Donation of Foods for Use in the United States, Its Territories and Possessions and Areas Under Its Jurisdiction (Soup Kitchens and Food Banks), and the Emergency Food Assistance Program

SUMMARY: This final rule amends the Food Distribution Program

Regulations and the Emergency Food Assistance Program (TEFAP)

Regulations to codify previously proposed food distribution provisions

contained in the Hunger Prevention Act of 1988 and several

nondiscretionary food distribution requirements contained in the Food,

Agriculture, Conservation, and Trade Act of 1990, and the Food,

Agriculture, Conservation, and Trade Act Amendments of 1991. The

statutory requirements contained in this final rule address:

Distribution of additional commodities to emergency feeding

organizations, soup kitchens, and food banks; use of Emergency Food

Assistance Program administrative funds; State and local maintenance-

of-effort requirements; priority in the distribution of commodities to

existing networks and organizations under TEFAP; and explicit inclusion

of hospitals and facilities caring for needy infants and children as

charitable institutions. In addition to codifying provisions contained

in the above laws, this final rule implements previously proposed

discretionary changes initiated by the Department in order to reduce

the administrative burden imposed upon State agencies and to make the

Department's regulations more consistent.

EFFECTIVE DATE: This final rule is effective May 11, 1994.

FOR FURTHER INFORMATION CONTACT: Philip K. Cohen, Chief, Program

Administration Branch, Food Distribution Division, 3101 Park Center

Drive, room 502, Alexandria, Virginia 22302, telephone (703) 305-2662.

SUPPLEMENTARY INFORMATION:

Classification

Executive Order 12866

This final rule has been determined to be not significant for

purposes of Executive Order 12866 and, therefore, has not been reviewed

by the Office of Management and Budget.

Regulatory Flexibility Act

This action has been reviewed with regard to the requirements of

the Regulatory Flexibility Act (5 U.S.C. 601-612). The Administrator of

the Food and Nutrition Service (FNS) has certified that this final rule

will not have a significant economic impact on a substantial number of

small entities. Most of the new provisions in this rule affect State

agencies. While some of the recipient agencies affected by this rule

may be considered ``small entities,'' the cost of compliance with the

changes in this rule will be minimal because the time and cost of

preparing any paperwork relative to participation will be very limited.

Executive Order 12372

These programs are listed in the Catalog of Federal Domestic

Assistance under 10.550 and 10.568 and are subject to the provisions of

Executive Order 12372, which requires intergovernmental consultation

with State and local officials (7 CFR part 3015, subpart V and the

final rule-related notices published at 48 FR 29114, June 24, 1983 and

49 FR 22676, May 31, 1984).

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.

3507), additional recordkeeping and reporting requirements contained in

this final rule are subject to review and approval by the Office of

Management and Budget. Current reporting and recordkeeping requirements

were approved under Control Number 0584-0293.

Statutory Effective Dates

The provisions of the Hunger Prevention Act of 1988, Public Law

100-435, on the following subjects were effective September 19, 1988:

(1) The distribution of additional commodities for use by emergency

feeding organizations, soup kitchens and food banks; (2) the use of

TEFAP administrative funds for the costs of providing recipients

information on commodity storage and handling; (3) the distribution of

commodities that have been donated by persons or entities other than

USDA by emergency feeding organizations; (4) the increase in the amount

of TEFAP administrative funds passed through by States to emergency

feeding organizations from 20 percent to 40 percent; (5) the use of

volunteer workers for the distribution of non-USDA commodities by State

agencies and emergency feeding organizations; (6) State and local

maintenance-of-effort requirements; and (7) the authority for States to

give priority to existing networks and organizations that distribute

food to low-income households when distributing commodities under TEFAP

(as reflected in Secs. 250.3 (definitions of ``soup kitchen'' and

``food bank''), 250.52, 251.3 (definition of ``formula''), 251.4

(c)(3), (h) and (i), 251.6(a)(4), 251.7(a), 251.8(d), 251.10 (e)(7),

(g) and (h) of this final rule).

The provisions of the Food, Agriculture, Conservation, and Trade

Act of 1990, Public Law 101-624, relating to the use of TEFAP

administrative funds for repackaging and processing certain commodities

and the specific inclusion of hospitals and facilities caring for needy

infants and children in the definition of charitable institutions (as

reflected in Secs. 251.8(d)(1)(i) and 250.3 (definition of ``charitable

institution'') of this final rule) were effective November 28, 1990.

