three Scenarios
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Interstate Program--Summary of Incremental Cost Estimates ($ Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Fiscal Year                               2009       2010          2011          2012          2013          2014          5-Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs if 200 establishments.............................        $1.93         $5.55         $4.07         $4.22         $4.40         $4.58       $22.83
Costs if 400 establishments.............................         1.93          7.11          5.34          5.55          5.77          6.00        29.77
Costs if 600 establishments.............................         1.93          8.79          6.53          6.79          7.06          7.33        36.50
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Interstate Program with 200 Establishments ($ Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Fiscal Year                               2009       2010          2011          2012          2013          2014          5-Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of establishments *..............................  ...........        200           200           200           200           200     ...........
Total grants to States **...............................  ...........         $1.54         $1.11         $1.15         $1.20         $1.25  ...........
Total salaries & benefits...............................  ...........          2.20          2.17          2.25          2.35          2.45  ...........
DDM.....................................................  ...........          0.15          0.16          0.16          0.17          0.18  ...........
State coordinator (SC)..................................  ...........          1.69          1.76          1.83          1.91          1.98  ...........
Lab staff...............................................  ...........          0.24          0.25          0.26          0.27          0.29  ...........
Operating expenses......................................  ...........          1.81          0.79          0.82          0.85          0.89  ...........
Travel-SC & lab staff...................................  ...........          0.16          0.09          0.09          0.10          0.10  ...........
Training/Outreach.......................................         1.43          1.25          0.35          0.36          0.38          0.39  ...........
Equipment and admin.....................................         0.50          0.40          0.35          0.36          0.38          0.39  ...........
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................         1.93          5.55          4.07          4.22          4.40          4.58        22.83
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Interstate Program with 400 Establishments ($ Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Fiscal Year                               2009       2010          2011          2012          2013          2014          5-Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of establishments *..............................  ...........        400           400           400           400           400     ...........
Total grants to States **...............................  ...........         $3.07         $2.23         $2.31         $2.40         $2.49  ...........
Total salaries & benefits...............................  ...........          2.23          2.32          2.42          2.52          2.62  ...........
DDM.....................................................  ...........          0.30          0.31          0.33          0.34          0.35  ...........
State coordinator (SC)..................................  ...........          1.69          1.76          1.83          1.91          1.98  ...........
Lab staff...............................................  ...........          0.24          0.25          0.26          0.27          0.29  ...........
Operating expenses......................................  ...........          1.81          0.79          0.82          0.85          0.89  ...........
Travel-SC & lab staff...................................  ...........          0.16          0.09          0.09          0.10          0.10  ...........
Training/Outreach.......................................         1.43          1.25          0.35          0.36          0.38          0.39  ...........
Equipment and admin.....................................         0.50          0.40          0.35          0.36          0.38          0.39  ...........
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................         1.93          7.11          5.34          5.55          5.77          6.00        29.77
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Interstate Program with 600 Establishments ($ Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Fiscal Year                               2009       2010          2011          2012          2013          2014          5-Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of establishments *..............................  ...........        600           600           600           600           600     ...........
Total grants to States **...............................  ...........         $4.67         $3.34         $3.46         $3.60         $3.74  ...........
Total salaries & benefits...............................  ...........          2.23          2.32          2.42          2.52          2.62  ...........
DDM.....................................................  ...........          0.30          0.31          0.33          0.34          0.35  ...........
State coordinator (SC)..................................  ...........          1.69          1.76          1.83          1.91          1.98  ...........
Lab staff...............................................  ...........          0.24          0.25          0.26          0.27          0.29  ...........
Operating expenses......................................  ...........          1.89          0.87          0.90          0.94          0.97  ...........

[[Page 47662]]

 
Travel-SC & lab staff...................................  ...........          0.24          0.17          0.18          0.18          0.19  ...........
Training/Outreach.......................................         1.43          1.25          0.35          0.36          0.38          0.39  ...........
Equipment and admin.....................................         0.50          0.40          0.35          0.36          0.38          0.39  ...........
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................         1.93          8.79          6.53          6.79          7.06          7.33        36.50
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Economic Assumptions from OMB for the 2010 Budget
--------------------------------------------------------------------------------------------------------------------------------------------------------
State & Local Exp, %....................................  ...........          3.1           3.5           3.8           3.9           3.9   ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
FSIS Civilian pay, %....................................  ...........          5.1           4.1           4.1           4.1           4.1   ...........
Non-Pay Expenditure, %..................................  ...........          0.8           1.2           1.4           1.6           1.6   ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           State Grant Incremental Increase in FSIS Reimbursement to the State
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per Establishment.......................................  ...........     $5,374        $5,563        $5,774        $5,999        $6,233     ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Note that in FY 2010 about one quarter of establishments are expected to enroll each quarter. In subsequent fiscal years, all establishments will be
  in the program for the full year.
** Note ``Total grants to States'' includes funding for Transition Grants in 2010 for States to use to help plants train one person in HACCP and SOPs
  per Sec.   332.12 and Sec.   381.522.

