Retained Water in Raw Meat and Poultry Products; Poultry Chilling Performance Standards

DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 381 and 441

[Docket No. 97-054P]

RIN 0583-AC26

Retained Water in Raw Meat and Poultry Products; Poultry Chilling

Performance Standards

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing

regulations to limit the amount of water retained by raw, single-

ingredient, meat and poultry products as a result of post-evisceration

processing, such as carcass washing and chilling. Meat and poultry

carcasses and parts would not be permitted to contain water resulting

from post-evisceration processing unless the establishment demonstrates

that water retention is necessary to meet applicable food safety

requirements. In addition, the establishment would be required to

disclose on the label the maximum percentage of retained water in the

product. The proposed labeling statement would provide information to

consumers of raw meat and poultry products that would help them to make

purchasing decisions. Establishments having data demonstrating that

there is no retained water in their products could choose not to label

the products with the retained-water statement or to make a no-

retained-water claim on the product label.

FSIS is also proposing to revise the poultry chilling regulations

to improve consistency with the Pathogen Reduction/Hazard Analysis and

Critical Control Points (PR/HACCP) regulations, eliminate ``command-

and-control'' features, and reflect current technological capabilities

and good manufacturing practices.

DATES: Comments must be received on or before December 10, 1998.

ADDRESSES: Submit one original and two copies of written comments to

Docket Clerk, U.S. Department of Agriculture, Food Safety and

Inspection Service, Room 102, 300 12th Street, SW., Washington, DC

20250-3700. Please refer to docket number 97-054P in your comments. All

comments submitted in response to this proposal, as well as research

and background information used by FSIS in developing this document,

will be available for public inspection in the Docket Clerk's Office

between 8:30 a.m. and 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Patricia F. Stolfa, Assistant Deputy

Administrator, Office of Policy, Program Development, and Evaluation,

Food Safety and Inspection Service, U.S. Department of Agriculture,

Washington, DC 20250-3700; (202) 205-0699.

SUPPLEMENTARY INFORMATION:

Background

FSIS carries out the mandates of the Federal Meat Inspection Act

(FMIA; 21 U.S.C. 601 et seq.), the Poultry Products Inspection Act

(PPIA; 21 U.S.C. 451 et seq.), and the Egg Products Inspection Act (21

U.S.C. 1031 to 1056) to ensure that meat, meat food, poultry, and egg

products in interstate and foreign commerce are wholesome, not

adulterated, and properly marked, labeled, and packaged. The Agency

maintains continuous inspection oversight of operations in meat and

poultry slaughtering and processing establishments and in egg product

processing plants. Among the requirements enforced by the Agency are

those having to do with the post-evisceration handling and storage of

carcasses and parts.

Meat and poultry carcasses are handled in a manner intended to

yield wholesome, unadulterated products. After evisceration, raw meat

and poultry carcasses are subject to various processes, including

washing and chilling, to preserve the safety of the products. The

Agency is concerned about the potential for water absorption and

retention in the stages of processing after livestock and poultry

carcasses are eviscerated and trimmed. Because an eviscerated carcass

is open and exposed to water through the washing, chilling, and

spraying processes, it is likely to absorb and retain water under the

skin and in muscle tissue. There is a potential for product

adulteration due to excess water absorption and retention.

In livestock slaughtering establishments, carcasses undergo a final

wash after slaughter and dressing to remove any adhering foreign matter

before being placed in the cooler. Historically, meat carcasses have

been air-chilled. Since the late 1970's, FSIS has permitted air

chilling in combination with a water spray to minimize carcass

shrinkage and promote rapid heat loss.

Air chilling results in carcass weight loss from evaporation of the

natural water in the carcass during evaporative cooling. Spraying water

on livestock carcasses during air chilling either replaces the water

that would have evaporated during air chilling or prevents the water in

the carcass from evaporating. The result is that livestock carcasses

subjected to a water spray retain water, and consequently, weight,

which would have been lost as a result of air chilling. Water spray

systems must be operated in a manner that does not result in a shift's

production of meat carcasses from weighing, on average, more than their

pre-chilled weight. (FSIS Directive 6330.1) This directive recognizes

that it is technologically feasible and commercially practical to chill

livestock carcasses in a manner that, on average, does not result in an

increase in the carcass weight above the pre-chilled weight.

Although livestock slaughter establishments are not prohibited from

using water immersion chilling methods, federally inspected

establishments in the United States do not use immersion chilling for

livestock carcasses. Immersion chilling is impractical because of the

size of livestock carcasses and the associated costs of equipment and

other resources.

Processing and chilling methods used for some edible meat

byproducts and organ meats may result in water retention. For example,

cheek meat, meat from ears and tails, and organ meats are washed,

cleaned and chilled to preserve safety and wholesomeness before being

shipped. Tripe is bleached and scalded before being shipped.

Chitterlings (swine intestines) are washed and chilled before shipment

and are packaged with water. A few establishments chill beef cheek

meats in water, a process that may result in the absorption of water.

The product is labeled to indicate the maximum percentage added water

it may contain to alert buyers to the fact that the product may weigh

more because of the chilling process.

Unlike livestock establishments, poultry processors have

traditionally chilled poultry using the water immersion chilling

method. Although air chilling is permitted, immersion chilling is more

rapid and cost efficient. The use of water immersion chilling is

limited to whole poultry carcasses or major carcass portions. Poultry

establishments are required to reduce the internal temperature of

water-chilled poultry carcasses to 40 degrees F. or less within 4 to 8

hours after slaughter, depending on the size of the carcass (9 CFR

381.66(b)).

Water-immersion chilling is the preferred poultry chilling method

in the United States for several reasons. First, water is the most

effective and efficient conducting medium for removing animal heat.

[[Page 48962]]

Before the 1960's, poultry was chilled in layers of ice or immersed

in small tanks of ice water. The poultry was chilled using these

methods for a sufficient amount of time to reduce the temperature of

the poultry to 40 degrees F. or below, after which the tanks were

emptied. The use of small individual single-use tanks required

significant resources, including space, employees, and water or ice.

Because of these disadvantages, continuous immersion chillers were

developed. Continuous immersion chillers consist of one or more large

tanks where chilled water is continually replenished and poultry

carcasses continuously enter and exit. Modern chillers are equipped

with refrigeration units and systems for controlling water volume,

direction, and agitation. They are efficient, rapid, and economical.

Chilling poultry carcasses in water-immersion chillers always

results in some absorption and retention of water, primarily in the

skin and the tissue immediately under the skin. Also, some water

becomes bound to the muscle tissue.

FSIS has consistently required that the retention of water in meat

and in poultry products be minimized. FSIS is mandated to prevent the

distribution in commerce of meat and poultry products that are

adulterated or misbranded. A product is adulterated if, among other

circumstances, ``a substance has been added to or mixed with the

product to increase its bulk or weight or make it appear of greater

value than it is.'' (21 U.S.C. 601(m)(8), 453(g)(8)). Thus, a product

containing excessive water may be considered adulterated. Likewise, a

product containing excessive water may be considered misbranded. A

product is misbranded if, among other circumstances, its label is false

or misleading in any particular. (21 U.S.C. 601(n)(1), 453(h)(1)).

Immersion chilling of poultry could result in a product's becoming

misbranded or economically adulterated through the retention of

absorbed water. However, because immersion chilling is the most

efficient way to control bacterial growth in poultry products and to

ensure that establishments consistently meet applicable chilling time

and temperature requirements, FSIS has permitted the retention of some

water in poultry.

FSIS has limited water retention to amounts that are considered

unavoidable while achieving applicable food safety requirements. The

regulations generally require water absorption and retention in poultry

products to be minimized (9 CFR 381.66(d)(1)). FSIS promulgated

regulations defining maximum water retention levels for classes of

poultry in 1959, 1960, and 1971 (24 FR 9566 (12/1/59); 26 FR 6471 (7/

19/61); and 35 FR 739 (10/7/70)). Poultry products containing water in

excess of the regulatory limits are considered adulterated.

To ensure that poultry products do not exceed maximum water

retention levels, inspectors sample carcasses each day from each

chilling system at a point before the poultry is washed and again

shortly after the poultry exits the chiller. If the water limits are

exceeded, the poultry is retained until enough water has drained to

bring the poultry into compliance with the limits. As a practical

matter, establishments maintain overall water absorption averages below

the maximum limitation to consistently comply with the regulatory

limits. However, some firms equip and operate their processing lines in

a manner that will enable them to control retained water to a level as

close as possible to the regulatory limits. Sometimes the regulatory

limits are exceeded. The poultry may then be held at the plant for a

longer time to permit excess water to drain, or it may be diverted to

operations, such as boning and cut-up, or other processing operations

in which excess water is lost.

Concerns About Differences Between the Meat and the Poultry Regulations

Early in 1996, FSIS received a petition from several national

livestock industry associations concerning perceived inequities between

the meat and poultry regulations. The petitioners argued that the

restriction on water absorption in meat carcasses is inequitable in

comparison to the absorption allowance for poultry and that, moreover,

poultry carcasses with weight added through water absorption are

economically adulterated. The petitioners requested that FSIS prohibit

the retention of any water absorbed by poultry carcasses during

immersion chilling. This request was among those the petitioners

reiterated in a February 7, 1997, letter to the Department. FSIS plans

to address elements of the petitioners' requests other than the

absorbed-water issue in future rulemaking documents.

In 1994, a group of poultry consumers and red meat producers

brought an action against the Department in the United States District

Court for the Southern District of Iowa challenging several differences

in the regulatory requirements for meat and poultry, including the

contaminant removal methods, standards of identity, and water-

retention. (Kenney, et al. v. Glickman.)

Plaintiffs alleged that poultry products containing absorbed water

were both economically adulterated and misbranded within the meaning of

the PPIA. They also alleged that the regulations establishing maximum

levels for water retention violated the Administrative Procedure Act

because they were arbitrary and capricious when compared to the

regulatory prohibition on absorbed water in meat carcasses. The Court

found that poultry containing absorbed water was not economically

adulterated or misbranded under the PPIA. However, the Court also found

that the regulation specifying water absorption and retention limits

for ready-to-cook poultry that is to be frozen, cooked, or consumer-

packaged as whole poultry (9 CFR 381.66(d)(2)) was arbitrary and

capricious because the Secretary did not explain in the rulemaking

record how he determined the particular water retention levels, why

water retention cannot be reduced below current levels, or why meat and

poultry should be treated differently.

The Court left in place the general requirement at 9 CFR

381.66(d)(1) for establishments to minimize water absorption and

retention in poultry at the time of packaging. The Court also left

standing the regulations at 9 CFR 381.66(d)(3)-(6) controlling the

amount of retained water in chickens and turkeys that are to be cut up

or ice-packed.

The American Meat Institute (AMI), a trade association representing

meat and poultry slaughtering and processing establishments, petitioned

the Department on October 2, 1997, to amend the regulations governing

water absorption and retention in certain raw meat and poultry

products. This petitioner requested five specific changes:

Repealing regulations requiring poultry carcasses to be

chilled below 40 deg.F within a specified time

Requiring water retention in meat and poultry products to

have been minimized at the time of packaging

Allowing meat and poultry carcasses to absorb and retain

water that is incidental and unavoidable in chilling practices designed

to improve food protection

Measuring weight gain from water retention as the

difference between the hot carcass weight and the weight of packaged,

finished products

Requiring labeling of raw meat and poultry with retained

water above certain minimum absorption and retention levels FSIS

considered the petitioner's requests in developing this proposal.

[[Page 48963]]

Purpose for New Regulation

In proposing new regulations governing water retention in raw meat

and poultry products, FSIS intends: (1) to provide consumers with

additional information to help them in making purchasing decisions; (2)

to eliminate certain differences between the meat and the poultry

inspection regulations; (3) to establish regulations that are

consistent with the objectives of regulatory reform and with the

Agency's ``Pathogen Reduction; Hazard Analysis and Critical Control

Points Systems (PR/HACCP)'' regulations (61 FR 38806; July 25, 1996);

and (4) to streamline the regulations.

This proposal would respond to the District Court's findings that

the regulations the Court set aside were ``arbitrary and capricious''

by providing: (1) that any water retention limits be established on the

basis of sound data; (2) that such limits be as low as technically

feasible in meeting food safety requirements; and (3) that, to the

extent possible, the same criteria for establishing water retention

limits apply both to meat and to poultry products.

FSIS currently lacks information on which to base any water

retention limit, or to determine whether any limit currently in use can

be further reduced. The proposal would be intended, in part, to ensure

the availability of data demonstrating that water retention in affected

products is unavoidable and that any water retention limits the Agency

sets are the minimum feasible. The soundness of the data would be

ensured in large measure by its having been collected under protocols

approved by FSIS (see below).

This proposal would respond, at least in part, to four of the five

requests in AMI's petition. It concerns water absorbed and retained in

product as a result of post-evisceration processing and, hence, the

difference between ``hot carcass'' and finished product weight. It

would require that water retention be minimized, that the processing

that resulted in water absorption have a food-safety purpose, and that

the amount of water retained be indicated on labels of affected

products.

This proposal does not address the time and temperature

requirements for chilling poultry carcasses. FSIS intends to undertake

a separate rulemaking on this subject.

Proposed Provisions To Limit Retained Water in Meat and Poultry

FSIS is proposing new requirements in new Part 441 to address water

retention in single-ingredient raw meat and ready-to-cook poultry

products as a result of post-evisceration processing. The proposed

requirements would replace those set forth in 9 CFR Sec. 381.66(d)(3)-

(8) as well as those in Sec. 381.66(d)(2). The intention is to

restrict, as much as feasible, the amount of water absorbed and

retained in meat and poultry products. The Agency would also require

product labels to state the maximum percentage of retained water the

products may contain.

Some quantitative limit or measure is necessary to determine

whether water retention has been minimized. Until the decision in

Kenney v. Glickman, FSIS used the limits specified in Sec. 381.66(d)(2)

to determine whether poultry establishments were meeting the

requirement to minimize water absorption and retention in whole birds.

The only currently available quantitative limit for determining

whether water retention in raw products has been minimized (other than

the limits for cut-up or ice-pack poultry in 9 CFR 381.66(d)(3)-(6)) is

zero percent. FSIS is aware that it may be difficult to eliminate water

retention for poultry and some meat products while continuing to meet

applicable food safety requirements. FSIS is therefore proposing an

alternative to a zero-percent retained-water requirement.

Establishments would be required to collect data, in accordance with a

protocol approved by FSIS, and demonstrate that water retention is an

unavoidable consequence of the process used to meet a food safety

requirement, such as the Salmonella performance standards or time/

temperature chilling requirements. FSIS expects that, to determine that

any unavoidable water retention is the minimum feasible, the protocol

would provide for testing the process under alternative equipment

settings or other variables.

FSIS would accept data generated from an approved protocol to

support water retention levels for multiple establishments using

similar post-evisceration processing techniques and equipment.

Depending on the design of the protocol and the adequacy of the data

collected under it, the data could be used to justify an industry-wide

water-retention limit, a limit applying to poultry products processed

by several establishments, or a limit applying only to a single

establishment's product. Establishments using an industry-wide or

multi-establishment limit would have to be able to demonstrate that the

conditions under which their products are processed match those assumed

or specified in the protocol used to justify the limit.

