[Federal Register: January 18, 2001 (Volume 66, Number 12)]
[Proposed Rules]               
[Page 4969-4999]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja01-39]                         


[[Page 4969]]

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Part IV





Department of Agriculture





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Food Safety and Inspection Service



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9 CFR Parts 317 and 381



Nutrition Labeling of Ground or Chopped Meat and Poultry Products and 
Single-Ingredient Products; Proposed Rule


[[Page 4970]]


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DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 317 and 381

[Docket No. 98-005P]
RIN 0583-AC60

 
Nutrition Labeling of Ground or Chopped Meat and Poultry Products 
and Single-Ingredient 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 to 
amend the Federal meat and poultry products inspection regulations to 
require nutrition labeling of the major cuts of single-ingredient, raw 
meat and poultry products, unless an exemption applies. For these 
products, FSIS is proposing to make the guidelines currently in place 
for the voluntary nutrition labeling program mandatory. Thus, the 
Agency is proposing to require that nutrition information be provided 
for these products either on their label or at their point-of-purchase. 
During the most recent surveys of retail stores, the Agency did not 
find significant participation in its voluntary nutrition labeling 
program, which covers the major cuts of single-ingredient, raw 
products. Without nutrition information for these products, the Agency 
has tentatively concluded that the major cuts of single-ingredient, raw 
meat and poultry products would be misbranded under the Federal Meat 
Inspection Act and the Poultry Products Inspection Act.
    FSIS is also proposing to amend its regulations to require 
nutrition labels on all ground or chopped meat and poultry products, 
with or without added seasonings, unless an exemption applies. Under 
existing regulations, multi-ingredient ground or chopped products, 
(e.g., ground pork with seasonings), and heat processed ground or 
chopped products (e.g., fully cooked or partially cooked patties) are 
required to be nutritionally labeled, unless they qualify for an 
exemption, but single-ingredient, raw ground or chopped products are 
not required to be so labeled. Without nutrition information for 
single-ingredient, raw ground or chopped products, the Agency has 
tentatively concluded that these products would be misbranded under the 
Federal Meat Inspection Act and the Poultry Products Inspection Act. 
The Agency has also tentatively determined that single-ingredient, raw 
ground or chopped meat and poultry products are different from other 
single-ingredient, raw meat and poultry products in several important 
respects. Thus, FSIS is proposing to make nutrition labeling 
requirements for all ground or chopped meat and poultry products 
consistent with those currently required for products in the mandatory 
nutrition labeling program (multi-ingredient and heat processed 
products).
    FSIS is proposing to require nutrition labels on packages of 
single-ingredient, raw ground or chopped products, rather than at their 
point-of-purchase, largely because these products are similar to 
products in the mandatory nutrition labeling program (which requires 
nutrition information to be on the label of individual packages), in 
that certain parameters, such as their fat content, can be controlled 
precisely to obtain the desired product. Although FSIS believes that 
nutrition information on labels of individual packages of single-
ingredient, raw products is useful, FSIS is proposing that nutrition 
information for the major cuts of single-ingredient, raw products may 
also be provided on point-of-purchase materials because FSIS believes 
that consumers have reasonable expectations as to the nutrient content 
of these products, the nutrient content of a specific major cut is 
relatively uniform across the market, and because these products are 
not formulated in the manner of ground or chopped products. For single-
ingredient, raw products that are not major cuts and that are not 
ground or chopped, FSIS is not proposing to require nutrition 
information on their labels or at their point-of-purchase because FSIS 
has not yet assessed whether adequate nutrition information is being 
provided for these products and, therefore, has not determined whether 
it would be beneficial to require nutrition labeling for these 
products.
    Finally, FSIS is proposing to amend the nutrition labeling 
regulations to provide that when a ground or chopped product does not 
meet the criteria to be labeled ``low fat,'' a lean percentage claim 
may be included on the label or in labeling as long as a statement of 
the fat percentage also is displayed on the label or in labeling.

DATES: Comments must be received on or before April 18, 2001.

ADDRESSES: Submit one original and two copies of comments to FSIS 
Docket Clerk, Docket #98-005P, Food Safety and Inspection Service, Room 
102, Cotton Annex, 300 12th Street, SW, Washington, DC 20250-3700. 
Reference material cited in the document and any comments received will 
be available for public inspection in the FSIS Docket Room from 8:30 
a.m. to 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Dr. Robert Post, Director, Labeling 
and Additives Policy Division, Office of Policy, Program Development, 
and Evaluation, Food Safety and Inspection Service, U.S. Department of 
Agriculture, Washington, DC 20250-3700; (202) 205-0279.

SUPPLEMENTARY INFORMATION:

Background

The Current Mandatory and Voluntary Nutrition Labeling Programs

    Mandatory nutrition labeling program. The Nutrition Labeling and 
Education Act (NLEA) of 1990 required nutrition labeling of most foods 
regulated by the Food and Drug Administration (FDA). FSIS published 
regulations establishing comparable nutrition labeling requirements for 
meat and poultry products. As explained in its proposed and final 
rules, FSIS determined that it had statutory authority to require 
nutrition labeling based on the Secretary of Agriculture's 
determination that meat and poultry products, other than single-
ingredient, raw products, would be misbranded in the absence of such 
information, under section 1(n) of the Federal Meat Inspection Act 
(FMIA) (21 U.S.C. 601(n)(1)) and section 4(h)(1) of the Poultry 
Products Inspection Act (PPIA) (21 U.S.C. 453(h)(1)) (56 FR 60305 and 
58 FR 637). These statutory provisions state that a product is 
misbranded if it is false or misleading in any particular. FSIS 
published an advance notice of proposed rulemaking on nutrition 
labeling of meat and poultry products on April 2, 1991 (56 FR 13564), a 
proposed rule on November 27, 1991 (56 FR 60302), a final rule on 
January 6, 1993 (58 FR 632), and subsequently other amendments to the 
rule.
    FSIS' regulations require nutrition labels on the packages of all 
multi-ingredient and heat processed meat and poultry products, unless 
an exemption applies. The required nutrition labeling provisions are 
referred to as ``the mandatory nutrition labeling program.'' The 
regulations include exemptions from nutrition labeling requirements for 
food products produced by small businesses, products intended for 
further processing, products not offered for sale to consumers, 
products in small packages that are individually wrapped packages of 
less than \1/2\ ounce net weight, custom slaughtered or prepared 
products, products intended for export, ready-to-eat products that are 
packaged

[[Page 4971]]

or portioned at a retail store or similar retail-type establishment, 
and multi-ingredient products processed at a retail store or similar 
retail-type establishment. The regulations also provide that nutrition 
labeling may be provided by alternate means for packages that have a 
total surface area available to bear labeling of less than 12 square 
inches; for these products, the regulations permit manufacturers to 
provide an address or telephone number on the package for consumers to 
write or call for nutrition information. Except for the nutrition 
labeling exemptions for custom slaughtered or prepared products and 
products intended for export, the exemptions from nutrition labeling 
requirements and the provision for alternate means of providing 
nutrition labeling on packages that have a limited surface area to bear 
labeling apply only when a product's labeling includes no nutrition 
claims or nutrition information. The regulations also state that 
restaurant menus generally do not constitute nutrition labeling or fall 
within the scope of the nutrition labeling regulations, and that foods 
represented or purported to be specifically for infants and children 
less than 4 years of age shall not include certain nutrient content 
declarations (see Secs. 317.400 and 381.500).
    The regulations specify the information that must be included on 
the labels of products in the mandatory nutrition labeling program. The 
required information includes the levels of total calories, calories 
from fat, total fat, saturated fat, cholesterol, sodium, total 
carbohydrate, dietary fiber, sugars, protein, and certain vitamins and 
minerals in the product. In certain situations, information concerning 
some of these nutrients is not required. For example, the label 
declaration of ``calories from fat'' is not required on products that 
contain less than 0.5 gram of fat per serving. The regulations also 
provide that information concerning stearic acid, polyunsaturated fat, 
monounsaturated fat, potassium, soluble fiber, insoluble fiber, sugar 
alcohol, other carbohydrates, and calories from saturated fat may be 
included voluntarily. When claims related to these nutrients are made, 
or when certain related nutrients are declared, information concerning 
these nutrients is required.
    The regulations require that the nutrient and food component 
quantities on the label of products in the mandatory nutrition labeling 
program be declared in relation to a serving. The regulations also 
require that the declaration of nutrient and food component content be 
on the basis of the product ``as packaged''; in addition, the 
declaration of nutrient and food component content may also be made on 
the basis of ``as consumed,'' provided that preparation and cooking 
instructions are clearly stated. The regulations also prescribe format 
requirements for nutrient information, which include specified headings 
that must be used in the presentation of nutrition labeling 
information.
    The regulations include provisions for Agency monitoring of 
compliance with the mandatory nutrition labeling requirements. FSIS 
conducts a continuous product sampling program to ensure compliance 
with nutrition labeling requirements (see Secs. 317.309(h)(1)-(8) and 
381.409(h)(1)-(8)).
    Voluntary nutrition labeling program. In the preamble to the 
January 6, 1993, final rule, FSIS stated that it would not require 
nutrition labeling for single-ingredient, raw meat and poultry products 
because the nutrient values of these products are not modified through 
various stages of preparation, such as cooking and heat processing. 
Therefore, the Agency believed that consumers had reasonable 
expectations as to the nutritional qualities of these products (58 FR 
637). In the preamble to the proposed rule, FSIS also stated that 
nutrition information for single-ingredient, raw products was available 
to consumers through other means such as the extension service, grocery 
stores, and trade associations (56 FR 60306). For these reasons, 
although the Agency adopted a mandatory nutrition labeling program for 
multi-ingredient products and heat processed products, it chose not to 
do so for single-ingredient, raw meat and poultry products, including 
single-ingredient, raw ground or chopped products. Instead, it 
established guidelines for voluntary nutrition labeling of these 
products (see Secs. 317.345 and 381.445).
    Under the voluntary nutrition labeling program, retailers and 
manufacturers are not required to provide nutrition information for 
single-ingredient, raw meat or poultry products. Instead, retailers and 
manufacturers voluntarily may provide nutrition information on the 
label of these products, or at their point-of-purchase by posting a 
sign or by making the information readily available in brochures, 
notebooks, or leaflet form in close proximity to the food. However, if 
a nutrition claim is made on these materials, all of the requirements 
of the mandatory nutrition labeling program apply.
    If only nutrition information, and not a nutrition claim, is 
supplied on the point-of-purchase materials of single-ingredient, raw 
products, the requirements of the mandatory program apply, but the 
nutrition information may be supplied on an ``as packaged'' or ``as 
consumed basis''; the listing of percent of Daily Value for certain 
nutrients and the footnote explaining that the Daily Values are based 
on a 2,000 calorie diet and that daily values may differ depending on 
calorie needs (see Secs. 317.309(d)(9) and 381.409 (d)(9)) may be 
omitted; and the point-of-purchase materials are not subject to any 
format requirements.
    If, however, a retailer or manufacturer provides nutrition 
information on the label of single-ingredient, raw products, this 
information must be presented in the same format as that prescribed for 
mandatory nutrition labeling of various products. However, for these 
products, unlike products in the mandatory nutrition labeling program, 
the nutrition information may be declared on the basis of either ``as 
consumed'' or ``as packaged.'' If the information is presented on the 
basis of ``as consumed,'' the regulations provide that the methods used 
to cook the product must be specified and should be those which do not 
add nutrients from other ingredients (see Secs. 317.345(d) and 
381.445(d)). Also, unlike products in the mandatory program, the 
declaration of the number of servings per container need not be 
included on the nutrition label.
    The regulations provide that the Agency will not conduct compliance 
sampling and testing of a product subject to the voluntary nutrition 
labeling program that contains nutrition labeling if the nutrition 
labeling is based upon the most current representative data base values 
contained in USDA's National Nutrient Data Bank or in its published 
form, the Agriculture Handbook No. 8 series, and if there are no 
nutrition claims made on the basis of the representative database 
values on the labeling of these products (Secs. 317.309(h)(9), 
317.345(e), 317.345(f), 381.409(h)(9), 381.445(e), and 381.445(f)).
    The Agriculture Handbook No. 8 series is now out of print. The 
current released form of the USDA's National Nutrient Data Bank is the 
USDA Nutrient Database for Standard Reference. USDA's Nutrient Data 
Bank is the Agricultural Research Service's internal system that stores 
information and has features necessary to produce the released 
database. The USDA Nutrient Database for Standard Reference is 
developed and maintained by the Agricultural Research Service and can 
be found on the internet at the

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following address: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.nal.usda.gov/fnic/foodcomp.
    The Agency may conduct sampling and testing for compliance with 
nutrition labeling requirements for single-ingredient, raw meat and 
poultry products if the nutrition information on their labeling is not 
based on the latest values contained in USDA's National Nutrient Data 
Bank or the USDA Nutrient Database for Standard Reference, or if there 
are nutrition claims made on the basis of the representative database 
values, on the labeling of these products.
    Compliance with voluntary nutrition labeling guidelines. FSIS' 
regulations provide that the Agency monitor compliance with its 
voluntary nutrition labeling program guidelines by evaluating the 
participation of retailers in the voluntary program every two years, 
beginning in May 1995, to determine whether significant participation 
of at least 60 percent of all companies evaluated exists (Secs. 317.343 
and 381.443). FSIS stated that it would issue its first report of its 
survey findings on the voluntary program by May 1995, and that it would 
reevaluate every two years after 1995 whether significant participation 
existed in the voluntary nutrition labeling program (56 FR 60306).
    FSIS regulations provide that a food retailer is participating at a 
significant level (1) if the retailer provides nutrition labeling 
information for at least 90 percent of the major cuts of single-
ingredient, raw meat and poultry products it sells; and (2) if the 
nutrition label on these products is consistent in content and format 
with the mandatory program, or if nutrition information is displayed at 
point-of-purchase in an appropriate manner. The regulations provide 
that significant participation by food retailers exists if at least 60 
percent of all companies that are evaluated are participating in 
accordance with the guidelines. The regulations provide that the 
voluntary nutrition labeling program will remain in effect as long as 
there is significant participation in the voluntary program by retail 
stores (Secs. 317.343 and 381.443).
    FSIS contracted with an independent market research contracting 
firm to conduct the retail surveys in 1995, 1996, and 1999. For each of 
these surveys, the firm surveyed a nationally representative sample of 
approximately 2,000 retail stores to obtain the information necessary 
to assess compliance with the guidelines for voluntary nutrition 
labeling of single-ingredient, raw meat and poultry products.
    The first survey to determine participation by retail stores in the 
voluntary nutrition labeling program was conducted in June 1995. At 
that time, the National Retail Tracking Index, Inc., found that 66.5 
percent of the stores surveyed were providing nutrition information on 
90 percent of the major cuts of single-ingredient, raw meat and poultry 
products. Therefore, this survey showed that significant participation 
in the voluntary nutrition labeling program existed. FSIS published a 
notice of availability of the survey results in the January 29, 1996 
Federal Register (61 FR 2790). In this survey, stores were counted as 
participating in the voluntary nutrition labeling program if they used 
point-of-purchase materials developed by the Food Marketing Institute 
(FMI) prior to the 1993 final rule on nutrition labeling of meat and 
poultry products. These materials did not comply entirely with the 
voluntary nutrition labeling program provisions in the 1993 final rule. 
For example, the older materials did not include the required percent 
daily values for certain nutrients. Therefore, the results of this 
survey may overestimate participation in the voluntary nutrition 
labeling program.
    The second survey was conducted in mid-December 1996. FSIS 
conducted it jointly with FDA. For this survey, the two agencies 
contracted with the firm that conducted the 1995 FSIS survey, now named 
Retail Diagnostics, Incorporated (RDI). At this time, RDI found that 
57.7 percent of stores surveyed provided nutrition information for 90 
percent of the major cuts of single-ingredient, raw meat and poultry 
products, in accordance with program guidelines. The third survey was 
conducted in October 1999. At this time, RDI found that 54.8 percent of 
stores surveyed provided nutrition information for 90 percent of the 
major cuts of single-ingredient, raw meat and poultry products, in 
accordance with program guidelines. Therefore, the two most recent 
surveys did not show significant participation in the voluntary 
nutrition labeling program, according to the voluntary nutrition 
labeling program regulations. Reports on the 1996 and 1999 surveys are 
available electronically on the FSIS web page at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fsis.usda.gov.

Nutrient Content Claims

    In addition to establishing the mandatory and voluntary nutrition 
labeling programs, the January 6, 1993, final rule provided definitions 
at Secs. 317.362 and 381.462 for specific nutrient content claims, 
including the terms ``lean'' and ``extra lean.'' The definitions of 
``lean'' and ``extra lean'' provide that these terms may be used on the 
label or in labeling only if the product meets certain criteria (see 
Secs. 317.362(e)(1) and (2) and 381.462(e)(1) and (2)). Meat products 
may be labeled ``lean'' if they contain less than 10 grams of fat, 4.5 
grams or less of saturated fat, and less than 95 milligrams of 
cholesterol per 100 grams of product and per reference amount 
customarily consumed for individual foods. Meat products may be labeled 
``extra lean'' if they contain less than 5 grams of fat, less than 2 
grams of saturated fat, and less than 95 milligrams of cholesterol per 
100 grams of product and per reference amount customarily consumed for 
individual foods. Ground beef and hamburger seldom meet the criteria 
that would allow producers to use the terms ``lean'' or ``extra lean'' 
on the label or in labeling of these products.
    The existing nutrition labeling regulations also provide that the 
term ``____ percent lean'' is a synonym for the term ``____ percent fat 
free,'' and that, in order for either term to be used on the label or 
in labeling of the product, the product must meet the criteria for 
``low fat'' (Secs. 317.362(b)(6) and 381.462(b)(6)). To meet the 
criteria for ``low fat,'' a product must have a reference amount 
customarily consumed greater than 30 grams or greater than 2 
tablespoons and must contain 3 grams of fat or less per reference 
amount customarily consumed for individual foods, or must have a 
reference amount customarily consumed of 30 grams or less or 2 
tablespoons or less and must contain 3 grams or less of fat per 
reference amount customarily consumed and per 50 grams 
(Secs. 317.362(b)(2) and 381.462(b)(2)). Most ground beef and hamburger 
do not qualify as ``low fat.'' Therefore, existing regulations preclude 
the use of the term ``____ percent lean'' on these products.
    On May 24, 1994 (59 FR 26916), FSIS published a proposed rule 
entitled ``Nutrition Labeling of Ground Beef and Hamburger.'' In the 
preamble to the proposal, FSIS explained that the Agency had determined 
that, although the existing regulations precluded producers of ground 
beef and hamburger from using the terms ``lean,'' ``extra lean,'' and 
``____ percent lean,'' these products should be labeled to permit 
consumers to readily identify and differentiate between the varying 
lean to fat ratios in such products. The Agency also stated that 
allowing such labeling would assist consumers in selecting leaner 
versions of these products and would provide an incentive for 
manufacturers to market products lower in fat. Finally, FSIS

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recognized that many producers had been using lean percentages on the 
labeling of ground beef and hamburger products for a significant period 
of time (59 FR 26917).
    Accordingly, FSIS proposed to amend its regulations to permit the 
use of percentage labeling for lean and fat on ground beef and 
hamburger products. Under this proposal, FSIS would have permitted a 
statement of the lean percentage on the labeling of ground beef and 
hamburger if it were contiguous to a statement of the fat percentage. 
The Agency would have allowed this labeling even when the ground beef 
or hamburger did not qualify as ``low fat.'' The Agency proposed to 
allow the use of the statement of lean and fat percentages only if the 
product were accompanied by nutrition information presented on the 
label, or in point-of-purchase materials in close proximity to the 
product. FSIS stated that it would consider expanding the proposed 
percentage labeling to ground meat from other species and to ground 
poultry if information submitted during the comment period demonstrated 
the need and consumer acceptability of these terms for such products or 
that differential treatment of ground beef relative to other ground 
products would inappropriately restrict informed consumer choice (59 FR 
26918).
    The Agency received a total of 2,732 comments on this proposal. 
Fifty-five percent (1,504) of the commenters supported the proposal, 39 
percent (1,063) opposed it, and 6 percent (165) addressed issues 
outside the scope of the proposed rule. Supporters of the proposal 
included trade associations representing food manufacturers and 
retailers, food manufacturers of both meat and poultry products, a 
large number of retailers, and State departments of agriculture. 
Supporters stated that percentage labeling provides useful information 
to consumers, that ``lean labeling'' aids consumers in selecting lower 
fat products, and that percentage labeling has been in use for more 
than 20 years. Opponents included consumer interest groups, health 
professionals and organizations, and consumers. They stated that the 
use of percent lean labeling is inherently misleading to consumers and 
will cause consumers to view ground beef as ``lean'' or ``low fat.''
    Twenty-one of the 1,504 commenters who supported the provisions 
wanted them to also apply to other species or products. These 
commenters stated that allowing percentage labeling for lean and fat 
for other ground meat and poultry products, besides ground beef and 
hamburger, would allow consumers to compare the fat content of beef or 
poultry items and to make informed dietary choices.
    On August 5, 1994, FSIS published a notice of extension of the date 
that it would enforce compliance with the nutrition labeling 
requirements for ground beef and hamburger (59 FR 39941). The Agency 
extended the compliance enforcement date for these products 
indefinitely, pending publication of a final rule on percentage 
labeling for lean and fat on ground beef and hamburger. The Agency has 
not published a final rule concerning percentage labeling of ground 
beef and hamburger. Therefore, producers and retailers continue to use 
the term ``lean'' in percentage labeling on the packages of ground beef 
and hamburger.