    Effect on Small Entities
    This proposed action will primarily affect very small and certain 
small establishments that operate under cooperative State meat or 
poultry inspection programs. Under section 11015, State-inspected 
establishments that employ on average 25 or fewer employees would be 
permitted to be selected to participate in a cooperative interstate 
shipment program. The law also permits the Secretary to select State-
inspected establishments that employ, on average, more than 25 but less 
than 35 employees to participate in the program. However, to remain in 
the program, these establishments must employ, on average, 25 or fewer 
employees three years after the regulations implementing the new 
cooperative interstate shipment program become effective. FSIS provides 
for the selection of State-inspected establishments that employ, on 
average, more than 25 but fewer than 35 employees in the proposed 
implementing regulations. Thus, this proposed rule will benefit these 
very small and small State-inspected establishments by allowing them to 
ship meat and poultry products in interstate and foreign commerce, 
thereby opening new markets for their products.
    Executive Order 12988
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule: (1) Preempts State and local laws and 
regulations that are inconsistent with this rule; (2) has no 
retroactive effect; and (3) does not require administrative proceedings 
before parties may file suit in court challenging this rule.
    Additional Public Notification
    Public awareness of all segments of rulemaking and policy 
development is important. Consequently, in an effort to ensure that 
minorities, women, and persons with disabilities are aware of this 
proposed rule, FSIS will announce it online through the FSIS Web page 
located at http://www.fsis.usda.gov/Regulations_&_Policies/2009_Proposed _Rules_Index/index.asp. FSIS will also make copies of this 
Federal Register publication available through the FSIS Constituent 
Update, which is used to provide information regarding FSIS policies, 
procedures, regulations, Federal Register notices, FSIS public 
meetings, and other types of information that could affect or would be 
of interest to constituents and stakeholders. The Update is 
communicated via Listserv, a free electronic mail subscription service 
for industry, trade groups, consumer interest groups, health 
professionals, and other individuals who have asked to be included. The 
Update is also available on the FSIS Web page. Through the Listserv and 
Web page, FSIS is able to provide information to a much broader and 
more diverse audience. In addition, FSIS offers an e-mail subscription 
service which provides automatic and customized access to selected food 
safety news and information. This service is available at http://www.fsis.usda.gov/news_and_events/email_subscription/. Options range 
from recalls to export information to regulations, directives and 
notices. Customers can add or delete subscriptions themselves, and have 
the option to password protect their accounts.
    Paperwork Reduction Act
    In accordance with section 3507(d) of the Paperwork Reduction Act 
of 1995, the information collection or recordkeeping requirements 
included in this proposed rule have been submitted for approval to the 
Office of Management and Budget (OMB).
    Title: ``Cooperative Inspection Programs: Interstate Shipment of 
Meat and Poultry Products''
    Type of collection: New.
    Abstract: FSIS has reviewed the paperwork and recordkeeping 
requirements in this proposed rule in accordance with the Paperwork 
Reduction Act. Under this proposed rule, FSIS is requiring certain 
information collection and recordkeeping activities.
    FSIS is proposing that States that are interested in participating 
in the cooperative interstate shipment program submit a request for an 
agreement to establish such a program through the appropriate FSIS 
District Office. In their requests, States must: (1) Identify 
establishments in the State that the State recommends for initial 
selection into the program; (2) include documentation to demonstrate 
that the State is able to provide necessary inspections services to 
selected establishments in the State and conduct any related activities 
that would be required under a cooperative interstate shipment program; 
and (3) agree to comply with certain conditions to assist with 
enforcement of the program. FSIS is also proposing that States that 
have entered into an agreement with FSIS for a cooperative interstate 
shipment program submit, through the FSIS District Office, an 
evaluation of each State-inspected establishment that has applied, and 
that the State recommends be selected, for the cooperative interstate 
shipment program.
    Under this proposal, State inspected establishments selected to 
participate in the cooperative interstate shipment program will be 
required to develop and maintain the same records that are required 
under the Acts and their implementing regulations. Selected

[[Page 47663]]

establishment will also be required to give the FSIS selected 
establishment coordinator (SEC) access to all establishment records 
required under the Acts and implementing regulations. Most States that 
have cooperative State meat or poultry products inspection programs 
have incorporated the Federal standards into their programs. Thus, most 
establishments selected to participate in the interstate shipment 
program are currently required to maintain records that comply with 
Federal standards. However, establishments located in States that have 
implemented recordkeeping requirements that are ``at least equal to'' 
but not identical to Federal requirements will need to modify their 
recordkeeping procedures to comply with Federal standards. All selected 
establishments will be required to give the FSIS SEC access to their 
records upon request.
    Estimate of Burden: FSIS estimates that 16 of the 27 States that 
currently have agreements for cooperative State meat or poultry 
products inspection programs will prepare and submit a request to FSIS 
to establish a cooperative interstate shipment program. The Agency also 
estimates that approximately 400 establishments will apply for the 
program. Thus, FSIS estimates that each of the 16 States mentioned 
above will need to prepare and submit, on average, 25 evaluations for 
the State-inspected establishments that have applied for, and that the 
State recommends, for selection into the program, for an estimated 
total of 400 evaluations.
    FSIS estimates that it will take approximately 40 hours for each 
State to prepare and submit a request to establish a cooperative 
interstate shipment program, for a total burden of 640 hours. The 
Agency estimates that it will take each State approximately 24 hours to 
prepare an evaluation of a State-inspected establishment's 
qualifications to be selected for a cooperative interstate shipment 
program, for a total burden of 9,600 hours.
    FSIS estimates that if all of the 400 establishments that apply are 
selected for the program, approximately 100 of these establishments 
will need to modify their recordkeeping procedures to come into 
compliance with Federal standards. The extent to which these 
establishments will need to modify their recordkeeping procedures will 
depend on requirements under the State inspection program. Because 
recordkeeping requirements under the State inspection program must be 
``at least equal to'' the Federal requirements, these modifications 
should be minor. FSIS estimates that it will take approximately 16 
hours for each establishment that is currently maintaining records 
under State standards to review and revise its recordkeeping 
procedures, and about 5 minutes for each establishment to file these 
records, for a total burden of approximately 1,608.3 hours.
    All of the estimated 400 establishments that participate in the 
program will be required to give the SEC access to all records required 
under the Federal Acts. FSIS estimates that it will take each 
establishment approximately 15 minute to assist the SEC to locate the 
necessary records for review on the initial visit, for a total burden 
of 100 hours. FSIS estimates that these establishments will need to 
spend and approximately 5 minute to assist the SEC locate records for 
review for each subsequent visit. If the SEC visits each selected 
establishment at least one a month, the total burden per establishment 
per year will be 1 hour, for a total estimated annual burden of 400 
hours.
    Respondents: State agencies that administer cooperative State meat 
and poultry products inspection programs and State-inspected 
establishments selected to participate in a cooperative interstate 
shipment program.
    Estimated number of respondents: 416 (16 States and 400 State-
inspected establishments).
    Estimated number of responses per respondent: One request to 
establish a cooperative interstate shipment program per State and 25 
evaluations of State-inspected establishments per State, on average.
    A one-time modification of records for each selected establishment 
whose recordkeeping does not comply with all Federal standards. One 
initial SEC visit in which each selected establishment will need to 
provide the SEC with access to all required records. Each establishment 
selected for the program will need to provide the FSIS access to its 
records on an ongoing basis.
    Estimated Total Annual Burden on Respondents: 12,348.3 hours to 
establish and implement the cooperative interstate shipment program in 
16 States. Once the program has been implemented, an estimated annual 
burden of 400 hours for selected establishments to provide the SEC 
access to establishment records on-going basis.
    Copies of this information collection assessment can be obtained 
from John O'Connell, Paperwork Reduction Act Coordinator, Food Safety 
and Inspection Service, USDA, 1400 Independence Avenue, SW., Room 3532 
South Building, Washington, DC 20250.
    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of FSIS' functions, 
including whether the information will have practical utility; (b) the 
accuracy of FSIS' estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumptions 
used; (c) ways to enhance the quality, utility, and clarity of the 
information to be collected; ways to minimize the burden of the 
collection of information on those who are to respond, including 
through the use of appropriate automated, electronic, mechanical, or 
other technological collection techniques, or other forms of 
information technology.
    Comments may be sent to both John O'Connell, Paperwork Reduction 
Act Coordinator, at the address provided above, and the Desk Officer 
for Agriculture, Office of Information and Regulatory Affairs, Office 
of Management and Budget, Washington, DC 20253.
    To be most effective, comments should be sent to OMB within 60 days 
of the publication date of this proposed rule.
    In accordance with section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the information collection or record 
keeping requirements included in this proposed rule have been submitted 
for approval to the Office of Management and Budget (OMB).

