Special Report: Industry has questions on interstate shipping rule

by Joel Crews and Bryan Salvage
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KANSAS CITY, Mo. – Last week, the US Department of Agriculture’s Food Safety and Inspection Service issued a final rule allowing interstate shipment of some state-inspected meat and poultry products. Until now, only federally inspected meat and poultry was allowed into interstate commerce.

So far, industry has been fairly quiet about this rule, but several trade associations have voiced their opinions, questions and concerns on this move to MEATPOULTRY.com.

In comments filed in November 2009 about the proposed rule, Mark Dopp, American Meat Institute senior vice president of regulatory affairs and general counsel, supported the agency’s proposed requirements that products shipped interstate be subject to identical rules — not simply to rules that are deemed “equal to” federal rules. Dopp said in an AMI press release that the same approach “…is both consistent with the provisions and intent of the enabling law, as well as ensuring the equitable application of the Federal Meat Inspection Act, the Poultry Products Inspection Act and their attendant regulations.”

“We are pleased that the new rule will require that state-inspected products shipped interstate must be subject to the same regulations and inspection requirements as federally-inspected products,” Dopp said in response to the new rule. “Not only is it a matter of fairness, such a requirement ensures that all meat crossing state lines is subject to the highest standards.

“The following quote is from the preamble and the thrust of what we wanted to ensure was in the rule – consistent with the language and intent of the Farm Bill: “An establishment that ships products across States lines must comply with all Federal standards regardless of the inspection program that it chooses to operate under,” Dopp told MEATPOULTRY.com.

The American Association of Meat Processors (AAMP) is pleased to see the release of the details regarding the Cooperative Interstates Shipment Program, says Jay Wenther, Ph.D., AAMP executive director. “For many years, AAMP has supported the interstate commerce of state inspection for meat and poultry products,” he added. “It never seemed logical that state-inspected meat products were safe to consume in one state, yet somehow thought of being unsafe if transported over a state’s borders. Although, AAMP understood there were other issues involved, such as potential recalls, jurisdiction, etc.”

However, Wenther says it is unfortunate the new rule seems to add an extensive layer of complexity. “The final rule provides thorough details, but the actual functionality of the program won’t be truly realized until the program is specifically set in motion,” he adds.

AAMP has members in each state identified (Vermont, Ohio, Wisconsin, and North Dakota) within the final rule that have expressed interest in the program. “It is unknown how many of them will participate in this program,” Wenther admits. “Some may choose to participate while others may decide that if they want to transport their products across state lines, it may be just as easy for them to transition directly into the federal meat inspection program. Our members operate across the spectrum of inspection forms.”

What’s best about this rule is ..... it is finally here, Wenther says. “After decades of encouraging Congress to create an interstate shipment provision, we finally have a regulation in place,” he adds. “The rule does allow for more potential domestic and international marketing opportunities.”

But there are some concerns about the rule. “Generally speaking, there is some vagueness to the details of the implementation to this rule and how states and establishments will actually comply that can only be addressed as the rule is adopted and beings to function,” Wenther says.

AAMP’s biggest concern is the “deselection” process described in the rule. Deselection is the process where an establishment would be removed from the interstate shipment cooperative program due to a failure to comply with the federal rules and regulations or for having more workers employed than prescribed in the final rule.

“Upon deselection, the establishment must operate under federal jurisdiction for at least one year before returning to state jurisdiction, if they so choose,” Wenther explains. “The deselected establishments lose their rights to choose their inspection system, and this provision gives the impression that establishments would be ‘punished’ if they were deselected by forcing them into federal inspection and losing their state meat inspection forum.”

A meat establishment may lose its ability to decide what inspection system it wants to be under if future problems arise, he continues. “If a state-inspected establishment wished to be a part of the Cooperative Interstate Shipment Program, they are required to meet the ‘same-as’ requirement,” Wenther says. “If they are in the Cooperative Interstate Shipment Program and then can’t meet the ‘same-as’ requirement, they will automatically be transferred into the federal inspection program.

“They cannot go back to state inspection until they complete one year of the federal inspection program,” Wenther iterates. “So, if an establishment struggles to meet the ‘same-as’ requirement under the Cooperative Interstate Shipment Program, they would most likely struggle [with the] ‘same-as’ requirement under the federal inspection program. Therefore, this may either cause them to cease operations, remove portions of the services offered or transition to custom exempt and/or retail exempt. All of these options would do very little for an already struggling industry that USDA/FSIS proclaims it is trying to assist.”