Other Nutrition Activities

    In addition to developing this proposed nutrition labeling rule, 
USDA conducts numerous other activities related to nutrition. This 
proposed rule on nutrition labeling is an integral part of USDA's 
efforts to educate consumers concerning nutrition and diets. Since 1980 
USDA and the Department of Health and Human Services (HHS) have jointly 
published the Dietary Guidelines for Americans every five years. The 
Dietary Guidelines provide advice concerning food choices that promote 
health and prevent disease. USDA and HHS released the Dietary 
Guidelines for Americans, 2000, at the National Nutrition Summit on May 
30, 2000, which was jointly sponsored by USDA and HHS. The Dietary 
Guidelines for Americans, 2000, advises consumers to aim for a total 
fat intake of no more than 30 percent of calories (page 30). In 
addition, the Dietary Guidelines for Americans, 2000, includes a chart 
showing the recommended upper limits for grams of saturated fat and 
total fat per day for a range of total calories per day (page 30). The 
nutrition information that FSIS is proposing to require on labels of 
ground or chopped products and on either labels or point-of-purchase 
materials for the major cuts of single-ingredient, raw products would 
include the number of calories and the grams of total fat and saturated 
fat the product contains. The information FSIS is proposing to require 
would, therefore, assist consumers in following the advice in the 
Dietary Guidelines for Americans, 2000.

Proposed Changes

    Nutrition labeling of the major cuts of single-ingredient, raw 
products. The Agency is proposing to require nutrition labeling of the 
major cuts of single-ingredient, raw meat and poultry products, except 
for certain exemptions. For these products, FSIS is proposing to make 
the guidelines currently in place for the voluntary nutrition labeling 
program mandatory. Thus, for all of these products, other than raw 
ground beef and ground pork which are currently classified as major 
cuts, FSIS is proposing that nutrition information be provided on the 
label of these products or at their point-of-purchase. As discussed 
below, at this time, FSIS is not proposing to require nutrition 
information for single-ingredient, raw meat and poultry products that 
are not major cuts and that are not ground or chopped products.
    In the preamble to the final rule on nutrition labeling of meat and 
poultry products, under the discussion of its voluntary nutrition 
labeling program which covered all single-ingredient, raw meat and 
poultry products, FSIS stated that it believed that it was important to 
provide nutrition information to consumers (58 FR 640). FSIS also 
stated that it believed that by allowing for the use of point-of-
purchase materials for single-ingredient, raw meat and poultry 
products, retailers would be able to provide consumers with the 
necessary nutrition information (58 FR 640). FSIS continues to believe 
that nutrition information for these products is important and 
necessary.
    In the two most recent surveys, FSIS found that significant 
participation in the voluntary nutrition labeling program does not 
exist. FSIS found that less than 60 percent of the stores surveyed 
provided nutrition information for 90 percent of the major cuts of 
single-ingredient, raw meat and poultry products. In its proposed and 
final rules on nutrition labeling of meat and poultry products, FSIS 
stated that if it determined, during any evaluation of its voluntary 
guidelines, that significant participation did not exist, it would 
initiate proposed rulemaking to determine whether it would be 
beneficial to require nutrition labeling on single-ingredient, raw meat 
and poultry products (56 FR 60306, 58 FR 640).
    Because the most recent surveys showed that significant 
participation in the voluntary nutrition labeling program does not 
exist, FSIS now believes that this proposed rule is necessary and that 
it would be beneficial to require the labeling of the major cuts of 
single-ingredient, raw meat and poultry products to bear nutrition 
information. FSIS believes that without nutrition information, 
consumers are not able to assess the nutrient content of the major cuts 
and thus cannot make educated

[[Page 4974]]

choices about these products based on nutrition information. FSIS 
believes that the lack of this information on the labeling of the major 
cuts causes the labeling to be misleading. The FMIA and PPIA provide 
that product is misbranded if its labeling is false or misleading in 
any particular (21 U.S.C. 601(n)(1) and 453(h)(1)). Therefore, without 
the nutrition information for the major cuts of single-ingredient, raw 
products that would be provided if significant participation in the 
voluntary program existed, the Agency has tentatively concluded that 
these products would be misbranded under section 1(n) of the FMIA or 
section 4(h) of the PPIA. FSIS requests comments on whether consumers 
are currently able to assess the nutrient content of the major cuts and 
whether consumers are currently able to make educated choices about 
these products based on nutrition information.
    If the guidelines currently in place for the voluntary nutrition 
labeling program are made mandatory, it would ensure that consumers are 
provided with necessary nutrition information concerning the major 
cuts. Therefore, the Agency is proposing to make mandatory for the 
major cuts of single-ingredient, raw meat and poultry products the 
current provisions for the voluntary nutrition labeling program for 
presentation of nutrition information on point-of-purchase materials.
    FSIS intends to make point-of-purchase materials available over the 
Internet free of charge. The point-of-purchase materials reflecting the 
final nutrition labeling regulations that FMI developed show nutrition 
information in charts with columns covering multiple products. FSIS 
requests comments on whether the Agency should develop point-of-
purchase materials that present nutrition information as a compilation 
of individual nutrition facts panels for each product or whether the 
nutrition information on the materials should be presented in charts 
with horizontal or vertical columns to cover multiple products.
    Also, consistent with the existing provisions in the voluntary 
nutrition labeling program, the Agency is proposing to require that if 
nutrition information is provided on the label of individual packages 
of major cuts of single-ingredient, raw products, the current 
requirements of the mandatory nutrition labeling program will apply, 
but the nutrition information on the label may be declared either on 
the basis of ``as consumed'' or ``as packaged.''
    FSIS is proposing to allow nutrition information on the label to be 
declared on the basis of ``as consumed'' without also requiring that 
the information on the label be declared on the basis of ``as 
packaged'' for the major cuts of single-ingredient, raw products 
because, as discussed below, most of these products will not need FSIS 
compliance scrutiny. Also as noted below, nutrition information for 
products under the existing mandatory nutrition labeling program must 
be provided on an ``as packaged'' basis for compliance purposes. 
Consistent with the existing voluntary nutrition labeling program, FSIS 
is proposing that the declaration of the number of servings per 
container need not be included on the nutrition label for the major 
cuts of single-ingredient, raw products. FSIS is not proposing to 
require that the number of servings per container be declared for the 
major cuts of single-ingredient, raw products because all of these 
products are random weight products, and the number of servings is not 
currently required on random weight products (see 
Secs. 317.309(b)(10)(iii) and 381.409(b)(10)(iii)).
    Although FSIS believes that nutrition information on labels of 
individual packages of single-ingredient, raw products is useful, FSIS 
is proposing that the nutrition information for the major cuts of 
single-ingredient, raw products may also be provided on point-of-
purchase materials because, as stated in the 1993 rule, consumers have 
reasonable expectations as to the nutrient content of these products. 
Also, the nutrient content of a given major cut is relatively uniform 
across the market, and these products are not formulated in the manner 
of ground or chopped products. Therefore, FSIS believes it would be 
relatively easy to prepare point-of-purchase materials for the major 
cuts and relatively easy for consumers to find the nutrition 
information for a particular major cut on point-of-purchase materials. 
Although FSIS continues to believe that consumers have reasonable 
expectations as to the nutrient content of these products, FSIS also 
continues to believe that it is important to provide nutrition 
information to consumers, either through labels on packages or point-
of-purchase materials. FSIS requests comment on whether consumers have 
reasonable expectations concerning the nutrient content of the major 
cuts of single-ingredient, raw products and on whether point-of-
purchase materials are appropriate vehicles for conveying nutrition 
information for these products. FSIS specifically requests comment on 
whether it should require that nutrition labeling should be provided 
for these products on their label and, if so, on what basis it would 
require such labeling.
    FSIS regulations provide that in evaluating whether there is 
significant participation in the voluntary nutrition labeling program, 
FSIS will consider only the major cuts of single-ingredient, raw meat 
and poultry products (Secs. 317.343(a) and 381.443(a)). Consistent with 
the regulations, FSIS' voluntary nutrition labeling surveys only 
assessed whether nutrition labeling was provided for the major cuts of 
single-ingredient, raw meat and poultry products.
    Examples of single-ingredient, raw products that are not major cuts 
(and that are not ground or chopped) include pork jowls, pigs feet, 
pork leg, pork shoulder picnic, and beef round rump. For single-
ingredient, raw products that are not ground or chopped and are not 
major cuts, FSIS is not proposing that nutrition information must be 
provided. However, FSIS is proposing that if nutrition information is 
provided, it must be provided according to the existing guidelines for 
the current voluntary nutrition labeling program. Therefore, if 
nutrition information is provided for these products, it would be 
consistent with nutrition information for the major cuts of single-
ingredient, raw products.
    As the next step in the process of evaluating the need for 
nutrition labeling of meat and poultry products, FSIS will examine the 
current state of nutrition labeling for single-ingredient, raw products 
that are not ground or chopped and that are not major cuts. FSIS will 
assess whether adequate nutrition information is being provided for 
these products. Until this assessment is made, FSIS cannot determine 
whether it would be beneficial to require nutrition labeling for 
single-ingredient, raw products that are not ground or chopped and are 
not major cuts. Whether the labeling of these products should be 
required to bear nutrition information would depend on whether adequate 
nutrition information is being provided for them and, if it is not 
being provided, what the effect is of its not being available. If FSIS 
determines that adequate nutrition information is not being provided 
for these products, FSIS will consider whether to propose to require 
nutrition labeling for these products.
    FSIS is proposing to revise the nutrition labeling regulations to 
clarify which provisions apply to nutrition labels on single-
ingredient, raw products that are not ground or chopped, including the 
major cuts, and which provisions apply to point-of-

[[Page 4975]]

purchase materials for these products. FSIS is proposing to revise the 
regulations so that the provisions for nutrition labels for these 
products are in Secs. 317.309 and 381.409, and the provisions for 
point-of-purchase materials for these products are in Secs. 317.345 and 
381.445.
    Nutrition labeling of ground or chopped products. The Agency is 
proposing to add new provisions at Secs. 317.301 and 381.401, in the 
Federal meat and poultry product inspection regulations. In proposed 
Sec. 317.301, FSIS is proposing to require that nutrition labels be 
provided for all ground or chopped (livestock species) and hamburger, 
with or without added seasonings, unless an exemption applies. In 
proposed Sec. 381.401, FSIS is proposing to require that nutrition 
labels be provided for all ground or chopped (kind), with or without 
added seasonings, unless an exemption applies. Products that will have 
to bear nutrition labeling if this proposal is finalized include 
single-ingredient, raw hamburger, ground beef, ground beef patties, 
ground chicken, ground turkey, ground chicken patties, ground pork, and 
ground lamb. In this discussion, these products will be referred to as 
ground or chopped products. Ground or chopped products that are multi-
ingredient products or heat processed products are already required to 
bear nutrition labeling, unless they qualify for an exemption. This 
proposed provision would extend the current mandatory nutrition 
labeling requirements to single-ingredient, raw ground or chopped 
products. The proposed provisions do not address sausages or other 
comminuted products. These products are typically multi-ingredient or 
heat processed products that are already required to bear nutrition 
information.
    As discussed under the ``Background'' heading above, the existing 
regulations include exemptions from nutrition labeling requirements, 
such as an exemption for products produced by small businesses, custom 
slaughtered or prepared products, and certain products that are 
packaged, portioned or processed at retail. As discussed below under 
the ``Exemptions'' heading, most of these exemptions would apply to 
ground or chopped products that qualify for the exemptions. However, 
FSIS is proposing that the current exemptions from nutrition labeling 
for ready-to-eat products packaged or portioned at retail stores and 
similar retail-type establishments and for multi-ingredient products 
processed at retail stores and similar retail-type establishments not 
apply to ground or chopped meat and ground or chopped poultry products, 
unless the retail store or similar retail-type establishment meets the 
requirements of the small business exemption. This issue is discussed 
further under the ``Exemptions'' heading below.
    The terms ``ground'' and ``chopped'' are synonymous (see 
Sec. 319.15). FSIS is proposing to use both terms because both are used 
in FSIS regulations and by industry. In the discussion below, any 
statements made regarding the nutrient values or the production of 
``ground'' products would also apply to ``chopped'' products.
    On June 3, 1997, the Center for Science in the Public Interest 
(CSPI) submitted a petition to FSIS stating that FSIS should require 
complete ``Nutrition Facts'' on ground beef labels that make nutrient 
content claims; should prohibit ``% lean'' claims on ground beef; 
should require ground beef to meet the same definitions of ``lean'' and 
``extra lean'' that apply to other foods; and should require ground 
beef labels to replace ``% lean'' and ``% fat'' claims with the same 
``% less fat'' claims used by other foods. CSPI also submitted 
information illustrating the variations in ground beef labels that 
include information on the lean or fat percentages of the product.
    Consistent with CSPI's petition, the Agency has tentatively 
determined that nutrition information should be required on packages of 
all ground or chopped meat and poultry products, unless an exemption 
applies. FSIS is proposing to require this information even if there 
are no nutrient content claims on the label.
    With regard to the statements in CSPI's petition concerning the use 
of ``% lean,'' ``lean,'' ``extra lean,'' and ``% less fat'' claims on 
ground beef labeling, FSIS is not revising the regulations as the 
petitioner requested. As discussed below, FSIS is proposing to permit a 
statement of lean percentage on the label or in labeling of all ground 
or chopped meat and ground or chopped poultry products that do not meet 
the regulatory definition for ``low fat'' as long as a statement of the 
fat percentage is also provided, because consumers have become 
accustomed to this information, and because FSIS believes that this 
information provides a quick, simple, accurate means of comparing these 
products.
    Unlike other single-ingredient, raw products, producers are able to 
formulate precisely the fat content of ground or chopped products. 
Therefore, in this respect, these products are similar to products in 
the existing mandatory program. The fat content of ground beef products 
can be formulated to range from under 6 percent to 30 percent. Below is 
a table that compares the nutrient values of three ground beef products 
that contain different levels of fat. All values are based on raw 
product.

----------------------------------------------------------------------------------------------------------------
      Nutrient values per 100 g          Ground beef 17% fat      Ground beef 21% fat      Ground beef 27% fat
----------------------------------------------------------------------------------------------------------------
Calories.............................  234....................  264....................  310.
Cholesterol..........................  69 mg..................  75 mg..................  85 mg.
Fatty acids, saturated...............  6.8 g..................  8.3 g..................  10.8 g.
----------------------------------------------------------------------------------------------------------------


    Source:  USDA Nutrient Database for Standard Reference (1985 
data)

    FSIS believes that consumers cannot easily see the fat in ground or 
chopped beef. In ground or chopped beef products, the fat is uniformly 
distributed throughout the product and is not clearly distinguishable 
on the surface of the product. Therefore, consumers cannot estimate the 
level of fat in these products and cannot compare the levels of fat in 
these products to those in other products.
    Fat is not the only factor that contributes to the nutrient 
variability of ground beef products. Producers sometimes use beef from 
advanced meat recovery (AMR) systems and low temperature rendering in 
ground or chopped beef products, which affect the nutrient variability 
of ground beef products. Product derived from low temperature rendering 
of beef tissue that is not fatty tissue, such as fat reduced beef or 
finely textured beef, is considered beef and can be used in ground or 
chopped beef or hamburger and other ground or chopped meat products. 
The regulations currently do not address the use of fat reduced beef or 
finely textured beef. FSIS may address the use of such products derived 
from low temperature rendering in a future rulemaking.

[[Page 4976]]

    An American Meat Institute (AMI) survey found that the use of 
product derived from AMR systems in ground beef was becoming more 
prevalent, although AMI did not obtain specific information concerning 
the volume of product from AMR systems (The American Meat Institute 
Foundation, Relative Ground Beef Contribution to the United States Beef 
Supply (May 1996): 10). This survey also found that producers use 
product such as finely textured beef recovered via technology (a 
product derived from low temperature rendering) in ground beef products 
to achieve specific lean contents (The American Meat Institute 
Foundation, Relative Ground Beef Contribution to the United States Beef 
Supply (May 1996): 11). It should be noted that beef from AMR systems 
is not used at retail, unless the retail establishment is grinding beef 
product produced at a Federal establishment. Ground beef produced at 
retail from a single cut of meat, such as ground chuck or ground round, 
would not typically include beef from AMR systems. However, ground beef 
produced at retail from trimmings produced at a Federal establishment 
could include beef from AMR systems.
    Typically, meat from AMR systems does not comprise more than 10 
percent of ground meat products, including ground beef (R.A. Field, 
``Bone Marrow Measurements for Mechanically Recovered Products from 
Machines that Press Bones,'' Meat Science 51 (1999): 206). Similarly, 
meat from low temperature rendering usually does not comprise more than 
10 percent of ground products, including ground beef. However, because 
beef from AMR systems or low temperature rendering generally has higher 
levels of cholesterol, iron, and calcium than other beef, the use of 
these types of beef in ground beef products can affect the nutrient 
content of these products. The table below shows the percentage fat and 
the levels of iron and calcium per 100 grams of product for regular 
ground beef, for beef from AMR systems, and for product made from 90 
percent regular ground beef and 10 percent beef from AMR systems. For 
regular ground beef and for beef from AMR systems, the table shows 
values from different studies (R.A. Field, ``Bone Marrow Measurements 
for Mechanically Recovered Products from Machines that Press Bones,'' 
Meat Science 51 (1999): 206, 209). FSIS calculated the nutrient values 
for product comprised of 90 percent ground beef and 10 percent AMR 
product based on the values from the studies. FSIS calculated values 
for product made from 90 percent ground beef and 10 percent AMR product 
because, as stated above, typically meat from AMR systems does not 
comprise more than 10 percent of ground meat products. All values shown 
below are based on raw product.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Regular ground beef                                                   Ground beef, 10% AMR
   Nutrient values per 100 grams        (Anderson et al.,     Beef from AMR (Hasiak  Beef from AMR product   product (Hasiak and    Ground beef, 10% AMR
                                              1986)             and Marks, 1997)        (Leising, 1997)             Marks)           product (Leising)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cholesterol........................  85 mg.................  115 mg................  102 mg...............  88 mg................  86.7 mg
Iron...............................  1.7 mg................  2.8 mg................  5.6 mg...............  1.81 mg..............  2.09 mg
Calcium............................  8 mg..................  108 mg................  115 mg...............  18.0 mg..............  18.7 mg
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Even if producers do not use beef from AMR systems or beef derived 
from low temperature rendering, they are able to precisely control the 
amount of fat in the beef that is ground or chopped to create packages 
of ground or chopped beef. A study concerning testing for the fat 
content of ground beef found that, using two testing methods, ground 
beef formulated for a certain fat percentage varied by only 2 
percentage points around the average fat percentage. Although this 
study found some problems concerning blending of ground beef and 
testing for the fat content in ground beef, its results show that the 
product can be and is precisely formulated and within the control of 
the producer (Robert Campbell, ``Ground Beef Testing: Determining Fat 
Content and Distribution,'' Meat and Poultry (October, 1997): 67-69). 
Many ground beef producers have quality control programs to control the 
fat content of their product. These producers conduct regular sampling 
and testing for fat in ground beef products. Thus, producers are able 
to formulate these products to control the amount of fat in them more 
precisely than the fat can be controlled in other cuts. Other single-
ingredient, raw products cannot be formulated in this manner or to this 
degree.
    Although ground beef comprises the majority of ground meat products 
sold at retail, products such as ground lamb and ground pork are also 
available. Similar to ground beef products, these products may contain 
varying amounts of fat and varying nutrient content, which consumers 
cannot visually detect. In addition, ground pork may include product 
from AMR systems or from low temperature rendering, which may affect 
the nutrient content of these products. Therefore, FSIS is proposing to 
require nutrition labeling on these products and other ground or 
chopped meat products. As noted above, meat from AMR systems or low 
temperature rendering typically does not comprise more than 10 percent 
of ground meat products, including ground pork. Product from AMR 
systems or low temperature rendering is generally not used in ground or 
chopped lamb. Because products such as ground pork and ground lamb may 
contain varying amounts of fat and nutrient content, which consumers 
cannot visually detect, and because ground pork may include product 
from AMR systems or low temperature rendering, FSIS is proposing to 
require nutrition labeling on all ground or chopped meat products.
    The fat-to-lean content of ground poultry products does not vary as 
greatly as that of ground beef products; however, the fat content of 
ground poultry can vary depending upon whether the product is ground 
light or dark meat, and whether the product includes poultry skin. As 
with the fat on ground meat products, consumers cannot readily detect 
the fat content of ground poultry products. The table below shows 
values for light and dark turkey meat, with skin and without skin. All 
values are based on raw product. The nutrient content of ground turkey 
would vary depending on which types of meat were used to produce the 
product.

