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The Ugly Underbelly of Zealous Regulation (Part 1)

Columnist: Bob Andrews
April, 2014 Issue
Columnist

Bob Andrews
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Consider the plight of Petaluma’s Rancho Feeding Corp., the only beef slaughterhouse in the North Bay. The U.S. Department of Agriculture used its muscle to encourage Rancho to recall a year’s worth of beef, more than 8.7 million pounds, charging that Rancho “processed diseased and unsound animals” without full inspection. At the time this is being written, Rancho has ceased operations, creating a crisis for the company, its employees and its customers, including many local ranchers who rely on the slaughterhouse [see “Rancho Feeding Corp.’s Recall Affects Us All”]. Many of these customers expressed strong support for the quality of work done by Rancho. The USDA and the owners haven’t given full explanations of the situation.
 
I don’t know what “without full inspection” means. Slaughterhouses and meat processing plants are inspected once or twice every work day, under complex and comprehensive regulations. How could inspectors miss so much that a year’s worth of meat has to be recalled? Did relations between Rancho and its inspectors completely break down?
 
How bad can the relationship between a meat plant owner and government inspectors get? The answer came on June 21, 2000, at a family-owned sausage factory in San Leandro. The owner, who’d complained bitterly of harassment by meat inspectors, shot and killed two USDA inspectors and one state inspector. Another state inspector barely escaped. The killer was tried, convicted and sentenced to death. He died of natural causes while on Death Row.
 
But there’s another story, a Sonoma County gothic horror story, about a meat processing plant that suffered the full consequences of regulatory power exercised by meat inspectors and the USDA itself. I gathered information about this story from meat industry publications and court records. Here’s what I learned.
 
The USDA has vast responsibility for food safety and thus vast powers of inspection and enforcement. Its inspection arm is the Food Safety and Inspection Service (FSIS). With a mandate of daily inspections of slaughterhouses and meat processing plants, FSIS inspectors have a lot of contact with plant operators and a tremendous amount of discretion to reject meat, which costs the owner money, or to close the plant due to a Plant Deficiency Report (PDR), which costs the owner money, reputation, customers and maybe even the entire business. To begin operations, each plant needs to get a Grant of Inspection, essentially a license. If the USDA withdraws the Grant of Inspection—for a day, a week, whatever—your plant is closed for that amount of time. No meat processing, no packaging, no shipments, no income, probably no pay for employees.
 
I’m not going to use real names of the Sonoma County plant, its owners, its inspectors or USDA administrative officials. The business began in 1980 with an aim of providing the highest-quality, easy-to-prepare specialty meat products—primarily veal and lamb—for restaurants and grocery stores. Its customers included John Ash & Co., Petrini’s, Disney World and hundreds of others, including the White House and arms of the military. In all of its years of operation, the business never had a claim against it, except for one instance of a broken diner’s tooth.
 
Over a period of years, however, the relationship between the plant’s owners and certain USDA/FSIS inspectors became contentious. The owners believed the USDA didn’t provide enough inspectors for daily visits to all the meat facilities in the North Bay and didn’t provide sufficient education for the inspectors. The owners alleged that one inspector didn’t know veal from pork, and that another inspector banned an expensive Hobart-brand meat saw (imported from Germany) because it didn’t have a United States serial number in USDA files.
 
The owners protested a number of actions taken by inspectors in the early 1990s. This led, they allege, to personal retaliation by inspectors, most notably in 1995 and 1996. The allegations include:
 
• A local inspector refused to release 500 pounds of veal imported from Holland, even though a USDA inspector in San Francisco had approved the meat. One box was missing a USDA stamp from San Francisco. The meat was destroyed.
 
• A local inspector refused to release $45,000 of meat purchased by the company at a Sonoma County Fair 4-H auction, due to rust residue (from a hanging hook) on a lamb carcass and the fact that the leg of one lamb was touching a frozen pig. These conditions existed in the truck from the slaughterhouse, not at the processing plant. Further, the meat was always intended as a donation to charities and was thus exempt from inspection. The plant owners had planned an elaborate ceremony to present the meat to charities. When no reversal came through from the USDA, the owners cancelled the ceremony and destroyed the meat. Then the owners purchased replacement meat and made the donation.
 
• The USDA closed the plant for 11 days when the owners forgot to notify the USDA that six potential employees would be training for knife skills on a Saturday.
 
• An inspector closed the plant for an entire day after one fly was discovered inside.
 
The plant owners listed literally dozens and dozens of additional allegations of harassment and intimidation by individual inspectors and the USDA, including an armed raid on the plant in December 1995, and a national recall of all of the plant’s products in 1996. The owners allege that there were seven plant closures in 1995 and 1996 costing them almost 36 weeks of operation, not to mention the huge cost of recalling products, which, they say, were falsely labeled as unsafe by the USDA.
 
Next month: The USDA and its inspectors get taken to court.

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