FSIS requests comment on the advisability of accepting, during the

comment period on this proposed rule, protocols for gathering data that

would justify industry-wide or process-specific water retention limits.

FSIS also requests comment on whether the Agency should accept

protocols submitted by industry groups for individual establishments.

In a recent Federal Register notice (62 FR 64767; December 9,

1997), FSIS requested comments on specifications for protocols to be

used for collecting data on chilled, ready-to-cook poultry products.

The suggested specifications for such a protocol included: a statement

of purpose; the type of washing or chilling system; a description of

the chiller system process, components, equipment, modifications, and

steps in the chilling process; the number of chillers in a series and

arrangements of components; the number of evisceration lines feeding

into a chiller; any pre-chilling steps; anti-microbial treatments, if

any; the length and velocity of dripping lines; any special apparatus

or procedure for removing excess water from birds; and a description of

chilling system factors affecting water absorption and retention, such

as the time of the birds in the chiller, the water temperature, and the

amount of chill water agitation.

To date, FSIS has received two comments on the notice. Three

livestock producer associations submitted a comment stating that they

were not in a position to provide information regarding protocols or

specifications for protocols to collect water retention data. They

maintained that the poultry industry would be supplying most, if not

all, the data needed to support any added-water limitations. They also

expressed the suspicion that data collected by the poultry industry

would reflect a ``push'' in the direction of maximum retention rather

than the true capability of technology and processing procedures to

minimize water retention.

The other comment was submitted by a trade association representing

turkey and other poultry producers and processors. The association

listed two principles and attendant considerations that, in its view,

should be observed in developing protocols. The first principle was

food safety: Considerations in achieving safety were rapid chilling of

carcasses and the efficiency of immersion chilling. The second

principle was product wholesomeness and quality. Attendant

considerations were restricting water absorption to the amount

necessary to achieve food safety, calculating water absorption from the

point of entry of carcasses into

[[Page 48964]]

the chilling medium, and recognizing that it is a documented fact that

water absorption is unavoidable in all poultry species. Additional

considerations presented in the comment were that water absorption is

not a food safety issue, and that water loss occurs during further

processing of carcasses.

FSIS has considered these comments and will be interested in

further discussion of water-data protocols in the context of this

proposal. Regarding the livestock producer associations' comment on

possible bias in data submitted by the poultry industry, FSIS notes

that any data submitted would have to have been collected under

scientifically designed protocols approved by the Agency. FSIS now

expects protocols it will approve to be composed of the elements listed

in Appendix A of this document. Further, any water retention in a

single-ingredient, raw meat or poultry product would have to be

reflected on the product label. The discipline of the marketplace as

well as FSIS regulatory oversight would help ensure the accuracy of

label statements.

Under proposed Sec. 441.10(a), meat or poultry products would have

to bear a label statement of the maximum percentage of water absorbed

and retained as a result of post-evisceration processes. A qualifying

statement accompanying the product name could read, ``may contain up to

__ percent absorbed water.'' The percentage would reflect the maximum

percentage of water that may be retained in the product. Alternatively,

the label could bear an accurate statement of the percentage of

retained water in the product. Establishments having data or

information to demonstrate that their products do not contain retained

water would not have to label the products and could include a no-

retained-water claim on the product label. The labels would be

generically approved pursuant to 9 CFR 317.5(b)(2) or 381.133(b)(2).

This proposed requirement, which is responsive, in part, to the AMI

petition discussed above, would ensure that accurate information

concerning the product is conveyed to the consumer in accordance with

the anti-misbranding provisions of the FMIA and the PPIA (especially 21

U.S.C. 601(n)(1), (6); 453(h)(1), (6)). It would ensure that the

product labeling is not misleading with respect to water retention in

the product. The placement of the required information on the label

would ensure that the information would be likely to be read and

understood by the ordinary individual under customary conditions of

purchase and use.

The information to be required would be analogous to the

information conveyed to consumers on the labels of ``ham--water added''

or fruit beverages labeled to indicate the actual percentage of juice

in the product. As a result, consumers would be able to determine

before they buy packaged raw meat or poultry products whether or not

the value of products with retained water was commensurate with prices

of alternatives in the meat case. The market will provide significant

incentives to plants to adopt new cost-effective technologies for

reducing retained water. FSIS requests comment on the usefulness to

consumers of the proposed labeling requirement.

The proposed requirements would affect only single-ingredient, raw,

whole, cut-up, or ground meat and poultry carcasses and parts,

including edible organs and other edible meat and poultry byproducts.

It would not affect raw products that now bear complete labeling or

nutrition labeling, such as pre-basted frozen turkeys, or further

processed products, such as deli meats. This proposal also would not

cover cooked and cured pork products, such as those currently subject

to protein-fat-free requirements (9 CFR 318.19(a)(5), 319.104-.105,

327.23).

FSIS personnel would verify an establishment's control of water

retention by checking the establishment records or by conducting in-

plant or in-distribution tests of products by methods that the Agency

would develop. FSIS would also conduct independent tests of the

establishment's absorbed-water control as part of investigations if a

problem were suspected or in the course of special studies.

Proposed Changes in Poultry Chilling Regulations

FSIS is proposing to amend the chilling requirements for poultry.

Various prescriptive requirements and specifications, such as the

minimum amount of fresh water intake by continuous chillers for each

poultry carcass, would be removed. Establishments would be given the

flexibility to take advantage of the latest technologies and

procedures.

This proposal would amend 9 CFR 381.65, which concerns general

operating procedures, by removing provisions that are redundant,

excessively detailed, or inconsistent with the PR/HACCP final rule. The

proposal would eliminate current paragraph (b), the prohibition on

handling and storing materials that could cause adulteration of poultry

products in any room where poultry products are processed, handled, or

stored. This provision will be unnecessary when HACCP plans are

implemented because each HACCP plan will specify the measures to be

taken to protect poultry products from physical, chemical, or

biological contamination. The requirements in current paragraphs (a)

and (c) of 9 CFR 381.65 would be retained as paragraphs (a) and (b)

because they set out general principles of good sanitation and

commercial practice that all establishments must observe.

The requirements in paragraphs (h) and (j) of 9 CFR 381.65,

relating to poultry thawing and dressing techniques, would be replaced

with two performance standards. The first would require simply that

establishments use thawing procedures that will prevent adulteration

of, or net weight gain by, the product. The second would require that

water used in thawing be permitted to drain freely from the carcass.

Proposed paragraph (c)(1), which would replace paragraph (h), would

require that frozen poultry be thawed for further processing in a

manner that will prevent product adulteration but would not require

that any specific thawing method be used.

The current thawing regulation does not prevent practices that may

constitute hazards to food safety. For example, it does not prevent re-

exposure of thawed, or partially thawed, product to a thawing medium

that may have become contaminated by previous use and that may be too

warm to prevent microbial growth. The current paragraph (h)(1)(i)

specifies a maximum permitted thawing medium temperature of 70 deg.F.,

which is too high to prevent microbial growth in product that is re-

exposed to or held in the medium. The regulation conflicts with HACCP

because establishments should assess thawing processes when conducting

their hazard analysis. Establishments must be given the responsibility

and flexibility to choose thawing measures that are effective and do

not create food safety hazards.

Proposed paragraph (c)(2) would replace the current paragraph (j),

which specifies the manner in which carcass wash water is to be

drained, with a performance standard requiring simply that the wash

water be permitted to drain freely from the carcass.

Current paragraph (d), which contains a requirement to remove

kidneys from mature chickens and turkeys, would be eliminated. The

kidneys of mature chickens and turkeys are a source of cadmium, which

can accumulate in the human liver and kidneys and cause acute or

chronic health problems.

[[Page 48965]]

Kidneys with excess cadmium are a ``food safety hazard reasonably

likely to occur'' that establishments will identify in their hazard

analyses and control through their HACCP systems. Thus, current

paragraph (d) is redundant with the HACCP regulations. The requirement

to remove kidneys is referenced in the definition of ``ready-to-cook

poultry'' at Sec. 381.1(b)(44). Therefore, the Agency is proposing to

amend that definition. Commenters on this proposal may wish to address

the need for regulatory food safety performance standards to control

heavy metal residues in organ meats, given the fact that establishments

will be operating HACCP systems.

Current paragraph (i), which specifies how poultry carcasses are to

be cut open for evisceration, would be removed. The regulation is

outdated, prescriptive, and may be an obstacle to improved product

safety. The current regulation is intended to ensure that opening cuts

are made without cutting the intestinal tract and without contaminating

the carcass. Unnecessary cuts are prohibited because they may result in

carcass contamination during evisceration or excessive water absorption

during chilling. The regulation is also intended to maximize the

viewing of the interior and viscera of the carcass by the postmortem

inspector.

In recent years, the poultry industry has developed new methods of

poultry evisceration that do not result in adulteration. For example,

ultrasound techniques are available for use as a diagnostic aid to

detect malformities or other defects before the carcasses are opened.

Also, equipment is available that can remove the viscera intact, using

vacuum suction, without breakage or spillage of intestinal contents,

and other available evisceration systems require that the carcass be

opened by a longitudinal cut. The current regulation generally limits

the opening cut to the area around the vent (cloaca) to prevent birds

from carrying excess water under the skin that could cause water-

control test failures. The new technologies can potentially improve

efficiency and product wholesomeness but are not likely to be

implemented unless the regulation is amended. The Agency believes that

establishments should have the flexibility to innovate and to implement

promising new technologies, consistent with their HACCP plans.

The requirement in current paragraph (k) to adequately drain ready-

to-cook poultry after chilling to remove ice and water before packaging

would be retained and the paragraph would be redesignated as paragraph

(d).

Current paragraphs (l) through (p) would be removed. These

paragraphs include requirements concerning the chilling of poultry

parts, the removal from establishments of offal resulting from

evisceration, the cleanliness of containers, the sturdiness of

packaging materials, and the use of protective coverings. These are all

matters to be addressed by establishments in their HACCP plans.

Finally, current paragraph (q), concerning the harvesting of

detached ova for human food, would be redesignated as paragraph (e) and

would be slightly revised to eliminate a command-and-control

requirement that the ova be identified past the point of inspection.

The requirement that ova may leave the official establishment only for

shipment to an egg products processing plant would remain.

In 9 CFR 381.66, paragraph (a) would be revised. This paragraph

requires that poultry be chilled or frozen in a manner that promptly

removes animal heat from the carcasses and does not adulterate the

product. The second sentence of the current paragraph, a command-and-

control requirement to file a description of the chilling or freezing

procedures with the inspector in charge, would be removed.

The general chilling requirements for poultry, paragraph (b), would

remain the same. FSIS regards the chilling of poultry to a safe

internal temperature within a minimum number of hours as a useful food-

safety precaution. However, as mentioned above, the Agency intends to

undertake rulemaking on this matter. The table of maximum times and

temperatures in paragraph (b) is based on the duration of the lag phase

of bacterial growth on the surfaces of dressed, ready-to-cook poultry

carcasses under plant conditions. Although interested persons are

encouraged to submit data that would justify a change in this

provision, amending the paragraph is outside the scope of the present

rulemaking.

The numerous detailed, prescriptive, command-and-control

requirements in paragraph (c) would be removed. For example, proposed

paragraph (c)(2)(i) does not specify chilling media temperatures and

the use of recording thermometers, as does the current paragraph

(c)(2)(i). Proposed paragraph (c)(1) would continue to require the use

of potable water, and proposed paragraph (c)(2)(i) would continue to

require sufficient water for a continuous overflow from chilling system

sections. However, specific requirements (paragraphs (c)(2)(ii)-(iii)

and (c)(2)(v)) concerning the operation of continuous chilling systems,

including the minimum amount of fresh water intake per bird, would be

removed.

Current paragraph (c)(2)(iv) would be redesignated as (c)(2)(ii).

This paragraph, which concerns the chilling of major portions of

poultry carcasses, is the subject of a final rule (proposed at 62 FR

31017; June 6, 1997) that appears elsewhere in this issue of the

Federal Register.

Current paragraph (c)(2)(vi), the highly detailed and prescriptive

requirements concerning water reconditioning systems for poultry

chillers, including the requirement for prior approval of such systems

by FSIS, would be removed. Establishments subject to the poultry

products inspection regulations are not using these systems because

none have proven feasible in commercial operations.

The requirements in paragraphs (c)(4)(i) and (c)(4)(ii), concerning

the holding of poultry in chilling tanks, would be removed, and in

paragraph (c)(5), the highly specific requirements concerning the use

of continuous chillers to chill giblets would be removed.

Establishments will address the food safety hazards associated with

these procedures in their HACCP plans. However, the requirement to

chill giblets to less than 40 deg.F. in under 2 hours would remain.

Paragraph (d) of section 381.66 would be completely revised. The

general requirement to minimize water absorption by raw poultry, and

the requirement to furnish equipment necessary for water tests, would

remain. The tables setting water absorption and retention limits for

the various kinds and weight classes of poultry would be eliminated, as

would the requirements for daily water testing by FSIS inspectors. The

requirement to notify FSIS of any adjustments in washing, chilling, and

draining methods would be also be removed.

FSIS is proposing to remove current paragraph (d)(10), which

specifies how poultry may be ice-packed in barrels and requires FSIS

approval for the use of alternative types of containers. Establishments

will address any food safety hazards associated with containers in

their HACCP plans.

The Agency is likewise proposing to remove paragraph (d)(11), which

requires establishments to prevent free water from being included in

giblet packages. Among other things, the current regulation requires

use of a specific type of giblet wrapping material and incorporates by

reference the testing standards that must be met in evaluating the

material. This kind of detailed specification is no longer necessary

under the Agency's new regulatory

[[Page 48966]]

approach. Also, establishments must comply with the regulations on net

quantity of contents and net weight (9 CFR 317.18-.19, 381.121-121b).

This proposal would give establishments greater responsibility and

flexibility in choosing appropriate giblet packaging materials. By

complying with the proposed retained-water limitation requirements

(discussed below) and by appropriately labeling product, establishments

would be ensuring that water absorption is controlled and that

consumers are informed.

Finally, paragraph (e), on air chilling, and paragraph (f),

governing the freezing of poultry, would be retained substantially in

their present form. Paragraph (f)(6), concerning immersion or spray

freezing compounds and equipment, would be removed because it is a

prior-approval requirement inconsistent with the HACCP regulations and

is duplicative of other inspection regulations.

The removal of the current poultry chilling regulations would

eliminate prescriptive, command-and-control procedures for determining

product compliance and would encourage processors to use the most

efficient and effective methods of controlling microorganisms.

Executive Order 12866 and Regulatory Flexibility Act

This proposed rule has been determined to be economically

significant and was reviewed by the Office of Management and Budget

under Executive Order 12866. The full text of the PRIA is published as

Appendix B of this document.