----------------------------------------------------------------------------------------------------------------
                                   Turkey, dark meat   Turkey, dark meat  Turkey, light meat  Turkey, light Meat
  Nutrient values per 100 grams        and skin              only              and skin              only
----------------------------------------------------------------------------------------------------------------
Calories........................  172...............  130...............  165...............  116

[[Page 4977]]


Cholesterol.....................  65 mg.............  62 mg.............  62 mg.............  58 mg
Fatty acids, saturated..........  2.99 g............  1.64 g............  2.19 g............  .53 g
----------------------------------------------------------------------------------------------------------------


    Source: USDA Nutrient Database for Standard Reference (1985 
data)
    Because the characteristics of ground or chopped poultry are 
similar to those of ground or chopped meat, FSIS is also proposing to 
require nutrition labeling on ground or chopped poultry products. The 
Agency is also proposing comparable requirements for ground or chopped 
meat and poultry products because it is committed to equitable 
treatment of meat and poultry products. FSIS has consistently taken the 
position that similar products should be regulated in a similar manner 
to facilitate consumers' ability to make comparisons among these 
products.
    For the reasons discussed above, the Agency has tentatively 
concluded that ground or chopped meat and poultry products that do not 
bear nutrition information would be misbranded under section 1(n)(1) of 
the FMIA and section 4(h)(1) of the PPIA. As noted above, in the 
January 6, 1993 final rule, the Agency did not require nutrition 
labeling on packages of single-ingredient, raw meat and poultry 
products because FSIS believed that consumers had reasonable 
expectations as to the nutritional qualities of such products since 
they are not modified through various stages of preparation, such as 
cooking and heat processing (58 FR 637). FSIS now believes that the 
variation in the fat and nutrient content of different ground or 
chopped products, the formulated nature of these products, and the fact 
that the fat content of these products cannot be readily visually 
assessed makes it difficult for consumers to have a reasonable 
expectation as to the nutritional quality of these products. Further 
consideration of the issues raised in the petition from CSPI brought 
many of these issues to FSIS' attention. If this proposal is adopted, 
the existing mandatory nutrition labeling provisions in Secs. 317.309 
and 381.409 would apply to these products, unless they are subject to 
an exemption.
    Although current labeling on ground beef products often includes 
information concerning the percentage of fat in the product, as noted 
in the CSPI petition, without complete nutrition labeling, consumers 
cannot easily determine the amount of fat per serving of ground beef. 
Also, without complete nutrition labeling, consumers cannot assess how 
much saturated fat, cholesterol, protein, or calories the product 
contains. Furthermore, consumers cannot easily compare fat percentages 
on the labeling of ground beef products with the information concerning 
grams of fat per serving or with the information concerning the percent 
daily values that is found on the labeling of products that are 
currently covered by the mandatory nutrition labeling program.
    The Agency tentatively concludes that information concerning the 
nutritional qualities of ground or chopped meat and poultry products is 
particularly important because these products, especially ground beef, 
are widely consumed. Pertinent nutrition information is integral to 
consumer purchase decisions because use of this information may result 
in prevention of health problems and reduction of health risks for some 
consumers. Additional information about the nutrient values of ground 
or chopped meat and poultry products would enable consumers to make 
informed decisions about including these products in their diets and, 
therefore, will help consumers to construct healthy diets.
    FSIS is proposing to require that nutrition information for ground 
or chopped meat and poultry products appear on the label of these 
products (unless an exemption applies), as is required for other 
products in the current mandatory nutrition labeling program, rather 
than on point-of-purchase materials. Ground or chopped products are 
similar to products in the mandatory nutrition labeling program, which 
requires nutrition information to be on the label of products, in that 
certain parameters, such as their fat content, can be controlled 
precisely to obtain the desired product. In addition, because there are 
numerous formulations of ground or chopped products, it would be 
difficult for producers or retailers to develop point-of-purchase 
materials that would address all the different formulations that exist 
for these products. Furthermore, it would be difficult for consumers to 
find the correct information for a specific ground or chopped product 
on point-of-purchase materials that include information concerning 
numerous formulations of these products. For these reasons, FSIS 
tentatively concludes that nutrition information should be required on 
the label of these products, consistent with the requirements in the 
existing mandatory nutrition labeling program. FSIS requests comments 
concerning whether nutrition information should be required on 
individual packages of ground or chopped product or whether the 
information should be allowed at their point-of-purchase.
    In addition, consistent with requirements for products that fall 
under the existing mandatory nutrition labeling program, FSIS is 
proposing that the declaration of nutrient and food component content 
for ground or chopped products be required on an ``as packaged'' basis. 
The preamble to the final rule explained why products in the mandatory 
nutrition labeling program would be required to be labeled on an ``as 
packaged'' basis: ``There are varieties of cooking methods that affect 
the nutrient values of food products differently. Therefore, there is 
no method to assure the accuracy or measure compliance of the nutrient 
values of food labeled on an `as consumed' basis.'' (58 FR 648). These 
reasons for requiring nutrition information on an ``as packaged'' basis 
for products in the current mandatory nutrition labeling program also 
are the basis for requiring that ground or chopped products be required 
to be labeled on an ``as packaged'' basis. Whether or not the fat is 
drained off during the cooking of ground or chopped products would 
affect the nutrient values of ground or chopped products. As discussed 
below, ground or chopped products will be subject to FSIS compliance. 
Therefore, FSIS tentatively concludes that it is necessary to require 
that nutrition information be presented on an ``as packaged'' basis for 
ground or chopped products in order to assure the accuracy of nutrient 
values and to measure compliance of the nutrient values of these 
products. FSIS requests comment on whether it would be difficult for 
producers to comply with this requirement.
    However, consistent with the provisions of the existing mandatory 
program, FSIS is proposing that nutrition information for ground or 
chopped products may be presented on an ``as consumed'' basis, in 
addition to the required ``as packaged'' basis, provided that 
preparation and cooking instructions are clearly stated. FSIS is 
proposing to allow nutrition

[[Page 4978]]

information on as ``as consumed'' basis, in addition to the required 
``as packaged basis,'' because FSIS believes this is useful information 
for consumers.
    FSIS requests comments on whether all Federal establishments and 
retail stores are able to control the fat and nutrient content of 
ground or chopped meat and poultry products. FSIS also requests comment 
on the practices of retail stores that grind or chop meat and poultry. 
FSIS is interested in whether retail stores that grind or chop product 
mix trimmings from one Federal establishment with trimmings from other 
Federal establishments. In addition, FSIS is interested in data on the 
extent to which product from AMR systems or product from low 
temperature rendering is used in ground or chopped products.
    FSIS requests comments concerning whether consumers have reasonable 
expectations as to the nutritional quality of ground or chopped 
product, whether consumers know which ground or chopped products are 
lowest in fat, whether consumers understand that the fat content of 
ground or chopped product can affect other nutrients, whether consumers 
can see the fat in ground or chopped meat and poultry products, and 
whether consumers can make comparisons among ground or chopped products 
and other products.

Exemptions

    Under Secs. 317.400(a)(1) and 381.500(a)(1), food products produced 
by small businesses are exempted from mandatory nutrition labeling if 
the product labels bear no nutrition claims or nutrition information. 
The regulations provide that a small business is any single-plant 
facility or multi-plant company or firm that employs fewer than 500 
people and, as of July 1996, that produces 100,000 pounds or less 
annually of the product that qualifies the establishment for the 
exemption from mandatory nutrition labeling. The Agency stated in the 
preamble to the January 6, 1993, final rule, that it would exempt small 
businesses from mandatory nutrition labeling requirements because these 
requirements would create undue economic hardship for small businesses 
and would create disincentives for these small businesses to develop 
more nutritious food products (58 FR 638).
    For the reasons stated in the January 6, 1993 final rule, FSIS 
continues to believe that small businesses should be exempt from the 
mandatory nutrition labeling requirements proposed for ground or 
chopped meat and ground or chopped poultry products. Therefore, under 
this proposal, ground or chopped products produced by establishments 
that qualify for the small business exemption would be exempt from the 
proposed nutrition labeling requirements.
    As discussed below, a significant amount of ground beef is 
processed at retail. Therefore, FSIS is proposing to revise the 
regulations to make clear that a single retail store or multi-retail 
store operation could qualify for the small business exemption. To 
qualify for this exemption, the retail facility must either be a single 
retail store that employs 500 or fewer people or a multi-retail store 
operation that employs 500 or fewer people. In addition, to qualify for 
the exemption, the retail establishment could produce no more than 
100,000 pounds per year of the product that qualifies the establishment 
for an exemption. Consistent with existing regulations, the 
qualification of a multi-retail store operation for an exemption from 
nutrition labeling would be based upon its total annual production of 
the product for all of its stores that qualifies the operation for the 
exemption and the total number of employees for all of its stores (see 
58 FR 638 for guidance on existing regulations).
    As under current regulations, for the purposes of the small 
business exemption, a food product is a formulation, not including 
distinct flavors which do not significantly alter the nutritional 
profile of the product, sold in any size package in commerce. 
Therefore, ground or chopped products formulated to have different 
levels of fat would be considered different food products for purposes 
of the small business exemption. For example, if a multi-retail store 
operation employed 500 or fewer people in total and produced, in total 
among all of its stores, 70,000 pounds of ground beef that is 10 
percent fat and 60,000 pounds of ground beef that is 20 percent fat 
annually, the multi-retail store operation would not be required to 
include nutrition information on the label of these specific products 
if the labels for these products bore no nutrition claims or nutrition 
information. However, for example, if a multi-retail store operation 
employed in total 500 or fewer employees and produced 130,000 pounds of 
10 percent fat ground beef annually in total among all of its stores, 
it would not be exempt from nutrition labeling requirements on the 
basis of the ``small business exemption.'' FSIS is interested in 
comments on whether the exemption proposed is appropriate for purposes 
of ground or chopped products produced at retail establishments.
    FSIS does not believe that the reasons that necessitated the 
establishment of the small business exemption, as explained in the 
January 6, 1993 final rule, are applicable to the major cuts of single-
ingredient, raw meat and poultry products produced by small businesses. 
For these products, FSIS is proposing that nutrition information may be 
provided on labels or alternatively at their point-of-purchase. FSIS 
intends to make point-of-purchase materials available over the Internet 
free of charge; therefore, the proposed nutrition labeling requirement 
for major cuts of single-ingredient, raw products should not impose an 
economic hardship for small businesses, including those that are retail 
stores. FSIS is proposing to revise Secs. 317.400(a)(1) and 
381.500(a)(1) to provide that the small business exemption would not 
apply to the major cuts of single-ingredient, raw products.
    Under existing Secs. 317.400(a)(7) and 381.500(a)(7), retail stores 
and similar retail-type establishments are exempted from nutrition 
labeling requirements for multi-ingredient products processed at retail 
establishments and ready-to-eat products packaged or portioned at 
retail establishments (which would include ready-to-eat and multi-
ingredient ground or chopped products) if the products bear no 
nutrition claims or nutrition information. As stated in the preamble to 
the January 6, 1993 final rule, FSIS exempted retail establishments 
from mandatory nutrition labeling requirements for these products 
because the Agency determined that it would be impractical to enforce 
nutrition labeling requirements on these products prepared or served at 
retail, and because the Agency concluded, based on a review of National 
Food Consumption Survey (NFCS) data, that the average person's diet 
consisted of an insignificant proportion of ready-to-eat retail 
packaged products or retail processed products (58 FR 639).
    Most ground poultry is processed and packaged outside retail 
establishments. However, most ground beef is ground and packaged at 
retail. An AMI report states that retail survey respondents reported 
that an average 18.5 percent of their ground beef sales was from 
product arriving in a finely ground state, ready to sell or ready for 
repackaging at retail. Retail stores or distribution centers ground or 
re-ground 81.3 percent of ground beef sold (The American Meat Institute 
Foundation, Relative Ground Beef Contribution to the United States Beef 
Supply (May 1996): 7).
    As noted above, in the preamble to the January 6, 1993, final rule, 
the

[[Page 4979]]

Agency concluded that the average person's diet consists of an 
insignificant portion of ready-to-eat retail packaged products or 
retail processed products. Consumers who purchase ground beef likely 
consume a significant amount of ground beef processed at retail. 
Therefore, there may be a significant amount of ground beef products 
that are ready-to-eat retail packaged products or retail processed 
products.
    As noted above, in the January 6, 1993 final rule, FSIS also 
exempted retail establishments from mandatory nutrition labeling partly 
because the Agency determined that it would be impractical to enforce 
nutrition labeling requirements on products prepared or served at 
retail. The Agency no longer believes enforcement of nutrition labeling 
requirements at retail stores to be impractical because FSIS is already 
conducting testing for Escherichia coli O157:H7 at retail.
    Because a significant amount of ground beef is processed at retail, 
the Agency believes that there may be a significant amount of multi-
ingredient ground beef retail processed products or ready-to-eat retail 
packaged products. FSIS also believes that enforcement of nutrition 
labeling at retail would not be impractical. Further, FSIS has 
tentatively concluded that ground or chopped products that do not 
include nutrition information would be misbranded for the reasons 
stated above. Therefore, the Agency is proposing that the current 
exemptions from nutrition labeling for ready-to-eat products packaged 
or portioned at retail stores and similar retail-type establishments 
and multi-ingredient products processed at retail stores and similar 
retail-type establishments not apply to ground or chopped meat and 
ground or chopped poultry products, unless the retail store or similar 
retail-type establishment meets the requirements of the small business 
exemption. FSIS requests comments and data on the volume of ground or 
chopped products that are multi-ingredient retail processed products or 
ready-to-eat retail packaged products.
    FSIS is also proposing to revise the current retail exemptions 
discussed above to make clear that if a retail establishment qualifies 
for the small business exemption discussed above, ground or chopped 
ready-to-eat products packaged or portioned at retail and ground or 
chopped multi-ingredient products processed at retail would be exempt 
from nutrition labeling requirements. Although most ground poultry is 
processed and packaged outside retail establishments, FSIS believes it 
is important to propose consistent requirements for all ground or 
chopped products. Therefore, for all ground or chopped products, 
including ground poultry, these exemptions would not apply, unless the 
retail store or similar retail-type establishment meets the 
requirements of the small business exemption.
    The exemptions for ready-to-eat products packaged and portioned at 
retail stores and for multi-ingredient products processed at retail 
stores would not apply to the major cuts of single-ingredient, raw 
products because they are not ready-to-eat or multi-ingredient 
products.
    As discussed above, in addition to the small business and retail 
exemptions, existing Secs. 317.400 and 381.500 provide other exemptions 
from nutrition labeling requirements. These exemptions include products 
intended for further processing, products not for sale to consumers, 
products in small packages that are individually wrapped packages of 
less than \1/2\ ounce net weight, custom slaughtered or prepared 
products, and products intended for export. To qualify for the first 
three exemptions, the product's label cannot bear nutrition information 
or a nutrition claim. In the preamble to the January 6, 1993, final 
rule, FSIS explained that it was providing an exemption for products 
intended for further processing and products not for sale to consumers 
because consumers do not see the nutrition information on products used 
for further processing or products that are not for sale to consumers. 
The Agency also explained that it would exempt individually wrapped 
packages of less than \1/2\ ounce net weight, provided no nutrition 
claim or nutrition information was made on the label, because these 
products are an insignificant part of the diet. With regard to the 
custom exemption, the Agency explained that an exemption should apply 
because these custom services are performed solely for individuals. 
Finally, the Agency explained that products intended for export should 
be exempt because these products are labeled according to the 
requirements of the country where the product is to be exported (58 FR 
639). The Agency has tentatively determined that the bases for these 
exemptions, as explained in the January 6, 1993 final rule, are valid 
as applied to nutrition labeling for ground or chopped products and for 
major cuts of single-ingredient, raw products. Therefore, under this 
proposal, any ground or chopped product or major cut of single-
ingredient, raw product that qualifies for any of these exemptions will 
continue to be exempt even if the proposed nutrition labeling 
requirements are adopted.
    Under current regulations, products in packages that have a total 
surface area available to bear labeling of less than 12 square inches 
are exempt from nutrition labeling, provided the product's labeling 
includes no nutrition claims or nutrition information and provided that 
an address or telephone number that a consumer can use to obtain the 
required information is included on the label. FSIS allowed for 
nutrition information to be provided by alternative means for products 
of this size in order to incorporate sufficient flexibility in the 
regulations (58 FR 47625). For ground or chopped products, FSIS 
believes it is necessary to provide this flexibility for products in 
packages that have a total surface area available to bear labeling of 
less than 12 square inches, provided that the labels for these products 
bear no nutrition claims or nutrition information. However, because 
nutrition information for the major cuts of single-ingredient, raw meat 
and poultry products may be provided on point-of-purchase materials, 
FSIS is proposing that the provisions for providing nutrition labeling 
by alternate means for products in packages that have a total surface 
area available to bear labeling of less than 12 square inches would not 
apply to the major cuts of single-ingredient, raw meat and poultry 
products.
    As stated in the existing regulations, restaurant menus generally 
do not constitute labeling or fall within the scope of these 
regulations. Likewise, restaurant menus that include ground or chopped 
products generally do not constitute nutrition labeling or fall within 
the scope of these regulations. Similarly, although a restaurant menu 
would most likely not include a major cut of single-ingredient, raw 
product, if it did, the menu would not fall within the scope of these 
regulations.
    Finally, the current regulations provide that foods represented or 
purported to be specifically for infants and children less than 4 years 
of age must not include certain nutrient content declarations, because 
infants and children less than 4 years of age have different nutrition 
needs than adults and children older than 4 years of age. Under this 
proposal, any ground or chopped product or major cut of single-
ingredient raw product represented or purported to be specifically for 
infants and children less than 4 years of age would be required to meet 
these same requirements.
    FSIS requests comments on whether its proposed revisions to the 
nutrition labeling exemptions are appropriate and

[[Page 4980]]

necessary for ground or chopped products and for the major cuts of 
single-ingredient, raw products.

Enforcement and Compliance

    Ground or chopped products. FSIS conducts a continuous sampling 
program of products that fall under the mandatory nutrition labeling 
program. If the proposal to mandate nutrition labeling of ground or 
chopped meat and ground or chopped poultry products is adopted, the 
procedures set forth for product sampling and nutrient analysis in 
Secs. 317.309(h)(1)-(8) and 381.409(h)(1)-(8) will be applicable to 
ground or chopped meat and to ground or chopped poultry products, 
respectively. Under this proposal, the Agency will sample and conduct 
nutrient analysis of ground or chopped products to verify compliance 
with nutrition labeling requirements, even if nutrition labeling on 
these products is based on the most current representative data base 
values contained in USDA's National Nutrient Data Bank or the USDA 
Nutrient Database for Standard Reference and there are no claims on the 
labeling. Therefore, if these proposed provisions for ground or chopped 
meat and poultry products are adopted, the Agency will treat these 
products as it treats all other products for which regulations already 
require nutrition labels on their package.
    FSIS is proposing that ground or chopped products be subject to 
compliance even if nutrition labeling on these products is based on the 
most current representative data base values contained in USDA's 
National Nutrient Data Bank or the USDA Nutrient Database for Standard 
Reference because the fat content of different ground or chopped 
products can vary significantly, depending upon the level of fat in the 
product being ground and depending on whether product from advanced 
meat recovery systems is used. Additionally, at this time, there are a 
limited number of ground or chopped products in the database (e.g., 
ground beef, 17% fat, 21% fat, and 27% fat).
    Further, FSIS program employees cannot visually assess whether 
nutrition information on the label of ground or chopped products 
accurately reflects the labeled products' contents because, in most 
cases, it is not possible to visually assess the level of fat in a 
ground product. For example, FSIS program employees cannot visually 
determine whether product that is labeled 17 percent fat ground beef is 
actually 17 percent fat ground beef as opposed to 27 percent fat (or 
another percentage of fat) ground beef. Therefore, even if the retailer 
or other producer uses information from the USDA database to label 
these products, FSIS will need to conduct compliance sampling and 
nutrient analysis to ensure that the information on the label 
accurately reflects the nutrient content of the labeled products.
    The Agency is also proposing to revise Secs. 317.345(e) and 
381.445(e) so that they refer to USDA's National Nutrient Data Bank and 
its released form, the USDA Nutrient Database for Standard Reference, 
and to remove current references to the Agriculture Handbook No. 8 
series, because this handbook series is now out of print.
    For the nutrition labeling of some ground or chopped meat or ground 
or chopped poultry, nutrient data may be immediately available through 
the USDA Nutrient Database for Standard Reference (e.g., ground beef 
with 17 percent fat, ground beef with 21 percent fat, and ground beef 
with 27 percent fat). Private databases may be available to assess the 
nutrient content of other products. In addition, producers are able to 
provide the nutrition information for many products produced to meet 
purchase specifications. Because producers know the different cuts of 
meat that go into ground or chopped product, they have the information 
necessary to determine the nutrient content of the products. FSIS 
believes that if they need to conduct nutrient analysis, the analysis 
should not impose an excessive burden. FSIS will develop a list of 
published sources of information concerning the nutrient content of 
ground or chopped products, so that industry could obtain available 
literature from local libraries. This information would facilitate the 
development of nutrition labels for ground or chopped products. FSIS 
requests comments and supporting data on the costs that Federal and 
retail establishments would incur for conducting nutrient analysis of 
ground or chopped products.
    For ground or chopped products that are nutritionally labeled at 
official establishments, FSIS program employees will collect samples 
for nutrient analysis at official establishments, consistent with the 
Agency's existing sampling program of products that fall under the 
mandatory nutrition labeling program. For ground or chopped products 
that are produced and nutritionally labeled at retail, it is likely 
that FSIS program employees will collect samples for nutrient analysis 
while they are conducting other program activities at retail stores. 
When collecting samples for nutrient analysis, FSIS will not typically 
collect samples of the same product from both Federal establishments 
and retail establishments, unless circumstances warrant sampling the 
same product at both locations. In general, if a product from a Federal 
establishment is further processed at retail, FSIS would only collect 
samples of that product at retail, where it would be packaged for sale 
to consumers. FSIS can distinguish between product packaged at retail 
versus product packaged at a Federal establishment.
    Major cuts of single-ingredient, raw products. If nutrition 
labeling of the major cuts of single-ingredient, raw products (other 
than ground beef or ground pork) is based on USDA's National Nutrient 
Data Bank or the USDA Nutrient Database for Standard Reference, and 
there are no nutrition claims on the labeling, FSIS will not sample and 
conduct a nutrient analysis of these products. The Agency's sampling 
and testing policy for these products will be consistent with its 
policy under the current voluntary nutrition labeling program for these 
products.
    For the major cuts of single-ingredient, raw products, FSIS 
personnel can visually identify the particular cut. If the nutrition 
information for these products is based on USDA's National Nutrient 
Data Bank or the USDA Nutrient Database for Standard Reference, and 
there are no nutrition claims on the labeling, it is not necessary for 
FSIS to verify the accuracy of this data because it is USDA data. If 
the nutrition information is based on USDA data, and there are no 
nutrition claims, FSIS program employees would only have to verify that 
the data presented accurately pertains to a particular major cut of 
single-ingredient, raw product. Therefore, FSIS does not need to 
conduct nutrient analysis for these products.
    If the nutrition information on the label or at the point-of-
purchase of major cuts of single-ingredient, raw products is based on 
databases other than the above referenced USDA ones or other data, or 
if there are nutrition claims on the labeling, these products would be 
subject to FSIS compliance analysis. Most nutrition information for the 
major cuts of single-ingredient, raw products is based on USDA data 
and, typically, no nutrition claims are made on the labeling of these 
products. Therefore, these products are and would generally continue to 
be exempt from the FSIS nutrition labeling compliance verification 
program.
    It is likely that FSIS program employees will verify that nutrition 
information is provided for the major

[[Page 4981]]

cuts of single-ingredient, raw products, either on their labels or at 
their point-of-purchase, at retail stores while they are conducting 
other program activities at retail. If nutrition information on the 
point-of-purchase materials or labels for these products is not based 
on USDA's National Nutrient Data Bank or the USDA Nutrient Database for 
Standard Reference, or if there are nutrition claims on the labeling, 
FSIS program employees may collect samples of the major cuts from 
retail stores for nutrient analysis. Similarly, if major cuts are 
nutritionally labeled at official establishments and the nutrition 
information on the label is not based on USDA's National Nutrient Data 
Bank or the USDA Nutrient Database for Standard Reference, or if there 
are nutrition claims on the labeling, FSIS program employees may 
collect samples of these products from the official establishment for 
nutrient analysis.

