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FOOD SAFETY AND INSPECTION SERVICE-9 CFR PARTS 303 and 381

[Docket No. 87-0021]

EXPERIMENTATION WITH PROCEDURES FOR DETERMINING THE INTENSITY OF INSPECTION
COVERAGE IN PROCESSING ESTABLISHMENT; WAIVERS OF PROVISIONS OF THE REGULA-
TIONS

Agency: Food Safety and Inspection Service [FSIS], USDA.
Action: Interim final rule with request for comments.

Summary: The Administrator, FSIS is initiating a period of experimentation as the first step in changing the Federal inspection system in establishments that prepare meat food products and/or process poultry products beyond slaughter and evisceration to a "discretionary inspection" (DI) system; that is, one in which the frequency and the manner of government inspection are based on considerations relevant to effective regulation of such products and protection of the public health and welfare, in accord with recent amendments to the Federal Meat Inspection Act (FMIA).

The object of this experimentation is to determine whether and, if so, to what extent the intensity of Federal inspection of meat and poultry products exceeds that which is necessary. During the period of experimentation, the level of Federal inspection may be reduced at some official establishment below the level required by current law. To the extent these reductions conflict with current provisions of the regulations, the Administrator plans to waive such provisions for the period of experimentation.

FSIS will consider relevant data, views, and arguments that are submitted during the next 30 days, and it will review the comments submitted and publish a final rule, indicating what, if any, changes it is making to this interim rule. In any event, during the period of experimentation, guidelines developed for use in making the determinations called for by these provisions may be modified if found to be infeasible or to improve effectiveness in assessing establishments or designing inspection coverage.

After this experimental step is completed, FSIS will propose new regulations that will fully implement its DI system. Interested members of the public will have an opportunity to comment on the design of the proposed DI system and specific proposed regulatory changes at that time.

Dates: Comments must be received on or before April 29, 1987. Effective March 30, 1987.

Addresses: Written comments to: Policy Office, Attn: Linda Carey, FSIS Hearing Clerk, Food Safety and Inspection Service, U.S. Department of Agriculture, Washington, DC 20250. Oral comments on the amendments to the poultry products inspection regulations to: Judith A. Segal, Director, Policy and Planning Staff, Food Safety and Inspection Service, U.S. Department of Agriculture, Washington, DC 20250, (202) 447-6525. (See also "Comments" under Supplementary Information.) For further information contact: Judith A. Segal, (202) 447-6525.

Supplementary information: Executive Order 12201 and Effect on Small Entities. The Administrator, FSIS, has made an initial determination that this interim final rule is not a major rule under Executive Order 12291. It is not likely to result in an annual effect on the economy of $100 million or more; a major increase in costs or prices for consumers, individual industries. Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United Statesbased enterprises to compete with foreign-based enterprises in domestic or export markets. The Administrator also has determined that this action will not have a significant economic impact on a substantial number of small entities, in accordance with the requirements of the Regulatory Flexibility Act (Pub. L. 96-354, 5 U.S.C. 601 et seq.)

The basis for these determinations includes the fact that waiver of certain provisions of the regulations and other aspects of experimentation described herein will affect only a limited number of processing establishments subject to inspection under the FMIA and/or the PPIA for a limited period. Any economic benefits which might indirectly result from inclusion in pilot testing (e.g., reduction in payments for inspection program employees working overtime) will be relatively small and affect only a portion of the establishments in which pilot tests are conducted, and selecting all establishments within a designated site that are found to satisfy the establishment performance criteria will further reduce the opportunity for any adverse effect on competition. Both the number of establishments selected and the length of time during which they are included in a pilot test of DI procedures will

