[Federal Register Volume 65, Number 84 (Monday, May 1, 2000)]
[Notices]
[Pages 25296-25298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-10745]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service


Food Distribution Program: Substitution of Donated Poultry With 
Commercial Poultry

AGENCY: Food and Nutrition Service, USDA.

ACTION: Notice.

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

SUMMARY: This notice announces the Food and Nutrition Service's (FNS) 
intent to continue a demonstration project to test program changes 
designed to improve the State processing of donated poultry by allowing 
the substitution of donated poultry supplied by the Department of 
Agriculture (the Department) with commercial poultry. The Department is 
currently operating a demonstration project that allows selected 
poultry processors to substitute commercial poultry for donated poultry 
in the State processing of donated poultry. Only bulk pack poultry and 
poultry parts are eligible for substitution under the current 
demonstration project. Notice of the project, which commenced operation 
on February 1, 1996, was published in the Federal Register at 61 FR 
5373 on February 12, 1996. The project was expanded and extended 
through June 30, 2000 (64 FR 35582, July 1, 1999). Under the 
demonstration project, FNS invoked its authority under 7 CFR 250.30(t) 
to waive the current prohibition at 7 CFR 250.30 (f)(1)(i) against the 
substitution of poultry items and to establish the criteria under which 
substitution will be permitted.
    The Department will continue to operate the demonstration project 
from July 1, 2000 through June 30, 2002. The Department will use the 
results of the demonstration project to further examine whether 
allowing the additional substitution will result in increased processor 
participation and provide a greater variety of processed end products 
to recipient agencies in a more timely manner at lower costs.

DATES: The proposals described in this Notice may be submitted to FNS 
through June 30, 2000. Note that the demonstration project runs until 
June 30, 2002.

ADDRESSES: Proposals should be sent to Suzanne Rigby, Chief, Schools 
and Institutions Branch, Food Distribution Division, Food and Consumer 
Service, U.S. Department of Agriculture, Park Office Center, 3101 Park 
Center Drive, Alexandria, Virginia 22302-1594.

FOR FURTHER INFORMATION CONTACT: David Brothers, Schools and 
Institutions Branch, at (703) 305-2644.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This notice has been determined to be not significant and therefore 
was not reviewed by the Office of Management and Budget under Executive 
Order 12866.

Executive Order 12372

    This program is listed in the Catalog of Federal Domestic 
Assistance under 10.550 and is subject to the provisions of Executive 
Order 12372, which requires intergovernmental consultation with State 
and local officials (7 CFR part 3015, subpart V and final rule-related 
notices published at 48 FR 29114, June 24, 1983 and 49 FR 22675, May 
31, 1984).

Regulatory Flexibility Act

    This action is not a rule as defined by the Regulatory Flexibility 
Act (5 U.S.C. 601-612) and is thus exempt from the provisions of that 
Act.

Background

    Section 250.30 of the current Food Distribution Program regulations 
(7 CFR part 250) sets forth the terms and conditions under which 
distributing

[[Page 25297]]

agencies, subdistributing agencies, and recipient agencies may enter 
into contracts with commercial firms for processing donated foods and 
prescribes the minimum requirements to be included in such contracts. 
Section 250.30(t) authorizes FNS to waive any of the requirements 
contained in 7 CFR part 250 for the purpose of conducting demonstration 
projects to test program changes designed to improve the State 
processing of donated foods.

Current Program Requirements

    The State processing regulations at Section 250.30(f)(1)(i) 
currently allow for the substitution of certain specified donated food 
items with commercial foods, with the exception of meat and poultry. 
Under the current regulations at Section 250.30(g), when donated meat 
or poultry products are processed or when any commercial meat or 
poultry products are incorporated into an end product containing one or 
more donated foods, all of the processing is required to be performed 
in plants under continuous Federal meat or poultry inspection or 
continuous State meat or poultry inspection in States certified to have 
programs at least equal to the Federal inspection programs. In addition 
to Food Safety Inspection Service (FSIS) inspection, all donated meat 
and poultry processing must be performed under Agricultural Marketing 
Service (AMS) acceptance service grading.
    Traditionally only a few companies have processed donated poultry. 
Those processors have stated that the policy prohibiting the 
substitution of donated poultry reduces the quantity of donated poultry 
they are able to accept and process during a given period. Poultry 
purchased by USDA for further processing is bulk chill packed. 
Processors must schedule production around deliveries of the donated 
poultry since it is a highly perishable product. Some of the processors 
must schedule production around deliveries of donated poultry for up to 
30 individual States. Vendors do not always deliver donated poultry to 
the processors as scheduled, causing delays in production of end 
products. These delays may be alleviated if the processors can 
substitute their commercial poultry for donated poultry.