Summary: Preliminary Regulatory Impact Analysis

The proposed rule resulted from an analysis of six alternative

regulatory approaches for addressing retained water in raw meat and

poultry products. The six alternatives include: (1) no limit on

retained water but mandatory labeling that identifies the percentage of

retained water in the product; (2) a requirement that all

establishments meet a water limit based on best available technology,

with mandatory labeling to indicate any retained water; (3) a moisture

limit based on best performance with existing equipment, with mandatory

labeling to show any retained water; (4) a standard of zero retained

moisture; (5) a requirement that no retained water could be included in

net weight; and (6) a requirement of zero retained water unless the

water retention is unavoidable in processes necessary to meet food

safety requirements, e.g., to reduce pathogens, with product labeling

to indicate the presence of retained moisture, where applicable. For

all alternatives where a limit on retained water is established, the

analysis assumed that the limits would be established by the regulated

industry associations or other groups.

FSIS chose the last alternative. The selected option would not

allow retained water in an affected product unless it is an inevitable

consequence of the process or processes used to meet applicable food-

safety requirements. Levels of unavoidable retained water would be

established by inspected establishments, associations, or other groups,

using acceptable protocols. Also, the maximum amount of retained water

that could be present would have to be indicated on the product label.

FSIS found that this option provides more benefits and fewer costs than

other options allowing retained water. By ``inevitable consequence''

the Agency means an unavoidable and irreducible side effect. A food-

safety requirement could be a regulatory prescription, such as the

temperature to which a product must be chilled and held. It could also

be a preventive measure taken at a CCP or a critical limit in the

establishment's HACCP plan. Given a food-safety requirement, an

establishment must choose a method for satisfying the requirement.

FSIS understands that the choice of method is based on a judgment

of technical and economic feasibility. FSIS understands that product

quality and product acceptability to the consumer are also important

factors. The Agency requests comment on these matters.

The method selected for meeting food safety requirements could have

side effects that cannot be eliminated. A side effect of an

antimicrobial treatment of carcasses or a carcass chilling method could

be an increase in the water content of carcasses and parts. FSIS is

proposing to require that the amount of water that might be retained in

carcasses and parts as a result of using such an antimicrobial or

chilling method be an unavoidable and irreducible side effect of using

that method.

To be applicable to the raw products of an inspected establishment,

a non-zero retained-water limit would have to be based on supporting

data collected in accordance with an FSIS-approved protocol. The

proposal would allow a protocol to be developed and data-generating

studies following the protocol to be carried out by an individual

establishment, an industry trade association, or other group using the

same or similar processing techniques and equipment. Depending on the

design of the protocol, the data gathered could justify water-retention

limits for a single establishment, a group of establishments with

similar equipment processing similar classes of raw product, or all

such establishments in an industry. To establish a non-zero retained

water limit, an inspected establishment, industry trade association, or

other group would have to generate the necessary supporting data. The

labels of products would have to indicate the presence of retained

water in the products.

This requirement would not appear to have a significant impact on

the meat industry because the meat industry is already achieving zero-

percent retained water. This proposal would, however, provide an

alternative for establishments that are having or will have trouble

meeting the Salmonella performance standards. These establishments

could use a full range of antimicrobial rinses or hot-water rinses

without having to worry about meeting zero-percent retained water. If

they can demonstrate that they need a non-zero limit to meet the

Salmonella standards, they can use the flexibility provided by the

proposed rule and establish a new water limit as long as they state the

maximum percentage of water absorbed and retained on product labels.

Immersion chilling is the process used by most poultry

establishments to meet the existing chilling requirements for poultry,

e.g., 9 CFR 381.66(b)(2) requires that poultry carcasses under 4 pounds

shall be chilled to 40 deg.F within 4 hours following evisceration. It

follows that, for most poultry establishments, the inevitable retained

water amount is the ``minimum'' level that can be reached with existing

immersion chiller equipment while still meeting the chilling

requirement. FSIS recognizes that this ``minimum'' must be established

within practical limits for operating parameters such as drip time and

chiller water temperature. The Agency believes that the industry

already has information concerning the chiller variable settings that

minimize water retention. FSIS, therefore, believes the poultry

industry can establish water retention limits for various chiller

systems with minimal costs. FSIS also recognizes that some poultry

establishments may require higher levels of retained water to meet the

Salmonella standards than they do to meet the existing chilling

requirements.

The proposal does not provide specific guidance on options

available for poultry processors that are already operating far below

the existing standards for Salmonella, such as by permitting higher

retained water levels

[[Page 48967]]

if data showed further pathogen reductions would be achieved.

The analysis estimates a range of costs the industry will incur to

meet this new regulatory requirement. If establishments are able to

demonstrate that current levels of retained water are necessary to

achieve applicable food safety standards, establishments would not

incur costs for reducing retained water. These establishments would

only incur costs for establishing limits and costs for labeling the

product. The costs of establishing limits for the poultry industry are

estimated to be $1.5 million. This estimate is based on each

establishment's conducting its own tests. The cost should be lower if

associations or other groups establish limits for different types of

chiller systems. Labeling costs are estimated to be $18.4 million if

all raw, single-ingredient poultry continues to retain water.

To the extent that establishments cannot demonstrate that current

retained water levels are necessary for achieving applicable food

safety standards, significant costs could be incurred as establishments

modify processes to minimize retained water levels. Reducing retained

water could entail a wide range of processing modifications, depending

on the type of chilling equipment currently used and amount of retained

water that would have to be removed. The PRIA estimates that the cost

of removing a substantial portion of the existing retained water could

easily approach $100 million. The PRIA estimates that the average

retained water for chicken as a percentage of net weight is currently

in the 5.0 to 6.5 percent range. The corresponding level for turkey is

4.0 to 4.5 percent.

The proposed rule should not have a significant impact on a large

number of small businesses. Almost half of all federally inspected

poultry slaughter establishments are large, based on the Small Business

Administration criterion of more than 500 employees. There are from 50

to 60 establishments that process under a million birds annually. Many

of these smaller operations do not use continuous immersion chillers.

They use ice or slush to meet the existing chilling requirements. Few,

if any, would have to reduce the current level of retained water. The

establishments most affected by this proposal are the firms operating

immersion chillers in a manner so as to target the maximum allowable

retained water.

Because of the Court's decision, FSIS needs to develop new

regulatory requirements to carry out its responsibilities for

protecting the public from economic adulteration. Preventing economic

adulteration provides a consumer benefit. Consumers would also benefit

from the additional information that would be provided by the labeling

requirement. The information on retained water should lead to more

informed purchasing decisions. The proposal would also provide all

affected establishments with the flexibility and market incentives to

implement new procedures for meeting pathogen reduction performance

standards. In addition, by replacing command-and-control requirements

with HACCP-consistent performance standards, the proposal would

eliminate some recordkeeping and reporting burdens, provide for

increased flexibility and reduce the costs of HACCP implementation.

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 or packaging

requirements on federally inspected meat or poultry products that are

in addition to, or different than, those imposed under the FMIA and

PPIA. States and local jurisdictions may, however, exercise concurrent

jurisdiction over meat and poultry products that are outside official

establishments for the purpose of preventing the distribution of meat

or 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.

This proposed rule is not intended to have retroactive effect.

There are no applicable administrative procedures that must be

exhausted prior to any judicial challenge to the provisions of this

proposed rule. However, the administrative procedures specified in 9

CFR 381.35 must be exhausted prior to any judicial challenge of the

application of the provisions of this proposed rule, if the challenge

involves any decision of an FSIS employee relating to inspection

services provided under the FMIA or PPIA.

Executive Order 12898

Pursuant to Executive Order 12898 (59 FR 7629; February 16, 1994),

``Federal Actions to Address Environmental Justice in Minority and Low-

Income Populations,'' FSIS has considered potential impacts of this

proposed rule on environmental and health conditions in low-income and

minority communities.

This proposed rule would provide new, uniform regulations limiting

the amount of water retained by raw, single-ingredient, meat and

poultry products as a result of post-evisceration processing, such as

carcass chilling, considered necessary to minimize pathogen growth on

the products. As explained in the economic impact analysis above, the

proposed regulations should generally benefit consumers of meat and

poultry products. The proposed regulations would not require or compel

meat or poultry establishments to relocate or alter their operations in

ways that could adversely affect the public health or environment in

low-income and minority communities. Further, this proposed rule would

not exclude any persons or populations from participation in FSIS

programs, deny any persons or populations the benefits of FSIS

programs, or subject any persons or populations to discrimination

because of their race, color, or national origin.

Paperwork Requirements

Title: Retained Water in Raw Meat and Poultry Products; Poultry

Chilling Performance Standards.

Type of Collection: Labels and labeling records; data or

information supporting labeling statements.

Abstract: Changes to product labels would be generically approved.

The paperwork and recordkeeping associated with such label approval is

approved under OMB control number 0583-0092. Slaughtering

establishments would have to have data to support percent-absorbed-

water statements on product labels and to demonstrate that the amount

of absorbed water in the product is unavoidable under the

establishments' HACCP plans. The data would have to have been collected

under FSIS-approved protocols.

This proposed rule would require an estimated 210,000 hours to

develop the data to support retained water levels above zero. All 300

federally inspected poultry establishments would need to conduct

studies to establish minimum retained water levels. The PRIA assumed

that the average establishment would conduct studies for two product

categories. The PRIA assumed that a reasonable study would examine 10

alternative chiller settings with four 50-bird water tests conducted

for each setting. Each test would require 2.5 hours. Thus, it would

take an estimated 200 hours for each of 300 poultry establishments, or

more than 30,000 hours.

[[Page 48968]]

The PRIA assumes that at most 500 meat establishments need to

develop non-zero water levels to meet the existing pathogen-reduction

performance standards. With larger carcasses, the recording time is

doubled to 200 hours per establishment. These 500 meat establishments

would also require 100 hours to collect microbial samples. Thus, the

information collection would be 300 hours for each of 500

establishments, or 150,000 hours.

All 800 establishments with non-zero levels would also have to

develop new, generically approved labels.

Estimate of Burden: Protocols for determining minimum feasible

water retention in product classes (3,000 hours); data supporting

absorbed-water label statements or the lack thereof (210,000 hours).

Respondents: Meat and poultry product establishments or trade

associations.

Estimated Number of Respondents: 800.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 213,000 hours.

Copies of this information collection assessment can be obtained

from Lee Puricelli, Paperwork Specialist, Food Safety and Inspection

Service, USDA, Cotton Annex Building, Room 107, 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 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,

Paperwork Specialist, see address above, and Desk Officer for

Agriculture, Office of Information and Regulatory Affairs, Office of

Management and Budget, Washington, DC 20253.

Comments are requested by December 10, 1998. To be most effective,

comments should be sent to OMB within 30 days of the publication date

of this proposed rule.

List of Subjects

9 CFR Part 381

Food labeling, Poultry and poultry products.

9 CFR Part 441

Consumer protection, Meat and meat products, Poultry and poultry

products.

For the reasons discussed in the preamble, FSIS is proposing to

amend 9 CFR Chapter III, as follows:

PART 381--POULTRY PRODUCTS INSPECTION REGULATIONS

1. The authority citation for part 381 would continue to read as

follows:

Authority: 7 U.S.C. 138f; 7 U.S.C. 450; 21 U.S.C. 451-470; 7 CFR

2.18, 2.53.

2. Paragraph (b)(44) of Sec. 381.1 would be revised to read as

follows:

Sec. 381.1 Definitions.

* * * * *

(b) * * *

(44) Ready-to-cook poultry. ``Ready-to-cook poultry'' means any

slaughtered poultry free from protruding pinfeathers, vestigial

feathers (hair or down), and from which the head, feet, crop, oil

gland, trachea, esophagus, feet, crop, oil gland, reproductive organs,

and lungs have been removed, and mature poultry from which the kidneys

have been removed, and with or without the giblets, and which is

suitable for cooking without need of further processing. Ready-to-cook

poultry also means any cut-up or disjointed portion of poultry or other

parts of poultry, such as reproductive organs, head, or feet that are

suitable for cooking without need of further processing.

* * * * *

3. Section 381.65 would be revised to read as follows:

Sec. 381.65 Operations and procedures, generally.

(a) Operations and procedures involving the processing, other

handling, or storing of any poultry product shall be strictly in accord

with clean and sanitary practices and shall be conducted in such a

manner that will result in sanitary processing, proper inspection, and

the production of poultry and poultry products that are not

adulterated.

(b) Poultry shall be slaughtered in accordance with good commercial

practices in a manner that will result in thorough bleeding of the

carcasses and assure that breathing has stopped prior to scalding.

Blood from the killing operation shall be confined to a relatively

small area.

(c)(1) When thawing frozen ready-to-cook poultry in water, the

establishment shall use methods that prevent adulteration of, or net

weight gain by, the poultry.

(2) The water used in washing the poultry shall be permitted to

drain freely from the body cavity.

(d) Ready-to-cook poultry shall be adequately drained after

chilling, to remove ice and water before the poultry is packaged or

packed for shipping.

(e)(1) Detached ova may be collected for human food in the official

establishment provided the collection is sanitary. Ova from condemned

carcasses shall be condemned and treated as required in Sec. 381.95.

Ova for human food must be cooled, packaged, and handled so as to be

fit for human food.

(2) Detached ova harvested for human food may leave the official

establishment only for movement to an egg products processing plant for

processing as allowed in Sec. 59.440 of the regulations (7 CFR 59.440)

under the Egg Products Inspection Act, and when moved from the official

establishment shall bear labeling which indicates that the ova were

harvested under sanitary supervision of the Inspection Service.

4. Section 381.66 would be amended by revising paragraphs (a), (c),

and (d) and removing paragraph (f)(6), to read as follows:

Sec. 381.66 Temperatures and chilling and freezing procedures.

(a) General. Temperatures and procedures which are necessary for

chilling and freezing ready-to-cook poultry, including all edible

portions thereof, shall be in accordance with operating procedures

which ensure the prompt removal of the animal heat and will preserve

the condition and wholesomeness of the poultry and assure that the

products are not adulterated.

(b) * * *

(c) Ice and water chilling. (1) Only ice produced from potable

water may be used for ice and water chilling. The ice shall be handled

and stored in a sanitary manner.

(2)(i) Chillers must contain sufficient water or ice, or both, to

keep the chilling media clean and provide a continuous overflow from

each section of the chilling system. If there is no loss of water

between sections, multiple section chilling systems may be connected so

the overflow from subsequent sections serves as water intake for the

first section.

(ii) Partial trimming and salvage of parts of poultry carcasses

often result in parts of major size, either front or rear portions,

wherein the major portion of

[[Page 48969]]

the poultry carcass remains intact. These portions may be chilled in

water and ice, including chilling in continuous chillers. Individual

parts from salvage operations, including but not limited to drumsticks,

thighs, split carcasses, and split breasts, shall not be cooled in

water and ice but may be cooled in the air, or ice, or under a spray of

water with continuous drainage.

(3) Previously chilled poultry carcasses and major portions shall

be maintained constantly at 40 deg.F. or below until removed from the

vats or tanks prior to being cooled to 40 deg.F. or below, for

freezing or cooling in the official establishment. Such products shall

not be packed until after they have been chilled to 40 deg.F. or

below, except when the packaging will be followed immediately by

freezing at the official establishment.

(4) Giblets shall be chilled to 40 deg.F. or below within 2 hours

from the time they are removed from the inedible viscera, except that

when they are cooled with the carcass, the requirements of paragraph

(b)(2) of this section shall apply. Any of the acceptable methods of

chilling the poultry carcass may be followed in cooling giblets.