not extend beyond that which is needed to test the program variables under consideration in establishments with different characteristics. While at this time FSIS can only estimate the number of establishments that could be included in such pilot tests, since it cannot predict the results of evaluations of establishment performance, the Agency plans to select approximately 15 establishments initially and not more than about 200 in all, or approximately 3 percent of the federally inspected establishments that will be subject to the fully implemented DI system. Moveover, the Agency plans to conduct pilot testing in establishments with a variety of characteristics, such as size and volume of product manufactured, with the number of establishments increasing as the evaluation proceeds and with the conditions and methods of inspection coverage comparable in establishments as to which similar considerations apply. Finally, FSIS expects the duration of pilot tests in most establishments to vary between 3 and 6 months and that it will terminate the experimentation period within about 1 year. When pilot tests are ended, the Agency will return to pre-experimentation conditions and methods of inspection coverage until the DI system is fully implemented and, at that time, all plants (including those previously selected for pilot testing) will be evaluated.

COMMENTS

Interested persons are invited to submit comments concerning this interim final rule. Such comments must be sent in duplicate to the FSIS Hearing Clerk. They should bear a reference to the docket number located in the heading of this document. Any person desiring an opportunity for oral presentation of views on the amendments to the poultry products inspection regulations must make such request to Dr. Segal so that arrangements may be made for such views to be presented. A transcript will be made of all views presented orally. All written and oral submissions made pursuant to this notice will be made available for public inspection between 9:00 a.m. and 4:00 p.m., Monday through Friday, in the Policy Office, Room 3168, South Agriculture Building, 14th Street and Independence Avenue, SW., Washington, DC.

BACKGROUND

The Secretary of Agriculture's duties include implementation of 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.) to prevent the preparation or processing and distribution of meat, meat food products, and poultry products which are adulterated or misbranded or not properly marked, labeled, and packaged (21 U.S.C. 453 (g) and (h), 457, 458, 601 (m) and (n), 607, and 610). Responsibility for exercising the functions of the Secretary contained in the FMIA and PPIA has been delegated to the Administrator, FSIS (7 CFR 2.17(g) and 2.55(a)(2)). Among those functions are administration of the inspection requirements for meat food and poultry products and sanitation practices in establishments preparing or processing such products for commerce or otherwise subject to inspection under the FMIA or PPIA (21 U.S.C. 455, 456, 605, 606, and 608) and the issuance of rules and regulations executing provisions of these Acts (21 U.S.C. 463(b) and 621).

The Congress of the United States recently amended the inspection requirements for meat food products in section 6 of the FMIA (21 U.S.C. 606). Pursuant to the Processed Products Inspection Improvement Act of 1986, Title IV of the Futures Trading Act of 1986 (FTA) (Pub. L. 99-641), rather than requiring the Secretary to cause inspectors appointed for that purpose to make "an examination and inspection of all meat food products prepared for commerce in any slaughtering, meat-canning, salting, packing, rendering, or similar establishment," such examination and inspection is to be:

Conducted with such frequency and in such manner as the Secretary considers necessary, as provided in rules and regulations issued by the Secretary, taking into account such factors as the Secretary considers to be appropriate. . .[FTA, section 403(a)]. Three such factors are specified in the statute: the nature and frequency of processing operations at an establishment, the adequacy and reliability of the processing controls and sanitary procedures at an establishment, and the history of compliance with inspection requirements in effect under the FMIA by the operator of an establishment or anyone responsibly connected with the business (i.e., any partner, officer, director, holder, or owner of 10 per centum or more of its voting stock or employee in a managerial or executive capacity) that operates that establishent.

By so amending the FMIA, Congress has authorized the Department, for a 6-year period,* to base the frequency with which and the manner in which meat food products are examined and inspected by program employees on considerations relevant to the effective regulation of meat food products and the protection of the public health and welfare. The legislation also reflects Congressional recognition that full implementation of a new system of government inspection of post-slaughter processing operations will take time: Title IV and the amendments made thereby became effective on the date of enactment (November 10, 1986), except that sections 6, 9, and 21 of the FMIA (21 U.S.C. 606, 609, and 621), as in effect immediately before that date, "apply with respect to establishments until the Secretary... first issues rules and regulations to implement the amendments made by section 403(a)" (FTA, section 408). This rulemaking initiates implementation of those amendments; however, as indicated below, it is only the first step in process intended to assure an orderly transition to the "discretionary inspection" (DI) system mandated by the recent amendments to the FMIA.