Percentage Labeling

    FSIS is withdrawing its proposed rule of May 24, 1994 (59 FR 
26916), discussed above, which sought to amend the regulations by 
permitting percentage labeling for lean and fat on ground beef and 
hamburger, when the product did not meet the regulatory criteria 
established for ``low fat,'' if the product had nutrition information 
on its labeling or in point-of-purchase materials that were in close 
proximity to the product. FSIS is withdrawing this proposal and 
proposing revised percentage labeling requirements in this rule. In 
this proposal, FSIS is expanding the categories of ground or chopped 
products that can have lean percentage labeling.
    FSIS is proposing to permit a statement of lean percentage on the 
label or in labeling of ground or chopped meat and poultry products 
that do not meet the regulatory criteria for ``low fat.'' The Agency is 
proposing to do so because many consumers have become accustomed to 
this labeling on ground beef products, and because FSIS believes this 
labeling provides a quick, simple, accurate means of comparing all 
ground or chopped meat and poultry products. The proposed regulatory 
language requires that a statement of fat percentage be contiguous to, 
in lettering of the same color, size and type as, and on the same color 
background as, the statement of lean percentage. The Agency is 
proposing these requirements concerning size, type, and color to ensure 
that the statement of the fat percentage is as clear and readily 
observable as the statement of the lean percentage.
    FSIS requests comments on whether percent fat/percent lean 
information provides a quick, simple, accurate means of comparing all 
ground or chopped meat and poultry products. Also, FSIS is specifically 
requesting comments concerning whether its proposed percent fat/percent 
lean labeling provisions for ground or chopped meat and ground or 
chopped poultry products that do not meet the regulatory criteria for 
``low fat'' would be misleading in any way. FDA's regulations do not 
provide for the nutrient content claim, ``X percent lean.'' Similarly, 
FDA does not allow a statement of ``percent fat/percent lean'' on the 
products it regulates. FSIS requests comment on whether these 
discrepancies between FDA's and FSIS' regulations will cause confusion 
among consumers. Finally, FSIS is not requiring the statement of fat 
percentage to precede the statement of lean percentage but will allow 
the statements to appear in either order. FSIS requests comment on 
whether consumers are more likely to read and understand the statement 
of fat percentage when it precedes the statement of lean percentage 
than when it follows the statement of lean percentage.

Executive Order 12866--Preliminary Analysis

    This action has been reviewed for compliance with Executive Order 
12866. As this action is determined ``significant'' for purposes of 
Executive Order 12866, the Office of Management and Budget (OMB) has 
reviewed it.

Need for the Rule

    During the 1996 nutrition labeling survey, RDI found 57.7 percent 
of stores surveyed provided nutrition information for 90 percent of the 
major cuts of single-ingredient, raw meat and poultry products, in 
accordance with program guidelines. In the 1999 nutrition labeling 
survey, RDI found that 54.8 percent of stores surveyed provided 
nutrition information for 90 percent of the major cuts of single-
ingredient, raw meat and poultry products, in accordance with program 
guidelines. Therefore, the most recent surveys did not show significant 
participation in the voluntary nutrition labeling program as defined in 
the regulations. Without significant participation, the Agency has 
tentatively concluded that a lack of consistent and complete nutrition 
information for the major cuts of single-ingredient, raw products 
exists. FSIS has also tentatively concluded that producers' ability to 
control the formulation of single-ingredient, raw ground or chopped 
products results in variations across these products that may be 
difficult for consumers to detect. Without nutrition information, FSIS 
believes that these products would be misbranded under section 1(n) of 
the FMIA or section 4(h) of the PPIA and that further action is 
necessary in order to provide consumers with adequate nutrition 
information that is consistent with the provisions of the 1993 final 
nutrition labeling rule.

Baseline

    In the analysis below, FSIS assumes that the level of voluntary 
labeling, absent any Federal action, would remain at the current level. 
The 1999 RDI nutrition labeling survey found that 54.8 percent of the 
stores surveyed provided nutrition information for 90 percent of the 
major cuts of single-ingredient, raw meat and poultry products, in 
accordance with program guidelines. As there has been little change in 
the level of compliance over the last several years (see discussion of 
previous surveys above), FSIS believes that it is appropriate to assume 
that this level of participation in the voluntary nutrition labeling 
program would not change unless the regulations are revised.
    In the analysis below, FSIS also assumes that 80 percent of the 
retail establishments and processors have made investments in the 
equipment necessary to print, stamp, or affix nutrition labels on 
products. This assumption is based on the results of the 1999 RDI safe 
handling labeling compliance survey. This survey revealed that 96.7 
percent of large chains, 90.5 percent of large independent retailers, 
and 84.1 percent of medium/small independents had already complied with 
the Mandatory Safe Handling Statements on Labeling of Raw Meat and 
Poultry Products final rule. FSIS used the 80 percent assumption in 
order to be conservative and not overestimate the percentage of 
processors and retailers that have already invested in the necessary 
equipment. Because the equipment needed to print, stamp, or affix 
nutrition labels is similar to the equipment used to print, stamp, or 
affix labels to meet the ``safe handling'' rule's requirements, FSIS 
assumes that 80 percent of establishments would not have to install new 
machines for stamping, printing, or affixing nutrition labels for 
ground or chopped products. FSIS is assuming that the same percentage 
of processors have invested in this equipment as retailers. Again, this 
is a conservative assumption. FSIS requests comments concerning whether 
the 80 percent

[[Page 4982]]

estimate is appropriate for both processors and retailers.
    To determine how many entities would be affected by this 
rulemaking, the Agency used a combination of FSIS developed databases 
and industry sources. Table 1 indicates that in 1999, 63 establishments 
produced ground poultry and 2,426 establishments produced ground meat. 
FSIS developed this data on establishments from its Enhanced Facilities 
Database (EFD). This source does not provide separate data for ground 
pork, lamb and beef. The number of establishments producing ground pork 
or lamb is, however, likely to be very small based on information from 
the AMI survey discussed below in the preliminary cost analysis. One 
plant that produced either meat or poultry and did not have employment 
size specification is excluded from Table 1.

 Table 1.--Size Distribution of Meat and Poultry HACCP Plants Producing
                             Ground Products
------------------------------------------------------------------------
                                          Poultry      Meat      Total
------------------------------------------------------------------------
Very Small.............................         10      1,470      1,480
Small..................................         23        843        866
Large..................................         28         68         96
Missing Values.........................          2         45         47
                                        --------------------------------
  Total................................         63      2,426     2,489
------------------------------------------------------------------------
Note: Very small=9 or less employees; small=10 to 499 employees;
  large=500 or more employees.

    FSIS believes that a significant amount of ground beef is processed 
at retail. Table 2 shows the number of retail stores in 1999. Most of 
these stores grind beef. However, FSIS does not have specific data 
concerning the levels of ground beef ground at retail or on the size of 
retail stores that process ground beef. FSIS researched Census data for 
this information, but specific information related to retail 
establishments processing ground or chopped product was unavailable. 
Table 2 reports data from FMI. FSIS combined the first two categories 
of supermarkets with sales in excess of $2 million per year to compare 
their share with ``other stores'' with sales of less than $2 million 
per year. In 1999, there were 127,000 retail grocery stores.

             Table 2.--Number of Retail Grocery Stores, 1999
------------------------------------------------------------------------
                                                    1999      1999 % of
                                                   number       total
------------------------------------------------------------------------
Total.........................................      127,000          100
Supermarket Chains & Independent..............       31,500           25
Other Stores..................................       37,200           29
Convenience Stores............................       57,500           45
Wholesale Clubs...............................          800         0.6
------------------------------------------------------------------------
Note: ``Supermarkets'' are defined to have sales of $2 million or more
  per year. ``Other Stores'' are defined to have sales of under $2
  million.


    Source: FMI Information Service, Progressive Grocer, 67th Annual 
Report of the Grocery Industry. April 2000, p.20.
    With respect to consumers, FSIS assumes that without further 
action, they would have access to the current level of labeling 
information and continue with their current dietary habits. The 1999 
RDI survey estimated that nutrition labeling, in accordance with the 
program guidelines, for the major cuts of single-ingredient, raw meat 
and poultry products was available to 62.8 percent of shoppers. This 
estimate was based on the sales volume of the stores surveyed. 
Consistent with the Agency's assumption about compliance among retail 
stores, FSIS assumes that this level of available nutrition 
information, in accordance with program guidelines, would not change 
without further regulatory action.
    FSIS used data from USDA's Continuing Survey of Food Intake by 
Individuals (CSFII), and the associated Diet and Health Knowledge 
Survey (DHKS) to establish a baseline for fat, saturated fat, and 
cholesterol intake. The CSFII collects data on food intakes by 
individuals. Most recently, USDA conducted three separate one-year 
surveys for 1994-96. These surveys recorded two nonconsecutive days of 
food consumption, and collected information on what and how much 
individuals ate, and where the food was obtained. This information was 
used to develop estimates of nutrient intake for each individual 
respondent. The DHKS gathered data on consumers' knowledge of issues 
related to diet and heath, and contained several questions relating to 
the use of nutrition information labels and nutrition information for 
food products. Linking information from the two surveys allowed FSIS to 
correlate use of nutrition information from the DHKS with nutrient 
intake data from the CSFII. The Agency focused here on two key 
questions pertaining to nutrition information use on all food products 
and on meat and poultry in particular:
    Q: When you buy foods, do you use the nutrition panel that tells 
the amount of calories, protein, fat, and such [e.g., sodium, total 
carbohydrate] in the serving of a food: Often (always), sometimes, 
rarely, or never? (Question 16-c, DKHS)
    Q: When you buy raw meat, poultry, or fish, do you look for 
nutrition information: Often (always), sometimes, rarely, or never? 
(Question 17-I, DHKS).
    Using data from the CSFII and the DHKS, FSIS estimated rates of 
nutrition information usage, based on these two questions. The results 
are presented in Table 3. Note that rates of label usage are uniformly 
higher for women than for men, and that rates of nutrition label usage 
are higher for food products as a whole than for raw meat, poultry and 
fish products.

                                                    Table 3.--Consumer Usage of Nutrition Information
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Often               Sometimes           Rarely/never           Do not buy
                                                                 ---------------------------------------------------------------------------------------
                                                                     Men       Women       Men       Women       Men       Women       Men       Women
--------------------------------------------------------------------------------------------------------------------------------------------------------
Use Nutrition Facts Panel.......................................       26.7       41.7       25.6       32.6       47.7       25.6        n/a        N/A
Look for Nutrition Information on Raw Meat, Poultry, or Fish....       16.9       22.1       18.2       18.0       62.7       57.9        2.2       2.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Percent of respondents, based on 3 year weighted averages, 1994-1996.

    To establish a baseline of Intake of Fat, Saturated Fat, and 
Cholesterol, FSIS used the same data sources to estimate dietary intake 
of fat, saturated fat, and cholesterol, along with the percentage of 
calories from fat and saturated fat. The CSFII contains information on 
the intake of these food components, based on the food consumption 
reported by survey respondents.
    Tables 4 and 5 present the estimated intake of fat, saturated fat, 
and

[[Page 4983]]

cholesterol from the CSFII, broken down by types of nutrition 
information usage reported in the DHKS.

                Table 4.--Dietary Intake of Fat, Saturated Fat, by Usage of Nutrition Facts Panel
----------------------------------------------------------------------------------------------------------------
                                                                                          Rarely/
                                                                 Often      Sometimes      never       Average
----------------------------------------------------------------------------------------------------------------
Men:
    Total Fat...............................................        83.13        92.52        98.14        92.51
    Saturated Fat...........................................        26.93        31.43        33.67        31.12
    Cholesterol.............................................       293.39       327.77       353.97       339.07
Women:
    Total Fat...............................................        55.95        62.78        63.98        60.16
    Saturated Fat...........................................       18. 04        20.77        21.39        19.71
    Cholesterol.............................................       196.60       216.84       230.03      210.53
----------------------------------------------------------------------------------------------------------------
Note: Fat intake in grams, cholesterol in milligrams.


 Table 5.--Dietary Intake of Fat, Saturated Fat, by Usage of Nutrition Information on Raw Meat, Poultry, or Fish
----------------------------------------------------------------------------------------------------------------
                                                                             Rarely/
                                                    Often      Sometimes      never      Do not buy    Average
----------------------------------------------------------------------------------------------------------------
Men:
    Total Fat..................................        81.64        92.49        96.09        74.48        92.51
    Saturated Fat..............................        27.20        31.09        32.44        24.02        31.12
    Cholesterol................................       311.81       321.49       355.14       236.83       339.07
Women:
    Total Fat..................................        53.90        61.70        62.18        57.23        60.16
    Saturated Fat..............................        17.39        20.60        20.41        17.27        19.71
    Cholesterol................................       194.32       219.27       216.55       135.89      210.53
----------------------------------------------------------------------------------------------------------------
Note: Fat intake in grams, cholesterol in milligrams.

    The estimated intake of fat and saturated fat can also be expressed 
as the percentage of calories from fat. This conversion is done with 
the following formula:

Percentage Calories from Fat = 900*fat/energy,

Where energy is total caloric intake (kilocalories), as measured by the 
CSFII. Tables 6 and 7 show the percentage of calories from fat (and 
total cholesterol) broken down by label and nutrition information 
usage:

       Table 6.--Percentage of Calories From Fat and Total Cholesterol, by Usage of Nutrition Facts Panel
----------------------------------------------------------------------------------------------------------------
                                                                                          Rarely/
                                                                 Often      Sometimes      never       Average
----------------------------------------------------------------------------------------------------------------
Men:
    Total Fat...............................................        31.54        33.63        35.27        33.44
    Saturated Fat...........................................        10.19        11.38        12.00        11.19
    Cholesterol.............................................       293.39       327.77       353.97       339.07
Women:
    Total Fat...............................................        31.14        33.40        34.49        32.49
    Saturated Fat...........................................        10.00        11.38        11.59        10.64
    Cholesterol.............................................       196.60       216.84       230.03      210.53
----------------------------------------------------------------------------------------------------------------
Note: Fat and Saturated Fat values are percentage of calories from fat source; cholesterol in milligrams.


 Table 7.--Percentage of Calories From Fat and Total Cholesterol, by Usage of Nutrition Information on Raw Meat,
                                                Poultry, or Fish
----------------------------------------------------------------------------------------------------------------
                                                                             Rarely/
                                                    Often      Sometimes      never      Do not buy    Average
----------------------------------------------------------------------------------------------------------------
Men:
    Total Fat..................................        31.67        34.03        33.88        29.69        33.44
    Saturated Fat..............................        10.53        11.36        11.37         9.52        11.19
    Cholesterol................................       311.81       321.49       355.14       236.83       339.07
Women:
    Total Fat..................................        31.62        32.94        32.87        26.79        32.49
    Saturated Fat..............................        10.15        10.82        10.82         9.19        10.64
    Cholesterol................................       194.32       219.27       216.55       135.89      210.53
----------------------------------------------------------------------------------------------------------------
Note: Fat and Saturated Fat values are percentage of calories from fat source; cholesterol in milligrams.


[[Page 4984]]

Regulatory Options

    FSIS considered several regulatory options: (1) Continuing with the 
existing voluntary program; (2) making the voluntary program mandatory; 
(3) requiring nutrition information on labels of all ground or chopped 
products and making the voluntary program mandatory for the major cuts 
of single-ingredient, raw meat and poultry products; (4) requiring 
nutrition information on labels of the major cuts of single-ingredient, 
raw meat and poultry products and on all ground or chopped products; 
and (5) requiring nutrition information on labels of all single-
ingredient, raw meat and poultry products and all ground or chopped 
products.
    Option 1: Continuing with the voluntary program. FSIS could 
continue with the existing voluntary program and attempt to increase 
participation by providing additional assistance to the 
nonparticipants. The 1999 nutrition labeling survey found a significant 
difference in participation rates according to outlet type. Chain 
stores showed a 65.5 percent participation rate, large independents 
showed a 46.5 percent participation rate, and medium and small 
independents showed a participation rate of 26.3 percent. Thus, FSIS 
could provide nutrition information or point-of-purchase materials to 
independent retail stores to encourage their participation in the 
voluntary nutrition labeling program.
    Retail establishments would continue to provide, on a voluntary 
basis, nutrition labeling for all single-ingredient, raw meat and 
poultry products, including major cuts identified in Secs. 317.344 and 
381.444 (including ground beef and ground pork) and cuts that are not 
identified as major cuts (including ground or chopped products not 
covered in Secs. 317.344 and 381.444). This information could be 
provided at the point-of-purchase or on the label of the product.
    Option 2: Make the voluntary program mandatory. FSIS could make the 
voluntary program mandatory by requiring nutrition information, either 
on labels or at the point-of-purchase, for all single-ingredient, raw 
meat and poultry products, including the major cuts of single-
ingredient, raw products identified in Secs. 317.344 and 381.444 
(including ground beef and ground pork) and the nonmajor cuts of 
single-ingredient, raw meat and poultry products (including ground or 
chopped products not covered in Secs. 317.344 and 381.444). Under this 
option, FSIS would assume that most retailers would display point-of-
purchase information for these products rather than nutrition labels, 
because this is an inexpensive means of providing nutrition information 
for multiple products. This approach does not allow for any distinction 
between ground or chopped meat and poultry products and other cuts of 
meat. In addition, this approach does not distinguish between the major 
and nonmajor cuts.
    Option 3: Require nutrition information on labels of all ground or 
chopped meat and poultry products and make the voluntary program 
mandatory for the major cuts of single-ingredient, raw meat and poultry 
products (other than ground beef and ground pork). FSIS could require 
nutrition information on the labels of all ground or chopped products 
and could require nutrition information, either on their labels or at 
their point-of-purchase, for the major cuts of single-ingredient, raw 
meat and poultry products identified in Secs. 317.344 and 381.444 
(other than ground beef and ground pork). Retail establishments and 
producers could continue to voluntarily provide nutrition information 
for nonmajor cuts of single-ingredient, raw meat and poultry products 
that are not ground or chopped. This approach allows for a distinction 
between ground or chopped meat and poultry and other cuts of meat and 
poultry. It also allows for a distinction between major and nonmajor 
cuts. Consistent with the regulations, the voluntary nutrition labeling 
surveys only assessed whether nutrition labeling was provided for the 
major cuts of single-ingredient, raw meat and poultry products. Until 
some assessment is made of whether adequate information is being 
provided for the nonmajor cuts of single-ingredient, raw products that 
are not ground or chopped, FSIS cannot determine whether it would be 
beneficial to require nutrition information for these products.
    In their June 3, 1997, petition discussed above, CSPI stated that 
USDA should require complete ``Nutrition Facts'' on ground beef labels 
that make nutrient content claims. This option would require complete 
``Nutrition Facts'' on all ground beef labels. Thus, CSPI's petition 
supports this aspect of this option. However, the CSPI petition also 
stated that point-of-purchase information is generally a poor 
substitute for labels and that the ``Nutri-Facts'' posters and 
brochures used by many stores have severe flaws. Thus, the CSPI 
petition does not support providing nutrition labeling at the point-of-
purchase.
    Option 4: Require nutrition information on labels of the major cuts 
of single-ingredient, raw meat and poultry products and on all ground 
or chopped products. FSIS could require nutrition information only on 
labels of the major cuts of single-ingredient, raw meat and poultry 
products identified in Secs. 317.344 and 381.444 (including ground beef 
and ground pork) and on all other ground or chopped products not 
covered in Secs. 317.344 and 381.444. As in Option 3, establishments 
could voluntarily provide nutrition information, either at the point-
of-purchase or on the label, for the nonmajor cuts of single-
ingredient, raw meat and poultry products that are not ground or 
chopped. This approach allows for a distinction between major cuts and 
nonmajor cuts that are not ground or chopped. Until some assessment is 
made of whether adequate information is being provided for the nonmajor 
cuts of single-ingredient, raw products that are not ground or chopped, 
FSIS cannot determine whether it would be beneficial to require 
nutrition information for these products.
    Option 5: Require nutrition labels on all single-ingredient, raw 
meat and poultry products and on all ground or chopped products. FSIS 
could require nutrition information on labels of all single-ingredient, 
raw meat and poultry products, including both the major cuts of single-
ingredient, raw products identified in Secs. 317.344 and 381.444 
(including ground beef and ground pork) and nonmajor cuts of single-
ingredient, raw products, and on all ground or chopped products not 
covered in Secs. 317.344 and 381.444. An April 4, 2000, press release 
on CSPI's web page, quotes the organization's executive director as 
stating, ``Frozen and processed meats already have nutrition labels. 
That same information should be on fresh meat'' (http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.cspinet.org/new/nutr_labeling.html). Thus, CSPI supports this 
option.
    FSIS requests comments on whether any of the options not chosen 
would be a viable alternative to the option chosen and on the possible 
costs and benefits of the options presented.

Quantification of Costs and Net Benefits of Regulatory Options

    FSIS' preliminary analysis does not allow for a comparison of net 
benefits among the regulatory options. The Agency is unable, at this 
time, to distinguish between the benefits that accrue from moving from 
a voluntary program to a mandatory program and the benefits that would 
accrue from requiring nutrition labels on products versus nutrition 
information on point-

[[Page 4985]]

of-purchase materials. Furthermore, although a comparison of costs of 
the regulatory options might be possible, FSIS has not quantified all 
costs. As a result, FSIS believes that it would be inappropriate to 
provide a comparison of net benefits of the regulatory options 
considered at this time.
    Below, FSIS provides a preliminary analysis of the costs and 
benefits of the proposed rule. FSIS requests comments on this 
preliminary analysis and any data that would be useful in estimating 
the costs and benefits of the proposed rule.