The provision of the Food, Agriculture, Conservation, and Trade Act

Amendments of 1991, Public Law 102-237, establishing a priority system

for the distribution of commodities to soup kitchens and food banks (as

reflected in Sec. 250.52(a) of this final rule) was effective February

2, 1992. Affected parties should already be complying with the mandates

of this legislation.

Good Cause Determinations

This final rule incorporates several new statutory requirements

which were not contained in a prior proposed rule: The nondiscretionary

requirements of the Food, Agriculture, Conservation, and Trade Act of

1990, Public Law 101-624, that address the specific inclusion of

hospitals and facilities caring for needy infants and children in the

definition of charitable institutions, and the allowable use of TEFAP

administrative funds to pay costs incurred for the processing and

repackaging of TEFAP commodities. It also incorporates the

nondiscretionary requirements of the Food, Agriculture, Conservation,

and Trade Act Amendments of 1991, Public Law 102-237, that establish a

priority system for the distribution of section 110 commodities. In

light of the nondiscretionary nature of these requirements and since

the legislatively mandated effective dates of these requirements were

November 28, 1990, and February 1, 1992, respectively, the

Administrator of FNS has found, in accordance with 5 U.S.C. 553(b),

that prior notice and comment are impracticable, unnecessary and

contrary to the public interest, and that good cause exists for

publishing revisions to Secs. 250.3 (definition of ``charitable

institution''), 250.52(a), and 251.8(d)(1)(i) without prior public

notice and comment. This final rule also amends Sec. 251.10(e)(2)(ii)

to revise the current requirement that monitoring visits of

distribution sites must be conducted simultaneously with actual

commodity distribution and/or eligibility determinations. It has come

to the Department's attention that it is not always possible for

reviews to be conducted in a manner that meets this requirement.

Accordingly, this rule amends Sec. 251.10(e)(2)(ii) to require that

reviews be conducted simultaneously with actual distribution and/or

eligibility determinations only to the maximum extent feasible. Since

this change serves to reduce the administrative burden currently

imposed on State agencies, the Administrator has found, in accordance

with 5 U.S.C. 553(b), that prior notice and comment are impracticable,

unnecessary and contrary to the public interest and that good cause

exists for publishing revisions to Sec. 251.10(e)(2)(ii) without prior

public notice and comment.

Executive Order 12778

This final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This rule is intended to have preemptive effect

with respect to any State or local laws, regulations or policies which

conflict with its provisions or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

unless so specified in the ``Effective Date'' section of this preamble.

Prior to any judicial challenge to the provisions of this rule or the

application of its provisions, all applicable administrative procedures

must be exhausted. This includes any administrative procedures provided

by State or local governments. For disputes involving procurements by

distributing and recipient agencies, this includes any administrative

appeal procedures to the extent required by 7 CFR Part 3016.

Background

As stated above, this final rule incorporates into program

regulations certain nondiscretionary requirements of the Food,

Agriculture, Conservation and Trade Act of 1990 (the FACT Act), Public

Law 101-624, and the Food, Agriculture, Conservation, and Trade Act

Amendments of 1991 (the FACT Act Amendments), Public Law 102-237. With

the exception of the provisions relating to the requirements of Public

Law 101-624 and Public Law 102-237, and a modification to the

monitoring requirement for distribution sites, all provisions of this

final rule were published in a proposed rule on April 6, 1990 (55 FR

12838). That proposal and the public comments submitted to the

Department on discretionary provisions are discussed below.

Food, Agriculture, Conservation, and Trade Act of 1990

The FACT Act was enacted on November 28, 1990. The major purposes

of Title XVII of the FACT Act were to reauthorize and improve the Food

Stamp Program and certain Food Distribution Programs. This rulemaking

implements the nondiscretionary provisions contained in the FACT Act

that relate to the domestic distribution of commodities. The provisions

that affect the Food Stamp Program have been implemented through

several separate rulemakings. In addition, separate rulemakings are

being promulgated to incorporate the discretionary domestic commodity

provisions included in the FACT Act into the Department's regulations.

In accordance with the provisions of the FACT Act, this final rule

amends current regulations to: (1) Delete the word ``Temporary'' from

the title of the Emergency Food Assistance Program; (2) explicitly

include hospitals and facilities caring for needy infants and children

in the definition of charitable institutions; and (3) permit the use of

TEFAP administrative funds to pay costs associated with the processing

and repackaging of TEFAP commodities. Following is a detailed

discussion of the regulatory changes being made in this final rule to

reflect these provisions.