This rulemaking also initiates changes that will result in the institution of a DI system for operations processing products from poultry carcasses that have passed post mortem inspection. The PPIA authorizes the Department to vary the frequency and the manner of government inspection in establishments conducting post-slaughter and evisceration processing of poultry products based on effective regulation and public protection considerations. In particular, section 6(b) (21 U.S.C. 455(b)) requires the Secretary to cause government inspectors to make "post mortem inspection of the carcass of each bird processed, and at any time such quarantine, segregation and reinspection as he deems necessary of poultry and poultry products capable of use as human food in each official establishment processing such poultry or poultry products for commerce or otherwise subject to inspection.

The Administrator of FSIS now believes that the frequency and manner of reinspection by program employees of poultry products made from poultry previously slaughtered and eviscerated and found to be not adulterated that is "deem[ed] necessary" should be varied, taking into account the same factors as those considered appropriate under the amended FMIA. To date, however, the rules and regulations and other aspects of inspection coverage have been basically comparable to those prescribed pursuant to the narrower pre-amendment authority in the FMIA. Therefore, exercising the authority to implement at DI system of inspection presents orderly transition concerns under the PPIA as well.

The Department supported the recent amendments to the FMIA, as well as administering the PPIA to institute the same approach to the inspection of comparable processing operations, because it believes that the efficiency and effectiveness of the meat and poultry inspection program in utilizing available resources to maximize the level of compliance with regulatory requirements, and thus achievement of the purposes of the FMIA and PPIA (see 21 U.S.C. 451 and 602 and FTA, section 402), can be improved by adjusting the frequency and the manner of government inspection. However, before modifying the inspection system as a whole and fully implementing a DI system, rules regarding the frequency and the manner of government inspection should be tested in order to assess their adequacy and appropriateness and thereby protect the integrity and effectiveness of the inspection program.

In particular, although it appears that the intensity of inspection coverage in some processing establishments exceeds that which should be considered or deemed necessary under the FMIA, as amended (21 U.S.C. 606), or the PPIA (21 U.S.C. 455), the Administrator of FSIS has concluded that procedures for determining whether and, if so, to what extent this is the case and for designing the conditions and methods of inspection coverage in such establishments should be tested in a small-scale, experimental setting in order to obtain sufficient information on which to base final amendments to various portions of the Federal meat inspection and the poultry products inspection regulations. Therefore, the first rules and regulations to be issued in implementing the amendments made by section 403(a) of the FTA to section 6 of the FMIA (21 U.S.C. 606) and instituting a comparable DI system under the PPIA consist of provisions for conducting pilot tests of such DI system in establishments subject to inspection under the FMIA (9 CFR 303.2) or the PPIA (9 CFR 381.3 (c) through (e)).

Not later than 6 years after the date of enactment, Congress is to evaluate the operation and effects of the amendments made by section 403 of the FTA for the purpose of determining whether to extend or modify the operation of such amendments and enact such legislation as may be necessary to efficiently and effectively carry out the FMIA (FTA, section 407).

These provisions in the initial regulations include the factors that appear appropriate for consideration in assessing the performance of an establishment to determine whether the intensity of inspection coverage can be reduced while continuing to assure effective regulation of products and protection of the public health and welfare (9 CFR 303.2(b)(1) and 381.3(d)(1)), as well as the factors that appear appropriate for consideration in assessing the characteristics of an establishment on which to base the level of Federal inspection and other conditions and methods of government inspection during such experimentation (9 CFR 303.2(b)(2) and 381.3(d)(2)). For purposes of both meat food product and poultry product inspection, criteria are specified to take into account the factors included in section 6(a)(2) of the amended FMIA (21 U.S.C. 606(a)(2); section 403(a) of the FTA): nature and frequency of processing operations (9 CFR 303.2(b)(2) and 381.3(d)(2)), adequacy and reliability of processing controls and sanitary procedures (9 CFR 303.2(b)(1) (ii) and (iii) and 381.3(d)(1) (ii) and (iii)), and history of compliance with inspection requirements (9 CFR 303.2(b)(1)(i) and 381.3(d)(1)(i)).