The Proposed Rule

    FSIS is proposing Option 3. FSIS is proposing to require nutrition 
labels on all ground or chopped meat and poultry products, with or 
without added seasonings, unless an exemption applies, and to make the 
voluntary nutrition labeling program mandatory for major cuts of 
single-ingredient, raw meat and poultry products identified in 
Secs. 317.344 and 381.444, unless an exemption applies.
    Without a mandatory labeling program for the major cuts of single-
ingredient, raw products (that are not ground or chopped), FSIS 
believes that complete and consistent information on the nutritional 
attributes of these products will not be provided to every consumer. 
FSIS also believes that the producers' ability to control the fat and 
nutrient content of ground or chopped product and the consumers' 
inability to detect the nutritional variations in these products 
through observation makes it necessary to further require that labeling 
requirements for all ground or chopped meat and poultry products be 
consistent with those currently required for multi-ingredient and heat 
processed products. The Agency has tentatively concluded that ground or 
chopped products and the major cuts of single-ingredient, raw products 
would be misbranded without nutrition information under the FMIA and 
the PPIA (21 U.S.C. 601(n)(1) and 21 U.S.C. 453(h)(1)).
    Many exemptions from the proposed nutrition labeling requirements 
would apply to ground or chopped products and to the major cuts of 
single-ingredient, raw products. The existing regulations provide that 
food products produced by small businesses are exempted from mandatory 
nutrition labeling if the product labels bear no nutrition claims or 
nutrition information. Under this rule, small businesses that qualify 
for the exemption would be exempt from the mandatory nutrition labeling 
requirements proposed for ground or chopped products. However, the 
small business exemption would not apply to the major cuts of single-
ingredient, raw meat and poultry products. Also, the existing 
regulations provide that retail stores and similar retail-type 
establishments are exempted from nutrition labeling requirements for 
multi-ingredient products processed at retail and ready-to-eat products 
packaged or portioned at retail if the products bear no nutrition 
claims or nutrition information. In this rule, FSIS is proposing that 
these exemptions not apply to ground meat and poultry products, unless 
the retail store or similar retail-type establishment meets the 
requirements for the small business exemption. For a full discussion of 
the exemptions, see the ``Exemptions'' heading above. FSIS is 
requesting comments on whether these exemptions are appropriate and 
necessary for retail and Federal establishments. The preliminary cost 
and benefits analyses below do not take the exemptions into account 
because FSIS does not have sufficient data concerning the 
establishments that would qualify for the small business exemption or 
the volume of product that would be exempted from nutrition labeling 
requirements. Therefore, FSIS requests comments on how the exemptions 
would affect the costs and benefits of the proposed rule.
    In addition to the proposed requirements discussed above, FSIS is 
proposing to amend the nutrition labeling regulations to provide that 
when a ground or chopped product does not meet the regulatory criteria 
to be labeled ``low fat,'' a lean percentage claim may be included on 
the label or in labeling as long as a statement of the fat percentage 
also is displayed on the label or in labeling. Under existing 
regulations, in order for the phrase ``____ percent lean'' to be used 
on the label or in labeling of a product, the product must meet the 
regulatory criteria for ``low fat.'' Most ground beef and hamburger 
products do not qualify as ``low fat.'' Therefore, existing regulations 
preclude the use of the term ``____ percent lean'' on these products. 
FSIS extended the compliance enforcement date for nutrition labeling 
requirements for ground beef and hamburger indefinitely, pending 
publication of a final rule on percentage labeling for lean and fat on 
ground beef and hamburger (59 FR 39941); therefore, producers and 
retailers continue to use the term ``lean'' in percentage labeling on 
the packages of ground beef and hamburger. FSIS is proposing to allow 
this information on the label or in labeling for ground or chopped 
products because many consumers have become accustomed to this labeling 
on ground beef products, and because FSIS believes this labeling 
provides a quick, simple, accurate means of comparing all ground or 
chopped meat and poultry products. Under the preliminary cost analysis 
below, FSIS provided a preliminary cost estimate for developing new 
labels that include statements of the lean percentage and the fat 
percentage. FSIS intends to develop a more detailed analysis of this 
labeling provision in the final rule.

Preliminary Estimations of the Cost of the Proposed Rule

    Making the voluntary program mandatory for the major cuts of 
single-ingredient, raw meat and poultry products. FSIS believes that 
the cost of providing nutrition labeling for the major cuts of single-
ingredient, raw meat and poultry products should not be significant. 
Retail establishments can choose between providing nutrition 
information through point-of-purchase materials or providing nutrition 
information on labels. Processors may also provide the information on 
labels or on point-of-purchase materials; however, FSIS would enforce 
these requirements at retail. Point-of-purchase materials are available 
for a nominal fee ($12.00 for members, $24.00 for nonmembers) through 
the Food Marketing Institute's web site (http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fmi.org). These 
materials meet the point-of-purchase requirements in this proposed 
rule. Also, FSIS intends to make point-of-purchase materials available, 
free of charge, on the FSIS web site. Another factor that would 
mitigate the cost impact of this requirement is that, based on the 
nutrition labeling survey conducted in 1999, many stores are currently 
providing nutrition information for the major cuts of single-
ingredient, raw products. As discussed above, the 1999 survey found 
that 54.8 percent of stores surveyed provided nutrition information for 
90 percent of the major cuts of single-ingredient, raw meat and poultry 
products, in accordance with program guidelines.
    FSIS estimates the one-time costs to retail establishments for 
obtaining point-of-purchase materials that include nutrition 
information for the major cuts of single-ingredient, raw meat and 
poultry products would be about $0.7 million. FSIS is estimating that 
all retailers would display point-of-purchase information for the major 
cuts of single-ingredient, raw meat and poultry products, because this 
is an inexpensive means of providing nutrition information for multiple

[[Page 4986]]

products and because this rule will not require that manufacturers 
include nutrition labels on the major cuts of single-ingredient, raw 
meat and poultry products. FSIS estimates that obtaining point-of-
purchase materials and making them available to consumers would take an 
average of 30 minutes. As shown in Table 2 above, there were 69,500 
retail stores in 1999 (excluding convenience stores that do not 
normally sell meat products), and FSIS estimates salary and expenses 
costs for providing nutrition information to be $20 per hour (69,500 * 
0.5 * $20 = 0.7 million). This estimate does not take into account the 
voluntary nutrition labeling survey results which show that many stores 
currently provide nutrition information for the major cuts of single-
ingredient, raw products. Information concerning this cost is addressed 
in the Information Collection Request submitted to OMB and in the 
section on paperwork requirements below.
    As discussed above, FSIS is proposing that many of the existing 
exemptions from nutrition labeling requirements would apply to the 
major cuts of single-ingredient, raw meat and poultry products. 
However, FSIS is proposing that the small business exemption from 
nutrition labeling requirements would not apply to the major cuts of 
single-ingredient, raw products. As explained above, FSIS does not 
believe that the reasons that necessitated the establishment of the 
small business exemption, as explained in the January 6, 1993, final 
rule, are applicable to the major cuts of single-ingredient products. 
Also, because nutrition information for the major cuts of single-
ingredient, raw products may be provided on point-of-purchase 
materials, FSIS is proposing that the provisions for providing 
nutrition labeling by alternative means for products in packages that 
have a total surface area available to bear labeling of less than 12 
square inches would not apply to the major cuts of single-ingredient, 
raw products.
    Nutrition labeling of ground or chopped products. The costs of 
required labels would be incurred by ground meat or poultry processors 
supplying labeled products to retail stores for sale to consumers and 
by retail establishments who grind or chop meat and poultry products in 
their stores for sale to consumers. Costs would include the fixed costs 
of equipment, the operating costs of printing labels, including 
materials and labor, and the cost of nutrient analysis.
    FSIS estimated the costs of nutrition labels based on the cost 
analysis conducted for the ``Mandatory Safe Handling Statements on 
Labeling of Raw Meat and Poultry Products'' proposed rule published 
November 4, 1993 (58 FR 58922); the costs estimates were not revised in 
the final rule in response to comments. The rationale for using the 
``safe handling'' cost analysis is that the costs of the labels in 
these two proposals would be comparable for cost estimation purposes. 
FSIS is not using the regulatory impact analysis developed for the 
nutrition labeling regulations for cost estimation purposes because 
much less nutrient analysis will be required at this time than was 
required when the 1993 nutrition labeling regulations were published 
(January 6, 1993). There are currently much more data available for 
nutrition labeling than were available when the 1993 nutrition labeling 
regulations were published.

Safe Handling Cost Estimates

    Fixed costs. The ``safe handling'' rule estimated the fixed costs 
of installing or retrofitting labeling equipment for stamping, 
printing, or affixing labels. The ``safe handling'' rule had estimated 
the fixed costs of labeling fresh meat and poultry products for 
processors to range from $50 to $100 million. These costs were based on 
an estimate that there were somewhere between 50,000 and 100,000 labels 
approved for use by processors that were affected and an estimated 
average label modification cost of $1,000 (58 FR 58925).
    The fixed costs of compliance with the ``safe handling'' labeling 
rule for retail establishments were estimated to range from $144 to 
$216 million. These estimates assumed that larger retailers would 
modify their equipment to increase their label size to combine weight 
and price information with safe handling instructions if their existing 
equipment was incompatible. These estimates were based on the costs to 
the then (i.e., 1992) existing 23,813 supermarkets (with annual sales 
exceeding $2.5 million/year). Based on conversations with equipment 
suppliers and two to three retailers, FSIS estimated that upgrading the 
automated scales/wrapping systems to accommodate a larger label would 
cost $6,000 to $9,000 per store. Assuming that all 24,000 (approx.) 
supermarkets upgraded their equipment, the cost would range from $144 
($6000 x 24,000) to $216 ($9000 x 24,000) million. FSIS estimated these 
costs for large retail chains, i.e., supermarkets, because they 
constituted three-fourths of total grocery stores sales. For example, 
in 1992, of the total grocery stores sales of $360 billion (excluding 
sales taxes), supermarkets accounted for $274 billion, or 76 percent. 
FSIS also estimated these costs for large retail chains because FSIS 
assumed that small retailers would produce a second label using 
existing equipment to meet the ``safe handling'' rule requirements and, 
therefore, would incur mostly operating costs rather than fixed costs 
to meet the ``safe handling'' rule requirements.
    Operating costs. The ``safe handling'' analysis assumed that all 
meat and poultry products already included some form of commercially 
prepared labels, and that the incremental cost of adding safe handling 
instructions to the label would increase the total per label cost by 
$0.0025 to $0.005. This estimate was also supported by the comment of 
one large retail chain. In their response to the an earlier interim 
rule that included a preliminary economic analysis (58 FR 43478), this 
commenter stated that including the safe handling label, as part of 
their price labels, would double the cost of their labels from $0.0025 
to $0.005 per label. For firms that indicated that they would need 
separate labels for the safe handling statement (e.g., the small retail 
stores), the most frequent comment in response to the preliminary 
analysis was that the labels for safe handling would cost $0.01 each. 
In the ``safe handling'' rule, FSIS assumed that large retail chains 
would incur the lower costs ($0.0025 to $0.005) per label by including 
the safe handling statement as part of their price label. For the 
smaller firms requiring separate labels for the safe handling 
statement, FSIS assumed that their costs would be $0.01 per package. 
The higher costs for small retailers can be explained by the absence of 
economies of scale available to these retailers.
    As discussed above, in 1992, large retail chains had sales that 
accounted for 76 percent of total grocery store sales. In the ``safe 
handling'' rule, FSIS rounded this number and assumed that 80 percent 
of packages of meat and poultry products labeled and sold through 
retail would be sold through large retail chains. The ``safe handling'' 
rule estimated that there were 10 billion packages of meat and poultry 
product prepared and sold through retail. Therefore, the rule estimated 
that 8 billion packages would be prepared and sold by large retail 
chains and the remaining 2 billion packages would be prepared and sold 
by small retail firms. The safe handling rule estimated that the 10 
billion retail packages would have recurring costs associated with the 
``safe handling'' rule of $50 million per year. This estimate assumed 
that the 8 billion packages sold through large retail chains would have 
recurring costs of $0.00375 (midpoint of $.0025 and $0.005) and the 2 
billion packages sold

[[Page 4987]]

through small stores would have recurring costs of $0.01 per package.
    In the ``safe handling'' rule, the additional labor costs for 
applying the 2 billion separate safe handling labels by use of label 
guns for small firms were estimated. Based on the number of staff years 
at 160 and an average salary of $20,000 per year, the ``safe handling'' 
rule estimated the labor costs at about $3.2 million per year.
    The ``safe handling'' rule did not estimate operating costs of 
labeling for processors because they were expected to incur larger, 
upfront, one-time fixed costs, associated with making permanent 
modifications to labels.

Adjustments to the Costs in the Safe Handling Rule

    Estimating the volume of ground or chopped products. As explained 
above, the ``safe handling'' rule estimated the cost of labeling all 
fresh meat products. The number and volume of products that would 
require nutrition labels in this proposed rule are, however, much 
smaller relative to the number and volume of products in the ``safe 
handling'' rule, because the proposed rule would require nutrition 
labels on only ground or chopped meat and poultry products. FSIS 
adjusted the costs of the ``safe handling'' rule to reflect the costs 
related to the volume of ground or chopped product produced.
    In 1996, total U.S. annual production of ground beef was 7 billion 
pounds (American Meat Institute Foundation, Relative Ground Beef 
Contribution to the United States Beef Supply (May 1996): 5). The 
American Meat Institute (AMI) report cited has not been updated. 
However, according to AMI staff, total U.S. annual production of ground 
beef was 7.2 billion in 1998, an increase of less than 3 percent. For 
estimation purposes, FSIS believes the 1996 data are still valid. Based 
on discussion with AMI staff members, approximately 50 percent (or 3.5 
billion) of this output is sold through retail stores (the rest goes 
through restaurants and institutions). As regards other ground or 
chopped products such as poultry, pork, and turkey, AMI estimates that 
for every 100 pounds of ground beef, 12.3 pounds of these competing 
meats are produced (The American Meat Institute Foundation, Relative 
Ground Beef Contribution to the United States Beef Supply (May 1996): 
8). The estimate of 12.3 pounds is based on a survey sent by AMI to the 
top 50 retail chains and wholesalers. No attempt was made to expand the 
survey responses to a national level or develop estimates for the 
entire retail sector. In the absence of any information that would 
validate the survey responses for the entire retail sector, however, 
FSIS employed these estimates as approximate trends. However, FSIS 
invites comments and requests nationally representative data for the 
retailers for analysis of the final rule.
    To arrive at the total volume of ground or chopped meat and poultry 
products sold in retail stores, FSIS first assumed that 50 percent of 
total production, or 3.5 billion pounds, represented ground or chopped 
beef sold in retail stores. Second, based on the AMI survey referred to 
above, FSIS assumed that ground or chopped poultry and other meats 
represented 12.3 percent of ground beef sales. Therefore, the total 
annual volume of ground or chopped meat and poultry sold through retail 
establishments amounted to 3.9 (3.5 + .4) billion pounds [3.5 billion + 
(3.5 billion * 0.123 = .431 billion].
    Fixed costs. As explained above, the ``safe handling'' rule had 
estimated the fixed costs of safe handling labeling for processors to 
range from $50 to $100 million. Also explained above, the fixed costs 
of compliance with the ``safe handling'' labeling rule for retail 
establishments were estimated to range from $144 to $216 million. The 
estimation of these fixed costs assumed that larger retail stores would 
modify equipment to increase their label size to combine weight and 
price information with safe handling instructions if their existing 
equipment was incompatible. In this rule, retail stores also might 
modify equipment to increase their label size to combine weight and 
price information with nutrition information.
    To calculate the fixed costs of nutrition labeling of ground or 
chopped products, FSIS adjusted the fixed costs in the ``safe 
handling'' rule to account for existing equipment. FSIS believes that 
many establishments have already incurred fixed costs required for the 
``safe handling'' rule. For example the 1999 safe handling survey 
revealed that 96.7 percent of large chains, 90.5 percent of large 
independents, and 84.1 percent of medium/small independents had already 
complied with the ``safe handling'' rule requirements. Therefore, as 
explained in the ``Baseline'' section above, FSIS made the conservative 
assumption that 80 percent of the estimated fixed costs were already 
incurred by retailers and processors and only 20 percent of the 
estimated fixed costs would be required for compliance with the 
proposed rule. Hence the estimated fixed costs of the proposed rule 
would range from $10 million to $20 million for processors and from 
$28.8 million to $43.2 million for retailers.
    Although these costs were estimated based on 1992 prices, there has 
been virtually no change in their prices in the year 2000. For example, 
the index number for producer prices for blast furnaces and steel mills 
was 105.8 (1982 = 100) in 1992, and it was almost the same at 105.3 
(1982 = 100) in July 2000. FSIS used this index number because these 
producers also manufacture equipment used for stamping and printing 
labels. Therefore, these costs are current and do not need any 
updating. These costs are shown in columns 1 and 2, Table 8.
    Operating costs. As explained above, the safe handling analysis had 
assumed that all meat and poultry products already included some form 
of commercially prepared labels, and that the incremental cost of 
adding safe handling instructions to the labels would increase the 
total per label cost by $0.0025 to $0.005. The ``safe handling'' rule 
also estimated that the cost to firms that would need separate labels 
for the safe handling statement would be $0.01 per label. As in the 
``safe handling'' rule, in this rule, FSIS is assuming that large 
retail chains would incur the lower costs ($0.0025 to $0.005) per 
label, because they would include nutrition information as part of 
their price labels. Similarly, consistent with the ``safe handling'' 
rule, for this rule, FSIS is assuming that smaller stores would apply a 
separate label with nutrition information.
    As explained above, in the ``safe handling'' rule, FSIS assumed 
that large retail chains would account for 80 percent of all retail 
packages labeled at retail and that the smaller firms would account for 
20 percent of all retail packages. FSIS believes that the estimate that 
80 percent of retail-labeled packages are sold through large retail 
chains is likely to be valid in the year 2000 (without the need to 
round up) because of a number of mergers, acquisitions, and 
consolidations in this sector in the recent years. For example, Royal 
Ahold bought Giant Foods, Albertson's bought American Stores, 
SUPERVALUE bought Richfood, and Food Lion bought Hannaford (Sean 
Mehegan, ``Merger Mania--Consolidation Changes the Face of the North 
American Supermarket Sector,'' Meat & Poultry (September 1999): 22-25). 
FSIS requests comments and data concerning whether the estimate that 80 
of retail-labeled packages are sold through large retail chains is 
accurate.
    For the proposed rule, FSIS is assuming that a package of ground or 
chopped meat or poultry would average

[[Page 4988]]

two pounds. FSIS believes that most packages of ground or chopped 
product weigh at least a fraction over one pound; however, this product 
is also sold in bulk size packages that are significantly over one 
pound. Therefore, FSIS believes that two pounds is a reasonable 
estimate of the average weight of a package of ground or chopped 
product. If FSIS were to assume that the average size package were 1 
pound, this assumption would double the estimated operating costs 
below. FSIS requests comments on whether two pounds is an accurate 
average weight estimate for packages of ground or chopped product.
    Since the estimated annual volume of ground or chopped product sold 
through retail is about 4 billion pounds, there will be 2 billion 
packages (at two pounds each) requiring the labels. Because FSIS 
assumes that 80 percent of these packages would be accounted for by 
large firms, their corresponding shares of the packages would be 1.6 
billion (80 percent of 2 billion) and small firms would account for the 
rest, i.e., 0.4 billion packages (20 percent of 2 billion). Assuming a 
mid-point cost of $0.00375 for the range of safe handling label costs 
for large retail stores ($0.0025 to $0.005), the compliance cost for 
these stores would be $6 million (1.6 billion packages * $0.00375). The 
compliance cost for separate nutrition labels required by small firms 
would be about $4 million (0.4 billion packages times $0.01 per 
package). These costs were estimated in 1992, and there was an increase 
of 20 percent in related costs in July 2000. This increase is based on 
the producer price index numbers for plastics, foil, and coated paper 
bags, the materials on which labels would be printed (1992 = 142.9, 
July 2000 = 171.7). Therefore, these operating costs would increase by 
$2 million to $12 million in current prices.
    As explained above, the ``safe handling'' rule estimated the labor 
costs of small firms applying separate safe handling labels by use of 
label guns at about $ 3.2 million per year, based on 2 billion labels, 
and 160 staff years at an average salary of $20,000 per year. According 
to data from the Bureau of Labor Statistics, the average hourly 
earnings in June of 1999 were $7.88 per hour. Assuming at least 2,000 
work hours per year, the estimated annual earnings would be $15,760. 
FSIS adjusted the costs in the ``safe handling'' rule based on this 
earnings estimate. Therefore, FSIS revised the estimated ``safe 
handling'' labor costs to small firms to $3.0 million per year (160 
staff years times $16,000 per staff totals $2,560,000 per year, which 
FSIS rounded to $3 million). Since these costs were for 2 billion 
packages for the safe handling rule, the prorated costs for 400 million 
packages for the proposed rule would be $0.6 million (400 million times 
$3 million divided by 2 billion). Therefore, estimated total operating 
or recurring costs associated with the proposed rule would be $12.6 (12 
+ 0.6). These costs are shown in Table 8, row 2, column 3.
    The ``safe handling'' rule did not estimate operating costs of 
labeling for processors because they were expected to incur larger, 
upfront, one-time fixed costs, associated with making permanent 
modifications to labels. Therefore, Table 8, row 1, column 3, reports 
their operating costs as ``Not Applicable'' (NA). The recurring costs 
of nutrition labeling for processors other than retail establishments 
are not estimated in this rule because, again, FSIS expects these 
processors to incur larger, upfront, one-time fixed costs, associated 
with making permanent modifications to their existing labels.
    Paperwork burden costs. FSIS estimates that the one-time 
development and recordkeeping costs associated with nutrition labels 
for ground or chopped products for Federal establishments and retailers 
will total $8.8 million. As explained above, FSIS estimates the one-
time costs to retail establishments for obtaining point-of-purchase 
materials that include nutrition information for the major cuts of 
single-ingredient, raw products will be about $0.7 million. The 
paperwork burden cost estimates for the required nutrition labels for 
ground or chopped products are based on the time required to develop 3 
nutrition labels (120 minutes each), the time required for 
recordkeeping for the supporting data at Federal and retail 
establishments (5 minutes), and the time required for Federal 
establishments to submit label approval applications to FSIS (15 
minutes). FSIS estimates that there are 2,489 Federal establishments 
affected by the rule and 69,500 retail establishments and estimates 
salary and expenses for these activities to be $20 per hour. 
Information concerning these costs is addressed in the Information 
Collection Request submitted to OMB and the Paperwork Requirements 
section below.
    Table 8 shows that total operating compliance costs associated with 
nutrition labels for ground or chopped product are estimated at $12.6 
million.

