Beef industry insiders say that the federal government has backed away from a stringent new meat-inspection policy that a local beef producer claims forced his company into bankruptcy last year.

Dallas' Supreme Beef, which once provided one-fourth of the nation's ground beef for school lunches, challenged in court the U.S. Department of Agriculture's new science-based beef inspection standards for contaminants such as salmonella. After some failed tests for salmonella at Supreme Beef, the USDA pulled its inspectors from the company's two meat plants in the Fair Park area and Fannin County, effectively shutting down the beef supplier, which can't sell its beef in the United States without USDA inspection.

Supreme claimed that the agency had never obtained the approval of Congress to enforce its new standards and scored a victory when a federal court ordered the USDA to send its inspectors back to the plants. But Supreme's CEO, Steven Spiritas, alleges that the agency retaliated by stepping up its scrutiny of the company's ground beef, ordering many more tests than are usually conducted.

When the USDA used ultra-sensitive tests and found potentially deadly E. coli bacteria in a batch of beef, Spiritas ordered a recall. Supreme Beef lost so much business it was forced to shut down.

Now, the USDA is adopting a gentler approach to other meat producers that fail its new standards, apparently because it fears another high-profile challenge, says Rosemary Mucklow, executive director of the National Meat Association.

So far, two other Texas plants, one in Plainview and one in Waco, have failed in three rounds of random tests for salmonella levels under the agency's new microbial testing standard. The plant in Plainview is taking "corrective and preventative action" and is expected to begin a fourth phase of testing soon, a USDA spokeswoman said. But, unlike the agency's action after Supreme Beef failed a third phase of testing, the USDA isn't pulling its inspectors, and the plants remain open while the agency works with the meat producers to solve the bacteria issues.

"Obviously, the game plan has changed," Mucklow says. "Perhaps the people at USDA are beginning to understand that a random sample is not representative of the safety and quality of product that is being produced."

The USDA, she says, probably won't act severely against the two Texas plants unless a federal appeals court reverses a lower court ruling and finds that the agency acted appropriately in pulling its inspectors from Supreme Beef.

The 5th Circuit Court of Appeals is expected to hear oral arguments in the case on Monday in Austin and will issue a ruling sometime after that.

Supreme Beef's challenge brought into question the basis for the USDA's new tougher meat standards. Beef suppliers--particularly those in the South, where higher temperatures tend to allow bacteria such as salmonella to flourish--complain that the standards are based on faulty science.

The USDA maintains that its standards are sound. Until the appeals court rules, however, meat plants could cite the lower court ruling if the USDA tries to penalize them by removing its inspectors.

William Smith, assistant deputy administrator for the office of field operations for the Food Safety and Inspection Service, an arm of the USDA, said last week that a national advisory committee is reviewing the "salmonella performance standard" for ground beef. But, he said, the rules have not changed since Supreme Beef took the government to court, and the agency has not adopted a softer stance toward plants that fail tests.

"We went through the same rigorous process we've done with everybody," Smith said. "We are consistently applying the policy that existed prior to when the regulation was published. For us to make a put a plant in abeyance or defer would be that they have presented scientifically credible and technically credible information that says this will address the problem."

Spiritas says he wouldn't be surprised if the USDA is playing soft these days with other plants that have failed tests. He and others in the industry say the agency's much-touted random testing standard gives the public false confidence. It needs to be revamped and enforced fairly, they say. Spiritas says if the USDA had been fair to him the way it is apparently being fair to the other plants, he'd still be shipping millions of pounds of ground beef.

"We'd still have a family business, and we would still have 500 families smiling instead of all the tears that I'm continuing to hear about from these people," Spiritas says, referring to his former employees. "It's sad. A lot of these people have been with us for years, and they miss their jobs."

Spiritas and Mucklow argue that a random finding of positive for salmonella doesn't accurately indicate meat is unhealthy. Ground beef isn't mixed up like a liquid, so a small sample cannot fairly reflect a batch of thousands or millions of pounds of meat.

What's more, they say, salmonella is not even considered an adulterant like E. coli. Meat containing salmonella isn't pulled from shelves, and it isn't considered unhealthy to eat if cooked properly. Eggs and poultry often contain salmonella, and the public generally knows it and thoroughly cooks those products, they say.

Supreme Beef's fight with the government was detailed in a December 21, 2000, Dallas Observer cover story, "Slaughterhouse Jive." During the last few months, Spiritas has liquidated Supreme Beef's assets as part of bankruptcy.

"All of the equipment has been auctioned off, and the building has been listed for sale in Dallas," he says. "We're talking about a building that has been an active meat operation and goes back to the '30s in this part of town. It's sad to see this street empty where there used to be a hundred trucks lined up."

Spiritas says he's working on plans to get back into the beef-producing business, but not without reservations.

"I'm very concerned as to how the government would treat me in business," he says. "I know how they treated me before, and it could not have been worse."