Proposed Regulations

List of Subjects

9 CFR Part 321

    Grant programs--agriculture, Intergovernmental relations, Meat 
inspection.

9 CFR Part 332

    Grant programs--agriculture, Intergovernmental relations, Meat 
inspection.

9 CFR Part 381

    Grant programs--agriculture, Intergovernmental relations, Poultry 
and poultry products.

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

PART 321--COOPERATION WITH STATES AND TERRITORIES

    1. The authority citation for part 321 is revised to read as 
follows:

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


[[Page 47664]]


    2. A new Sec.  321.3 is added to read as follows:


Sec.  321.3  Cooperation of States for the interstate shipment of 
carcasses, parts of carcasses, meat, and meat food products.

    (a) The Administrator is authorized under 21 U.S.C. 683(b) to 
coordinate with States that have meat inspection programs as provided 
in Sec.  321.1 of this part to select certain establishments operating 
under these programs to participate in a cooperative program to ship 
carcasses, parts of carcasses, meat, and meat food products in 
interstate commerce. A cooperative program for this purpose is called a 
``cooperative interstate shipment program.''
    (b) Establishments selected to participate in a cooperative 
interstate shipment program described in this section must receive 
inspection services from designated State personnel that have been 
trained in the enforcement of the Act. If the designated personnel 
determine that the carcasses, parts of carcasses, meat, and meat food 
products prepared in establishments selected to participate in the 
cooperative interstate shipment program comply with all requirements 
under the Act, these items will bear an official Federal mark of 
inspection and may be shipped in interstate commerce. The Administrator 
will assign an FSIS ``selected establishment coordinator,'' who will be 
an FSIS employee, to each State that participates in a cooperative 
interstate shipment program to provide Federal oversight of the program 
and enforcement of the program's requirements. The Federal contribution 
for inspection services provided by States that enter into a 
cooperative interstate shipment program under this section will be at 
least 60 percent of eligible State costs.
    (c) Part 332 of this subchapter prescribes conditions under which 
States and establishments may participate in the cooperative interstate 
shipment program.
    (d) The Administrator will terminate a cooperative interstate 
shipment agreement with a State if the Administrator determines that 
the State is not conducting inspection at selected establishments in a 
manner that complies with the Act and the implementing regulations in 
this chapter.
    3. A new Part 332 is added to read as follows:

PART 332--SELECTED ESTABLISHMENTS; COOPERATIVE PROGRAM FOR 
INTERSTATE SHIPMENT OF CARCASSES, PARTS OF CARCASSES, MEAT, AND 
MEAT FOOD PRODUCTS

Sec.
332.1 Definitions.
332.2 Purpose.
332.3 Requirements for establishments; ineligible establishments.
332.4 State request for cooperative agreement.
332.5 Establishment selection; official number for selected 
establishments.
332.6 Commencement of a cooperative interstate shipment program; 
inspection by designated personnel and official mark.
332.7 Federal oversight of a cooperative interstate shipment 
program.
332.8 Quarterly reports.
332.9 Enforcement authority.
332.10 Deselection of ineligible establishments.
332.11 Transition to official establishments.
332.12 Transition grants.

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


Sec.  332.1  Definitions.

    The following definitions apply to the regulations in this part:
    Cooperative interstate shipment program. A cooperative meat 
inspection program described in Sec.  321.3 of this subchapter.
    Cooperative State meat inspection program. A cooperative State-
Federal meat inspection program described in Sec.  321.1 of this 
subchapter.
    Designated personnel. State inspection personnel that have been 
trained in the enforcement of the Act and any additional State program 
requirements in order to provide inspection services to selected 
establishments.
    Interstate commerce. ``Interstate commerce'' has the same meaning 
as ``commerce'' under Sec.  301.2 of this subchapter.
    Selected establishment. An establishment operating under a State 
cooperative meat inspection program that has been selected by the 
Administrator, in coordination with the State where the establishment 
is located, to participate in a cooperative interstate shipment 
program.


Sec.  332.2  Purpose.

