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A meatpacker linked to an E. coli outbreak reached an agreement with the federal government Friday to stave off its shutdown.

The dispute between Nebraska Beef Ltd. and the U.S. Department of Agriculture was seen by consumer advocates as an important test of the USDA's ability and willingness to enforce food safety regulations.

USDA officials had sought to close Nebraska Beef, starting on Jan. 14, until it corrected unsanitary conditions and inadequate food safety systems.

The meatpacker went to court to stop the government action, telling a federal judge a shutdown would cost it $2.7 million a day and put 1,100 people out of work at Nebraska Beef, which slaughters 2,000 head of cattle a day for shipment to supermarkets nationwide.

The judge issued a temporary restraining order against the USDA. But just before a court hearing on the dispute was scheduled to start, the two sides reached a settlement that will allow Nebraska Beef to stay open.

The terms of the settlement were not disclosed.

Consumer activists expressed disappointment.

"The plant has tried again and again to fix the problems, and how many bites at the apple do they get?" asked Art Jaeger, a spokesman for the Consumer Federation of America. "We think the USDA did the right thing in trying to shut them down."

The dispute began over the summer after a subsidiary, All American Meats, was identified by the USDA as the supplier of ground beef found to be contaminated with the potentially deadly E. coli bacteria. The USDA recalled the meat but would not disclose the number of pounds recalled or the scope or severity of the outbreak.

In court papers, William C. Smith, a deputy administrator for the U.S. Department of Agriculture's Food Safety and Inspection Service, had argued that Nebraska Beef has a history of serious unsanitary conditions and inadequate food safety systems. For example, Nebraska Beef was cited Oct. 15 and Dec. 8 after inspectors found visible feces on beef carcasses.

Smith said a shutdown was "necessary to protect the public health."

Nebraska Beef argued it has responded sufficiently to USDA concerns and complained that it has been subjected to greater scrutiny and penalties than other packing plants.

Nebraska Beef also disputed the government's charge that All American was the sole supplier of the suspect beef. However, the USDA pulled its inspectors from the Nebraska Beef plant twice after that, temporarily shutting it down Sept. 13 and Dec. 19.
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