Change in Program Name (Part 251)

Section 1772(a) of the FACT Act struck the word ``Temporary'' from

the title of the authorizing legislation contained in Public Law 98-8

and renamed the short title, ``Title II--Emergency Food Assistance Act

of 1983.'' In order to avoid confusion during the following

discussions, the incorporation of this change in the Department's

references to the law, the program name, and the commonly-used acronym

need to be clarified. Due to this change, the authorizing legislation

will be referred to hereinafter as EFAA instead of TEFAA. In addition,

the program's name has changed from the Temporary Emergency Food

Assistance Program to the Emergency Food Assistance Program. In

response to this legislative change, this final rule changes the title

of 7 CFR Part 251 by deleting the word ``Temporary.'' However, the

Department has decided to continue to use the program's original

acronym, TEFAP, and now will refer to ``the Emergency Food Assistance

Program'' whenever the acronym needs to be established.

Charitable Institution Definition (Sec. 250.3)

Section 1771(b) of the FACT Act amended section 4(a) of the

Agriculture and Consumer Protection Act of 1973 (Public Law 93-86; 7

U.S.C. 612c note) and section 416(a)(3) of the Agricultural Act of 1949

(7 U.S.C. 1431(a)(3)) to explicitly include hospitals and facilities

caring for needy infants and children in the category of institutions

eligible for commodity donations under these authorities. While these

institutions are, by definition, eligible to receive donations as

charitable institutions under current regulations, Sec. 250.3 of this

final rule is nonetheless being amended to specifically identify these

institutions in the definition of charitable institutions.

Repackaging and Processing Costs (Sec. 251.8(d)(1)(i))

Section 1772(d) of the FACT Act amended section 204 of the EFAA to

permit emergency feeding organizations to use TEFAP administrative

funds to pay costs associated with the repackaging and processing of

USDA commodities that are made available under the EFAA and section 110

of the Hunger Prevention Act of 1988 (Hunger Prevention Act). This

final rule revises Sec. 251.8(d)(1)(i) to incorporate this

nondiscretionary legislative mandate. For further discussion of this

provision, please refer to ``Restructuring of Administrative Cost

Provisions'' later in this preamble.

Hunger Prevention Act of 1988

In addition to certain nondiscretionary provisions in the FACT Act

and the FACT Act Amendments, this final rule incorporates certain

requirements contained in the Hunger Prevention Act. The major purposes

of the Hunger Prevention Act are to require the Secretary to purchase

additional commodities for distribution to low-income households,

improve the Child Nutrition and Food Stamp Programs, and provide other

hunger relief to needy households and the homeless. The commodity

provisions contained in the Hunger Prevention Act were addressed in a

proposed rule amending Parts 250 and 251 which was published in the

Federal Register on April 6, 1990 (55 FR 12838). The proposed rule

addressed the commodity provisions contained in the Hunger Prevention

Act relative to: (1) The distribution of additional commodities for use

by emergency feeding organizations, soup kitchens, and food banks; (2)

the use of TEFAP administrative funds to pay for the costs of providing

information on commodity storage and handling to recipients; (3) the

distribution of commodities that have been donated by persons or

entities other than USDA by emergency feeding organizations; (4) the

increase in the amount of administrative funding to be passed through

by States to emergency feeding organizations from 20 percent to 40

percent; (5) the use of volunteer workers and distribution of non-USDA

commodities by State agencies and emergency feeding organizations; (6)

State and local maintenance-of-effort requirements; and (7) the

authority for States to give priority to existing networks and

organizations that distribute food to low-income households when

distributing commodities under TEFAP.

The proposed rule also addressed certain discretionary changes to

provisions in part 251 which: (1) Reduced the required TEFAP monitoring

by State agencies; (2) clarified the State matching requirements for

TEFAP administrative funds; (3) included references to 7 CFR part 3016;

and (4) changed reference to the form used to report State and local

TEFAP costs. The proposed rule afforded the general public 60 days in

which to comment.

A total of 37 comment letters were received on the proposed rule.