    This part prescribes the conditions under which States that 
administer cooperative State meat inspection programs and 
establishments that operate under such programs may participate in a 
cooperative interstate shipment program.


Sec.  332.3  Requirements for establishments; ineligible 
establishments.

    (a) An establishment that operates under a cooperative State meat 
inspection program may apply to participate in a cooperative interstate 
shipment program under this part if:
    (1) The establishment employs on average no more than 25 employees 
based on the standards described in paragraph (b) of this section, or
    (2) The establishment employed more than 25 employees but fewer 
than 35 employees as of June 18, 2008. If selected to participate in a 
cooperative interstate shipment program, an establishment under this 
paragraph must employ on average no more than 25 employees as of 
[insert date 3 years after effective date of final rule] or it must 
transition to become an official establishment as provided in Sec.  
332.11 of this part.
    (b) An establishment that has 25 or fewer employees based on the 
following standards is considered to have 25 or fewer employees on 
average for purposes of this part.
    (1) All individuals, both supervisory and non-supervisory, employed 
by the establishment on a full-time, part-time, or temporary basis are 
counted when calculating the total number of employees.
    (2) All individuals employed by the establishment from a temporary 
employee agency, professional employee organization, or leasing concern 
are counted when calculating the total number of employees.
    (3) The average number of employees is calculated for each of the 
pay periods for the preceding 12 calendar months.
    (4) Part-time and temporary employees are counted the same as full-
time employees.
    (5) If the establishment has not been in business for 12 months, 
the average number of employees is calculated for each of the pay 
periods in which the establishment has been in business.
    (6) Volunteers who receive no compensation are not considered 
employees.
    (7) The total number of employees can never exceed 35 individuals 
at any given time, regardless of the average number of employees.
    (c) The following establishments are ineligible to participate in a 
cooperative interstate shipment program:
    (1) Establishments that employ more than 25 employees on average 
(except as provided under paragraph (a)(2) of this section);
    (2) Establishments operating under a Federal-State program as 
provided in Sec.  321.2 of this subchapter as of June 18, 2008;

[[Page 47665]]

    (3) Official establishments;
    (4) Establishments that were official establishments as of June 18, 
2008, but that were re-organized on a later date by the person that 
controlled the establishment as of June 18, 2008;
    (5) Establishments operating under a cooperative State meat 
inspection that employed more than 35 employees as of June 18, 2008, 
that were reorganized on a later date by the person that controlled the 
establishment as of June 18, 2008;
    (6) Establishments that are the subject of a transition under Sec.  
332.11 of this part;
    (7) Establishments that are in violation of the Act;
    (8) Establishments located in States without a cooperative State 
meat inspection program; and
    (9) Establishments located in a State whose agreement for a 
cooperative interstate shipment program was terminated by the 
Administrator as provided in Sec.  321.3(d) of this subchapter.
    (d) An establishment that meets the conditions in paragraph (a) of 
this section and that is not an ineligible establishment under 
paragraph (c) of this section may apply for selection into a 
cooperative interstate shipment program through the State in which the 
establishment is located.


Sec.  332.4  State request for cooperative agreement.

    (a) State participation in a cooperative interstate shipment 
program under this part is limited to States that have implemented 
cooperative State meat inspection programs.
    (b) To request an agreement for a cooperative interstate shipment 
program under this part, a State must submit a written request to the 
Administrator through the FSIS District Office for the FSIS District in 
which the State is located. In the request the State must:
    (1) Identify establishments in the State that have requested to be 
selected for the program that the State recommends for initial 
selection into the program;
    (2) Demonstrate that the State is able to provide the necessary 
inspection services to selected establishments in the State and conduct 
any related activities that would be required under a cooperative 
interstate shipment program established under this part; and
    (3) Agree that, if the State enters into an agreement with FSIS for 
a cooperative interstate shipment program, that the State will:
    (i) Provide FSIS with access to the results of all laboratory 
analyses conducted on product samples from selected establishments in 
the State;
    (ii) Notify the selected establishment coordinator for the State of 
the results of any laboratory analyses that indicate that a product 
prepared in a selected establishment may be adulterated or may 
otherwise present a food safety concern; and
    (iii) When necessary, cooperate with FSIS to transition selected 
establishments in the State that have been deselected from a 
cooperative interstate shipment program to become official 
establishments.
    (c) If the Administrator determines that a State that has submitted 
a request to participate in a cooperative interstate shipment program 
qualifies to enter into a cooperative agreement for such a program, the 
Administrator and the State will sign a cooperative agreement that sets 
forth the terms and conditions under which each party will cooperate to 
provide inspection services to selected establishments located in the 
State.
    (d) After the Administrator and a State have signed an agreement 
for a cooperative interstate shipment program as provided in paragraph 
(c) of this section, the Administrator will:
    (1) Appoint an FSIS employee as the FSIS selected establishment 
coordinator for the State and
    (2) Coordinate with the State to select establishments to 
participate in the program as provided in Sec.  332.5(b) of this part.


Sec.  332.5  Establishment selection; official number for selected 
establishments.

    (a) An establishment operating under a cooperative State meat 
inspection program will qualify for selection into a cooperative 
interstate shipment program if the establishment:
    (1) Has submitted a request to the State to be selected for the 
program;
    (2) Has the appropriate number of employees under Sec.  332.3(a) of 
this part;
    (3) Is not ineligible to participate in a cooperative interstate 
shipment program under Sec.  332.3(c) of this part;
    (4) Is in compliance with all requirements under the cooperative 
State meat inspection program; and
    (5) Is in compliance with all requirements under the Act and the 
implementing regulations in this chapter.
    (b) To participate in a cooperative interstate shipment program, an 
establishment that meets the conditions in paragraph (a) of this 
section must be selected by the Administrator, in coordination with the 
State where the establishment is located.
    (c) If an establishment is selected to participate in a cooperative 
interstate shipment program as provided in paragraph (b) of this 
section, the State is to assign the establishment an official number 
that reflects the establishment's participation in the cooperative 
interstate shipment program and advise the FSIS selected establishment 
coordinator for the State of the official number assigned to each 
selected establishment in the State. The official number assigned to 
every selected establishment must contain a suffix, e.g., ``SE,'' that 
identifies the establishment as a selected establishment and that 
identifies the State, e.g., ``SETX,'' for ``selected establishment 
Texas.''
    (d) Failure of the State to comply with paragraph (c) of this 
section will disqualify the State from participation in the cooperative 
interstate shipment program.