Demonstration Project

    From July 1, 2000 to June 30, 2002, the Department will continue to 
operate a demonstration project under which it will permit approved 
processors to substitute commercial poultry for donated poultry in the 
State processing of donated poultry. FNS is invoking its authority 
under 7 CFR 250.30(t) to waive the current prohibition in 7 CFR 
250.30(f)(1)(i) against the substitution of poultry for purposes of 
this demonstration project.
    The demonstration project will be limited to bulk pack chicken, 
chicken parts, and bulk pack turkey because the processing of such 
items can be readily evaluated. The definition of substitution in 7 CFR 
250.3 requires the replacement of commercial product for donated food 
to be of the same generic identity and equal or better quality. With 
bulk pack chicken, chicken parts, and bulk pack turkey these 
requirements can be met easily and quickly. Bulk pack turkey has been 
added to the original demonstration project that allowed for the 
substitution of bulk pack chicken and bulk pack chicken parts because 
USDA graders can easily determine if commercial turkey meets or exceeds 
the specifications for donated turkey.
    FNS is inviting interested poultry processors to submit written 
proposals to participate in the demonstration project. The following 
basic requirements will apply to the demonstration project:
    <bullet> As with the processing of donated poultry into end 
products, AMS graders must monitor the processing of any substituted 
commercial poultry to ensure program integrity is maintained.
    <bullet> Only bulk pack chicken, chicken parts, and bulk pack 
turkey delivered by USDA vendors to the processor will be eligible for 
substitution. No backhauled product will be eligible. (Backhauled 
product is typically cut-up frozen poultry parts delivered to schools 
which may be turned over to processors for further processing at a 
later time.)
    <bullet> Substitution of commercial poultry may occur in advance of 
the actual receipt of the donated poultry by the processor. However, no 
substitution may occur before the product is purchased by USDA and the 
contract is awarded. Lead time between the purchase and delivery of 
donated poultry may be up to five weeks. Any variation between the 
amount of commercial poultry substituted and the amount of donated 
poultry received by the processor will be adjusted according to 
guidelines furnished by USDA.
    <bullet> Any donated poultry not used in end products because of 
substitution must only be used by the processor at one of its 
facilities in other commercial processed products and cannot be sold as 
an intact unit. However, in lieu of processing the donated poultry, the 
processor may use the product to fulfill other contracts with USDA 
provided all terms of the other contract are met.
    <bullet> The only regulatory provision or State processing contract 
term affected by the demonstration project is the prohibition on 
substitution of poultry (section 250.30(f)(1)(i) of the regulations). 
All other regulatory and contract requirements remain unchanged and 
must still be met by processors participating in the demonstration 
project.
    The demonstration project will enable FNS to evaluate whether to 
propose amendment of program regulations to provide for the 
substitution of donated poultry with commercial poultry in the State 
processing program. Particular attention will be paid to whether such 
an amendment of the regulations would probably increase the number of 
processors participating, and whether it would probably increase the 
quantity of donated poultry that each processor accepts for processing. 
Further, FNS will attempt to determine whether the expected increase in 
competition and the expected increase in the quantity of donated 
poultry accepted for processing enables processors to function more 
efficiently, producing a greater variety of processed poultry end 
products in a more timely manner at lower costs.
    The initial, but limited, data gathered from recipient agencies, 
AMS graders, and AMS procurement has been positive. USDA is convinced 
that given additional time, more chicken processors will decide to 
participate. The limited participation in the demonstration, to date, 
has not provided FNS with sufficient data to make an informed decision 
regarding benefits that might accrue to State processing programs 
should the terms of the demonstration be made permanent.
    Interested processors should submit a written proposal to FNS 
outlining how they plan to carry out the substitution while complying 
with the above conditions. Processors who are currently participating 
in the demonstration should apply to continue in the demonstration. The 
proposal must contain (1) a step-by-step description of how production 
will be monitored, (2) a complete description of the records that will 
be maintained for (a) the commercial poultry substituted for the 
donated poultry and (b) the disposition of the donated poultry 
delivered. All proposals will be reviewed by representatives of the 
Food Distribution Division of FNS and by representatives of AMS Poultry 
Division's Grading Branch. Companies approved for participation in the 
demonstration project will be required to enter into an agreement with 
FNS and AMS which authorizes the processor to substitute commercial 
bulk pack

[[Page 25298]]

chicken, chicken parts, and bulk pack turkey in fulfilling any current 
or future State processing contracts during the demonstration project 
period. Participation in the demonstration project will not ensure the 
processor will receive any State processing contracts.

    Dated: April 19, 2000.
Samuel Chambers, Jr.,
Administrator, Food and Nutrition Service.
[FR Doc. 00-10745 Filed 4-28-00; 8:45 am]
BILLING CODE 3410-30-P