(d) Water absorption and retention. (1) Poultry washing, chilling,

and draining practices and procedures shall be such as will minimize

water absorption and retention at time of packaging.

(2) The establishment shall provide scales, weights, identification

devices, and other supplies necessary to conduct water tests.

* * * * *

5. A new Part 441 would be added to subchapter E to read as

follows:

PART 441--CONSUMER PROTECTION STANDARDS: RAW PRODUCTS

Authority: 7 U.S.C. 450, 1901-1906; 21 U.S.C. 451-470, 601-695;

7 CFR 2.18, 2.53.

Sec. 441.10 Retained water.

Raw meat and poultry carcasses and parts shall not contain water

resulting from post-evisceration processing unless the establishment

preparing them demonstrates to the Administrator, with data collected

in accordance with an FSIS-approved protocol, that any water retained

is an inevitable consequence of the process used to meet applicable

food safety requirements. Raw meat and poultry carcasses and parts that

retain water must bear a statement on the label in prominent letters

and contiguous to the product name indicating the maximum percentage of

water that may be retained. Raw meat and poultry carcasses and parts

that retain no water may bear a statement indicating that no water is

retained.

Done at Washington, DC on September 3, 1998.

Thomas J. Billy,

Administrator.

Appendix A--Expected Elements of a Protocol for Gathering Water

Retention Data

Purpose statement. The primary purpose of the protocol should be

to determine the amount or percentage of water absorption and

retention that is inevitable using a particular chilling system

while achieving the regulatory pathogen reduction performance

standard for Salmonella as set forth in the PR/HACCP regulations (9

CFR 310.25(b), 381.94(b)) and the time/temperature requirements set

forth in 9 CFR 381.66. Additional purposes that could be included

are determining chilling system efficiency and evaluating product

quality.

Type of washing and chilling system used by the establishment.

Any post-evisceration washing or chilling processes that affect

water retention levels in and microbial loads on raw product should

be described. For poultry establishments, the main chiller types,

identified by the mechanism used to transport the birds through the

chiller or to agitate the water in the chiller, are the drag-

through, the screw type, and the rocker-arm type.

Configuration and any modifications of the chiller system

components. A description of chiller-system configurations and

modifications should be provided. The description should include the

number and type of chillers in a series and arrangements of chilling

system components, and the number of evisceration lines feeding into

a chiller system. If there is a pre-chilling step in the process,

its purpose and the type of equipment used should be accurately

described. Any mechanical or design changes made to the chilling

equipment should be described.

Special features in the chilling process. Any special features

in the chilling process, such as antimicrobial treatments, should be

described. Also, the length and velocity of the dripping line should

be described, as well as the total time allowed for dripping. Any

special apparatus, such as a mechanism for squeezing excessive water

from chilled birds, should be explained.

Description of variable factors in the chilling system. The

protocol should describe variable factors that affect water

absorption and retention. In poultry processing, such factors are

typically considered to be the time in chiller water, the water

temperature, and agitation. The protocol should consider air

agitation, where applicable.

Additional factors that may affect water-absorption and

retention are scalding temperature and the pressure or amount of

buffeting applied to birds by feather removal machinery, and the

resultant loosening of the skin. Another factor that should be

considered is the method used to open the bird for evisceration.

Standards to be met by the chilling system. For example, the

chilling system may be designed simply to achieve a reduction in

temperature of ready-to-cook poultry to less than 40 deg.F. within

the time limit specified by the regulations, or in less time. As to

the standard for pathogen minimization, the Salmonella pathogen

reduction standards, as set forth in the PR/HACCP final rule, have

been suggested. Although there is not yet an applicable Salmonella

standard for turkeys, commenters are free to suggest a practicable

standard for use in gathering data on turkeys under the protocols

here suggested. Additional microbiological targets, such as E. coli

or Campylobacter levels, or reductions in numbers of other

microorganisms, may also be used.

Testing methods to be employed. The protocol should detail the

testing methods to be used both for measuring water absorption and

retention and for sampling and testing product for pathogen

reductions. The protocol should call for water retention and

pathogen reduction tests at various chilling equipment settings and

chilling time-and-temperature combinations. The method to be used in

calculating water absorption and retention should be reproducible

and statistically verifiable.

With respect to the pathogen-reduction aspect of the testing,

FSIS recommends the methods used for E. coli and Salmonella testing

under the PR/HACCP regulations. The number of samples, the type of

samples, the sampling time period, and the type of testing or

measurement should be included in the protocol.

Reporting of data evaluation of results. The protocol should

explain how data obtained are to be reported and summarized. The

criteria for evaluating the results and the basis for conclusions to

be drawn should be explained.

Conclusions. The protocol should provide for a statement of what

the data obtained demonstrate and what conclusions were reached.

Appendix B--Preliminary Regulatory Impact Analysis--Retained Water

in Meat and Poultry Products

August 1998--U.S. Department of Agriculture, Food Safety and Inspection

Service

Table of Contents

Executive Summary

I. Introduction

II. Need for Regulatory Action

III. Background

IV. Description of Proposed Rule

V. Analysis of Existing Data on Retained Water

VI. Retained Water in Net Weight

VII. Economic Analysis of Retained Water in Meat and Poultry

VIII. Options Identified

IX. Analysis of Options

X. Cost of Proposed Rule

XI. Benefits of Proposed Rule

XII. Effect on Product Quality

XIII. Aggregate Market Effects

Executive Summary

This analysis was conducted to meet the requirements of

Executive Order 12866 and

[[Page 48970]]

the Regulatory Flexibility Act. The proposed rule has been

designated economically significant because there is a potential

impact of $100 million or more. This Preliminary Regulatory Impact

Analysis (PRIA) shows that the rule could lead to a substantial

reduction in the amount of retained water in poultry which could

have a significant economic impact on the poultry industry. Under

the proposed rule, raw, single-ingredient meat and poultry products

would not be permitted to contain water resulting from post-

evisceration processing unless the establishment demonstrates that

water retention is an inevitable consequence of the process or

processes used to meet applicable food safety requirements. There

are three types of costs associated with this proposed rule. There

are costs for conducting the tests necessary to establish retained

water levels. There are also costs associated with reducing retained

water to such levels. Finally, there are costs for revising product

labels to indicate the presence of retained water. Product labels

would indicate the percentage of net weight represented by retained

water. This information could be used by consumers in making product

choices. The market could provide incentives to firms to invest in

new technologies that would reduce retained water.

Most of the cost of this proposed rule would be experienced by

the poultry industry. Most, if not all, raw poultry products now

contain retained water whereas only a few meat byproducts or organ

meats may now contain retained water. Most costs experienced by the

meat industry would be associated with voluntary decisions to use

new or different processes to meet food safety requirements that

would result in some level of unavoidable retained water.

This analysis estimates a range of costs the poultry industry

would incur to meet this new regulatory requirement. If

establishments are able to demonstrate that current levels of

retained water levels are an inevitable consequence of the processes

used to meet applicable food safety standards, establishments would

not incur costs for reducing retained water. These establishments

would incur costs for justifying existing retained water levels and

costs for revising product labels. The costs of establishing limits

for the poultry industry are estimated to be $1.5 million. Label

revision costs are estimated to be $18.4 million if all raw, single-

ingredient poultry continues to contain retained water.

To the extent that poultry establishments cannot demonstrate

that current retained water levels are necessary for achieving

applicable food safety standards, significant costs could be

incurred as establishments modify processes to reduce retained water

levels. Reducing retained water could entail a wide range of

processing modifications, depending on the type of chilling

equipment currently used and the amount of retained water that would

have to be removed. The analysis estimates that the average retained

water for chicken as a percentage of net weight is probably in the

5.0 to 6.5 percent range. The average retained water for turkey as a

percentage of net weight is probably in the 4.0 to 4.5 percent

range.

If this proposed rule would require removing a substantial

portion of the existing retained water, then the costs to the

poultry industry could exceed $100 million. FSIS' retained water

tests on whole broilers show that retained water varies considerably

from establishment to establishment. For 13 establishments operating

under the 8 percent regulatory limit for whole broilers, the average

retained water at the end of the drip line ranged from 4.72 to 7.32

percent. FSIS believes that the establishments operating at the

higher end of this spectrum are targeting the regulatory limit and

establishments operating at the lower end of this spectrum are, most

likely, operating at or near the minimum necessary to meet existing

chilling requirements which are food safety standards. For this

reason, FSIS does not expect to see costs approaching the $100

million level. However, FSIS also recognizes that the retained water

levels at the lower end of the spectrum could be tied to purchase

specifications or other factors and may not be true minimum levels.

Therefore, this analysis has estimated the cost of removing a

substantial portion of the current levels of retained water from all

poultry establishments.

This PRIA estimates that using additional drain time to reduce

retained water in poultry by 4 to 5 percentage points in all

establishments could cost up to $94 million in one-time fixed costs.

Annual recurring costs are estimated at $10 million. These cost

estimates are based on situations where inspected establishments

were required to drain retained water that exceeded regulatory

limits. FSIS program personnel do not believe it is feasible to

eliminate all retained water from immersion-chilled poultry. Thus,

if establishments must eliminate a substantial portion of retained

water, they would incur the costs of minimizing the water plus the

costs of establishing the minimum or minimums and labeling costs.

The costs of the proposed rule, however, are highly dependent on the

level of retained water that is necessary to meet existing food

safety requirements. That level will remain unknown until

established by well-designed studies. However, as discussed above,

FSIS predicts that only those poultry establishments operating at

the higher end of the retained water spectrum would have to

substantially reduce their retained water levels. This prediction is

based on data showing that establishments can control retained water

and data showing that some are controlling retained water so as to

be at or near the applicable regulatory limit.

This proposal fills a regulatory void created by the U.S.

District Court decision to set aside the water retention limits for

whole birds. The regulatory limits that the Court set aside were not

based on adequate analytical support. Regulatory limits are

necessary to protect the public from economic adulteration.

Preventing economic adulteration provides a consumer benefit.

Consumers would also benefit from the additional information that

would be provided by the labeling requirement. The information on

retained water should lead to more informed purchasing decisions.

The proposal would also provide affected establishments with the

flexibility they need to choose the most appropriate means for

implementing HACCP plans for assuring the safety of raw product. For

example, under the proposed rule, both meat and poultry carcasses

would be allowed to retain absorbed water if data showed that such

water was unavoidable in order to assure compliance with the

pathogen reduction performance standards for Salmonella. In

addition, by replacing certain existing command-and-control

requirements with HACCP-consistent performance standards, the

proposal would allow increased flexibility which should reduce the

costs for HACCP implementation. This analysis does not attempt to

quantify the benefits of the increased flexibility that results from

eliminating command-and-control requirements. The proposal would

also remove certain recordkeeping and reporting requirements.

In terms of aggregate market effects, the analysis concludes

that, when compared to the present situation, the proposed rule

could result in higher prices for both poultry and meat, with less

poultry consumed and more meat consumed. However, when estimated

costs are compared with aggregate consumer expenditures, the

analysis shows that costs are very small compared with current

expenditures. Maximum first year cost estimates for the poultry

industry represent 0.36 percent of aggregate consumer expenditures

on poultry. Recurring costs to the poultry industry represent only

0.03 percent of consumer expenditures and 0.04 cents per pound.

I. Introduction

FSIS is proposing regulations limiting the amount of retained

water raw meat and poultry products may contain. The proposed

rulemaking would, among other things, amend the meat and poultry

inspection regulations governing water retained by carcasses and

parts of carcasses as a result of post-evisceration washing and

chilling necessary to ensure product safety and wholesomeness. The

amended regulations would apply the same retained-water standard to

both red meat and poultry. Meat and poultry carcasses and parts

would not be permitted to contain water resulting from post-

evisceration processing unless the establishment demonstrates that

water retention is an unavoidable consequence of the processing used

to meet existing food safety requirements. Under the proposal, raw

meat and poultry products that retain water would have to be labeled

indicating the maximum amount of retained water that may be present

as a percentage of product weight.

In addition to revising the regulations controlling retained

water, FSIS is also proposing to revise the poultry regulations

covering thawing procedures, water use and reconditioning, and

certain other operating procedures. These other regulations are

being revised to improve consistency with the Pathogen Reduction/

Hazard Analysis and Critical Control Points (PR/HACCP) regulations,

eliminate ``command-and-control'' features, and reflect current

technological capabilities and good manufacturing practices. By

replacing command-and-control requirements with

[[Page 48971]]

HACCP-consistent performance standards, the proposal would allow

increased flexibility and should reduce costs for HACCP

implementation. Removing some command-and-control regulations would

also eliminate some existing recordkeeping and reporting burdens.

This analysis does not attempt to quantify the benefits of the

increased flexibility that results from eliminating command-and-

control requirements.

II. Need for Regulatory Action

Respond to Court Decision

The regulations controlling retained water in poultry carcasses

have consisted of three major components: (1) a performance standard

requiring washing, chilling, and draining practices that will

minimize water absorption and retention at time of packaging, (2)

limits for maximum retained water in birds that will be packaged as

whole carcasses, and (3) limits for maximum retained water in birds

that will be ice-packed or cut up prior to packaging. The

performance standard is interpreted as minimizing the water that is

absorbed and subsequently retained, i.e., it is not interpreted as

requiring minimization of both water absorption and water retention.

In implementing the standard, FSIS concludes that the performance

standard is met when retained water is under the maximum limits.

Until the Court case referred to below, the maximum retained

water for most whole chickens (those 4.25 pounds or under) was 8

percent. The maximum retained water for chicken that will be ice-

packed or subsequently cut up into parts is 12 percent. The 12

percent limit is based on the premise that chicken parts from whole

birds with water levels between 8 and 12 percent will reach the 8

percent level by the time the parts are packaged. The analogous

limits for turkey are similar but include unique limits for 12

different carcass weight categories. The maximum retained water

limits for whole turkey range from 4.3 to 8.0 percent depending on

weight. The corresponding limits for cut-up turkey range from 5.3 to

9.0 percent. The maximum retained water for whole ducks, geese and

guineas was 6 percent, the same limit that applied to chickens over

4.25 pounds.

The U.S. District Court, in the matter of Kenney v. Glickman,

set aside the water retention limits for whole birds. The Court

found that the analytical support for the existing limits was

insufficient. Thus, there are currently no regulatory criteria to

determine whether retained water has been minimized in chilled or

frozen whole birds. FSIS is mandated to prevent the distribution in

commerce of meat or poultry products that are adulterated or

misbranded. Under the meat and poultry statutes, a product is

adulterated if, among other circumstances, a substance has been

added to or mixed with the product to increase its bulk or weight or

make it appear of greater value than it is. Thus, if water has not

been minimized, the product may be considered adulterated. Such

product may also be considered misbranded. Without limits on

retained water, FSIS cannot adequately protect consumers from

adulteration and misbranding due to excessive retained water in

whole birds.