Sec.  332.6  Commencement of a cooperative interstate shipment program; 
inspection by designated personnel and official mark.

    (a) A cooperative interstate shipment program will commence when 
the Administrator, in coordination with the State, has selected 
establishments in the State to participate in the program.
    (b) Inspection services for selected establishments participating 
in a cooperative interstate shipment program must be provided by 
designated personnel, who will be under the direct supervision of a 
State employee.
    (c) Carcasses, parts of carcasses, meat, and meat food products 
prepared in a selected establishment and inspected and passed by 
designated State personnel must bear an official Federal mark, stamp, 
tag, or label of inspection in the appropriate form prescribed in part 
312 of this subchapter that includes the information specified in Sec.  
332.5(c) of this part.
    (d) Carcasses, parts of carcasses, meat, and meat food products 
prepared in a selected establishment that comply with the conditions in 
paragraph (c) of this section may be distributed in interstate 
commerce.


Sec.  332.7  Federal oversight of a cooperative interstate shipment 
program.

    (a) The FSIS selected establishment coordinator for a State that 
has entered into an agreement for a cooperative interstate shipment 
program will visit each selected establishment in the State on a 
regular basis to verify that the establishment is operating in a manner 
that is consistent with the Act and the implementing regulations in 
this chapter. If necessary, the selected establishment coordinator, in 
consultation with the District Manager that covers the State, may 
designate qualified FSIS personnel to visit a

[[Page 47666]]

selected establishment on behalf of the selected establishment 
coordinator.
    (b) The selected establishment coordinator, in coordination with 
the State, will verify that selected establishments in the State are 
receiving the necessary inspection services from designated personnel, 
and that these establishments are eligible, and remain eligible, to 
participate in a cooperative interstate shipment program.
    The selected establishment coordinator's verification activities 
may include:
    (1) Verifying that each selected establishment employs, and 
continues to employ, 25 or fewer employees, on average, as required 
under Sec.  332.3(a) of this part, unless the establishment is 
transitioning to become an official establishment;
    (2) Verifying that the designated personnel are providing 
inspection services to selected establishments in a manner that 
complies with the Act and the implementing regulations in this chapter;
    (3) Verifying that that State staffing levels for each selected 
establishments are appropriate to carry out the required inspection 
activities; and
    (4) Assessing each selected establishment's compliance with the Act 
and implementing regulations under this chapter.
    (c) If the selected establishment coordinator determines that 
designated personnel are providing inspection services to selected 
establishments in the State in a manner that is inconsistent with the 
Act and the implementing regulations in this chapter, the Administrator 
will provide an opportunity for the State to develop and implement a 
corrective action plan to address inspection deficiencies identified by 
the selected establishment coordinator. If the State fails to develop a 
corrective action plan, or the selected establishment coordinator for 
the State determines that the corrective action plan is inadequate, the 
Administrator will terminate the agreement for the cooperative 
interstate shipment program as provided in Sec.  321.3(d) of this 
chapter.


Sec.  332.8  Quarterly reports.

    (a) The selected establishment coordinator will prepare a report on 
a quarterly basis that describes the status of each selected 
establishment under his or her jurisdiction.
    (b) The quarterly report required in paragraph (a) of this section 
will:
    (1) Include the selected establishment coordinator's assessment of 
the performance of the designated personnel in conducting inspection 
activities at selected establishments and
    (2) Identify those selected establishments that the selected 
establishment coordinator has verified are in compliance with the Act 
and implementing regulations in this chapter, those that have been 
deselected under Sec.  332.10 of this part, and those that are 
transitioning to become official establishments under Sec.  332.11 of 
this part.
    (c) The selected establishment coordinator is to submit the 
quarterly report to the Administrator through the District Manager for 
the State where the selected establishments identified in the report 
are located.


Sec.  332.9  Enforcement authority.

    (a) To facilitate oversight and enforcement of this part, selected 
establishments operating under a cooperative interstate shipment 
program must, upon request, give the FSIS selected establishment 
coordinator or other FSIS officials access to all establishment records 
required under the Act and the implementing regulations in this 
chapter. The Administrator may deselect any selected establishment that 
refuses to comply with this paragraph.
    (b) Selected establishment coordinators may initiate any 
appropriate enforcement action provided for in part 500 of this chapter 
if they determine that a selected establishment under their 
jurisdiction is operating in manner that is inconsistent with the Act 
and the implementing regulations in this chapter. Selected 
establishments participating in a cooperative interstate shipment 
program are subject to the notification and appeal procedures set out 
in part 500 of this chapter.
    (c) If inspection at a selected establishment is suspended for any 
of the reasons specified in Sec.  500.3 or Sec.  500.4 of this chapter, 
FSIS will:
    (1) Provide an opportunity for the establishment to implement 
corrective actions and remain in the cooperative interstate shipment 
program, or
    (2) Move to deselect the establishment as provided in Sec.  332.10 
of this part.
    (d) The decision to deselect a selected establishment under a 
suspension will be made on a case-by-case basis. In making this 
decision, FSIS, in consultation with the State where the selected 
establishment is located, will consider, among other factors:
    (1) The non-compliance that led to the suspension;
    (2) The selected establishment's compliance history; and
    (3) The corrective actions proposed by the selected establishment.


Sec.  332.10  Deselection of ineligible establishments.

    (a) The Administrator will deselect a selected establishment that 
becomes ineligible to participate in a cooperative interstate shipment 
program for any reason listed under Sec.  332.3(c) of this part.
    (b) An establishment that has been deselected must transition to 
become an official establishment as provided in Sec.  332.11 of this 
part.


