[Federal Register Volume 60, Number 71 (Thursday, April 13, 1995)]
[Proposed Rules]
[Pages 18781-18782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9085]



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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 60, No. 71 / Thursday, April 13, 1995 / 
Proposed Rules


[[Page 18781]]


DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Part 250

RIN 0584-AB99


Waiver Authority Under the State Processing Program

AGENCY: Food and Consumer Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to amend the Food Distribution Program 
regulations by giving the Food and Consumer Service authority to waive 
provisions contained in the Food Distribution Program regulations at 7 
CFR part 250. This authority would be used to conduct, in one or more 
areas of the United States, demonstration projects designed to test 
program changes to determine whether the changes would improve the 
State processing of donated foods.

DATES: To be assured of consideration, comments must be postmarked on 
or before May 15, 1995.

ADDRESSES: Comments should be sent to Phil Cohen, Chief, Policy and 
Program Development Branch, Food Distribution Division, Food and 
Consumer Service, U.S. Department of Agriculture, 3101 Park Center 
Drive, Room 502, Alexandria, Virginia 22302. Comments in response to 
this rule may be inspected at 3101 Park Center Drive, room 506, 
Alexandria, Virginia, during normal business hours (8:30 a.m. to 5 
p.m.), Mondays through Fridays.

FOR FURTHER INFORMATION CONTACT: David Seger, Policy and Program 
Development Branch, Food Distribution Division, Food and Consumer 
Service, U.S. Department of Agriculture, 3101 Park Center Drive, Room 
502, Alexandria, Virginia 22302; or telephone (703) 305-2660.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866 and, therefore, has not been reviewed 
by the Office of Management and Budget (OMB).

Paperwork Reduction Act

    This proposed rule reflects no new information collection 
requirements under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-
3502). The OMB control number assigned to the existing recordkeeping 
and reporting requirements was approved by OMB for Part 250 under 
control number 0584-0007. The current burden hours will not change as a 
result of this proposed rule.

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 22676, May 
31, 1984).

Executive Order 12778

    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This proposed rule is intended to have preemptive 
effect with respect to any State or local laws, regulations or policies 
which conflict with its provisions or which would otherwise impede its 
full implementation. This proposed rule is not intended to have 
retroactive effect unless so specified in the Effective Date section of 
this preamble. Prior to any judicial challenge to the provisions of 
this rule or the application of its provisions, all applicable 
administrative procedures must be exhausted. This includes any 
administrative procedures provided by State or local governments. For 
disputes involving procurement by distributing and recipient agencies, 
this includes any administrative appeal procedures to the extent 
required by 7 CFR Parts 3015 or 3016.

Regulatory Flexibility Act

    This proposed rule has been reviewed with regard to the 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The 
Administrator of the Food and Consumer Service (FCS) has certified that 
this proposed rule will not have a significant economic impact on a 
substantial number of small entities. The cost of compliance to State 
processors of donated foods is expected to be reduced by the changes 
proposed in this rule.

Background

    Section 250.30 of the current Food Distribution Program regulations 
sets forth the terms and conditions under which distributing 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.

Discussion of Proposed Rule
    The State processing regulations contain provisions specifically 
intended to ensure that processors account for all donated foods in the 
manufacture of end products and pass on the full value of the donated 
food as savings to eligible recipient agencies. In the late 1970's and 
the early 1980's, audits conducted by the Department of Agriculture's 
Office of Inspector General disclosed significant abuses in the 
processing program. As a result of these audits, certain requirements 
were incorporated to ensure that processors properly account for the 
donated food, such as the certified public accountant audit report 
requirement at Secs. 250.18(b) and 250.30(c)(4)(xi), the requirement 
for Agricultural Marketing Service (AMS) acceptance service grading of 
meat and poultry products at Sec. 250.30(g) and (h), and the 
performance supply and surety bond requirement at 
Sec. 250.30(c)(4)(viii)(B).
    In recent years, it has been pointed out that some of the 
provisions contained in the State processing regulations are overly 
restrictive. As a result of the restrictions, some commercial 
processors have opted to no longer participate in the program. The Food 
and Consumer Service (FCS) is aware that new companies are not willing 
to enter into agreements with the distributing agencies, thus eroding 
competition. Processors have also commented that compliance with some 
of the provisions in the regulations has increased their cost of 
producing end products. These increased costs are in 

[[Page 18782]]
turn being passed on to the recipient agencies.
    In addition, FCS' review of the certified public accountant audit 
reports submitted by multi-State processors participating in the 
processing program has disclosed that the majority of processors 
participating in the program are operating in compliance with the 
regulations and their processing agreements. Also, representatives from 
AMS have indicated that processors are properly accounting for meat and 
poultry.
    FCS is interested in attracting more companies to participate in 
the processing program in order to increase competition. Increased 
competition should lower costs, improve quality, and provide a greater 
variety of end products for recipient agencies. Reducing unnecessarily 
burdensome requirements should further reduce the cost to recipient 
agencies. FCS has identified certain provisions in the regulations that 
could be modified or eliminated. The Department is interested in 
conducting demonstration projects in these areas to determine if 
changing the rules will result in increased competition and lower costs 
in the program. In order to conduct such projects, it will be necessary 
for FCS to waive certain requirements contained in the regulations.
    This rule proposes to permit FCS to waive any of the requirements 
of the Food Distribution Program regulations at Part 250 for the 
purposes of conducting demonstration projects to test program changes 
designed to improve the State processing of donated foods.

List of Subjects in 7 CFR Part 250

    Agricultural commodities, Food assistance programs, Food 
processing.

    For reasons set forth in the preamble, 7 CFR Part 250 is proposed 
to be amended as follows:

PART 250--DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS 
TERRITORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION

    1. The authority citation for Part 250 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 612c, 612c note, 1431, 1431b, 
1431e, 1431 note, 1446a-1, 1859; 15 U.S.C. 713c; 22 U.S.C. 1922; 42 
U.S.C. 1751, 1755, 1758, 1760, 1761, 1762a, 1766, 3030a, 5179, 5180.

    2. In Sec. 250.30, a new paragraph (t) is added to read as follows:


Sec. 250.30  State processing of donated foods.

* * * * *
    (t) Waiver authority. The Food and Consumer Service may waive any 
of the requirements contained in this part for the purpose of 
conducting demonstration projects to test program changes designed to 
improve the State processing of donated foods.

    Dated: April 6, 1995.
William E. Ludwig,
Administrator.
[FR Doc. 95-9085 Filed 4-12-95; 8:45 am]
BILLING CODE 3410-30-P