Eliminate Inconsistency

In addition to the situation created by the July 1997 Court

decision, FSIS sees additional need for regulatory action. With

respect to the regulation of retained water, there are differences

or inconsistencies both between the livestock and poultry industries

and within the existing regulatory framework for poultry. FSIS

allows poultry to retain water absorbed during processing as an

unavoidable result of traditional chilling practices. There is no

comparable allowance for meat. The regulatory definitions for

economic adulteration ``by substances added so as to increase bulk

or weight or make a product appear better or of greater value than

it is'' are identical for meat and poultry. Although the Secretary

of Agriculture has the authority to apply the adulteration

provisions differently, FSIS believes there can be more consistency

between the livestock and poultry industries in how the adulteration

provisions are applied to retained water in raw products. The

traditional differences in chilling practices have led to a

situation where the weight of a meat carcass usually decreases

during chilling while the weight of a poultry carcass increases.

The Department promulgated regulations limiting water absorption

in poultry in 1959, 1961, and 1970 (December 1, 1959, 24 FR 9566;

July 19, 1961, 26 FR 6471; October 7, 1970, 35 FR 739). The existing

regulations contain a standard of performance that calls for

minimization and maximum retained water limits for poultry carcasses

based on carcass weight and intended use. Under the existing

regulatory enforcement framework, a poultry establishment is

``minimizing'' retained water when it is operating within the

existing limits. FSIS is aware that not all establishments are

really minimizing retained water. Data analyzed for this PRIA show

that some poultry establishments have been controlling their

processes to retain the maximum allowed water. While this is

considered acceptable in the sense that product is not adulterated,

it is not consistent with a regulatory intent to minimize. However,

it may be consistent with food safety objectives to reduce

pathogens.

The existence of the 12 percent limit for cut-up chicken is in

itself inconsistent with the concept of minimization. Many

establishments pack both whole and cut-up chicken. In meeting the 8

percent limit for whole birds, they demonstrate that their minimum

is below 8 percent. The 12 percent limit serves as an opportunity to

maintain water levels in cut-up poultry. The 12 percent limit is

also available as default when the 8 percent limit is not achieved.

An establishment can divert birds to cut-up operations when they

fail the whole bird limit.

III. Background

There are no existing meat regulations that address retained

water in raw meat products. Without any regulatory limits, FSIS has

enforced the adulteration provision of the FMIA to mean that any

level of retained water is adulteration. FSIS has allowed cold water

spray chilling systems as a supplement to air chilling of beef and

hog carcasses under the conditions outlined in FSIS Directive

6330.1. That document requires that establishments develop quality

control systems and inspectors monitor these quality control

programs to make sure that the total weight of a group of spray-

chilled carcasses is not greater than the total pre-wash weight of

the same carcasses. Thus, while an individual carcass may show a

weight gain, FSIS enforces a standard of zero-retained water for

groups of beef or pork carcasses for spray chilling systems. In

contrast, FSIS has not required establishments to closely monitor

water when using pathogen reduction methods on the kill floor, such

as pre-evisceration carcass sprays or steam vacuum processes.

FSIS implements an extensive program to assure compliance with

existing limits for retained water in poultry. Retained water can

result from both carcass washing and carcass chilling, i.e., the

post-evisceration washing and chilling processes. The existing

procedures for conducting retained water tests for poultry are

outlined in Part 10 of the Meat and Poultry Inspection Manual. The

standard procedures instruct the inspector to tag and weigh a sample

of 10 birds from the eviscerating line before the final carcass

wash. The final carcass wash occurs before birds enter the chiller.

The same 10 birds are then weighed after the chiller at a point

specified in the establishment's water control procedures as

outlined on FSIS Form 528. The most common point is the end of the

drip line or the last accessible point on the drip line. The test

procedures are the same regardless of whether the whole bird or cut-

up limits apply.

Under standard procedures, inspectors conduct one test each

shift. Today, many establishments are tested once each week based on

history of compliance. The standard procedures state that test birds

must not be allowed extra draining, i.e., they must reflect the

production lot. The standard water procedures may specify that the

test birds are drained for a specific time if production is all

drained for the same time. For example, one establishment specifies

that test birds are to be drained four (4) hours before being

weighed. When water limits are exceeded, product is retained.

Violations do occasionally occur and appear to be a function of

how close to the regulatory limit an establishment is operating.

Existing data indicate that some establishments control their

process way below the limits and never come close to a violation.

Based on the data reviewed for this analysis, most establishments do

not have water violations or rarely exceed existing limits. A few,

however, appear to target the limit and frequently experience

retained product as an extra operating expense. In the data examined

for this analysis, retained product required additional drain times

ranging from 3 minutes to 12 hours.

FSIS' existing retained water control program is a relatively

resource intensive effort. In a poultry establishment with two

shifts and two chiller systems, FSIS may be conducting four 10-bird

tests each day. Each test takes from 40 to 60 minutes for selecting,

tagging, and weighing birds and then recording results and making

necessary calculations. Even with reduced testing in

[[Page 48972]]

many establishments, it appears reasonable to estimate that FSIS

conducts between 300 and 400 retained water tests each day. Assuming

a 260-day work year, FSIS conducts from 78,000 to 104,000 tests

annually. At 40 to 60 minutes each, the annual testing represents

from 25 to 50 staff years of 2,080 hours each. The Agency also

expends an estimated 560 staff-hours each year reviewing changes in

establishment washing, chilling, and draining procedures. These

estimates do not include the cost of addressing violations.

FSIS intends to pursue a new water control program that can

incorporate wholesale or retail sampling to identify establishments

that may be exceeding water limits and then target resources to

conduct follow-up testing to confirm compliance or noncompliance.

FSIS is aware of a retail testing method that has been developed and

used in European Union member States. The method involves measuring

drippage from sampled products against what is considered the

natural water content of the product.

In its 1980 net weight proposal, FSIS considered a ``building-

block'' approach to net weight compliance that was then being

reviewed by the Codex Alimentarius Commission. This approach, as

described in the 1980 notice, ``would be modeled on a statistical

limits of variance technique developed by Switzerland for

application to imported, prepackaged foods. Inspectors would make

limited inspections for compliance at retail. If the sampling

technique indicates a noncompliance problem, additional inspection

of the same product would be made at retail and further back in the

marketing chain, including at processing plants. If the problem

continues following notification of the producers, a more precise

enforcement test would be applied.'' An alternative that lends

itself to this type of approach will rate high on the criterion for

an efficient, equitable enforcement system.

IV. Description of Proposed Rule

The proposed rule would establish a single retained water

standard for all raw, single ingredient meat and poultry products.

This standard would allow retained water only if that water was an

inevitable consequence of the process or processes used to assure

compliance with existing food safety requirements. The presence of

any retained water would, however, have to be identified on product

labeling.

The proposed requirements would affect only single-ingredient,

raw, whole, cut-up, or ground meat and poultry carcasses and parts,

including edible organs and other edible meat and poultry

byproducts. It would not affect raw products with labeling that

includes a list of ingredients or nutrition labeling, such as pre-

basted frozen turkeys or individually quick frozen (IQF) poultry

parts labeled to indicate the addition of basting solutions.

The proposal would also modify other existing regulations

related to water use and chilling requirements. For example, the

proposal would remove a requirement that establishments must file a

description of chilling and freezing procedures with the inspector-

in-charge (IIC). At the same time, the proposal would remove the

requirements that the establishment submit written notice of any

adjustments to washing, chilling, and draining methods before any

changes are made and provide FSIS data showing the adjustments are

effective in meeting existing water limits. These modifications

would reduce recordkeeping and reporting burdens.

The proposal would also remove specific requirements concerning

the amount of fresh water intake required in the first section of a

continuous chilling system. The existing regulations require a

minimum of one-half gallon per frying chicken and proportionately

more for other classes of poultry, including not less than one

gallon per turkey. The potential for lowering water costs is

unknown. The general requirements for using potable water and

continuous overflow from one section of the chiller to the next will

remain. The requirement for continuous overflow would appear to

limit the opportunity for reduced water usage.

The regulations concerning water intake were established at a

time when FSIS assumed responsibility for controlling pathogen

levels and frequently did so with design requirements. In 1978, the

Department published a proposal (43 FR 14043, April 4, 1978) that

would reduce water intake requirements by 50 percent when chlorine

levels in the incoming water were at least 20 parts per million. The

proposal was subsequently withdrawn. Of concern during the

rulemaking were studies by USDA and the Virginia Polytechnic

Institute and State University (VPI) that showed that bacteria

levels increased as intake water was reduced. While the relationship

of water intake and pathogen levels remains a public health concern,

FSIS is no longer attempting to design protection using command and

control regulations. Under the Pathogen Reduction/HACCP final rule,

establishments are required to meet pathogen reduction performance

standards. This current proposal is a performance-based standard

that will lead to retained water levels that are necessary to meet

pathogen reduction requirements and other food safety standards. The

current proposal is consistent with FSIS objectives of setting

performance standards and moving away from design requirements, such

as the minimum of one-half gallon of fresh water intake per chicken.

It is now industry's responsibility to establish how water intake

relates to both retained water and pathogen levels.

The proposal would also remove prescriptive requirements for

water reconditioning systems for poultry chillers. This change would

not have an impact because reconditioning systems have not proven

feasible in commercial operations.

FSIS intends to retain the existing requirements mandating that

the internal temperature of poultry carcasses be lowered to 40

deg.F. or less within a specified time. The Agency also will

continue to require that each establishment provide scales, weights,

identification devices, and other supplies necessary to conduct

water tests. While the Agency envisions a compliance-sampling

program using the deviation from an expected level of total water

content as a screening system, the Agency will still use the

existing sampling system to confirm potential compliance problems.

The poultry regulations discussed above concerning water use,

chilling requirements and water retention are all contained in 9 CFR

381.66 (Temperatures and chilling and freezing procedures). This

proposal would also remove several existing regulations from 9 CFR

381.65 that now address general operating procedures, many of which

are not related to water use or chilling procedures. Operating

procedure requirements that would be removed or revised under this

proposal include the following:

Specific requirements that prescribe the nature of

opening cuts for evisceration,

The requirement to remove kidneys from mature poultry,

Requirements pertaining to the handling and storage of

materials that could adulterate product,

Requirements for containers, packaging, and covering

materials,

Requirements on removing offal from establishments,

Requirements prescribing how to thaw frozen poultry and

drain ready-to-cook poultry,

Requirements on how establishments can chill parts of

carcasses, and

Requirements related to harvesting detached ova.

The regulations that would be eliminated are either regulations

that are overly prescriptive command and control regulations, such

as those defining opening cuts or regulations that are now redundant

with HACCP, e.g., the removal of kidneys. The reason for removing

the kidneys of mature chickens and turkeys is that they are a source

of cadmium, which can accumulate in the human liver and kidneys and

cause acute or chronic health problems. This is a ``food safety

hazard reasonably likely to occur'' that establishments will

identify in their hazard analyses and control through their HACCP

systems. Thus, a regulatory requirement for their removal would be

redundant with the HACCP regulations.

V. Analysis of Existing Data on Retained Water

As discussed above, most raw, single-ingredient meat products

are not currently allowed to contain any retained water. This

analysis assumes that these meat products will continue to be

produced without retained water. Products that are packed in water

or may retain water are already labeled to indicate such

information. Chitterlings (swine intestines) are washed and chilled

before shipment and are packaged with water. Certain organ meats and

meat from ears and tails are also washed and chilled using water. A

few establishments chill beef cheek meats in water, a process that

may result in the absorption of water. The product is labeled to

indicate the maximum percentage added water it may contain to alert

buyers to the fact that the product may weigh more because of the

chilling process. The Agency does not have data on the volume of

meat products with retained water or data on the current levels of

retained water. These products do not, however,

[[Page 48973]]

represent a major portion of the meat industry.

In order to estimate the current level of retained water, in

early 1997, the Agency's headquarters staff informally requested

field offices to forward readily available water data from poultry

plants. The material assembled varied from region-to-region and

plant-to-plant. The field offices did not use a standard method to

summarize available data. In some cases, the individual

establishments were identified; in other instances, all plant

identification was removed. The allowable water, i.e., the

applicable regulatory limit, was not always readily discernible. The

data covered the period of January through May 1997. Most of the

data was included on the Daily Moisture Records (FSIS Form 549 or

its replacement Form 6310-1). These records record the pre-wash and

post-chill weight of each individual bird for each 10-bird test.

Five 10-bird tests are recorded on each record.

While the data assembled was not systematically collected, it

has a degree of randomness and provides a preliminary estimate of

the amount of water currently absorbed and retained during the

washing and chilling process as measured by existing FSIS water test

procedures. An analysis was conducted using all the data that met

the following criteria for establishments slaughtering young

chickens.

{time} Minimum of twenty 10-bird tests (200 birds).

{time} Existing regulatory limit available.

{time} All available test data collected under a single applicable

limit.

{time} All results clearly legible.

{time} Establishment identified (to connect water data with

production).

The data from 33 establishments slaughtering young chickens met

the above criteria. These 33 establishments represented 17.5 percent

of FY 1996 production. Within the 33, 19 establishments were

operating under the 12 percent water limit that was applicable to

cut-up and ice-pack poultry. These 19 establishments accounted for

9.11 percent of the total FY 1996 production and 52 percent of the

production within the 33 establishments.

Thirteen establishments were operating under an 8 percent water

absorption limit during the period the data was collected. The 8

percent limit applies to whole carcass pack chickens or frozen

chickens that are 4.25 pounds or less. The 13 establishments

represented 7.95 percent of FY 1996 production. One establishment

was operating under the 6 percent limit for whole chickens over 4.25

pounds.

Among the 33 establishments, 48 percent of the young chickens

were being processed under the water limits for whole birds. Today,

the National Broiler Council estimates that only 10 percent of

broilers are ``marketed'' as whole birds. Two factors explain this

difference. First, if any birds in a production shift are to be

shipped whole, the entire shift is subject to the whole bird limit.

Second, some birds are shipped whole and then cut up in a second

establishment conducting further processing. The 10 percent

``marketed'' as whole birds refers to retail and food service

destinations.

The 13 establishments operating under the 8 percent limit had an

average absorbed water level of 5.81 percent and a production based

weighted average of 5.68 percent. Individual establishment averages

ranged from 4.72 to 7.32 percent. These percentages represent

percentage gain relative to the carcass weight prior to the final

carcass wash. The individual plant averages were calculated by

combining all available water tests from all shifts and all washer/

chiller systems. Averaging all water test results in this manner

assumes that each test represents an equal amount of production.

Many plants have more than one chiller system and multiple shifts.

Production may not be equally distributed across all shift-chiller

combinations.

The 19 establishments operating under the 12 percent limit had

an average absorbed water level of 9.11 and a weighted average of

9.02 percent. As above, these percentages represent percentage gain

relative to the carcass weight prior to the final carcass wash.

While 18 of these establishments had absorbed water levels close to

8 percent or above, one establishment had an average water level of

5.37 based on sixty 10-bird tests (600 birds) conducted from January

through April 1997. The establishment operates two systems, one

averaged 5.61 percent, the other 5.14. All the daily records were

checked to indicate the establishment was producing cut-up poultry.

In addition to the data analyzed above (33 establishments), the

1997 data included water tests from three young chicken

establishments that processed both whole birds under the 8 percent

limit and cut-up chickens under the 12 percent limit. For these 3

plants, there were at least 20 tests at each level.