                 Table 8.--Estimated Compliance Costs for Ground or Chopped Products ($ Million)
----------------------------------------------------------------------------------------------------------------
                                                                     Fixed costs                      Paperwork
                                                             --------------------------  Operating      burden
                                                                  Low          High        costs        costs
----------------------------------------------------------------------------------------------------------------
Processors..................................................         10.0         20.0           NA           .3
Retailers...................................................         28.8         43.2         12.6          8.5
                                                             ---------------------------------------------------
    Total...................................................         38.8         63.2         12.6          8.8
----------------------------------------------------------------------------------------------------------------

    Discounted value of compliance costs. The low and high estimates of 
fixed costs were added to the operating costs and paperwork burden 
costs estimated above. Therefore, FSIS obtained two series of costs, 
low and high, for a period of 20 years. The low estimate was $60.2 
million per year ($38.8 million + 12.6 million + 8.8 million) and the 
high cost estimate was $84.6 million ($63.2 million + $12.6 million + 
$8.8 million). These series were discounted at 7 percent to compare 
them with discounted benefits, which are also discounted at 7 percent. 
It was assumed that the costs would be incurred in the middle of each 
year for the next 20 years. The results revealed that the present 
values of compliance costs for the next 20 years (from 2001 to 2020) 
ranged from $659.69 million to $927.05 million. Other than the 
paperwork costs discussed above, there should not be many costs 
associated with nutrition labels that would exceed the estimates in the 
``safe handling'' rule. Nutrient content is dependent on fat levels, 
and there is a direct relationship between fat and other nutrients. 
Producers should be able to use available data or to extrapolate from 
existing data to develop the data for nutrition labels. In addition, 
FSIS will develop a list of published sources of information concerning 
the nutrient content of ground or chopped products,

[[Page 4989]]

so that industry could obtain available literature from local 
libraries. This information would facilitate the development of 
nutrition labels for ground or chopped products. FSIS requests comments 
and data on any additional costs associated with nutrition labels that 
were not included in this preliminary cost analysis.
    Although nutrition labels are not currently required on single-
ingredient, raw ground or chopped products, such labels are often 
provided voluntarily on these products. According to information 
submitted by CSPI, a number of major supermarket chains, including 
Dominick's, Fred Meyer, Jewel, Kroger, Wegman's, Winn-Dixie, 
Albertson's, and some Lucky and Safeway stores, now include full 
``Nutrition Facts'' labels on their ground beef (Bonnie Liebman, 
``Where's the Beef Labeling,'' Nutrition Action Healthletter (June 
1999): 8-11). Because FSIS does not have complete information 
concerning the volume of ground or chopped packages that bear nutrition 
labels, FSIS is estimating the costs of labels for all packages of 
ground or chopped product in the cost estimates above.
    Impact of estimated costs. The preceding estimates of fixed, 
operating and paperwork burden compliance costs for the proposed 
requirements concerning ground or chopped product at $60.2 to $84.6 
million are not likely to be excessive relative to the volume of output 
of ground or chopped meat and poultry products sold at retail. For 
example, as noted above, the volume of these products is estimated at 
3.9 billion pounds. Therefore, these costs would range from 1.5 to 2 
pennies per pound ($60.2 million/3.9 billion pounds to $84.6 million/
3.9 billion pounds). FSIS has not conducted a thorough analysis of how 
the costs to Federal and retail establishments would affect the price, 
supply, and demand of ground or chopped products. Similarly, FSIS has 
not thoroughly evaluated how any changes in consumer behavior that may 
occur as a result of this rule would affect the price, supply, and 
demand of ground or chopped products.

Percentage Labeling

    The proposed percentage labeling for ground or chopped products 
would not result in significant costs because such labeling would be 
optional rather than mandatory. If retailers and other producers found 
this labeling to be costly, they would simply not exercise this option. 
Because FSIS extended the compliance enforcement date for use of the 
term ``lean'' for these products, pending publication of a final rule 
on percentage labeling for lean and fat on ground beef and hamburger, 
many of these products already bear these statements on their labels. 
If producers chose to develop new labels, the costs per label would be 
comparable to those for printing nutrition labels ($0.0025 to $0.05 per 
label if the information is included as part of their price label, and, 
$0.01 per label if they developed separate labels). FSIS requests 
comment on the costs and benefits of percent fat/percent lean labeling 
on ground or chopped products.

Benefits

    The benefits of nutrition labeling depend on the extent to which 
consumers change their food consumption in favor of products that are 
more nutritious. As noted earlier, the absence of nutrition labeling to 
indicate nutrition contents of ground or chopped meat and poultry 
products and the major cuts of single-ingredient, raw products does not 
allow consumers to get adequate information for making their purchasing 
decisions. Provision of nutrition labels and point-of-purchase 
materials would disseminate nutrition information and enhance 
consumers' food purchasing decision-making process.
    Consumption habits vary with knowledge of nutrition and health, 
preference for healthful diets, and socioeconomic status of different 
segments of the population. For example, consumers with preferences for 
healthful diets are likely to select products with lower fat and 
cholesterol levels to assist in the reduction of risk for coronary 
heart problems and cancerous diseases. Some consumers might perceive 
that a product is of higher quality or more nutritious if it has lower 
fat and cholesterol contents. Availability of nutrition labels on 
ground or chopped meat and poultry products and nutrition information 
for the major cuts of single-ingredient, raw products may help 
purchasing decision-making by these select groups of consumers.
    Literature review of impact of labeling on diet quality. Nutrition 
labels on products such as cereals have existed for over two decades. 
Research studies on the effect of nutrition labeling on diet quality 
for these non-meat and poultry products indicate a positive 
relationship between these variables. Kreuter et al. (1997) analyzed 
survey data of 885 adult patients from four family medical clinics in 
Missouri (see the ``References'' section below for full citations of 
the literature referred to in this discussion). To participate, 
patients completed a self-administered survey while waiting to see 
their physicians. The results revealed that patients eating diets lower 
in fat were much more likely (51% versus 26%) than patients whose diets 
were higher in fat to report that nutrition labels influenced their 
food purchasing decisions.
    Guthrie et al. (1995) linked USDA's 1989 Continuing Survey of Food 
Intakes by Individuals (one database) to Diet and Health Knowledge 
Survey (another database). They concluded that label use appeared to be 
associated with the consumption of diets that were higher in vitamin C 
and lower in cholesterol.
    Neuhouser et al. (1999) analyzed data from a survey of 1,450 adult 
residents in Washington State. The survey assessed nutrition label use, 
fat-related diet habits, fruit and vegetable consumption, diet-related 
psychosocial factors, health behavior, and demographic characteristics. 
They concluded that label use was significantly associated with lower 
fat intake and, after controlling for all demographic, psychosocial, 
and behavioral variables, label use explained 6% of the variance in fat 
intake (their conclusion had a probability of 99.9%).
    Mathios and Ippolito (1998) analyzed the effect of nutrition 
information in advertising and labels on consumption of food cereals 
with fiber content. They divided their study into two periods: First, 
the period, 1978-1984, when the FDA permitted printing of fiber content 
on cereal boxes but did not permit printing of any health claims, and 
the period 1985-87 when health claims were permitted. They concluded 
that in concert with an increase in fiber intake of cereals in their 
diets, the average intakes of fat, saturated fat, and cholesterol for 
both men and women declined during both the periods, albeit, the 
decline was greater during the second period relative to the first. 
They concluded that the increase in fiber and the decrease in fat and 
cholesterol consumption were associated with the consumption of labeled 
cereals.
    Preliminary benefits analysis. FSIS consulted with ERS to develop 
the following empirical analysis of the benefits of nutrition labeling. 
The estimated benefits take the form of reductions in the incidence of 
coronary heart disease and three types of cancer which may accrue as 
consumers improve their diet quality through increased use of nutrition 
information generated by the regulation. FSIS used survey data on 
nutrient intake and label use to correlate intake of fat, saturated 
fat, and cholesterol to usage of existing nutrition information. The 
Agency estimated the value of the potential changes from intake of fat, 
saturated fat,

[[Page 4990]]

and cholesterol that could occur as consumers respond to the newly 
available nutrition information. FSIS applied the model developed by 
Zarkin, et. al. which links changes in the serum cholesterol rate to 
changes in the percentage of total calories from polyunsaturated fat, 
saturated fat, and dietary cholesterol (Gary A. Zarkin, Nancy Dean, 
Josephine A. Mauskopf, and Richard Williams, ``Potential Health 
Benefits of Nutrition Label Changes,'' American Journal of Public 
Health 83(5) (May 1993): 717-724; Gary A. Zarkin, Nancy Dean, Josephine 
A. Mauskopf, and Dierdre M. Neighbors, ``Estimated Benefits of 
Nutrition Label Changes: Final Report, Volume 1,'' Center for Economics 
Research, Research Triangle Institute, Research Triangle Park, NC, 
27709. April 1991). Changes in serum cholesterol are then used to 
estimate the health outcomes, which are reductions in the number of 
cases and mortality from three cancers (breast, colorectal, and 
prostate) and coronary heart disease. Finally, the Agency attached 
economic value to the public health changes by estimating the implied 
value of life associated with reductions in premature mortality.
    To determine how much of a behavioral response and change in 
dietary intake may result from providing more nutrition information on 
meat and poultry products, FSIS makes the following assumption: The 
Agency assumes that when labels and other sources of nutrition 
information are provided for raw meat and poultry products that 
nutrition information usage rates will rise to match label usage rates 
for food products as a whole (see Table 3). Currently, some nutrition 
information is provided for some single-ingredient, raw meat and 
poultry products, but the information is not currently required. 
Mandatory nutrition labeling rules for the major cuts of single-
ingredient, raw products and ground or chopped products would mean the 
nutrition information provided for these products would be comparable 
to that provided for other food products. FSIS therefore could 
reasonably assume that nutrition information usage rates for raw meat 
and poultry products would then become the same as the label usage 
rates for all foods taken together. For example, before mandatory 
nutrition information labeling, the data show that about 17 percent of 
men look for nutrition information on meat ``Often'' (Row 2 of table 
3). In this analysis, then, FSIS assumed that after mandatory nutrition 
information labeling, 26.7 percent of men would use the nutrition fact 
panel or point-of-purchase materials for meat products, which is the 
label usage rate for all foods (Row 1 of table 3). Similarly, the 
Agency assumes that the percentage of women using nutrition information 
on meat products ``Sometimes'' would rise from 18 percent to 32.6 
percent.
    What does this mean for diet quality? Here, FSIS made another 
(admittedly strong) assumption: The Agency assumed that as nutrition 
information usage rates rise for consumers eating meat and poultry, 
dietary patterns will change in a manner consistent with current data. 
As shown above, there is strong statistical evidence that people who 
use nutrition information to guide their food consumption decisions 
have healthier diets. While other factors may be at work, and the role 
of information use in causing dietary changes is unclear, FSIS makes 
the assumption that the provision of additional nutrition information 
and making that information available to more consumers will lead to 
behavioral shifts and increased diet quality. Thus, FSIS assumes the 
effect of providing new information for meat and poultry products would 
make consumers who NEVER used nutrition information for meat and 
poultry products become aware of the diet implications of their choices 
in meat and poultry products. These consumers would then choose to 
consume the same mix of products as people who are currently aware of 
the nutritional quality of meat and poultry products. For example, men 
who currently do not look for nutrition information on meat in the 
absence of mandatory nutrition information labeling who would begin 
using this information ``Sometimes'' after labeling is in place would 
see a decrease in fat intake from 98 grams to 92.5 grams.
    Under these assumptions, then, FSIS could see how requirements for 
mandatory nutrition information labeling on raw meat and poultry 
products could possibly affect diet quality. To reach the values shown 
in table 6, FSIS multiplied each cell in table 5 by the associated 
percentage of label use (nutrition facts panel use) from table 3. By 
doing this, FSIS increased the numbers of people in the ``always'' and 
``sometimes'' cells, and decreased the number of people in the 
``rarely'' and ``never'' cells, so that the distribution of label usage 
on meat and poultry products would reflect the distribution of label 
usage on all products. Aggregating across categories, FSIS got a new 
weighted average intake, which could be seen after the imposition of 
mandatory labeling requirements.

                             Table 9.--Change in Intake Due To Increased Label Usage
----------------------------------------------------------------------------------------------------------------
                                                                   Intake prior
                                                                   to mandatory        After        Percentage
                                                                     nutrition     adjusting for    decrease in
                                                                    labeling of      increased        intake
                                                                  meat & poultry    label usage
----------------------------------------------------------------------------------------------------------------
Men:
    Total Fat...................................................           92.51           91.31            1.30
    Saturated Fat...............................................           31.12           30.69            1.37
    Cholesterol.................................................          339.07          334.95            1.21
Women:
    Total Fat...................................................           60.16           58.57            2.65
    Saturated Fat...............................................           19.71           19.21            2.55
    Cholesterol.................................................          210.53          208.16           1.13
----------------------------------------------------------------------------------------------------------------
Note: Fat intake in grams, cholesterol in milligrams.


[[Page 4991]]


    Table 10.--Change in Percentage of Calories From Fat and Cholesterol Intake Due To Increased Label Usage
----------------------------------------------------------------------------------------------------------------
                                                                   Intake prior
                                                                   to mandatory        After        Percentage
                                                                     nutrition     adjusting for    decrease in
                                                                    labeling of      increased     calories from
                                                                  meat & poultry    label usage    fat or intake
----------------------------------------------------------------------------------------------------------------
Men:
    Total Fat...................................................           33.44           33.33            0.11
    Saturated Fat...............................................           11.19           11.14            0.04
    Cholesterol.................................................          339.07          334.95            4.12
Women:
    Total Fat...................................................           32.49           32.37            0.11
    Saturated Fat...............................................           10.64           10.54            0.10
    Cholesterol.................................................          210.53          208.16           2.37
----------------------------------------------------------------------------------------------------------------
Note: Fat and saturated fat values are percent calories from fat. Cholesterol is mg.

    Evaluation of health effects. Based on epidemiological research, 
FSIS related the reductions estimated in Table 10 to estimated decrease 
in incidence of major diseases associated with consumption of fat and 
cholesterol. The diseases considered in this analysis include three 
types of cancer--breast, prostate, and colon/rectal--and coronary heart 
disease. Epidemiological studies of the relationships between dietary 
fat and cholesterol intake and incidence of cancer and coronary heart 
disease indicate that saturated and polyunsaturated fat and cholesterol 
are converted into serum cholesterol. Serum cholesterol has an impact 
on the incidence rates of these diseases. FSIS used the following 
equation from Zarkin et al. (1993) to convert fat contents into the 
change in serum cholesterol (SC) rate, in milligram/deciliter (mg/dl):

(1) SC (Mg/dl) = 2.16S - 1.65P + 0.097C

Where SC is serum cholesterol, S is the change in percentage of total 
calories represented by saturated fat, P is the change in percentage of 
total calories represented by polyunsaturated fat, and C is the change 
in dietary cholesterol measured in mg/1000 calories.
    FSIS substituted the estimated values of percentage changes in 
saturated fat and cholesterol intake from the last column of Table 10 
into this equation. Since FSIS did not have separate data for 
polyunsaturated (P) fat, it was assumed that P would be one-third of 
total fats, as was also assumed by Zarkin et al. The estimates of serum 
cholesterol for male and female consumers are as follows:

                        Table 11.--Reduction in Serum Cholesterol and Change in Mortality
----------------------------------------------------------------------------------------------------------------
                                                 % Change in  % Change in                                 %
                                                   calories     calories    Change in    Change in    Reduction
                                                  from total   from sat.   cholesterol     serum          in
                                                     fat          fat         intake    cholesterol   mortality
----------------------------------------------------------------------------------------------------------------
Men............................................         0.11         0.04         4.12        0.399       0.0240
Women..........................................         0.11         0.10         2.37        0.231       0.0139
----------------------------------------------------------------------------------------------------------------

FSIS used the calculated values of SC presented above to estimate 
incidence of breast, prostate, colon/rectal cancer, and coronary heart 
disease. Zarkin et al. (1993) concluded that an increase in serum 
cholesterol by 20 mg/dl was associated with a 1.2-percent increase in 
the incidence of each of these diseases. FSIS employed this rate to 
convert reductions in total fat, saturated fat, and cholesterol in 
Table 10 into SC. It is estimated that the reduction in mortality 
associated with changing dietary pattern from mandatory nutrition 
information labeling are 0.024 percent for men, and about 0.014 percent 
for women.

           Table 12.--Reduction in Mortality, Annual New Cases of Mortality, and Estimated Lives Saved
----------------------------------------------------------------------------------------------------------------
                                         Reduction in       Annual new cases of          Lives saved
                                         mortality (%)           mortality      --------------------------------
                                    --------------------------------------------     5          6          7
                                         1          2          3          4     --------------------------------
                                    --------------------------------------------
                                        Men       Women       Men       Women       Men       Women      Total
----------------------------------------------------------------------------------------------------------------
Breast Cancer......................  .........     0.0139  .........     41,200          0          6          6
Prostate Cancer....................     0.0240  .........     31,900  .........          8          0          8
Colorectal Cancer..................     0.0240     0.0139     28,000     28,000          7          4         11
Coronary Heart Disease.............     0.0240     0.0139    231,332    228,769         55         32         87
----------------------------------------------------------------------------------------------------------------

    Table 12 presents data on the annual new cases of mortality 
associated with the three types of cancer and coronary heart disease 
for men and women in the United States in 1998. Data for the number of 
deaths came from the National Center for Health Statistics (coronary 
heart disease) and the American Cancer Society (cancer). Data on 
colorectal cancer were not available by gender; FSIS assumed the 
estimated 56,000 cases were distributed equally between men and women.
    Estimating the benefits of preventing premature death. The benefits 
of the

[[Page 4992]]

proposed nutrition information labeling rule would be the lives saved 
due to the estimated reductions in mortality rates associated with 
these diseases. However, placing reduction of the risk of premature 
death in an economic context is difficult and controversial (for an in-
depth analysis of this issue, see Fred Kuchler and Elise Golan, 
``Assigning Value to Life: Comparing Methods for Valuing Health 
Risks,'' Agricultural Economic Report No. 784, U.S. Dept. Agric., Econ. 
Res. Service, Washington, DC, Nov. 1999). The problem is that there is 
no market for reducing diet-related fatal risks. If food were marketed 
by risk levels (say, probabilities of inducing cancer or heart disease) 
and consumers treated advertised risk levels like they do other 
objectively measurable product characteristics (e.g., weight or 
volume), there would be little difficulty in valuing food safety. 
Product prices could be statistically associated with risk levels, 
yielding the risk-dollar trade-off consumers make. That is, FSIS could 
measure, based on consumer purchases, the dollar value consumers attach 
to particular types of risk reduction.
    There is no price that can be tabulated from commercial 
transactions that reflects the value of reducing diet-related fatal 
risks. Actions that individuals might take to reduce these risks do not 
leave a behavioral trail for analysts to follow. This information void 
makes it difficult to evaluate programs that might reduce diet-related 
risks. In particular, there is no obvious dollar value to assign to the 
major benefit of such programs, namely lives saved.
    Ultimately, FSIS wanted to monetize the benefits of diet-related 
fatal health risk reduction. Other risks do leave a clear behavioral 
trail that analysts have followed, measuring the risk-dollar trade-off 
individuals make. The Agency's goal was to find a method of 
transferring market-based risk-dollar trade-off estimates to diet-
related fatal cancer risks.
    The most studied risk choices are those for on-the-job risks of 
accidental injury and death. Analysts have estimated the compensation 
required to induce workers to accept such risks. Many studies of labor 
market behavior have been carried out because the wide range of risk 
levels workers accept and the wide range of wages paid are amenable to 
statistical analysis. Available evidence suggests that workers' 
subjective assessments of risks they face are plausible (W.K. Viscusi, 
Fatal Tradeoffs--Public & Private Responsibilities for Risk. New York: 
Oxford University Press, 1992).
    Viscusi (1992) summarized the empirical work estimating the value 
of risk of premature death. Several studies estimate the risk-dollar 
trade-off in the labor market by dividing the wage premium for risky 
jobs by the risk of a fatal job injury. Drawing on the compiled results 
of these studies, he stated: ``Although the estimates of the risk-
dollar tradeoff vary considerably depending on the population exposed 
to the risk, the nature of the risk, and similar factors, most of the 
reasonable estimates of the value of life are clustered in the $3 to $7 
million range'' (p. 73). Thus, compensating wages indicate that, on 
average, industrial workers value a statistical life at $5 million 
(December 1990 dollars), the midpoint of the range. ERS currently uses 
the $5 million per life estimate (adjusted upwards for inflation to 
2000 dollars) to measure the benefits of preventing premature death 
from foodborne diseases caused by microbial pathogens (such as E. coli 
O157:H7, Salmonella, and Listeria monocytogenes.) (Crutchfield, 
Roberts, Buzby, and Frenzen, `` Food Safety Efforts Accelerate in the 
1990's,'' Food Review, 23 (3), September-December 2001, forthcoming). 
This estimate has been used by other government agencies to evaluate 
the benefits of regulations designed to reduce the risk of premature 
death. For example, The Food and Drug Administration (Procedures for 
the Safe and Sanitary Processing and Importing of Fish and Fishery 
Products Final Rule, 60 FR 65095) and the Consumer Product Safety 
Commission (Miller et al., ``The Consumer Product Safety Commission's 
Revised Injury Cost Model,'' Peer Review Draft Prepared for the U.S. 
Consumer Product Safety Commission, July 1, 1997) currently use 
Viscusi's mid-point value of $5 million for each life saved. (Kuchler 
and Golan, ``Assigning Value to Life: Comparing Methods for Valuing 
Health Risks,'' Agricultural Economic Report No. 784, U.S. Department 
of Agriculture, Economic Research Service, Washington, DC, November 
1999, page 25). However, other agencies use lower life values in their 
analyses. FSIS requests comments on whether $5 million is an 
appropriate value of life estimate.
    FSIS used the $5 million estimate as reflecting willingness to pay 
to avoid health risks. This is not the value an individual would pay to 
save his own life, but the aggregate value paid by many individuals to 
reduce a small risk of death each faces. To make this transfer, FSIS 
assumed that individuals make consistent risk choices, reducing health 
risks as much as their budgets allow. The Agency assumed individuals 
focus on the likelihood of health outcomes and how bad the outcomes 
might be, without regard to the different physical characteristics of 
hazards that give rise to health risks. The assumption critical for 
making the transfer from valuing job risks to valuing cancer risks is 
that individuals value years of life, and all years are equally 
valuable. All individuals are assumed to value a year of life equally.
    FSIS adjusted for differences between years of life lost to cancer 
and heart disease fatalities and years of life lost to workplace 
fatalities. The value of statistical life estimate is based on a worker 
anticipating a fatal injury and losing an average life expectancy of 
36.5 years (W.K. Viscusi, W.K. Cigarette taxation and social 
consequences of smoking. In James M. Poterba (ed.), Tax Policy and the 
Economy. Volume 9. Cambridge: MIT Press for the National Bureau of 
Economic Research, 1995). Potential life years lost to cancer and heart 
disease deaths were calculated by FSIS using data from National Centers 
for Health Statistics (National Center for Health Statistics, National 
Vital Statistics Report 48 (11) (July 24, 2000): 167). NCHS reports the 
number of years lost before age 75 per 100,000 population under the age 
of 75. These data were divided by the number of cancer and heart 
disease deaths for the population under 75 years of age to estimate the 
average number of life years lost up to age 75. The average number of 
life years lost were 14.9 for breast cancer, 3.9 for prostate cancer, 
9.56 for colorectal cancer, and 10.2 for coronary heart disease. Thus, 
to calculate a value of life lost to cancer or heart disease, FSIS 
adjusted the $5 million estimate downward to reflect the fewer years of 
life lost to cancer or heart disease, compared to work-related deaths. 
This calculation is similar to that carried out by Viscusi for 
estimating the value of statistical lives lost to environmental tobacco 
smoke (Viscusi, 1995).
    FSIS treated the last 36.5 years of life (L36.5) as a 
capital asset with a current value of $5 million. If the risk market 
could be characterized as an efficient market, the asset price should 
be equal to the present value of the service flow the asset produces.
[GRAPHIC] [TIFF OMITTED] TP18JA01.069

    R is the (assumed) constant annual value of life and r is the time 
preference

[[Page 4993]]

rate used to discount future benefits. Consider now the case of an 
individual facing an expected loss of 10.2 years of life from coronary 
heart disease. From this perspective, the value of the last 10.2 years 
of life for a victim of coronary heart disease is

L10.2 = e-26.3rr-1R(1 - 
e-10.2r).