Wenther says the intent of this rule is to limit the interstate shipment of meat to small and very small establishments, resulting in strict employee limitations. “Hiring more employees than called for in the regulation would result in deselection from the program,” he adds. “The rule calls for only 25 employees, including full-time, part-time, seasonal and volunteers who handle meat and poultry products. There is a degree of vagueness also as to whom is counted as an employee of the meat sector of the business. An establishment would seemingly be penalized if they want to grow their business. The rule does allow for an increase of up to 35 employees during busy seasons, as long as the average remains at 25.”

This program builds another layer of complexity to an already complex meat-inspection system for establishments, inspectors and administrators from different government agencies, Wenther says. “Potential issues are most likely expected between the state inspection system and the federal meat inspection because that is the nature of inspection, resulting in differing opinions and procedures,” he adds. “It appears this rule blends the two systems, which requires a great deal of management and communication for an effective system.”

States must also individually approve this rule in their states for participation as well, he points out. “This may require legislative action in some states,” he adds. “Although USDA/FSIS will provide 60% of the funding, this program may still be cost prohibitive during these harsh government budgetary times. It may also be prohibitive for programs to invest time and resources into retraining state meat inspection staff and upgrading laboratory services to the ‘same as’ standards.”

Another potential concern is the final rule is silent on whether a state can impose a user fee to establishments wishing to participate in the interstate shipment program, Wenther says. “Individual states may attempt to implement fees in some manner to cover the costs of the program that may discourage establishments to go into this program,” he adds.

Reflecting more on the rule, Wenther says it discusses the possibility of transition funds available to establishments for training employees on HACCP and sanitation SSOPs to help transition to operate as a “same as facility.”

“Transition funds are a good gesture, but to be eligible for this new program a plant must already be under the ‘equal-to’ state inspection program,” Wenther says. “Establishments under ‘equal-to’ state inspection programs are required to already have HACCP and sanitation SOPs implemented. So, essentially the funds are available to another establishment employee who can get trained or that someone within the establishment can get retrained.”

This concept of “transition funds” also gives the impression to individuals outside the meat industry that these state-inspected establishments are currently operating with no or less than adequate HACCP and sanitation SOPs, which is not true, Wenther points out. “AAMP offers that these resources may be better utilized as funds to assist establishments that are forced through the deselection process to become compliant as a federal facility,” he adds.

Wenther says the 25 employee limit of this rule warrants additional explanation. USDA/FSIS says this figure reflects the “applicable methods used by the Small Business Administration [SBA] to calculate the number of employees for a small business concern,” Wenther says.

“Yet, it is ironic that USDA/FSIS has an entirely different system used to determine business size as it relates to the current HACCP regulations [i.e., very small establishments = all establishments with fewer than 10 employees, small establishments = all establishments with 10 or more employees but fewer than 500, and large establishments = all establishments with 500 or more employees],” he adds. “No reason is given for this discrepancy. There is also some confusion on which employees to count as those that handle meat and poultry products. A part-time cashier can be counted as a full-time meat-handling employee in the same way as a full-time butcher, according to the rule.

Regarding the deselection process, there is nothing in the final rule about the retail exemption option, Wenther continues. “Does an establishment have the right to choose retail exemption upon deselection versus forced federal inspection? More clarification is needed on the choices and consequences establishments have in changing inspection, either voluntarily or through deselection in regards to retail exempt status option,” he concludes

Jeremy Russell, National Meat Association spokesman, told MEATPOULTRY.com, “The rule is too new for us to have taken a position yet, although we support the concept of interstate shipment — as long as plants under state inspection are meeting the same food-safety requirements as federal plants. There are probably some smaller companies that will attempt to make shipments eventually, but given all of the complications that the rule entails they may not find it as easy as they would have hoped.

“[Participating processors] have to be able to show they have less than 25 employees who are interacting with the meat and there will be a Food Safety and Inspection Service coordinator reviewing the state inspection at their facility to assure that it complies,” he added. “If it's deemed inadequate to the 'same as' requirement, then they will be forced to go under federal inspection for at least a year to prove they can meet FSIS requirements. Seems like it could be quite cumbersome to the small guys and that it might make their life simpler to just be under federal inspection, instead of what appears to amount to both state and federal inspection.”
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