The results are shown in the following table:

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

8 percent 12 percent

Establishment limit Limit Difference

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

A................................ 6.42 7.67 1.25

B................................ 5.26 6.15 0.89

C................................ 5.94 7.30 1.36

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

An analysis of variance procedure indicated that, after accounting

for variability between plants, there is a statistically significant

difference (confidence greater than 99%) between the percentages of

water gain at the two regulatory limits. It follows that these

establishments are not really minimizing retained water when

operating under the 12 percent limit because they have lower

retained water when processing whole birds. The difference does not,

however, approach 4 percent.

Because there are 12 different water limits for different sizes

of turkeys, the approach to analyzing existing data had to be

different. It's common to see three different water limits for a

five-test series recorded on the Daily Moisture Records. The data

from turkey establishments was sorted using the following two

criteria:

Minimum of ten 10-bird tests conducted under limits

applicable to turkeys packaged as whole birds.

Establishment identified.

A review of the existing data identified six establishments that

were operating under the limits for whole carcass packing

procedures. These six establishments represented 12.7 percent of

federally inspected turkeys in FY 1966. An estimated 40 percent of

all turkeys are marketed as whole birds. Because of the 12 different

limits for whole turkeys depending on weight, this analysis did not

attempt to estimate absorbed water for different sizes of birds.

The six turkey plants had an average absorbed water level of

4.39 percent and a weighted average of 4.74 percent. Individual

plant averages ranged from 1.91 to 5.53 percent. This analysis did

not attempt to estimate water levels for cut-up or ice-packed

turkeys.

The review of Daily Moisture Records identified a couple of

potential issues that should be addressed by comments. First, some

of the highest water results occurred when line speeds were running

too slow for the established water control procedures. Since slowing

line speeds may be a response to higher pathogen levels there is

some indication that water pick up and pathogen levels may be

inversely related under some conditions. In one case, a company

conceded that it could not pass the 8 percent whole bird water

limits at certain lower speeds and agreed to divert birds to cut-up

operations when the line speed dropped to a certain level. By

diverting the birds to cut-up, the establishment avoided the process

of conducting a 50-bird test to establish the necessary drain time

to meet the 8 percent limit. Another plant noted that slower speeds

resulted in insufficient numbers of birds for proper travel through

their chiller system with rocker arms.

As a second issue, the data indicate that more problems arise

with very small birds, i.e., broilers in the 2\1/2\ to 3-pound

range. Individual birds would show water pick-up in the 20 to 24

percent ranges. FSIS staff notes that eviscerating equipment

sometimes causes extra large openings on small carcasses that lead

to pockets of water under the skin. These birds are informally

referred to as ``water bags.'' The water test is rather meaningless

for these birds if they are headed to cut-up operations because the

water in

[[Page 48974]]

these pockets drains quickly and easily at the cut-up operation.

VI. Retained Water in Net Weight

The proposed rule would require that product labels indicate the

percentage of net weight represented by retained water. All the data

presented in the previous section refers to retained water as a

percentage gain from the carcass weight prior to the final carcass

wash. The same volume of retained water expressed as a percentage of

net weight will be somewhat lower because net weight includes the

pre-wash carcass weight plus any absorbed water.

A second difference occurs because FSIS water tests normally

occur at the end of the drip line. The exact relationship between

the volume of retained water as recorded by FSIS tests and the

volume of retained water in finished packaged product is unknown.

Retained water in finished packaged product will be lower for

several reasons. First, an establishment's handling procedures will

lead to some water loss before the product is packaged and weighed.

Today, only 10 percent of broilers are ``marketed'' as whole birds.

Thus, a lot of broilers produced under whole bird limits are being

cut up in the originating establishment or in a subsequent

establishment before being packed as finished product. Second, any

product that exceeds existing limits is required to drain for a

specific time as determined by program personnel. Third, the

establishment may implement draining procedures to meet a customer's

purchase specifications. In these cases, the retained water included

in net weight could be far less than the retained water measured by

FSIS tests.

It is also difficult to compare the water data for whole birds

with the data on cut-up poultry. As discussed above, available data

showed whole young chickens to average 5.68 percent while cut-up

young chickens averaged 9.02 percent on a production-based weighted

average. The 12 percent limit on cut-up chickens was based on a

premise that if poultry for cut-up averages less than 12 percent at

the time of water test, it would drain to less than 8 percent during

the remaining handling prior to final packaging. This does not mean

that poultry destined for cut-up will drain 4 percent. It seems

reasonable to assume, however, that the level of 9.02 percent will

approach the whole bird level of 5.68 percent, probably ending up

somewhere between 6.0 and 7.0 percent.

Allowing for some drain in the whole bird packaging process and

considering the conversion to percentage of net weight, it seems

likely that the average retained water for chicken as a percentage

of net weight is probably in the 5.0 to 6.5 percent range. This

estimate is consistent with findings published in a study \1\

conducted in 1979 by the Economics, Statistics, and Cooperatives

Service (ESCS (now ERS)). That study, hereafter referred to as the

1979 ERS study, estimated that average water pickup for six

processors at the time of packaging was 5 to 6 percent. Because some

product undergoes further cut-up and packaging in other

establishments, the average water level leaving originating

establishments is not the same as the level in customer packages.

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

\1\ Assessment of Proposed Net Weight Labeling Regulations,

Staff Report, Prepared by the Economics, Statistics, and

Cooperatives Service for the Food Safety and Quality Service, USDA,

August 1979.

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

The whole bird data on turkeys, i.e., 4.74 percent retained

water, is a better estimate for packaged turkey since 40 percent are

marketed as whole birds. One would expect some additional drainage

before the birds are packaged. The average retained water level for

turkey as a percentage of net weight is probably somewhere in the

range of 4 to 4.5 percent.

VII. Economic Analysis of Retained Water in Meat and Poultry

This chapter examines the economic issues associated with

retained water in poultry. For analytical purposes, this chapter

assumes that the average retained water for all chicken is 5 percent

of net weight and the average for turkeys is 4 percent of net

weight. The analysis in Sections 4 and 5 concluded that the averaged

retained water for chicken is probably between 5.0 and 6.5 percent

and the average retained water for turkey is probably between 4.0

and 4.5 percent.

In FY 96, there were 7.67 billion chickens slaughtered under

Federal inspection. Based on an estimated average carcass weight of

3.36 pounds, the total weight of ready-to-cook chicken was 25.8

billion pounds. If the average retained water was 5 percent, then

one can view the total as 24.5 billion pounds of chicken and 1.3

billion pounds of retained water. Since the wholesale price of whole

broilers was $.6124 per pound,\2\ the chicken had an estimated whole

bird, wholesale value of $15.8 billion.

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

\2\ Livestock, Diary and Poultry Situation and Outlook, LDP-M-

44, ERS, USDA, August 15, 1997.

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

In FY 96, there were 289.6 million turkeys slaughtered under

Federal inspection. Using an average carcass weight of 17.9 pounds,

the production was 5.18 billion pounds. The average FY 1996

wholesale price was $.665 per pound resulting in a total wholesale

value of $3.4 billion. Using an estimated average retained water

level of 4 percent, one could view the production as 4.97 billion

pounds of turkey and 0.21 billion pounds of retained water.

There are two ways of looking at the current situation. One is

the perspective that customers are paying $15.0 billion for the

chicken and $789.4 million for the retained water and $3.3 billion

for turkey and $136 million for retained water. The other is that

the water has no effect on the value of the poultry. In this case,

the value of the chicken is $15.8 billion and the value of the

turkey is $3.4 billion. The customer is simply not being informed

that the true wholesale price of the chicken on a ``zero added

water'' basis is $.6446 per pound and not $.6124. Similarly, the

customer is not being informed that the true wholesale value of

turkey is $.684 per pound and not $.665.

While the 1979 ERS study was focused on analyzing alternative

net weight regulations, the study addressed essentially the same

issue as retained water when it considered drained weight labeling.

The ERS study used an ``added water in chicken'' example to

illustrate the retail price effects of dry tare versus drained

weight labeling of packaged chicken. The example was a package of

chicken breasts selling for $1.20 per pound with a labeled weight of

3 pounds using a dry tare system. The tare is the weight of any

container, or wrapper, or other material not included in the stated

weight of a package. This package would cost the consumer $3.60. If

this package undergoes a water loss of 4 percent, and assuming the

net weight was exact under the dry tare system, the consumer

selecting this package would be receiving 2.88 pounds of drained

weight chicken and the real price per pound of chicken is $1.25

($3.602.88 pounds).

Under a drained weight system, assuming exact measurements, the

package would show a net weight of 2.88 pounds and a price per pound

of $1.25. The cost of the package would remain $3.60. The ERS study

used this example to illustrate that changing net weight

methodology, by itself, only changes the information a consumer

receives but not the real cost of the product. After analyzing the

``water in chicken'' issue, the 1979 ERS study concluded:

Whether consumers pay chicken prices for water is not clear simply

because a dry tare labeling weight is allowed. If $3.60 is the

competitive cost for a package of chicken breasts of that quality,

then the consumer is not paying $1.20/lb. for 0.12 lb. of water and

juices. The consumer is simply not being informed that the true

price of chicken at the retail level on a drained weight basis is

$1.25/lb. not $1.20. Consumers may well be paying more for chicken

or other meat and poultry products than can be justified. But to

verify such an assertion would require an extensive study of the

industrial organization of the industry and data on firm costs,

revenues, and profits. Answering that question is beyond the scope

of this study.

The economic issue raised by the retained water issue is whether

labels reflecting the price of poultry on a ``green weight'' basis

would have enough of an effect on the demand for poultry that

consumers would purchase less poultry and more product that competes

with poultry. This analysis, like the earlier ERS study, has not

attempted to predict the shifts in supply and demand that might

occur if product labels included the ``true'' price of poultry. The

marketplace issues are more complex than just pounds and cents.

Discussions with retail industry personnel indicate that they

believe many consumers object to free liquid in packages and that

``dry'' looking packages would have a positive impact on demand.

They also noted that labeling of water is not necessarily a

detraction. They point to the rapidly growing market for

Individually Quick Frozen (IQF) Ice-Glazed poultry. This product

sometimes includes labeling indicating the addition of basting

solutions to enhance flavor and juiciness. IQF Ice-Glazed and

marinated products are marketed based on convenience.

VIII. Options Identified

FSIS identified six options for regulating retained water in raw

meat and poultry products. These six options are:

[[Page 48975]]

No limits on retained water as long as the product

label indicated the amount of retained water.

A standard requiring zero retained water for all raw,

single-ingredient products.

A requirement that there could be no retained water in

the stated weight of the product.

A standard that would set limits for retained water

based on best available technology within traditional production

practices. This option would also require that retained water be

identified on product labels.

A standard that would set limits for retained water

based on optimum use of existing equipment. This option would also

require that retained water be identified on product labels.

A standard that would require an establishment to

demonstrate that any retained water is an inevitable consequence of

the process used to meet applicable food safety requirements. This

option would also require that retained water be identified on

product labels.

IX. Analysis of Options

This section provides an assessment of the six regulatory

options identified. The six options fit into three categories. The

first category is represented by Option 1 and can be characterized

as the option where there would be no limits on retained water for

any raw product as long as the label indicated the presence of that

water. The second category covers options where no retained water

would be allowed. This analysis discusses two variations, one

(Option 2) where no retained water would be allowed in the product

and another (Option 3) where no retained water could be included in

the product weight. Options 4, 5, and 6 are all similar in that they

would permit limited water retention and they would require that any

retained water be identified on product labels. These last three

options differ in the basis for establishing the limits for water

retention. The three options consider limits based on best available

technology, limits based on best performance with existing

equipment, and limits based on the retained water necessary to meet

existing food safety requirements. Setting new limits based on any

of these three criteria would have to meet the Court's requirement

that the rulemaking record explain how particular water retention

levels are set.

All six options provide consumers with improved information on

the ``true'' price of poultry. Improved information results from

either labeling the level of retained water, eliminating all

retained water, or a combination of labeling and limiting the amount

of retained water. Improved information provides a consumer benefit

in that it allows consumers to make more informed purchasing

decisions. The analysis that follows does not quantify the consumer

benefits of each option. FSIS recognizes that removing all retained

water informs consumers of the ``true'' price of poultry; no further

calculation balancing water content and label price would be

necessary. A combination of labeling with a limit on retained water

may have greater consumer benefits than labeling alone because the

labeled product price would provide improved information to those

consumers that would not use the retained water information.

Option 1--Labeling of Percentage Retained Water

Under this option, there would be no limit on retained water as

long as the amount, i.e., percentage of product weight, was

indicated on the product label. The same requirement would apply to

both meat and poultry products. To assure prominent notification,

the product name on the labeling of an affected product would be

accompanied by a statement, such as ``may contain up to __ percent

retained water'' or ``contains __ percent retained water.''

After identifying this option, the department concluded that

this regulatory option would not be consistent with the existing

adulteration provisions discussed earlier. In other words, unlimited

retained water would constitute economic adulteration, even if

identified through labeling. While this conclusion eliminates this

option, this analysis uses the option as a vehicle to discuss the

costs and benefits of using labels to inform consumers about

retained water.

The cost analysis presented later in Section X concludes that

all poultry labels could be revised at a cost of $18.4 million. This

cost would be an up-front, nonrecurring cost. The label revision

costs of $18.4 million are an estimate for the cost of revising

labels for raw poultry shipped from federally inspected poultry

establishments that both slaughter and further process raw poultry.

The estimate of $18.4 million does not include potential label

revision costs for product that is produced in one of the slaughter/

processing establishments and then further processed in a second

inspected establishment that does not slaughter poultry. To

illustrate, there are inspected establishments that purchase whole

birds and further process these carcasses into parts of carcasses

and other establishments that purchase parts of carcasses and

further process these parts. The inspected establishments purchasing

product that has ``percentage retained water labeling'' would have

to label their further processed, single-ingredient, raw products

unless they had data showing that the further processing they

conduct removes all the retained water. Presumably, the percentage

of retained water would decrease during further processing. The

further processing establishments would have to label their products

to indicate the presence of any remaining retained water. FSIS does

not have information on the number of establishments or labels that

could potentially be affected.

There are two other situations where revised labels could be

required. While most raw poultry sold in retail stores is packaged

and labeled in federally inspected establishments, some raw product

is repackaged and labeled at the retail level. Retail stores would

have to label their single-ingredient, raw products unless they had

data showing that the processing and repackaging they conduct

removes all retained water. Thus, there would be some cost for

labeling retained water at the retail level. Finally, there may also

be a few meat labels that need to be revised since some byproducts

and organ meats are now washed in water before being shipped.

There would also be the cost of establishing the level of

retained water. As discussed earlier, FSIS now employs from 25 to 50

staff years measuring retained water. Inspected establishments could

utilize FSIS test results or conduct there own retained water tests.

If such tests are conducted by Quality Control (QC) technicians

making $35,000 annually, the cost of 25 to 50 staff years represents

from $875,000 to $1.75 million, annually. This option would not

require any reduction in the current levels of retained water. Thus,

there would be no costs for modifying production practices. The cost

analysis in Section X addresses the cost of establishing a minimum

which is a different task than establishing the level.

The labeling of product to identify retained water benefits

consumers. The information provided has value because it allows

consumers to make better decisions. In the terminology of the 1979

ERS study, the labeling of retained water would help consumers

establish the ``true'' price of poultry.