    The equations for both L36.5 and L10.2 can be 
solved for R and equated, yielding

L10.2 = L36.5 e-26.3r(1 - 
e-36.5r)-1.

The value of cancer avoidance depends on an individual's rate at which 
future years of life are discounted. At an interest rate of 7 percent, 
the value is $636,755. At an interest rate of 3 percent, the value is 
$1,056,261.
    This estimate is in December, 1990 dollars. Using the CPI-U to 
update this estimate from 1990 to 2000 dollars (CPI-U = 133.8 in 
December 1990, and 171.3 average for 2000), the value becomes $815,218 
(7 percent discount rate) and $1,352,298 (3 percent) in 2000 dollars. 
Similar calculations were made for deaths associated with the other 
three diseases considered (which take into account the different number 
of life years lost for each disease). The results are reported in 
Tables 13 and 14. To arrive at an estimate of the benefits associated 
with reductions in mortality due to changes in fat and cholesterol 
intake, FSIS multiplied the dollar value assigned to each premature 
death prevented by the number of lives saved due to changes in diet 
quality. This estimate is reported for each disease as ``Total benefits 
per year'' in Tables 13 and 14. The total for all diseases is $86.6 
million dollars at a 7 percent discount rate and $145.2 million at 3 
percent.
    It should be noted that the calculations used to estimate present 
value explicitly account for the time factor associated with delayed 
health impacts of dietary change. Decreases in intake of saturated fat, 
fat, and cholesterol will reduce the incidence of heart disease and 
cancer, but not immediately--the reductions in illness and death will 
begin to occur years into the future. However, the formulas used for 
calculating the present value of the benefits explicitly take this into 
account, for they reflect the value placed on lost years of life 
occurring in the future.

       Table. 13--Estimated Lives Saved and Associated Economic Benefits, Using a 7 Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                     Prostate       Colorectal    Coronary heart
                                   Breast cancer      cancer          cancer          disease      All diseases
----------------------------------------------------------------------------------------------------------------
Deaths Per Year.................          41,200          31,900          28,028         228,231         329,359
Lives Saved Due to Dietary                     6               8              11              87             111
 Changes from Labeling..........
Years of Life Lost Per Premature            14.9             3.9             9.6            10.2             N/A
 Death..........................
Dollar Value of 1 Life Saved ($)       1,032,665         384,390         780,670         815,218             N/A
Total Benefits Per Year ($).....       5,906,020       1,513,329       8,273,399      70,936,607      86,629,355
20 Year Present Value ($).......      62,568,456      16,032,277      87,648,507     751,503,430    917,752,620
----------------------------------------------------------------------------------------------------------------
Note: Cancer deaths are for 2000, heart disease deaths are for 1998. Number of lives saved is rounded to the
  nearest integer. All benefits estimates are in year 2000 dollars.


                           Table. 14--Estimated Lives Saved and Associated Economic Benefits, Using a 3 Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Coronary heart
                                                             Breast cancer     Prostate cancer   Colorectal cancer       disease          All diseases
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deaths Per Year (1998)...................................             41,200             31,900             28,028            228,231            329,359
Lives Saved..............................................                  6                  8                 11                 87                111
Years of Life Lost Per Death.............................               14.9                3.9               10.6               10.2                N/A
Dollar Value of 1 Life Saved ($).........................          1,844,723            570,731          1,395,308          1,352,298                N/A
Total Benefits Per Year ($)..............................         10,550,343          2,246,945         14,787,213        117,670,918        145,255,419
20 Year Present Value ($)................................        156,962,464         33,428,870        219,996,395      1,750,646,120     2,161,033,850
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Cancer deaths are for 2000, heart disease deaths are for 1998. Number of lives saved is rounded to the nearest integer. All benefits are in year
  2000 dollars.

    It should be kept in mind that these estimates are based on annual 
data, and represent only one year's benefits. FSIS assumed that the 
reduction in mortality would continue each year. Using a twenty-year 
time horizon, FSIS estimated the present value (discounted at seven 
percent and three percent) of continuing reduction in premature deaths. 
This estimate was $918 million for all diseases at 7 percent, and 
$2.161 billion at 3 percent. FSIS requests comment on the benefits 
analysis above.
    Summary of costs and benefits of the proposed nutrition labeling 
rule. As discussed above, FSIS' preliminary analysis does not allow for 
a comparison of the net benefits among the regulatory options 
considered.
    For the proposed rule, the present values of benefits estimated in 
the two scenarios with 7 and 3 percent discount rates, respectively, 
range from $918 million to $2.161 billion. The present value (at a 7 
percent discount rate for 20 years) of annualized fixed costs, 
operating and paperwork burden costs (including paperwork costs for 
providing nutrition information for the major cuts) for the lower bound 
estimate amounts to $659.69 million. In case the higher estimate of 
fixed costs is used, the fixed, the operating, and the paperwork burden 
costs amount to $927.05 million, at a 7 percent discount rate for 20 
years.
    Percentage labeling. This proposed rule would allow but would not 
require a statement of the fat and lean percentage in ground or chopped 
products. FSIS believes that this nutrition information helps consumers 
make better food choices and provides incentives to producers to 
continue producing nutritionally-improved products which contribute 
substantially to the health benefits associated with nutrition 
labeling. However, FSIS does not have the data necessary to quantify 
these benefits. FSIS requests comments concerning the benefits of 
percentage labeling on ground or chopped products.

[[Page 4994]]

Regulatory Flexibility Act (RFA)--Preliminary Analysis

    Based on the cost analysis above, FSIS has made an initial 
determination that this rule will not have a significant economic 
impact on a substantial number of small entities, as defined by the 
Regulatory Flexibility Act (5 U.S.C 601). In the cost analysis above, 
FSIS estimated that the total costs for required nutrition labels on 
ground or chopped products would be between 1.5 and 2 pennies per 
pound. Also, as stated above, FSIS believes that the cost of providing 
nutrition labeling for the major cuts of single-ingredient, raw meat 
products should be negligible. FSIS estimates the total one-time costs 
to all retail establishments combined for obtaining point-of-purchase 
materials that include nutrition information for the major cuts of 
single-ingredient, raw products will be about $0.7 million.
    The data in Table 1 in the ``Baseline'' section above suggest that 
about one-half of the poultry plants were large (28 out of 63) in 1999. 
The number of ``small'' and ``very small'' poultry plants was 23 and 10 
respectively. In the absence of the availability of any data on 
production levels of these plants, FSIS assumes that the very small 
plants with less than ten employees are likely to produce less than 
100,000 pounds per ground poultry product. This assumption is not 
unrealistic because poultry grinding is a labor-intensive process and 
less than ten employees are not likely to produce more than 100,000 
pounds per ground product because these employees also process other 
products in these plants. Based on this assumption, 10 very small 
poultry establishments (or only 15% of all poultry establishments) are 
likely to be exempt from nutrition labeling requirements for ground or 
chopped products. However, these establishments would not be exempt if 
they are owned by a large corporation that owns several plants and 
employs 500 or more workers among all of its plants or produces more 
than 100,000 pounds of a particular ground product in total among all 
of its plants. FSIS did not have data linking these establishments to 
their corporate ownership.
    The EFD indicates that most of the ground meat producing plants are 
very small. For example, of the 2,426 ground meat establishments, 1470 
or 60% are very small. The number of small and large ground meat 
establishments are 843 and 68, respectively. Therefore, assuming that 
the very small establishments produce less than 100,000 pounds of a 
particular ground meat product, 60% of all these plants would be exempt 
from nutrition labeling requirements for ground or chopped products. In 
practice, the number of plants that would be exempt may be smaller than 
60 percent because many of these plants may be owned by large, multi-
plant corporations. However, FSIS does not have data on corporations 
that own these individual establishments.
    As discussed above, FSIS believes that a significant amount of 
ground beef is processed at retail. Table 2 in the ``Baseline'' section 
above shows the number of retail stores in 1999. Most of these stores 
grind beef. However, FSIS does not have specific data concerning the 
levels of ground beef ground at retail or on the size of retail stores 
that process ground beef. FSIS researched Census data for this 
information, but specific information related to retail establishments 
processing ground or chopped product was unavailable. Therefore, FSIS 
does not currently have all the data necessary for a comprehensive 
analysis on the effects of this rule on small entities. In addition to 
the lack of data on retail stores producing ground or chopped product, 
FSIS does not have data on the specific types and quantities of ground 
products produced in individual plants to determine the number of 
single-plant facilities or multi-plant companies or firms that would be 
exempt from this regulation. Therefore, FSIS is requesting this 
information and inviting comments concerning potential effects. In 
particular, FSIS is interested in determining the number and kind of 
small entities that may incur benefits or costs from implementation of 
this proposed rule.
    FSIS will make available a list of published sources of information 
so that industry can obtain literature from local libraries. This 
information will assist in the development of nutrition labels for 
ground or chopped products. This list of published sources of 
information should also help minimize the economic effect of this rule 
on small entities.
    FSIS is cognizant of the possibility that while the exempted 
establishments would not have to incur labeling costs, they might not 
realize benefits of greater sales of the labeled products, in case they 
choose not to nutritionally label their products. This is because if 
demand for the labeled product increases relative to demand for non-
labeled products, the exempt establishments would lose their market 
shares to the nonexempt establishments producing nutritionally labeled 
products. Therefore, to keep their market shares, these exempt 
establishments are likely to voluntarily include nutrition information 
on the product label. Such a strategy would minimize the adverse impact 
on these smaller establishments. It would, however, also increase their 
costs associated with labeling. Economic theory dictates that these 
establishments would compare the costs of nutrition labels with the 
benefits of retaining their market shares and would decide to label 
their products if the benefits of increasing the market shares exceed 
the label costs.
    Nutrition labeling would be required, either on the product label 
or on point-of-purchase materials, for the major cuts of single-
ingredient, raw product. Therefore, if manufacturers do not provide 
nutrition information on the label, retailers would be required to 
provide this information at the point-of-purchase or on product labels. 
However, as noted above, this requirement should not impose major costs 
or other burdens because many stores are currently providing nutrition 
information for these products, point-of-purchase materials are 
available for a nominal fee through FMI's web site ($12.00 for members, 
$24.00 for nonmembers), and FSIS intends to make point-of-purchase 
materials available, free of charge, on the FSIS web site.
    The economic impact on retail stores is likely to be minimal 
because recently there has been considerable consolidation of these 
stores due to mergers and acquisitions resulting in an increased market 
share of large retailers relative to small ones. For example, recently 
Royal Ahold, the Dutch Conglomerate, bought out Giant Food. Earlier 
last year, Ahold also announced the pending purchase of Supermarket 
General-II Holdings Corporation, parent of the Pathmark chain. 
Similarly, SUPERVALUE acquired Richfood, Food Lion bought out Hannaford 
Brothers, and Scarborough, and Albertson's purchased American Stores. 
(Sean Mehegan, ``Consolidation Changes the Face of the North American 
Supermarket Sector,'' Meat & Poultry (September 1999): 22-25). These 
mergers and acquisitions are likely to increase market shares of the 
large retailers at the cost of smaller ones.
    Table 2 in the ``Baseline'' section above shows the number of 
retail grocery stores in 1999. The economic impact of the first-year 
costs of compliance on the processors and the retailers is determined 
by dividing the total first-year costs by the number of processors or 
retailers. Table 8 revealed the range of first-year costs to processors 
for labeling ground or chopped products at $10.3 million to 20.3 
million. These

[[Page 4995]]

costs include the fixed costs, operating costs, and the paperwork 
burden costs. Since the number of processors is 2,489 (see Table 1), 
the impact per processor would range from $4,138.21 ($10.3 million/
2,489) to $8,155.89 ($20.3 million/2,489). Similarly, Table 8 also 
shows that the first-year costs to retailers for labeling ground or 
chopped products range from $ 49.90 million($28.8 + $12.6 million + 
$8.5 million) to $ 64.3 million ($43.2 million + $12.6 million +$8.5 
million). In addition, as explained above, the total paperwork burden 
costs to retailers for providing point-of-purchase materials for the 
major cuts of single-ingredient, raw products is approximately $0.7 
million. Thus, the total costs to retailers would range from $50.6 
million to $65 million. Since the number of retail stores (see Table 2) 
in 1999 was 69,500 (excluding convenience stores that do not normally 
sell meat products), the impact per retail store would range from 
$728.06 ($50.6 million/69,500) to $935.25 ($65 million/69,500). 
Therefore, the impact of the first-year cost would be greater on the 
processors relative to retailers.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. States and local jurisdictions are preempted by 
the Federal Meat Inspection Act (FMIA) and the Poultry Products 
Inspection Act (PPIA) from imposing any marking, labeling, packaging, 
or ingredient requirements on federally inspected meat and poultry 
products that are in addition to, or different than, those imposed 
under the FMIA or the PPIA. However, States and local jurisdictions may 
exercise concurrent jurisdiction over meat and poultry products that 
are outside official establishments for the purpose of preventing the 
distribution of meat and poultry products that are misbranded or 
adulterated under the FMIA or PPIA, or, in the case of imported 
articles, which are not at such an establishment, after their entry 
into the United States.
    The proposed rule is not intended to have retroactive effect.
    If this proposed rule is adopted, administrative proceedings will 
not be required before parties may file suit in court challenging this 
rule. However, the administrative procedures specified in Secs. 306.5 
and 381.35 must be exhausted before there is any judicial challenge of 
the application of the proposed rule, if the challenge involves any 
decision of an FSIS employee relating to inspection services provided 
under FMIA and PPIA.

Public Notification and Request for Data

    FSIS requests information regarding the impact of this proposed 
rule on minorities, women, and persons with disabilities, including 
information on the number of minority-owned meat and poultry 
establishments, the makeup of establishment workforces, and the 
communities served by official establishments.
    Public involvement in all segments of rulemaking and policy 
development are important. Consequently, in an effort to better ensure 
that minorities, women, and persons with disabilities are aware of this 
proposed rule and are informed about the mechanism for providing their 
comments, FSIS will announce it and provide copies of this Federal 
Register publication in the FSIS Constituent Update. FSIS provides a 
weekly FSIS Constituent Update, which is communicated via fax to over 
300 organizations and individuals. In addition, the update is available 
on line through the FSIS web page located at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fsis.usda.gov. 
The update is used to provide information regarding FSIS policies, 
procedures, regulations, Federal Register notices, FSIS public 
meetings, recalls, and any other types of information that could affect 
or would be of interest to our constituents/stakeholders. The 
constituent fax list consists of industry, trade, and farm groups, 
consumer interest groups, allied health professionals, scientific 
professionals, and other individuals that have requested to be 
included. Through these various channels, FSIS is able to provide 
information to a much broader, more diverse audience. For more 
information and to be added to the constituent fax list, fax your 
request to the Congressional and Public Affairs Office, at (202) 720-
5704.

Paperwork Requirements

    Title: Nutrition labeling of ground or chopped meat and poultry 
products and single-ingredient products.
    Type of Collection: New.
    Abstract: FSIS has reviewed the paperwork and record keeping 
requirements in this proposed rule in accordance with the Paperwork 
Reduction Act. Under this proposed rule, FSIS is requiring several 
information collection and recordkeeping activities. FSIS is proposing 
to require nutrition labeling on the major cuts of single-ingredient, 
raw meat and poultry products, either on their label or at their point-
of-purchase, unless an exemption applies. If the manufacturer provides 
nutrition information on the label of individual packages of the major 
cuts of single-ingredient, raw meat or poultry products, the retailer 
would not be required to provide the information at the point-of-
purchase. However, if the manufacturer does not provide the nutrition 
information on the label of these products, the retailer would be 
required to provide the information at their point-of-purchase. In the 
estimate of burden below, FSIS is estimating that all retailers would 
display point-of-purchase information for the major cuts of single-
ingredient, raw meat and poultry products, because this is an 
inexpensive means of providing nutrition information for multiple 
products and because this rule will not require that manufacturers 
include nutrition labels on the major cuts of single-ingredient, raw 
meat and poultry products. FSIS is also proposing to require nutrition 
labels on all ground or chopped meat and poultry products, with or 
without added seasonings, unless an exemption applies.
    Estimate of burden: FSIS estimates that obtaining point-of-purchase 
materials and making them available for consumers would take an average 
of 30 minutes. FSIS believes that the nutrition information on most 
point-of-purchase materials will be based on the most current 
representative database values contained in USDA's National Nutrient 
Data Bank or the USDA Nutrient Database for Standard Reference. FSIS 
also believes it is unlikely that there will be any nutrition claims 
made on the point-of-purchase materials on the basis of the 
representative data base values. Therefore, these products will not be 
subject to FSIS compliance review, and there will be no recordkeeping 
requirements based on this information.
    FSIS estimates that developing nutrition labels for ground or 
chopped products would take an average of 120 minutes. Labels developed 
at official establishments would be submitted to FSIS. FSIS estimates 
that each official establishment that produces ground or chopped 
product would submit three labels to FSIS for approval. FSIS estimates 
that it would take an average of 15 minutes to prepare and submit the 
form for prior approval. All ground or chopped product would be subject 
to FSIS compliance review; therefore, producers of ground or chopped 
product would be required to maintain records to support the validity 
of nutrient declarations contained on product labels. FSIS estimates 
the average time for recordkeeping would be 5 minutes.
    Respondents: Meat and poultry establishments and retail stores.

[[Page 4996]]

    Estimated number of respondents: 71,989.
    Estimated number of responses per respondent: 3.
    Estimated total annual burden on respondents: 474,549.
    Copies of this information collection assessment can be obtained 
from Lee Puricelli, Paperwork Specialist, Food Safety and Inspection 
Service, USDA, 112 Annex, 300 12th St., Washington, DC 20250.
    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the Agency, including whether the information will have practical 
utility; (b) the accuracy of the Agency's 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; and (d) 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 Lee Puricelli, see address above, and the 
Desk Officer for Agriculture, Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20253. 
Comments are requested by February 20, 2001. To be most effective, 
comments should be sent to OMB within 30 days of the publication date.