Respondents represented 14 State agencies, 2 cities, 2 counties and 19

interested groups. Despite general support of the proposed rule, the

following issues were raised by some commenters: Limitations on the

distribution of section 110 soup kitchen/food bank commodities

resulting from the Hunger Prevention Act's definition of food banks and

soup kitchens; the organization of regulations pertaining to the

administration and distribution of soup kitchen/food bank commodities

obtained under section 110 of the Hunger Prevention Act; authorization

for the Secretary to establish procedures which allow non-USDA

commodities to be used to supplement USDA commodities; and the decrease

in the monitoring for emergency feeding organizations.

The remainder of this preamble discusses the provisions contained

in the proposed rule, the comments received in response to that rule,

and the Department's response to the comments on discretionary

provisions as implemented through this final rule. For a more

comprehensive understanding of the provisions contained in this final

rule, the reader should refer to the preamble of the proposed rule.

Additional Commodities

Additional TEFAP Commodities (Sec. 251.4(h))

Section 104 of the Hunger Prevention Act amended the EFAA to add

sections 213 and 214. Section 214 required the Secretary to spend $120

million to purchase, process and distribute additional commodities

during each of Fiscal Years 1989 and 1990. Paragraph (a) of section 213

mandated that these commodities be provided to States for distribution

to emergency feeding organizations. Section 1772 of the FACT Act

extended the Secretary's authority to purchase additional commodities

for distribution through TEFAP through Fiscal Year 1995.

In order to clarify the eligibility of emergency feeding

organizations to receive these commodities, a new paragraph (h) was

added to Sec. 251.4 in the proposed rule. Commenters did not oppose

this provision. Since section 1772(g) of the FACT Act, enacted

subsequent to the proposed rule, extended the Secretary's purchase

authority through Fiscal Year 1995, the provisions contained in

paragraph (h) of Sec. 251.4 of the proposed rule relative to the types

of additional TEFAP commodities emergency feeding organizations are

eligible to receive have been retained in this final rule.

In addition, section 105(c) of the Hunger Prevention Act amended

section 203B(a) of the EFAA to grant States the option, when allocating

TEFAP commodities within the State, to give priority to existing food

bank networks and other organizations whose ongoing primary function is

to facilitate the distribution of food to low-income households. This

provision was included in Sec. 251.4(h) of the proposed rule, and is

retained this final rule.

Section 110 Commodities for Soup Kitchens/Food Banks

Section 110(c) of the Hunger Prevention Act required the Secretary

to purchase, process, and distribute additional commodities to States.

The Hunger Prevention Act authorized the distribution of these

commodities to soup kitchens and food banks in addition to the

commodities otherwise made available to these organizations. Section

1774(a) of the FACT Act amended section 110 to extend the Secretary's

authority to purchase additional commodities for distribution to these

organizations, and provided that there are authorized to be

appropriated $40 million for each of Fiscal Years 1992 through 1995.

However, only $32 million was appropriated for Fiscal Years 1992 and

1993. The specific provisions relative to the distribution of these

commodities as they were proposed and the comments received are

discussed in detail below.

Organization of Regulations

A few comments were received concerning the proposed placement of

the provisions regarding the distribution of the section 110

commodities in both parts 250 and 251. Commenters expressed concern

that the separation of regulations led to confusion and unnecessary

delays in administering the program in cases where the State agency

responsible for distributions to charitable institutions was not also

the State agency administering TEFAP. Two commenters recommended the

consolidation of all regulations regarding section 110 commodities in

the TEFAP regulations (part 251).

It should be noted that section 110 of the Hunger Prevention Act

did not amend the EFAA; thus, the distribution of commodities under

this section is not directly a part of TEFAP. Therefore the Department

decided, in implementing the legislation, to treat food banks and soup

kitchens that serve the needy with section 110 commodities as recipient

agencies under the Food Distribution Program regulations (part 250).

Conversely, authorization for the receipt of TEFAP administrative funds

by institutions receiving section 110 commodities is contained in

section 204(a)(1) of the EFAA. Thus, for administrative funding

purposes, these institutions are considered emergency feeding

organizations and are governed by TEFAP regulations (part 251).

In addition, part 251 contains certain requirements which are not

appropriate for soup kitchens and food banks receiving section 110

commodities. Such provisions in part 251 include requiring individual

certification of recipients and certain recordkeeping and reporting

requirements. Rather than include all regulations regarding section 110

commodities in part 251 along with a host of exceptions to existing

regulations that do not apply, the Department will continue to address

the section 110 provisions as appropriate through both parts 250 and

251.