Sec.  332.11  Transition to official establishment.

    If an establishment is deselected from a cooperative interstate 
shipment program as provided in Sec.  332.10 of this part, FSIS, in 
coordination with the State where the establishment is located, will 
develop and implement a plan to transition the establishment to become 
an official establishment.


Sec.  332.12  Transition grants.

    (a) Transition grants are funds that a State participating in a 
cooperative interstate shipment program under this part may apply for 
to reimburse selected establishments in the State for the cost to train 
one individual in the seven HACCP principles for meat or poultry 
processing as required under Sec.  417.7 of this chapter and associated 
training in the development of sanitation standard operating procedures 
required under part 416 of this chapter.
    (b) A State participating in a cooperative interstate shipment 
program that receives a transition grant must use grant funds to 
reimburse the training costs of one employee per each selected 
establishment in the State. Any other use of such funds is prohibited.

PART 381--POULTRY PRODUCTS INSPECTION REGULATIONS

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

    Authority:  7 U.S.C. 138f, 450; 21 U.S.C. 451-470; 7 CFR 2.7, 
2.18, 2.53.

    5. A new Sec.  381.187 is added to subpart R to read as follows:


Sec.  381.187  Cooperation of States for the interstate shipment of 
poultry products.

    (a) The Administrator is authorized under 21 U.S.C. 472(b) to 
coordinate with States that have poultry products inspection programs 
as provided in Sec.  381.185 of this subpart to select certain 
establishments operating under these programs to participate in a 
cooperative program to ship poultry products in interstate commerce. A 
cooperative program for this purpose is called a ``cooperative 
interstate shipment program.''

[[Page 47667]]

    (b) Establishments selected to participate in a cooperative 
interstate shipment program described in this section must receive 
inspection services from designated State personnel that have been 
trained in the enforcement of the Act. If the designated personnel 
determine that the poultry products prepared in establishments selected 
to participate in the cooperative interstate shipment program comply 
with all requirements under the Act, these items will bear an official 
Federal mark of inspection and may be shipped in interstate commerce. 
The Administrator will assign an FSIS ``selected establishment 
coordinator,'' who will be an FSIS employee, to each State that 
participates in a cooperative interstate shipment program to provide 
Federal oversight of the program and enforcement of the program's 
requirements. The Federal contribution for inspection services provided 
by States that enter into a cooperative interstate shipment program 
under this section will be at least 60 percent of eligible State costs.
    (c) Subpart Z, of this part 381 prescribes conditions under which 
States and establishments may participate in the cooperative interstate 
shipment program.
    (d) The Administrator will terminate a cooperative interstate 
shipment agreement with a State if the Administrator determines that 
the State is not conducting inspection at selected establishments in a 
manner that complies with the Act and the implementing regulations in 
this chapter.
    5. A new subpart Z is added to part 381 to read as follows:
Subpart Z--Selected Establishments; Cooperative Program for Interstate 
Shipment of Poultry Products
Sec.
381.511 Definitions.
381.512 Purpose.
381.513 Requirements for establishments; ineligible establishments.
381.514 State request for cooperative agreement.
381.515 Establishment selection; official number for selected 
establishments.
381.516 Commencement of a cooperative interstate shipment program; 
inspection by designated personnel and official mark.
381.517 Federal oversight of a cooperative interstate shipment 
program.
381.518 Quarterly reports.
381.519 Enforcement authority.
381.520 Deselection of ineligible establishments.
381.521 Transition to official establishment.
381.522 Transition grants.

Subpart Z--Selected Establishments; Cooperative Program for 
Interstate Shipment of Poultry Products


Sec.  381.511   Definitions.

    The following definitions apply to the regulations in this part:
    Cooperative interstate shipment program. A cooperative poultry 
products inspection program described in Sec.  381.187 of this part.
    Cooperative State poultry products inspection program. A 
cooperative State-Federal poultry products inspection program described 
in Sec.  381.185 of this part.
    Designated personnel. State inspection personnel that have been 
trained in the enforcement of Act and any additional State program 
requirements in order to provide inspection services to selected 
establishments.
    Interstate commerce. ``Interstate commerce'' has the same meaning 
as ``commerce'' under Sec.  381.1 of this part.
    Selected establishment. An establishment operating under a State 
cooperative poultry products inspection program that has been selected 
by the Administrator, in coordination with the State where the 
establishment is located, to participate in a cooperative interstate 
shipment program.


Sec.  381.512  Purpose.

    This subpart Z prescribes the conditions under which States that 
administer cooperative State poultry products inspection programs and 
establishments that operate under such programs may participate in a 
cooperative interstate shipment program.


Sec.  381.513   Requirements for establishments; ineligible 
establishments.

