Aug. 21, 2012  -- Federal inspectors have temporarily shut down a California meat company that provided beef for the popular In-N-Out Burger chain and the U.S. school lunch program, saying there was evidence of "egregious, inhumane handling and treatment of livestock."

The federal action came Monday after inspectors viewed an undercover video made at the Central Valley Meat Company in Hanford, California over two weeks last month by an investigator for the animal rights group, Compassion Over Killing.

The tape shows workers using electric prods on cattle that can barely walk and the group alleged that the company used potentially diseased "downer cows" and treated them in an inhumane manner.

"The abuses that we uncovered should concern people for the way in which these animals were treated, but it also brings up food safety concerns and that is something that the American public wants to know about," said Erica Meier, the executive director of Compassion Over Killing.

Under federal law, since 2009, "non-ambulatory disabled cattle are not eligible for slaughter" for human consumption because of concerns the so-called "downer" cattle could carry disease, including mad cow disease.

The ban on "downer" cows, according to Meier, came "shortly after another investigation inside a California slaughter house uncovered similar egregious abuses."

"That investigation resulted in the nation's largest meat recall," she added.

There is no indication any of the cows slaughtered at the Central Valley Meat plant were diseased and the USDA did not order a recall of beef coming from the plant.

Portions of the video will be first seen publicly this evening on "ABC World News with Diane Sawyer."

A spokesperson for the Department of Agriculture's Food Safety and Inspection Service said the action was based on the company's failure to prevent the inhumane handling of livestock for human consumption.

"Upon confirming several humane handling violations, FSIS suspended operations at the facility and is prepared to take further action as warranted by the investigation," a spokesperson told ABC News.

A spokesman for In-N-Out Burger says Central Valley Meat provided between 20 and 30 percent of the beef used by the chain's restaurants and that it canceled its contract immediately once it heard of the allegations Monday.

In-N-Out Burger has developed a devoted following, including a long list of Hollywood celebrities, based on its claims of "quality you can taste." Its website says the chain makes its own hamburger patties "using premium cattle selected especially for In-N-Out-Burger," for which it says it pays "a premium."

A company spokesman said its own inspectors at the now-closed plant had never seen any inhumane treatment of the kind allegedly captured on the video.

In a statement to ABC News, the chain's chief operating officer, Mark Taylor, said, "In-N-Out Burger would never condone the inhumane treatment of animals, and, in fact, all of our suppliers must agree to abide by our strict standards for the humane treatment of cattle."

Central Valley Meat is also a supplier of beef to the USDA national school lunch program. It currently holds a $3.8 million, two-month contract with the government.

In a statement, the president of Central Valley Meat, Brian Coelho, said, "We take these allegations seriously and we are committed to correcting any problems identified on the video as quickly as we possibly can."

Coelho said the allegations "are both disturbing and surprising" because the plant is "under continuous inspection by USDA Food Safety and Inspection personnel who are empowered to take immediate action when they observe a problem."

A Central Valley Meat spokesman said the company "is working closely with the USDA's Food Safety and Inspection Service to address animal-handling concerns arising from a covert video supplied to USDA by an animal rights group. Central Valley Meat takes these issues very seriously and is now developing a plan of action to present to FSIS to remedy any potential violations of USDA guidelines. Based on our own investigation and 30 years of producing safe, high-quality U.S. beef, we are confident these concerns pose no food safety issues. We take these allegations very seriously and will immediately address any concerns the USDA may have."

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The animal rights group said the failure of on-site federal inspectors was its own red flag.

"These abuses inside slaughter houses across the country are often happening right under the nose of government inspectors," said Meier of Compassion Over Killing.

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