Thus, the experimentation period is expected to provide information on, among other things, the adequacy of such criteria for evaluating the performance of all establishments conducting post-slaughter preparation of meat food products and/or post-slaughter and evisceration processing of poultry products. FSIS will use the information obtained to decide whether the criteria set forth in these provisions should be further refined or supplemented before their application to all such processing establishments is proposed as part of the rulemaking in which a proposal that would amend the Federal meat inspection regulations and the poultry products inspection regulations to include the new and revised provisions needed for full implementation of a DI system will be considered. FSIS currently anticipates completion of that rulemaking in early 1988. The final rule so amending the regulations also will rescind the provisions for experimentation with DI procedures set forth herein, unless such experimentation period has been terminated earlier.

FSIS plans to select establishments for inclusion in a pilot test from those the Administrator identifies for review (9 CFR 303.2(a) and ̄ 381.3(c)). Initially, a small group of establishments will be so identified, and such establishments will be ones in which there is reason to believe that the current intensity of inspection coverage exceeds that which should be considered or deemed necessary under the FMIA or PPIA. As testing proceeds, the Administrator intends to identify additional establishments to the extent appropriate in view of findings to date. FSIS expects that the number of establishments selected for pilot tests may increase from approximately 15 to as many as 200 as groups of establishments in new, limited geographical sites are phased in over the course of the experimentation period. Such sites will be designated on the basis of their suitability for generating information to satisfy evaluation needs. The length of time during which establishments are included in a pilot test will vary depending on the testing involved and is expected to be from 3 to 6 months in most establishments.

The performance of establishments so identified will be evaluated, and such an establishment may be selected for inclusion in the pilot testing of procedures for reducing the intensity of inspection coverage if, and only if, this evaluation (1) reveals, in records compiled no earlier than 10 years before, no documented instances of substantial and recent noncompliance with applicable regulatory requirements and (2) evidences the competence and control procedures needed to assure and monitor compliance with applicable regulatory requirements (9 CFR 303.2(c)(1) and 381.3(e)(1)). The "sustantial and recent" criterion is intended to assure that in assessing compliance history (9 CFR_303.2(b)(1)(i) and 381.3(d)(1)(i)), both_the nature and frequency of noncompliance with process, environment, and/or product requirements are taken into account for an appropriate length of time. Thus, noncompliance is to be regarded as substantial when, for example, it involves the preparation of adulterated product that could pose a serious public health threat if distributed to consumers or recurring failures that could be considered indicative of a lack of regard for the public health or welfare; and, within the 10-year time limit on record documentation, the more substantial the violation, the longer it is to be regarded as sufficiently recent for consideration. The second performance evaluation criterion reflects the assessment of both management knowledge of appropriate manufacturing practices and applicable regulatory requirements, demonstrated ability to apply that knowledge in a timely and consistent manner, and commitment to correcting deficiencies noted by inspection program employees and otherwise assuring compliance with applicable regulatory requirements (9 CFR 303.2(b)(1)(ii) and 381.3(d)(1)(ii)) and the procedures used to control the production process, environment, and resulting product in order to assure and monitor compliance with requirements of the FMIA or PPIA and rules and regulations thereunder (9 CFR 303.2(b)(1)(iii) and

381.3(d)(1)(iii)). FSIS believes that by applying these criteria, its performance evaluation will achieve the objective of only including an establishment in pilot testing if there are adequate indications that the probability of future noncompliance at such establishment is low.