    (a) An establishment that operates under a cooperative State 
poultry products inspection program may apply to participate in a 
cooperative interstate shipment program under this subpart if:
    (1) The establishment employs on average no more than 25 employees 
based on the standards described in paragraph (b) of this section, or
    (2) The establishment employed more than 25 employees but fewer 
than 35 employees as of June 18, 2008. If selected to participate in a 
cooperative interstate shipment program, an establishment under this 
paragraph must employ on average no more than 25 employees as of 
[insert date 3 years after effective date of final rule] or it must 
transition to become an official establishment as provided in Sec.  
381.521 of this subpart.
    (b) An establishment that has 25 or fewer employees based on the 
following standards is considered to have 25 or fewer employees on 
average for purposes of this subpart.
    (1) All individuals, both supervisory and non-supervisory, employed 
by the establishment on a full-time, part-time, or temporary basis are 
counted when calculating the total number of employees.
    (2) All individuals employed by the establishment from a temporary 
employee agency, professional employee organization, or leasing concern 
are counted when calculating the total number of employees.
    (3) The average number of employees is calculated for each of the 
pay periods for the preceding 12 calendar months.
    (4) Part-time and temporary employees are counted the same as full-
time employees.
    (5) If the establishment has not been in business for 12 months, 
the average number of employees is calculated for each of the pay 
periods in which the establishment has been in business.
    (6) Volunteers who receive no compensation are not considered 
employees.
    (7) The total number of employees can never exceed 35 individuals 
at any given time, regardless of the average number of employees.
    (c) The following establishments are ineligible to participate in a 
cooperative interstate shipment program:
    (1) Establishments that employ more than 25 employees on average 
(except as provided under paragraph (a)(2) of this section);
    (2) Establishments operating under a Federal-State program as 
provided in Sec.  381.186 of this part as of June 18, 2008;
    (3) Official establishments;
    (4) Establishments that were official establishments as of June 18, 
2008, but that were re-organized on a later date by the person that 
controlled the establishment as of June 18, 2008;
    (5) Establishments operating under a cooperative State poultry 
products inspection program that employed more than 35 employees as of 
June 18, 2008, that were reorganized on a later date by the person that 
controlled the establishment as of June 18, 2008;
    (6) Establishments that are the subject of a transition under Sec.  
381.521 of this subpart;
    (7) Establishments that are in violation of the Act; and
    (8) Establishments located in States without a cooperative State 
poultry products inspection program.
    (9) Establishments located in a State whose agreement for a 
cooperative interstate shipment program was terminated by the 
Administrator as provided in Sec.  381.187(d) of this part.

[[Page 47668]]

    (d) An establishment that meets the conditions in paragraph (a) of 
this section and that is not an ineligible establishment under 
paragraph (c) of this section may apply for selection into a 
cooperative interstate shipment program through the State in which the 
establishment is located.


Sec.  381.514  State request for cooperative agreement.

    (a) State participation in a cooperative interstate shipment 
program under this subpart is limited to States that have implemented 
cooperative State poultry products inspection programs.
    (b) To request an agreement for a cooperative interstate shipment 
program under this subpart, a State must submit a written request to 
the Administrator through the FSIS District Office for the FSIS 
District in which the State is located. In the request the State must:
    (1) Identify establishments in the State that have requested to be 
selected for the program that the State recommends for initial 
selection into the program;
    (2) Demonstrate that the State is able to provide the necessary 
inspection services to selected establishments in the State and conduct 
any related activities that would be required under a cooperative 
interstate shipment program established under this subpart; and
    (3) Agree that, if the State enters into an agreement with FSIS for 
a cooperative interstate shipment program, that the State will:
    (i) Provide FSIS with access to the results of all laboratory 
analyses conducted on product samples from selected establishments in 
the State;
    (ii) Notify the selected establishment coordinator for the State of 
the results of any laboratory analyses that indicate that a product 
prepared in a selected establishment may be adulterated or may 
otherwise present a food safety concern; and
    (iii) When necessary, cooperate with FSIS to transition selected 
establishments in the State that have been deselected from a 
cooperative interstate shipment program to become official 
establishments.
    (c) If the Administrator determines that a State that has submitted 
a request to participate in a cooperative interstate shipment program 
qualifies to enter into a cooperative agreement for such a program, the 
Administrator and the State will sign a cooperative agreement that sets 
forth the terms and conditions under which each party will cooperate to 
provide inspection services to selected establishments located in the 
State.
    (d) After the Administrator and a State have signed an agreement 
for a cooperative interstate shipment program as provided in paragraph 
(c) of this section, the Administrator will:
    (1) Appoint an FSIS employee as the FSIS selected establishment 
coordinator for the State and
    (2) Coordinate with the State to select establishments to 
participate in the program as provided in Sec.  381.515(b) of this 
subpart.


Sec.  381.515  Establishment selection; official number for selected 
establishments.

    (a) An establishment operating under a cooperative State poultry 
products inspection program will qualify for selection into a 
cooperative interstate shipment program if the establishment:
    (1) Has submitted a request to the State to be selected for the 
program;
    (2) Has the appropriate number of employees under Sec.  381.513(a) 
of this subpart;
    (3) Is not ineligible to participate in a cooperative interstate 
shipment program under Sec.  381.513(c) of this subpart;
    (4) Is in compliance with all requirements under the cooperative 
State poultry products inspection program; and
    (5) Is in compliance with all requirements under the Act and the 
implementing regulations in this chapter.
    (b) To participate in a cooperative interstate shipment program, an 
establishment that meets the conditions in paragraph (a) of this 
section must be selected by the Administrator, in coordination with the 
State where the establishment is located.
    (c) If an establishment is selected to participate in a cooperative 
interstate shipment program as provided in paragraph (b) of this 
section, the State is to assign the establishment an official number 
that reflects the establishment's participation in the cooperative 
interstate shipment program and advise the FSIS selected establishment 
coordinator for the State of the official number assigned to each 
selected establishment in the State. The official numbers assigned to 
every selected establishment must contain a suffix, e.g., ``SE,'' that 
identifies the establishment as a selected establishment; that includes 
the letter ``P,'' which identifies the establishment as a poultry 
establishment; and that identifies the State, e.g., ``SEPND,'' for 
``selected establishment poultry North Dakota.''
    (d) Failure of a State to comply with paragraph (c) of this section 
will disqualify the State from participation in the cooperative 
interstate shipment program.


Sec.  381.516  Commencement of a cooperative interstate shipment 
program; inspection by designated personnel and official mark.

    (a) A cooperative interstate shipment program will commence when 
the Administrator, in coordination with the State, has selected 
establishments in the State to participate in the program.
    (b) Inspection services for selected establishments participating 
in a cooperative interstate shipment program must be provided by 
designated personnel, who will be under the direct supervision of a 
State employee.
    (c) Poultry products processed in a selected establishment and 
inspected and passed by designated State personnel must bear an 
official Federal mark, stamp, tag, or label of inspection in the 
appropriate form prescribed in subpart M of this part that includes the 
information specified in Sec.  381.515(c) of this subpart.
    (d) Poultry products processed in a selected establishment that 
comply with the conditions in paragraph (c) of this section may be 
distributed in interstate commerce.