References

American Cancer Society. ``2000 Facts and Figures: Selected 
Cancers.'' http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.cancer.org/statistics/cff2000/ 
selectedcancers.html
The American Meat Institute Foundation. Relative Ground Beef 
Contribution to the United States Beef Supply. May 1996.
National Center for Health Statistics: Health, United States, 2000. 
U.S. Department of Health and Human Services, Centers for Disease 
Control and Prevention, Division of Data Services, Hyattsville, MD, 
2000.
National Center for Health Statistics: National Vital Statistics 
Report. Vol. 48, No. 11, July 24, 2000. U.S. Department of Health 
and Human Services, Centers for Disease Control and Prevention, 
Division of Data Services, Hyattsville, MD.
Retail Diagnostics, Inc. U.S. Department of Agriculture Nutrition 
Labeling and Safe Handling Information Study: December 1996, final 
report, March 19, 1997.
Retail Diagnostics, Inc. U.S. Department of Agriculture Nutrition 
Labeling and Safe Handling Information Study: October 1999, draft 
report, December 10, 1999.
Campbell, Robert. ``Ground Beef Testing: Determining Fat Content and 
Distribution,'' Meat and Poultry, October, 1997.
Crutchfield, S.R., T.A. Roberts, P.D. Frenzen, and J.C. Buzby. 
``Food Safety Efforts Accelerate in the 1990's'' Food Review, Vol. 
23, No. 3, September-December 2000, forthcoming.
Field, R.A. ``Bone Marrow Measurements for Mechanically Recovered 
Products from Machines that Press Bones,'' Meat Science, Vol. 51. 
2000.
Guthrie, J.F., J.J. Fox, L.E. Cleveland, and S. Welsh. ``Who Uses 
Nutrition Labeling, and What Effects Does Label Use Have on Diet 
Quality,'' Research Article, Society for Nutrition Education, 1995, 
163-172.
Kim, Sung-Yong, Rodolfo M. Nagaya, Jr., and Oral Capps, Jr. ``The 
Effect of Food Label Use on Nutrient Intakes: An Endogenous 
Switching Regression Analysis.'' Journal of Agricultural and 
Resource Economics, Vol. 25, No. 1, pp. 215-231. 2000.
Kreuter, M.W., L.K. Brennan, D.P. Schrff, and S.N. Lukwago, ``Do 
Nutrition Label Readers Eat Healthier Diets? Behavioral Correlates 
of Adults' Use of Food Labels,'' American Journal of Preventive 
Medicine, Vol. 13, No. 4, 1997, 277-283.
Kuchler, Fred, and Elise Golan. ``Assigning Value to Life: Comparing 
Methods for Valuing Health Risks.'' Agricultural Economic Report No. 
784, U.S. Dept. Agric., Econ. Res. Service, Washington, DC, Nov. 
1999.
Liebman, Bonnie. ``Where's the Beef Labeling,'' Nutrition Action 
Healthletter, June 1999, 8-11.
Mathios, A.D. and P.M. Ippolito. ``Food Companies Spread Nutrition 
Information Through Advertising and Labels,'' Food Review, May-
August, 1998, 38-43.
Mehegan, Sean, ``Merger Mania--Consolidation Changes the Face of the 
North American Supermarket Sector,'' Meat & Poultry, September 1999, 
22-25.
Miller, T.R., B.A. Lawrence, A.M. Jensen, G.M. Waehrer, R.S. Spicer, 
D.C. Lestina, and M.A. Cohen. ``The Consumer Product Safety 
Commission's Revised Injury Cost Model,'' Peer Review Draft Prepared 
for the U.S. Consumer Product Safety Commission, July 1, 1997.
Neuhouser, M.L, A.R. Kristal, and R.E. Patterson. ``Use of Food 
Nutrition Labels is Associated with Lower Fat Intake,'' Journal of 
the American Dietetic Association, Vol. 99, No. 45, 1999, 45-53.
Viscusi, W.K. 1992. Fatal Tradeoffs--Public & Private 
Responsibilities for Risk. Oxford University Press. New York.
Viscusi, W.K. 1995. Cigarette taxation and social consequences of 
smoking. In James M. Poterba (ed.), Tax Policy and the Economy. 
Volume 9. MIT Press for the National Bureau of Economic Research. 
Cambridge.
Zarkin, Gary A., Nancy Dean, Josephine Mauskopf, and Richard 
Williams, ``Potential Health Benefits of Nutrition Label Changes,'' 
American Journal of Public Health, 83(5) May 1993: 717-724.
Zarkin, Gary, Nancy Dean, Josephine A. Mauskopf, and Dierdre M. 
Neighbors, ``Estimated Benefits of Nutrition Label Changes: Final 
Report, Volume 1.'' Center for Economics Research, Research Triangle 
Institute, Research Triangle Park, NC 27709. April 1991.

List of Subjects

9 CFR Part 317

    Food labeling, Food packaging, Meat Inspection, Nutrition, 
Reporting and recordkeeping requirements.

9 CFR Part 381

    Food labeling, Food packaging, Nutrition, Poultry and poultry 
products, Reporting and recordkeeping requirements.

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

PART 317--LABELING, MARKING DEVICES AND CONTAINERS

    1. The authority citation for part 317 would continue to read as 
follows:

    Authority: 21 U.S.C 601-695; 7 CFR 2.18, 2.53.
    2. Section 317.300 would be revised to read as follows:


Sec. 317.300  Nutrition labeling of meat and meat food products.

    (a) Unless the product is exempted under Sec. 317.400, nutrition 
labeling must be provided for all meat and meat food products intended 
for human consumption and offered for sale, except single-ingredient, 
raw products that are not ground or chopped products described in 
Sec. 317.301 and are not major cuts of single-ingredient, raw meat 
products identified in Sec. 317.344. Nutrition labeling must be 
provided for the major cuts of single-ingredient, raw meat products 
identified in Sec. 317.344, either in accordance with the provisions of 
Sec. 317.309 for nutrition labels, or in accordance with the provisions 
of Sec. 317.345 for point-of-purchase materials, except as exempted 
under Sec. 317.400. For all other products for which nutrition labeling 
is required, including ground or chopped meat products described in 
Sec. 317.301, nutrition labeling must be provided in accordance with 
the provisions of Sec. 317.309, except as exempted under Sec. 317.400.
    (b) Nutrition labeling may be provided for single-ingredient, raw 
meat products that are not ground or chopped meat products described in 
Sec. 317.301 and that are not major cuts of single-ingredient, raw meat 
products identified in Sec. 317.344, either in accordance with the 
provisions of Sec. 317.309 for nutrition labels, or in accordance with 
the provisions of Sec. 317.345 for point-of-purchase materials.

[[Page 4997]]

    3. A new Sec. 317.301 would be added to read as follows:


Sec. 317.301  Required nutrition labeling of ground or chopped meat 
products.

    (a) Nutrition labels must be provided for all ground or chopped 
products (livestock species) and hamburger with or without added 
seasonings (including, but not limited to, ground beef, ground beef 
patties, ground sirloin, ground pork, and ground lamb) that are 
intended for human consumption and offered for sale, in accordance with 
the provisions of Sec. 317.309, except as exempted under Sec. 317.400.
    4. Section 317.309 would be amended as follows:
    a. In paragraph (b)(3), the first sentence would be amended by 
adding ``that are not ground or chopped meat products described in 
Sec. 317.301'' after the phrase ``single-ingredient, raw products'', 
and by removing ``as set forth in Sec. 317.345(a)(1)''; the second 
sentence would be revised by adding, ``that are not ground or chopped 
meat products described in Sec. 317.301'' after the phrase ``single-
ingredient, raw products'', and the following new sentence would be 
added after the first sentence:
* * * * *
    (b) * * *
    (3) * * * ``For single-ingredient, raw products that are not ground 
or chopped meat products described in Sec. 317.301, if data are based 
on the product ``as consumed,'' the data must be presented in 
accordance with Sec. 317.345(d). * * *
* * * * *
    b. Paragraph (b)(10) would be amended by adding the following new 
sentence at the end of the paragraph:
* * * * *
    (b) * * *
    (10) * * * The declaration of the number of servings per container 
need not be included in nutrition labeling of single-ingredient, raw 
meat products that are not ground or chopped meat products described in 
Sec. 317.301, including those that have been previously frozen.
* * * * *
    c. Paragraph (b)(11) would be amended by adding the phrase 
``single-ingredient, raw products that are not ground or chopped meat 
products described in Sec. 317.301 and'' after ``exception of''.
    d. Paragraph (d)(3)(ii) would be amended by removing the period and 
adding ``or on single-ingredient, raw meat products that are not ground 
or chopped meat products described in Sec. 317.301.'' at the end of the 
paragraph.
    e. Paragraph (e)(3) would be amended by adding ``, but may be on 
the basis of ``as consumed'' for single-ingredient, raw meat products 
that are not ground or chopped meat products described in 
Sec. 317.301,'' after ``as packaged''.
    f. Paragraph (h)(9) would be amended by removing the phrase 
``(including ground beef)'' products'', by adding, ``that are not 
ground or chopped meat products described in Sec. 317.301'' after 
``products'', by removing the phrase, ``its published form, the 
Agriculture Handbook No. 8 series available from the Government 
Printing Office'', and by adding, in its place, ``its released form, 
the USDA Nutrient Database for Standard Reference'', and by removing 
the period and adding the following at the end of the paragraph: `` as 
provided in Sec. 317.345(e) and (f).''
    5. Section 317.343 would be removed.
    6. Section 317.344 would be amended by removing the phrases 
``ground beef regular without added seasonings, ground beef about 17% 
fat,'' and ``ground pork.''
    7. Section 317.345 would be amended as follows:
    a. Paragraph (d) would be amended by removing ``should'' and 
adding, in its place, ``for products covered in paragraphs (a)(1) and 
(a)(2) must''.
    b. Paragraph (e) would be amended by removing ``its published form, 
the Agriculture Handbook No. 8 series'' and by adding, in its place, 
``its released form, the USDA Nutrient Database for Standard 
Reference'', and by removing ``(including ground beef)''.
    c. Paragraph (f) would be amended by adding ``provided'' after 
``nutrition information is''.
    d. Paragraph (g) would be amended by removing the phrase 
``(including ground beef)''.
    e. The section heading and paragraphs (a) and (c) would be revised 
to read as follows:


Sec. 317.345  Nutrition labeling of single-ingredient, raw meat 
products that are not ground or chopped products described in 
Sec. 317.301.

    (a)(1) Nutrition information on the major cuts of single-
ingredient, raw meat products identified in Sec. 317.344, including 
those that have been previously frozen, is required, either on their 
label or at their point-of-purchase, unless exempted under 
Sec. 317.400. If nutrition information is presented on the label, it 
must be provided in accordance with Sec. 317.309. If nutrition 
information is presented at the point-of-purchase, it must be provided 
in accordance with the provisions of this section.
    (2) Nutrition information on single-ingredient, raw meat products 
that are not ground or chopped meat products described in Sec. 317.301 
and are not major cuts of single-ingredient, raw meat products 
identified in Sec. 317.344, including those that have been previously 
frozen, may be provided at their point-of-purchase in accordance with 
the provisions of this section or on their label, in accordance with 
the provisions of Sec. 317.309.
    (3) A retailer may provide nutrition information at the point-of-
purchase, by various methods, such as by posting a sign, or by making 
the information readily available in brochures, notebooks, or leaflet 
form in close proximity to the food. The nutrition labeling information 
may also be supplemented by a video, live demonstration, or other 
media. If a nutrition claim is made on point-of-purchase materials, all 
of the format and content requirements of Sec. 317.309 apply. However, 
if only nutrition information--and not a nutrition claim--is supplied 
on point-of-purchase materials, the requirements of Sec. 317.309 apply, 
provided, however:
    (i) The listing of percent of Daily Value for the nutrients (except 
vitamins and minerals specified in Sec. 317.309 (c)(8)) and footnote 
required by Sec. 317.309(d)(9) may be omitted; and
    (ii) The point-of-purchase materials are not subject to any of the 
format requirements.
* * * * *
    (c) For the point-of-purchase materials, the declaration of 
nutrition information may be presented in a simplified format as 
specified in Sec. 317.309(f).
* * * * *
    8. Section 317.362 would be amended by adding a new paragraph (f) 
to read as follows:


Sec. 317.362  Nutrient content claims for fat, fatty acids, and 
cholesterol content.

* * * * *
    (f) A statement of the lean percentage may be used on the label or 
in labeling of ground or chopped meat products described in 
Sec. 317.301 when the product does not meet the criteria for ``low 
fat,'' defined in Sec. 317.362(b)(2), provided that a statement of the 
fat percentage is contiguous to and in lettering of the same color, 
size, type, and on the same color background as the statement of the 
lean percentage.
* * * * *
    9. Section 317.400 would be amended as follows:
    a. Paragraph (a)(1), introductory text, would be amended by 
removing the comma and adding, at the end of the paragraph, ``, except 
that this exemption does not apply to the major cuts of

[[Page 4998]]

single-ingredient, raw products identified in Sec. 317.344,''.
    b. Paragraph (a)(1)(ii) would be amended by adding ``, including a 
single retail store,'' after the phrase ``single-plant facility,'' and 
by adding, ``, including a multi-retail store operation,'' after 
``company/firm''.
    c. Paragraph (a)(7)(i) would be amended by removing the semi-colon 
and by adding the following at the end of the paragraph: ``, provided, 
however, that this exemption does not apply to ready-to-eat ground or 
chopped meat products described in Sec. 317.301 that are packaged or 
portioned at a retail establishment, unless the establishment qualifies 
for an exemption under paragraph (a)(1) of this section;''.
    d. Paragraph (a)(7)(ii) would be amended by removing the period and 
by adding the following at the end of the paragraph: ``, provided, 
however, that this exemption does not apply to multi-ingredient ground 
or chopped meat products described in Sec. 317.301 that are processed 
at a retail establishment, unless the establishment qualifies for an 
exemption under paragraph (a)(1) of this section.''
    e. Paragraph (d)(1) would be amended by removing the period at the 
end of the first sentence, and by adding the following to the end of 
the first sentence: ``, except that this exemption does not apply to 
the major cuts of single-ingredient, raw meat products identified in 
Sec. 317.344.''

PART 381---POULTRY PRODUCTS INSPECTION REGULATIONS

    10. 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 2.18, 
2.53.

    11. Section 381.400 would be revised to read as follows:


Sec. 381.400  Nutrition labeling of poultry products.

    (a) Unless the product is exempted under Sec. 381.500, nutrition 
labeling must be provided for all poultry products intended for human 
consumption and offered for sale, except single-ingredient, raw 
products that are not ground or chopped products described in 
Sec. 381.401 and are not major cuts of single-ingredient, raw poultry 
products identified in Sec. 381.444. Nutrition labeling must be 
provided for the major cuts of single-ingredient, raw poultry products 
identified in Sec. 381.444, either in accordance with the provisions of 
Sec. 381.409 for nutrition labels, or in accordance with the provisions 
of Sec. 381.445 for point-of-purchase materials, except as exempted 
under Sec. 381.500. For all other products that require nutrition 
labeling, including ground or chopped poultry products described in 
Sec. 381.401, nutrition labeling must be provided in accordance with 
the provisions of Sec. 381.409, except as exempted under Sec. 381.500.
    (b) Nutrition labeling may be provided for single-ingredient, raw 
poultry products that are not ground or chopped poultry products 
described in Sec. 381.401 and that are not major cuts of single-
ingredient, raw poultry products identified in Sec. 381.444, either in 
accordance with the provisions of Sec. 381.409 for nutrition labels, or 
in accordance with the provisions of Sec. 381.445 for point-of-purchase 
materials.
* * * * *
    12. A new Sec. 381.401 would be added to read as follows:


Sec. 381.401  Required nutrition labeling of ground or chopped poultry 
products.

    Nutrition labels must be provided for all ground or chopped poultry 
(kind) with or without added seasonings (including, but not limited to, 
ground chicken, ground turkey, and (kind) burgers) that are intended 
for human consumption and offered for sale, in accordance with the 
provisions of Sec. 381.409, except as exempted under Sec. 381.500.
* * * * *
    13. Section 381.409 would be amended as follows:
    a. In paragraph (b)(3), the first sentence would be amended by 
adding ``that are not ground or chopped poultry products described in 
Sec. 381.401'' after the phrase ``single-ingredient, raw products'' and 
by removing ``as set forth in Sec. 381.445(a)(1)''; the second sentence 
would be amended by adding, ``that are not ground or chopped poultry 
products described in Sec. 381.401,'' after the phrase ``single-
ingredient, raw products''; and the following new sentence would be 
added after the first sentence:
* * * * *
    (b) * * *
    (3) * * * For single-ingredient, raw products that are not ground 
or chopped poultry products described in Sec. 381.401, if data are 
based on the product ``as consumed,'' the data must be presented in 
accordance with Sec. 381.445(d).* * *
    b. Paragraph (b)(10) would be amended by adding the following new 
sentence at the end of the paragraph:
* * * * *
    (b) * * *
    (10) * * * The declaration of the number of servings per container 
need not be included in nutrition labeling of single-ingredient, raw 
poultry products that are not ground or chopped poultry products 
described in Sec. 381.401, including those that have been previously 
frozen.
* * * * *
    c. Paragraph (b)(11) would be amended by adding the phrase 
``single-ingredient, raw products that are not ground or chopped 
poultry products described in Sec. 381.401 and'' after ``exception 
of''.
    d. Paragraph (d)(3)(ii) would be amended by removing the period and 
adding ``or on single-ingredient, raw poultry products that are not 
ground or chopped poultry products described in Sec. 381.401.'' at the 
end of the paragraph.
    e. Paragraph (e)(3) would be amended by adding ``, but may be on 
the basis of ``as consumed'' for single-ingredient, raw poultry 
products that are not ground or chopped poultry products described in 
Sec. 381.401,'' after ``as packaged''.
    f. Paragraph (h)(9) would be amended by adding, ``that are not 
ground or chopped poultry products described in Sec. 381.401'' after 
``products'', by removing the phrase, ``its published form, the 
Agriculture Handbook No. 8 series'', and by adding, in its place, ``its 
released form, the USDA Nutrient Database for Standard Reference'', and 
by removing the period and adding the following at the end of the 
paragraph: 
``, as provided in Sec. 381.445(e) and (f).''
    14. Section 381.443 would be removed.
    15. Section 381.445 would be amended as follows:
    a. Paragraph (d) would be amended by removing ``should'' and 
adding, in its place, ``for products covered in paragraphs (a)(1) and 
(a)(2) of this section must''.
    b. Paragraph (e) would be amended by removing ``its published form, 
the Agriculture Handbook No. 8 series'' and by adding, in its place, 
``its released form, the USDA Nutrient Database for Standard 
Reference.''
    c. Paragraph (f) would be amended by adding ``provided'' after 
``nutrition information is''.
    d. The section heading and paragraph, (a) and (c) would be revised 
to read as follows:


Sec. 381.445  Nutrition labeling of single-ingredient, raw poultry 
products that are not ground or chopped products described in 
Sec. 381.401.

    (a)(1) Nutrition information on the major cuts of single-
ingredient, raw poultry products identified in Sec. 381.444, including 
those that have been previously frozen, is required, either on their 
label or at their point-of-purchase, unless exempted under 
Sec. 381.500. If

[[Page 4999]]

nutrition information is presented on the label, it must be provided in 
accordance with the provisions of Sec. 381.409. If nutrition 
information is presented at the point-of-purchase, it must be provided 
in accordance with the provisions of this section.
    (2) Nutrition information on single-ingredient, raw poultry 
products that are not ground or chopped poultry products described in 
Sec. 381.401 and are not major cuts of single-ingredient, raw poultry 
products identified in Sec. 381.444, including those that have been 
previously frozen, may be provided at their point-of-purchase in 
accordance with the provisions of this section or on their label, in 
accordance with the provisions of Sec. 381.409.
    (3) A retailer may provide nutrition information at the point-of-
purchase, by various methods, such as by posting a sign, or by making 
the information readily available in brochures, notebooks, or leaflet 
form in close proximity to the food. The nutrition labeling information 
may also be supplemented by a video, live demonstration, or other 
media. If a nutrition claim is made on point-of-purchase materials, all 
of the format and content requirements of Sec. 381.409 apply. However, 
if only nutrition information--and not a nutrition claim--is supplied 
on point-of-purchase materials, the requirements of Sec. 381.409 apply, 
provided, however:
    (i) The listing of percent of Daily Value for the nutrients (except 
vitamins and minerals specified in Sec. 381.409(c)(8)) and footnote 
required by Sec. 381.409(d)(9) may be omitted; and
    (ii) The point-of-purchase materials are not subject to any of the 
format requirements.
* * * * *
    (c) For the point-of-purchase materials, the declaration of 
nutrition information may be presented in a simplified format as 
specified in Sec. 381.409(f).
* * * * *
    16. Section 381.462 would be amended by adding a new paragraph (f) 
to read as follows:


Sec. 381.462  Nutrient content claims for fat, fatty acids, and 
cholesterol content.

* * * * *
    (f) A statement of the lean percentage may be used on the label or 
in labeling of ground or chopped poultry products described in 
Sec. 381.401 when the product does not meet the criteria for ``low 
fat,'' defined in Sec. 381.462(b)(2), provided that a statement of the 
fat percentage is contiguous to and in lettering of the same color, 
size, type, and on the same color background as the statement of the 
lean percentage.
* * * * *
    17. Section 381.500 would be amended as follows:
    a. Paragraph (a)(1) would be amended by removing the comma and 
adding, at the end of the paragraph, ``, except that this exemption 
does not apply to the major cuts of single-ingredient, raw poultry 
products identified in Sec. 381.444.
    b. Paragraph (a)(1)(ii) would be amended by adding, ``, including a 
single retail store,'' after the phrase ``single-plant facility,'' and 
by adding ``, including a multi-retail store operation'' after 
``company/firm''.
    c. Paragraph (a)(7)(i) would be amended by removing the semi-colon 
and adding the following at the end of the paragraph: ``provided, 
however, that this exemption does not apply to ready-to-eat ground or 
chopped poultry products described in Sec. 381.401 that are packaged or 
portioned at a retail establishment, unless the establishment qualifies 
for an exemption under paragraph (a)(1) of this section,'' after 
``establishment''.
    d. Paragraph (a)(7)(ii) would be amended by removing the period and 
adding the following at the end of the paragraph: ``provided, however, 
that this exemption does not apply to multi-ingredient ground or 
chopped poultry products described in Sec. 381.401 that are processed 
at a retail establishment, unless the establishment qualifies for an 
exemption under paragraph (a)(1) of this section.'' after 
``establishment''.
    e. Paragraph (d)(1) would be amended by removing the period at the 
end of the sentence, and by adding the following to the end of the 
sentence: ``except that this exemption does not apply to the major cuts 
of single-ingredient, raw poultry products identified in 
Sec. 381.444.''

    Done in Washington, DC, on January 8, 2001.
Thomas J. Billy,
Administrator.
[FR Doc. 01-1119 Filed 1-17-01; 8:45 am]
BILLING CODE 3410-DM-P