This story from the Chicago Tribune appeared in the Trib this morning.
WASHINGTON — One federal inspector calls it the "E. coli loophole." Another says, "Nobody would buy it if they knew." The officials are referring to the little-discussed fact that the U.S. Department of Agriculture has deemed it acceptable for meat companies to cook and sell meat on which E. coli, a bacterium that can sicken and even kill humans, is found during processing. The "E. coli loophole" affects millions of pounds of beef each year that tests positive for the presence of E. coli O157:H7, a particularly virulent strain of the bacterium. The agency allows companies to put this E. coli-positive meat in a special category—"cook only."
...Some cooked beef products end up in the National School Lunch Program, which is administered by the USDA. The agency bought 2.8 million pounds of cooked beef in 2006, according to USDA records.