Sec.  381.517  Federal oversight of a cooperative interstate shipment 
program.

    (a) The FSIS selected establishment coordinator for a State that 
has entered into an agreement for a cooperative interstate shipment 
program will visit each selected establishment in the State on a 
regular basis to verify that the establishment is operating in a manner 
that is consistent with the Act and the implementing regulations in 
this chapter. If necessary, the selected establishment coordinator, in 
consultation with the District Manager that covers the State, may 
designate qualified FSIS personnel to visit a selected establishment on 
behalf of the selected establishment coordinator.
    (b) The selected establishment coordinator, in coordination with 
the State, will verify that selected establishments in the State are 
receiving the necessary inspection services from designated personnel, 
and that these establishments are eligible, and remain eligible, to 
participate in a cooperative interstate shipment program. The selected 
establishment coordinator's verification activities may include:
    (1) Verifying that each selected establishment employs, and 
continues to employ, 25 or fewer employees, on average, as required 
under Sec. Sec.  381.513(a) of this part, unless the establishment is 
transitioning to become an official establishment;

[[Page 47669]]

    (2) Verifying that the designated personnel are providing 
inspection services to selected establishments in a manner that 
complies with the Act and the implementing regulations in this chapter;
    (3) Verifying that that State staffing levels for each selected 
establishment are appropriate to carry out the required inspection 
activities; and
    (4) Assessing each selected establishment's compliance with the Act 
and implementing regulations in this chapter.
    (c) If the selected establishment coordinator determines that 
designated personnel are providing inspection services to selected 
establishments in the State in a manner that is inconsistent with the 
Acts and the implementing regulations in this chapter, the 
Administrator will provide an opportunity for the State to develop and 
implement a corrective action plan to address inspection deficiencies 
identified by the selected establishment coordinator. If the State 
fails to develop a corrective action plan, or the selected 
establishment coordinator for the State determines that the corrective 
action plan is inadequate, the Administrator will terminate the 
agreement for the cooperative interstate shipment program as provided 
in Sec.  381.187(d) of this part.


Sec.  381.518  Quarterly reports.

    (a) The selected establishment coordinator will prepare a report on 
a quarterly basis that describes the status of each selected 
establishment under his or her jurisdiction.
    (b) The quarterly report required in paragraph (a) of this section 
will:
    (1) Include the selected establishment coordinator's assessment of 
the performance of the designated personnel in conducting inspection 
activities at selected establishments and
    (2) Identify those selected establishments that the selected 
establishment coordinator has verified are in compliance with the Act 
and implementing regulations in this chapter, those that have been 
deselected under Sec.  381.520 of this subpart, and those that are 
transitioning to become official establishments under Sec.  381.521 of 
this subpart.
    (c) The selected establishment coordinator is to submit the 
quarterly report to the Administrator through the District Manager for 
the State where the selected establishments identified in the report 
are located.


Sec.  381.519  Enforcement authority.

    (a) To facilitate oversight and enforcement of this subpart, 
selected establishments operating under a cooperative interstate 
shipment program must, upon request, give the FSIS selected 
establishment coordinator or other FSIS officials access to all 
establishment records required under the Act and the implementing 
regulations in this chapter. The Administrator may deselect any 
selected establishment that refuses to comply with this paragraph.
    (b) Selected establishment coordinators may initiate any 
appropriate enforcement action provided for in part 500 of this chapter 
if they determine that a selected establishment under their 
jurisdiction is operating in manner that is inconsistent with the Act 
and the implementing regulations in this chapter. Selected 
establishments participating in a cooperative interstate shipment 
program are subject to the notification and appeal procedures set out 
in part 500 of this chapter.
    (c) If inspection at a selected establishment is suspended for any 
of the reasons specified in Sec.  500.3 or Sec.  500.4 of this chapter, 
FSIS will:
    (1) Provide an opportunity for the establishment to implement 
corrective actions and remain in the cooperative interstate shipment 
program, or
    (2) Move to deselect the establishment as provided in Sec.  381.520 
of this subpart.
    (d) The decision to deselect a selected establishment under a 
suspension will be made on a case-by-case basis. In making this 
decision, FSIS, in consultation with the State where the selected 
establishment is located, will consider, among other factors:
    (1) The non-compliance that led to the suspension;
    (2) The selected establishment's compliance history; and
    (3) The corrective actions proposed by the selected establishment.


Sec.  381.520  Deselection of ineligible establishments.

    (a) The Administrator will deselect a selected establishment that 
becomes ineligible to participate in a cooperative interstate shipment 
program for any reason listed under Sec.  381.513(c) of this subpart.
    (b) An establishment that has been deselected must transition to 
become an official establishment as provided in Sec.  381.521 of this 
subpart.


Sec.  381.521  Transition to official establishment.

    If an establishment is deselected from a cooperative interstate 
shipment program as provided in Sec.  381.520 of this subpart, FSIS, in 
coordination with the State where the establishment is located, will 
develop and implement a plan to transition the establishment to become 
an official establishment.


Sec.  381.522  Transition grants.

    (a) Transition grants are funds that a State participating in a 
cooperative interstate shipment program under this subpart may apply 
for to reimburse selected establishments in the State for the cost to 
train one individual in the seven HACCP principles for meat or poultry 
processing as required under Sec.  417.7 of this chapter and associated 
training in the development of sanitation standard operating procedures 
required under part 416 of this chapter.
    (b) A State participating in a cooperative interstate shipment 
program that receives a transition grant must use grant funds to 
reimburse the training costs of one employee per each selected 
establishment in the State. Any other use of such funds is prohibited.

    Done at Washington, DC, on September 7, 2009.
Alfred V. Almanza,
Administrator.
[FR Doc. E9-21952 Filed 9-14-09; 11:15 am]
BILLING CODE 3410-DM-P