The extent of the labeling benefit, i.e., the value of labeling

information to consumers, is affected by several factors. These

include the type of label that will eventually be required, the

number of different labels present in the marketplace and the

variation in retained water within a specific production lot. The

first factor affecting the value of the labeling information is the

type of label statement. If the label statement indicates ``up to

____ percent retained water,'' the consumer cannot use the

information to calculate a true price per pound because the label

would not specify the actual amount of retained water. The ``up to

____ percent'' type of label would provide consumers with general

information indicating that some level of added water was present.

This type of label does not provide the same incentive to minimize

added water as a label indicating a specific percentage, i.e.,

``contains ____ percent added water.''

The second factor affecting the value of labeling is the number

of different labels present in the marketplace. If different

establishments have different labels for different levels of

retained water, consumers could be faced with a multitude of

different labels making price comparisons very difficult. It is not

unusual for a large supermarket to stock raw poultry from more than

10 different federally inspected establishments. While it appears

reasonable to assume that a company or an establishment would prefer

to use a single retained water statement for all raw product labels,

it is possible that some establishments would develop alternative

labels for each product, each indicating a different level of

retained water. Added water content could be established on a day-

to-day or production-shift basis.

A third factor affecting the value of labeling is the variation

in retained water within a specific production lot. Natural

[[Page 48976]]

variation is a component of all food attribute labeling. Variation

does appear, however, to present a greater than usual concern with

retained water. Based on the 10-bird tests conducted by FSIS, the

package-to-package variation could be relatively high for whole

birds. In a randomly selected 10-bird test for whole broilers

(average ``green weight'', i.e., carcass weight prior to any water

absorption, was 3.6 pounds), the average retained water was 6.57

percent. The range was from less than 1.0 percent (0.95) to 14.6

percent. Only five birds were within 2.0 percent of the

average 6.57 percent. Two individual birds exceeded the 8.0 percent

limit. In a second 10-bird test of 3.2-pound broilers averaging 6.92

percent retained water, 6 of 10 were within 2.0

percent. Three individual birds exceeded the 8.0 percent limit. This

data raises an issue concerning how a percentage labeling option

would be implemented, i.e., what level would be required to appear

on product labels? Would it be the average or would it be a level

that included 90 or 95 percent of the individual birds?

The amount of retained water appears to vary less for turkeys.

In one randomly selected 10-bird test of smaller turkeys (regulatory

limit of 6.0 percent), 9 of 10 were within 1.0 percent

of an average retained water level of 5.45 percent. In a 10-bird

test of larger birds (regulatory limit 5.3 percent), 7 of 10 were

within 1.0 percent. One bird exceeded the regulatory

limit.

While the variation rate affects the value of the labeling

benefit, it does not eliminate the benefit. For an individual

purchase, purchasing a product labeled ``2% retained water'' does

not guarantee more useable product than purchasing a product labeled

``4% retained water.'' When averaged over several purchases,

however, the product labeled to indicate less retained water should

result in more useable product. In addition, a large portion of raw

poultry is now marketed as packages of thighs, wings, breast

quarters, leg quarters, and boneless, skinless breast meat, etc. For

these types of packages, the bird-to-bird variation is less of a

concern.

Option 2--Zero Retained Water

The Agency could establish a standard of zero retained water for

all raw, single-ingredient meat and poultry products. In theory,

given sufficient drip time or drain time or drying time, all raw,

single-ingredient products can be returned to a ``green weight.''

However, available data suggests that returning immersion-chilled

poultry to ``green weight'' may not be feasible. The 1979 ERS study

included data that supports the conclusion that water retained

during washing and chilling does not completely drain from poultry

by the time the product reaches the consumer. For the study, ERS, in

conjunction with ten local weights and measures agencies, measured

the percent drain in 297 retail packages of chicken from five

poultry processors. All packages were whole cut-up chicken packed at

establishments using immersion chilling. All brands had an average

water pickup of 5 to 6 percent at the time of packaging. For the 297

packages the average drain as a percentage of labeled net weight was

3.42 percent. Assuming the product started at an average of 5.5

percent, the product was still retaining approximately 2.0 percent

absorbed water when sampled at retail. The study did not indicate

how many days the product had been in distribution. One processor

was shipping to retail stores on both the east and west coast. Thus,

in some cases, there was considerable transportation time involved.

There was a second \3\ study that showed that the water loss

that occurs in the plant from the time the poultry is placed in the

package to the time it leaves the plant is substantially less than

total retained water. During the development of the 1989 Net Weight

Proposal (54 FR 9370, March 6, 1989), FSIS, in cooperation with the

National Broiler Council and the National Conference on Weights and

Measures, conducted a study on water loss. Data collected from ten

chicken processors showed that the average water loss occurring in

the plant after packaging was 1.8 percent. The study did not,

however, include data on the length of time the product stayed in

the plant after initial packing.

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

\3\ U.S. Department of Commerce, National Institute of Standards

and Technology (NIST), Report of the 73rd National Conference on

Weights and Measures, NIST Special Publication 750, 1988.

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

FSIS technical personnel believe that a zero standard would

require the poultry industry to abandon immersion chilling because

attaining zero-retained water with immersion chilling is not

technically feasible. Installing air chilling or air chilling/spray

systems would require major reconstruction costs for the poultry

industry. There is also a potential cost associated with possible

increases in pathogen levels. Studies have shown that immersion

chilling reduces overall pathogen levels on poultry. If this option

would force the poultry industry to abandon immersion chilling and

pathogen levels increased, then there could be additional social

costs associated with increases in foodborne illness. With this

option there would be no need to revise product labels.

Under this option, consumers would benefit by being fully

informed as to the ``true'' price of both meat and poultry products.

No balancing of water content and label price would be necessary.

However, because the benefits of better informed consumers from a

zero-retained water standard are unlikely to surpass the costs, this

option was eliminated.

Option 3--``Green Weight'' Labeling

A variation on the concept of zero-retained water is the option

where there could be no retained water in the stated weight of the

product. Establishments would be required to establish a retained

water level for each ``lot'' or shift. Scales would then have to be

adjusted to account for retained water. The weight indicated on

product labels would be an estimate of the ``green weight'' prior to

the final carcass wash.

The only direct cost is the cost of establishing the amount of

retained water in order to adjust scales. There would be no need to

revise product labels or modify chilling practices. The major impact

would be a reduction in the labeled volume of poultry production by

an estimated 1.5 billion pounds. To maintain the current level of

sales in dollars, the poultry industry would have to raise the

wholesale price per pound by an average of 5.1 percent. Retail

prices would also increase. Consumers would, most likely, perceive

an increase in poultry prices. As the 1979 ERS study noted, however,

changing net weight methodology, by itself, only changes that

information a consumer receives but not the real cost of the

product. Consumers would, however, be fully informed as to the

``true'' price of poultry.

A disadvantage of this option would be that the labeled weight

would only be an estimate of the ``green weight.'' The package-to-

package variation would now be an issue for the accuracy of the net

weight statement rather than the accuracy of a qualifying statement.

There could also be considerable differences between labeled weight

and packaged weight. This option would require the Agency to revise

the overall system for regulating net weight accuracy.

If this option were selected, FSIS would have to reopen the net

weight regulations. In 1990, after four proposals and almost two

decades, FSIS published final rules for net weight labeling of meat

and poultry products (55 FR 49826, November 30, 1990). In the final

net weight rule, FSIS established a regulatory framework that for

all compliance testing in federally inspected establishments, the

net weight of raw chicken would be established using a dry tare

system. In a dry tare system, both free liquid and liquid absorbed

by packaging material would be included in the net weight of the

product. At the same time, the rule recognized that a few State and

local weights and measures authorities still prefer to conduct wet-

tare compliance testing. Under a wet-tare system, the free liquid

and liquid absorbed by packaging material are not counted in

measuring the product weight. The final rule established a 3 percent

``gray area'' where if fresh poultry minus any liquids (free liquid

plus liquid absorbed by any packaging material) is within 3 percent

of the labeled weight, further information is sought before any

determination is made. The 3 percent ``gray area'' applies only in

localities using wet-tare testing. The task force that recommended

the 3 percent gray area for raw poultry noted \4\ that the

recommended level would require over pack by manufacturers supplying

wet-tare localities to compensate for water lost.

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

\4\ U.S. Department of Commerce, National Institute of Standards

and Technology (NIST), Report of the 73rd National Conference on

Weights and Measures, NIST Special Publication 750, 1988.

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

Enforcement of net weight requirements is an area where Federal,

State, and local authorities share responsibility and must

cooperate. The enforcement procedures, as adopted by the National

Conference on Weights and Measures, are published in NIST Handbook

133, Third Edition, Supplement, ``Checking the Net Contents of

Packaged Goods.'' FSIS' net weight regulations incorporate Handbook

133 by reference. The National Institute of Standards and Technology

(NIST) has a statutory responsibility for ``cooperation with the

[[Page 48977]]

States in securing uniformity of weights and measures laws and

methods of inspection.'' At the same time, the FMIA and PPIA do not

allow State and local jurisdictions to impose any standards that

differ from those published by FSIS. In publishing the final net

weight regulations in 1990, FSIS stated that the ``rule is designed

to enhance the ability of Federal, State, and local agencies to

enhance the industry-wide use of strict net weight standards at the

packing, warehouse and retail level.'' Although this option would

enable FSIS to address economic adulteration, it was eliminated

because (1) the benefits in the form of consumer information do not

appear to outweigh the costs of adjusting scales and labels to show

green weight, and (2) because of the need to maintain uniformity in

weights and measures laws and methods of inspection.

Option 4--Retained Water Limits Based on Best Available Technology

Within Traditional Production Practices

Under this option, FSIS would require all establishments to meet

water limits based on the lowest levels that are currently being

achieved by those establishments using the best available water-

immersion chilling technology. The limit for retained water in

carcass beef, pork, lamb, and goat would remain at zero. There might

be some costs associated with establishing limits for the byproducts

and organ meats that are now processed separately from carcasses.

FSIS recognizes that, for the poultry industry, the concept of a

``minimum'' cannot be separated from some definition of standard

manufacturing practices that would include a reasonable drip or

drain time and some reasonable minimum temperature for chiller

water. Longer drip lines and lower chiller water temperatures are

both factors that would increase the cost of chilling poultry.

Under this option, it is envisioned that the new limits would be

established based on data from the establishments using the best

technology. There would be costs for collecting and analyzing the

data and costs from modifying processes to reduce water retention.

This option could impose considerable costs on those establishments

that do not currently have the best available technology.

The maximum allowed water level could actually be a series of

levels for different types and weights of meat and poultry products.

Under this option, products could not contain more than the

established limits and all products containing retained water would

have to be labeled indicating the presence of retained water. The

costs of labeling the percentage retained water would be similar to

those described under Option 1. The factors affecting the value of

labeling information would still exist, but there should be fewer

different labels because the range of permissible retained water

levels would be reduced.

Operating the best technology so as to minimize retained water

may not be consistent with minimizing pathogens. Thus, there is a

potential cost associated with increased pathogen levels and

increased foodborne illness.

This option would enable FSIS to effectively address economic

adulteration and would provide consumers information. However,

because the costs to industry to acquire the best available

technology would be large and would outweigh consumer benefits, this

option was eliminated. Furthermore, the option has the effect of a

design standard.

Option 5--Water Limits Based on Existing Equipment

This option would require all establishments to operate their

existing equipment so as to minimize retained water. As discussed in

the previous option, minimums would have to be based on some

reasonable limits for operating parameters. The retained water

requirement for carcass meat would remain at zero since meat

establishments are already operating at zero.

As with the previous option, new retained water limits are

required for this option. Data would have to be collected and

analyzed to establish minimum water levels for different types of

equipment. There would be costs for collecting and analyzing this

data, most likely greater than for the previous option. However, no

establishment would have to replace equipment, as all minimums would

be based on existing equipment. This option would presumably lead to

a larger number of retained water requirements. FSIS technical

staffs believe retained water is related to variables such as type

of chiller, water temperature, time in chiller and type and level of

agitation.

Retained water would have to be identified on product labels.

The costs of labeling retained water would be similar to those under

Options 1 and 4. The factors affecting the value of labeling would

still exist. Having different minimums for different equipment would

probably lead to a greater number of labeling variations.

Minimizing retained water may not be consistent with processes

that minimize pathogens. Thus, there is a potential cost associated

with increased pathogen levels and increased foodborne illness.

Option 5 is superior to Option 4 in that no establishment would

have to replace existing equipment or processes. This factor

outweighs the potentially higher cost of establishing limits and the

potential decrease in the value of labeling information due to a

greater number of labeling variations. Option 5 is deemed inferior

to the preferred option which follows because it does not provide

flexibility to the meat industry and does not integrate food safety

requirements. Options 4 and 5 may lead to increased pathogen levels

and increased costs of foodborne illness.

Option 6--Retained Water Limits Established by Processes Necessary

To Meet Food Safety Requirements

Under this option, all establishments would be expected to meet

a zero-retained water standard (i.e., Option 2) unless data

demonstrate that another level is necessary to meet existing food

safety standards using existing washing, chilling, and draining

systems (i.e., by introducing food safety objectives to Options 4

and 5). FSIS envisions that such data could be established on an

industry-wide basis, for a specific industry sector using similar

processes, or on an establishment-by-establishment basis. The data

could be collected and analyzed by individual establishments or by

trade associations or other groups.

There would be costs for collecting and analyzing data. For the

previous option, the data would be collected to establish a minimum.

For this option, the data would be collected to establish a minimum

while still meeting the existing chilling requirements. Thus, the

poultry industry costs for establishing the limits should be

essentially the same as the costs for the previous option. The meat

industry would establish limits for retained water only if they

viewed it as a new lower cost option for meeting pathogen reduction

performance standards. Any retained water would have to be

identified on product labels. The limits on retained water would,

most likely, be a series of levels for different types and weights

of meat and poultry products. The costs of labeling retained water

would be similar to those under Options 1, 4 and 5. The value or

usefulness of the labeling will depend on the number of different

limits and whether those limits are established on an industry-wide

basis or on an establishment-by-establishment basis.

The actual retained water limits for this option would be based

on the inevitable consequence of meeting food safety requirements

with existing processes. The necessity of meeting food safety

requirements would lead to equal or higher retained water levels

than those based on best available technology (Option 4) or best use

of existing equipment (Option 5). Since the costs of modifying

production processes decrease as the level of allowed retained water

increases, costs are the same or lower for this option than those

for Options 4 and 5. The costs for establishing the retained water

limits should be similar to those for Options 4 and 5. The labeling

costs are essentially the same. For this option, there are no

potential costs associated with increases in pathogen levels and

foodborne illness. Thus, since the labeling benefits are essentially

the same, this option is expected to have the greatest net benefits

of the three options that permit limited retained water. This option

was selected as the proposed rule.

X. Cost of Proposed Rule

The purpose of this section is to estimate the costs of proposed

rule. The proposed rule would create three types of costs: (1) the

costs for establishing water levels necessary to meet food safety

requirements, (2) the costs associated with reducing retained water

to such levels, and (3) the costs of revising product labels to

indicate the presence of retained water. Most of the potential cost

impact falls on the poultry establishments using water-immersion

chiller systems. There are approximately 300 federally inspected and

an estimated 65 State-inspected poultry slaughter establishments.