In any establishment included in such a pilot test, during experimentation the conditions and methods of inspection coverage of operations other than the slaughter of livestock or the slaughter and evisceration of poultry, including the frequency of government inspection, are to be determined by the inspection program based on (1) an evaluation of the characteristics of the particular establishment, (2) the significance of potential health consequences of noncompliance, and (3) the availability of meat and poultry inspection program employees (referred to as "Program" and "Inspection Service" employees in the Federal meat inspection and the poultry products inspection regulations, respectively) (9 CFR 303.2(c)(2) and 381.3(e)(2)). Drawing upon its experience in regulating a broad range of establishments with differing characteristics and allocating inspection program resources, FSIS has developed tentative guidelines for use in making these determinations during pilot testing. Thus, for example, in assessing processing operation complexity (9 CFR 303.2(b)(2)(i) and 381.3(d)(2)(i)). FSIS will be categorizing operations as involving product preparation or processing that is "simple", "medium", or "complex" by applying Directive 1030.2 (Documentation of Processing and Combination Assignments, 4/22/85, which is available for public inspection and copying in the Policy Office (see "Addresses")). FSIS also plans to utilize a three category approach in assessing certain other establishment characteristics (9 CFR 303.2(b)(2)(iii), (iv), and (vi) and 381.3(d)(2)(iii), (iv), and (vi)): production volume (highest total product volume during any quarter within the preceding year as less than 60,000; 60,000 to 1,000,000; or more than 1,000,000 pounds), establishments size (less than 12,000; 12,000 to 80,000; or more than 80,000 square feet), and the scope of any livestock slaughter or poultry slaughter and evisceration operations (none, part time, or full time) also being conducted (but to which the DI system will not apply) at an establishment which makes meat food and/or poultry products that are processed further (i.e., a “combination" establishment).

The Federal meat inspection regulations (9 CFR Chapter III, Subchapter A) and the poultry products inspection regulations (9 CFR Part 381) will continue to apply to establishments in which FSIS is pilot testing except to the extent that the frequency of Federal inspection or other conditions and methods of inspection coverage determined to be appropriate for the period of experimentation are identified as conflicting with provisions of the regulations. To that extent, the Administrator plans to waive such provisions for the period of experimentation (9 CFR 303.2(c)(2) and 381.3(e)(2)). Such waivers will permit the testing of new procedures that are expected to facilitate definite improvements and will reflect a determination that prescribing alternative conditions and methods of inspection coverage is not contrary to statutory purposes or provisions. They are, therefore, consistent with Agency policy as to when the temporary suspension of provisions of the regulations comports with its responsibilities in administering the FMIA.

The Administrator believes that the Federal meat inspection regulations should address the waiver for limited periods of provisions of those regulations to provide for situations in which alternative courses of action are appropriate and do not conflict with either the purposes or the provisions of the statute. In particular, the Administrator has determined that despite potential or actual conflicts with provisions of the regulations, such alternative courses of action should be pursued in administering the FMIA in order to permit: (1) Appropriate and necessary action in the event of a public health emergency and (2) experimentation so that new procedures, equipment, and/or processing techniques may be tested to facilitate definite improvements. In both of these classes of cases, the waiver decision reflects a judgment that certain provisions of the regulations as applied in specific situations should be temporarily suspended in order to achieve the purposes of the FMIA and that the alternative course of action pursued during such a limited period is not inconsistent with FMIA provisions. Among other things, FSIS may, as in the instant case, need to obtain additional information before it can assess the nature or scope of any amendments to be proposed or can provide sufficient description of the subjects and issues involved to give interested persons a meaningful opportunity to participate in rulemaking.

The inclusion of such a rule in the Federal meat inspection regulations (9 CFR 303.1(g)) specifies Agency policy for carrying out its statutory responsibilities and conducting the meat and poultry inspection program pursuant to the FMIA and PPIA. The poultry products inspections regulations already include such a rule (9 CFR 381.3(b)). However, the emergency situations provided for in the poultry prod

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