There will also be some impact on livestock slaughter establishments

and on retail stores that re-pack and re-label raw, single

ingredient meat and poultry products.

[[Page 48978]]

Cost of Establishing Water Limits

The proposed rule would prohibit retained water in raw meat and

poultry products unless the water is an inevitable consequence of

the process or processes used to meet applicable food safety

requirements. To establish a non-zero retained water limit, an

inspected establishment or trade association or other group would

have to generate supporting data. The proposal would allow such data

generating studies to be conducted for an individual establishment

or for an industry sector using the same or similar processing

techniques and equipment.

This requirement would not appear to have a significant impact

on the meat industry because the meat industry is already achieving

zero retained water. This proposal would, however, provide an

alternative for establishments that are having or will have trouble

meeting the Salmonella performance standards. These establishments

could utilize a full range of approved antimicrobial rinses or hot

water rinses without having to worry about achieving zero retained

water. If establishments can demonstrate that they need a non-zero

limit to meet the Salmonella standards, they can utilize the

flexibility provided by this rule and establish a new retained water

limit as long as they indicate the presence of retained water on

product labels.

It is assumed that 500 meat establishments (10% of the 5,000

affected meat establishments) would conclude that they cannot meet

the new pathogen reduction standards without using a process that

results in some level of retained water. The 10% estimate is from

the Final RIA published with the final PR/HACCP rule (see Federal

Register Vol. 61, No. 144, July 25, 1966, pages 38976-38977). In

that analysis, FSIS referred to historical data showing control

problems in from 5 to 10 percent of inspected establishments. The

estimated 500 establishments having difficulty meeting pathogen

reduction standards would be required to conduct water tests to

establish unavoidable levels and possibly some additional Salmonella

tests. The analysis assumes 200 hours per establishment for water

tests and 100 hours to collect a sample set for Salmonella. The

total cost would be 150,000 hours or $3.75 million for labor and

another $1.2 million for 35,000 sample analyses. These estimates are

based on cost factors from the FRIA for the PR/HACCP rule, i.e., $25

an hour for a quality control manager and $34 for a laboratory

analysis for Salmonella. The average sample set for meat is

approximately 70 samples considering 82 for steer or heifer

carcasses and 55 for swine carcasses. The total cost for the meat

establishments would be an estimated $5 million. The costs for

Salmonella testing and the costs of using alternative processes such

as carcass washing systems have already been addressed in the FRIA

for the PR/HACCP rule in the discussion of compliance costs for

meeting the Salmonella standards (Federal Register reference noted

above). The cost of establishing water limits (100,000 hours or $2.5

million) would be additional costs. In return, this rule provides an

alternative that doesn't currently exist.

FSIS does not consider air chilling an economically feasible

alternative for chilling poultry. Thus, it seems reasonable to

assume that the poultry industry would conclude that immersion

chilling is necessary to meet the existing chilling requirements for

poultry, e.g., 9 CFR 381.66(b)(2) requires that poultry carcasses

under 4 pounds shall be chilled to 40 deg. F. within 4 hours

following evisceration. It follows that the retained water necessary

to meet food safety requirements is the minimum level that can be

reached with existing equipment and still be in compliance with

chilling requirements. There is also the possibility that the

retained water necessary to meet the pathogen reduction performance

standards for Salmonella would be higher than the level necessary to

meet chilling requirements. The following discussion, however,

assumes that the unavoidable retained water levels are driven by the

chilling requirements.

The Agency believes that the industry already has considerable

information concerning the chiller variable settings that minimize

water retention. The variables of concern are chiller water

temperature, water intake, total time in chiller and level of

agitation. FSIS, therefore, believes the poultry industry can

establish water limits for various chiller systems with minimal

costs. Under current regulations (9 CFR 381.66(d)), establishments

must conduct a 50-bird test to demonstrate that any change in

chilling procedures does not affect compliance with existing

requirements. This analysis assumes that poultry establishments

could establish minimum retained water levels by conducting four 10-

bird tests at ten different chiller settings for each product

category. It is assumed that the average establishments would have

two product categories, e.g., light hens versus heavy toms. Each

test would take an estimated 2.5 hours to select birds, tag and

weigh birds, and reweigh birds after chilling. (The FSIS 10-bird

test takes from 40 to 60 minutes.) Time required between tests would

not be considered a cost. Thus, testing would cost each plant 200

hours or $5,000 using a quality control manager making $25 per hour.

The cost to 300 inspected establishments would be 60,000 hours or

$1.5 million. Some smaller federally inspected establishments and

presumably more State inspected establishments do not use immersion

chilling. They chill using ice and slush on processing tables/

counters and have retained water levels below 2 percent. In the data

collected from the field, two chicken establishments with annual

production under 200,000 birds had retained water levels of 1.58%

and 1.7%. It is assumed these smaller establishments are at a

minimum level and would incur no additional cost to establish a

minimum. These establishments do not appear to have any variables

that could be studied during a water test.

The proposal doesn't provide specific guidance on options

available for poultry processors that are already operating far

below the existing standards for Salmonella. As an illustrative

example, consider what options are available for a broiler slaughter

establishment that has an unavoidable retained water level of 5

percent (due to immersion chilling for time/temperature) and is

consistently achieving Salmonella positive levels of around 10

percent, well below the existing standard of 20 percent. Should this

establishment be able to operate at a higher retained water level if

data showed that the establishment could then achieve an even lower

level of Salmonella? Should the Agency's food safety objectives lead

to a solution where any level of water would be allowed if data

demonstrated a reduction in pathogens? While the current proposal

does not allow such flexibility, the Agency is requesting comment on

this aspect of the proposal. Under the current proposal, if FSIS

lowers the pathogen reduction standards as stated in the preamble to

the PR/HACCP rule, inspected establishments would have the option of

increasing retained water if appropriate tests showed that such

increases were unavoidable in meeting revised food safety standards.

Costs of Reducing Retained Water

If establishments are able to demonstrate that current levels of

retained water are necessary to meet food safety standards,

establishments would not incur costs for reducing retained water.

However, to the extent that establishments cannot demonstrate that

current retained water levels are necessary for meeting applicable

food safety standards, significant costs could be incurred as

establishments modify processes to minimize retained water levels.

Reducing retained water could entail a wide range of processing

modifications, depending on the type of chilling equipment currently

used and amount of retained water that would have to be removed.

The Economic Research Service (ERS) conducted some preliminary

analyses to begin to establish estimates of what it might cost to

significantly reduce the amount of retained water in raw poultry.

There are three ways to reduce retained water. The first involves

holding poultry in refrigerated rooms until excess water has drained

off the birds. The second involves making adjustments in the

chilling process to reduce water absorption. The third involves a

change in the chilling system, i.e., a move to air chilling or air

chilling in combination with a water spray. As noted elsewhere in

this PRIA, FSIS does not consider requirements that would mandate

air chilling to be economically feasible. The existing regulations

for air chilling (9 CFR 381.66(e)) require the internal temperature

of the carcass to be reduced to 40 deg.F or less within 16 hours.

There are limited data on costs of air chilling. Both reconstruction

costs and operating costs would be high. The 1979 ERS study included

an estimate from an industry source that air chilling uses more

energy and costs about 4 cents per pound more than immersion

chilling. The ERS study noted that there was only one major U.S.

poultry processor using air chilling in 1979. A draft Impact

Analysis Statement conducted for the 1978 proposal to reduce water

use requirements for chilling stated that retail prices for air

chilled birds were running approximately 20 percent higher than

water chilled birds. That analysis attributed the higher retail

prices to the higher capital cost and higher operating expenses.

[[Page 48979]]

The simplest way of viewing the cost of reducing retained water

is to consider the incremental operating costs under the conditions,

e.g., chiller temperature, that established the minimum unavoidable

water. Such conditions could also involve optimizing water

temperature and flow through the chillers, reducing the amount of

agitation of the chilling medium, and reducing the ``dwell time'' of

poultry in the chillers. If, as some believe, lower water

temperature reduces water absorption, the response to tighter

retained water requirements will be the installation of new or

heavier compressors to lower the temperature in the chiller units.

An installed additional compressor would cost an estimated $150,000

per establishment, or an estimated $45 million for all 300 federally

inspected establishments.

FSIS does not have a method for estimating a cost for operating

at conditions that establish a non-zero level of retained water

necessary to meet food safety requirements. As an alternative, this

PRIA estimates the cost of removing a substantial portion of the

existing water using an extended draining or dripping process. One

can view the estimated draining costs as an upper bound on the cost

of removing water. An establishment would only use draining under

conditions where the cost of draining was less than the incremental

operating costs.

To extend draining or dripping time, many establishments would

have to add refrigerated facilities, purchase vats for storing birds

being drained, hire additional personnel, and purchase additional

stock handling equipment. There would be inventory costs due to

holding birds off the market for a longer time before shipment.

Holding birds at inspected establishments would also reduce the

corresponding retail shelf life.

The ERS staff developed some cost estimates for holding poultry

based on the following industry input:

One common method of draining uses stainless steel vats

at a cost of $1,000 each.

Vats hold approximately 500 chickens or 100 turkeys.

Cooler space costs $125 per square foot.

Vats can be stacked two high.

Stacked vats with aisles require 12 square feet of

space per vat.

Forklifts to move vats cost $24,000 each.

With the above factors in mind, one can address the questions of:

``What are the fixed costs of draining a substantial amount of

absorbed water from poultry?''

The Daily Moisture Records sometime include a record of the

additional drain time required. The time varies considerably

probably depending on the initial water level, the drain

configuration, and the location of the excess water, i.e., under

skin versus between muscle tissue or within muscle tissue. The

available data, for cases where young chickens were more than 1

percent over the limit, indicates that it can take from \1/2\ to

3\1/2\ hours to drain one percent. In two cases where broilers

exceeded the 12 percent regulatory limit by more than 4 percent, the

required drain time was approximately 12 hours. Program personnel

estimate that the drain time per percent increases as the birds

approach ``green weight,'' i.e., it takes longer to drain from 8 to

4 percent than it does from 12 to 8 percent. Thus, it seems

reasonable to conclude that a 12-hour drain would be the minimum

time required to remove most of the retained water from chickens.

Most of the drain times for turkeys ranged from \1/2\ to 1 hour

on an ``hour per percentage reduction'' basis. However, two cases

showed drain times in the 10 to 11 hours per percentage reduction

range. All of the turkey violations noted were less than 1 percent

above the existing limit whereas some of the chickens started at

water levels 4 to 5 percentage points above existing limits.

The existing data from water control efforts indicates that it

could take at least 12 hours to remove a substantial portion of the

retained water in chickens. The 12-hour estimate is based on

starting at a relatively high percentage and lowering the level by 4

to 5 percentage points. Thus, a 12-hour drain would reduce the

existing level from 5 to 6.5 percent by an amount less than 4 to 5

percentage points. To drain chickens for 12 hours is somewhat

equivalent to saying the industry would need to add the extra

capacity to drain half a day's production, since most chicken is

processed in establishments running two shifts.

Since average chicken production is 29.5 million birds per day

(assuming a 260-day work year), half a day's production is 14.75

million birds. Using the above factors, this would require 29,510

vats at $29.5 million; 354,120 square feet of cooler space at $44.3

million; and $4.8 million of forklifts assuming the largest 200

chicken establishments would each require an additional forklift. In

this 12-hour case, the total fixed costs would be $78.6 million.

Similarly, half a day's production for turkeys is 557,000 birds

requiring 5,570 vats at a cost of $5.57 million and cooler space at

a cost of $8.36 million. Assuming that the largest 70 turkey

establishments would require an additional forklift at a total cost

of $1.68 million, the total fixed costs for draining all turkeys for

12 hours would be $15.6 million. Thus, total fixed costs for a 12-

hour drain for chickens and turkeys are estimated at $94.3 million.

One can argue that large plants already have the capacity to

store a shift's production. This occurs today when limits are

exceeded. The MPI Manual provides, as an alternative to calculated

drain time, a 24-hour continuous drain at 40 deg. F. or below before

shipping. The data reviewed for this analysis included two such

cases. Today's excess capacity can also be viewed as a contingency

capacity that would still be required over and above any additional

capacity needed to achieve an overall water reduction.

This analysis has not attempted to estimate the complete

variable costs of holding poultry to drain. Variable costs would

include increased labor costs, increased utility costs, increased

overhead, and the cost of carrying additional inventory. Holding

half a day's production is equivalent to continually storing a

wholesale value of $37 million in poultry ($19.2 billion divided by

520 shifts). At a 10 percent interest rate, the annual cost of

draining poultry for 12 hours would be $3.7 million.

It would also seem reasonable to assume a minimum average of one

additional employee per establishment. Three hundred employees at

$21,500 per year (average wage in chicken slaughter establishments

of $10.34 per hour) would result in an annual operating cost of $6.4

million. Thus, FSIS estimates the minimum variable costs at $10.1

million ($3.7 million plus $6.4 million) per year if the response is

to drain poultry.

The above analysis has provided an estimate of the cost of

reducing retained water by a ``substantial'' amount, i.e., an amount

that can be equaled to a 12-hour drain. Available data indicates

that a 12-hour drain could reduce overall water by an amount

somewhat less than 4 to 5 percentage points at an estimated first

year cost of $104.3 million ($94.2 plus $10.1 million) and recurring

annual costs of at least $10.1 million.

Cost of Revising Labels

The cost of revising labels is a relatively easy cost to

quantify. For previous rulemakings, FSIS has collected survey data

on the costs of label revisions. Labeling changes have been the

subject of several rulemakings in recent years.

The proposed rule would entail a one-time change in affected raw

meat and poultry product labels to add a statement of the percentage

of retained water in the product next to the product name.

Establishments would have to prepare or order new product labels to

comply with this requirement. FSIS would allow establishments to run

out their stocks of existing product labels before the proposed

labeling requirements would take effect. The establishments would,

therefore, not incur costs of discarding existing label inventories.

The cost of revising a label varies widely depending on the type

of label, the number of colors affected, and the printing process

used. Adding a water content statement is the lowest cost type of

modification because it involves single color printing and no

graphic art. The cost of revising labels is an up-front,

nonrecurring cost. This analysis uses an average cost of $1,000 for

each product label that must be modified. The cost can vary widely,

however. Discussions with turkey industry personnel indicate that it

can cost from $1,500 to $2,000 to change a label for one of the

opaque plastic bags used to package whole turkeys. In contrast, a

1992 survey conducted in conjunction with nutrition labeling

regulations found that many small firms use simplified labels that

can be revised for less than $200 per label.

The primary impact will be on the approximately 300 federally

inspected and 65 State inspected establishments that slaughter and

pack raw poultry. Currently, 135 of the federally inspected

establishments are considered large entities, according to Small

Business Administration (SBA) criteria (establishments having more

than 500 employees). The cost to these ``large'' establishments of

changing labels is estimated at approximately $12.5 million. There

are another 168 federally inspected poultry establishments that

slaughter and

[[Page 48980]]

pack raw poultry. The esti

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