Since implementation of the provisions of the Hunger Prevention Act

of 1988, it has been brought to the Department's attention that there

is considerable confusion relating to the structure of the proposed

regulations resulting from the fact that many soup kitchens and food

banks receive commodities through both the Department's donations to

charitable institutions and through section 110. As indicated above,

the Department will continue to address provisions for outlets

receiving section 110 commodities through both parts 250 and 251.

However, for the purpose of clarification, this final rule has been

restructured to move all of the provisions for the receipt of section

110 commodities from Sec. 250.41 to new Sec. 250.52. For commodities

received through the Department's donations to charitable institutions,

soup kitchens and food banks must continue to comply with the

provisions of Sec. 250.41; for section 110 commodities, the provisions

of the new Sec. 250.52 will apply. Requirements relating to soup

kitchens and food banks receiving TEFAP administrative funds will

continue to be addressed in part 251. The specific provisions contained

in Sec. 250.52 are discussed in further detail below.

Definition of Eligible Institutions (Secs. 250.3 and 250.52(a))

The Hunger Prevention Act specifically defines the types of food

banks and soup kitchens that are eligible to receive commodities

purchased under section 110. In section 110(b)(3), the Hunger

Prevention Act defines ``food bank'' as ``public and charitable

institutions that maintain an established operation involving the

provision of food or edible commodities, or the products thereof, to

food pantries, soup kitchens, hunger relief centers, or other food or

feeding centers that provide meals or food to needy persons on a

regular basis as an integral part of their normal activities.'' In

section 110(b)(6), the Hunger Prevention Act defines ``soup kitchen''

as ``public and charitable institutions that maintain an established

feeding operation to provide food to needy homeless persons on a

regular basis as an integral part of their normal activities.'' Section

110(e)(2)(A) of the Hunger Prevention Act further specifies that in

determining the amount of commodities that will be accepted by soup

kitchens and food banks, States shall give priority to institutions

that provide ``meals'' to homeless individuals.

The proposed rule incorporated the definitions of ``soup kitchen''

and ``food bank'' and the procedures for distributing section 110

commodities to these organizations in Sec. 250.41(d).

While the Hunger Prevention Act clearly defines ``food bank'' and

``soup kitchen'' and stipulates that section 110 commodities are to be

directed to the needy and homeless, several commenters opposed the

Department's proposed implementation of its provisions. Three

commenters rejected the regulatory proposal that commodities be

distributed only to soup kitchens and food banks as defined by the

Hunger Prevention Act. Their principal concern was that many rural

areas do not have access to food bank networks or soup kitchens and

thus would be excluded from receiving the additional commodities

authorized under section 110. One commenter recommended that ``food

pantries'' be eligible to receive commodities in areas where soup

kitchens and food bank warehouses do not exist. Another suggested that

alcohol treatment centers and domestic violence shelters should be

considered eligible for section 110 commodities on the basis that

without the services of these agencies, their clients could potentially

be homeless. Only two commenters supported the limitation of

distribution of section 110 commodities to soup kitchens and food banks

that provide meals to homeless individuals.

Subsequent to the publication of the proposed rule, Congress passed

the FACT Act. Section 1774(a)(2)(B) defines ``food pantry'' as ``a

public or private nonprofit organization that distributes food to low-

income and unemployed households, including food from sources other

than the Department of Agriculture, to relieve situations of emergency

and distress.'' Section 1774(a)(3) of the FACT Act addressed the

unintended exclusion of some States which have food pantries rather

than food banks by allowing distribution to food pantries in some

instances. Since the Department intends to exercise some discretion in

implementing this provision, the distribution of section 110

commodities to food pantries will be addressed in a separate proposed

rule. However, since section 1774(a) became effective on February 1,

1992, affected State distributing agencies should already be complying

with this statutory requirement.

On December 13, 1991, Congress passed the FACT Act Amendments,

Public Law 102-237. Section 922(a)(2) of Public Law 102-237 amended

section 110 of the Hunger Prevention Act to establish a priority system

for the distribution of these commodities, which at least partially

addresses the above comments. As discussed below, this final rule

reflects the priority distribution system set forth in Public Law 102-

237. The remaining commodity provisions contained in Public Law 102-237

will be addressed through a separate proposed rulemaking.

The priority system for the distribution of section 110 commodities

presented in this final rule increases the number and types of

institutions eligible to receive and distribute these commodities.

However, as required by statute, Sec. 250.52(a)(1) of this final rule

continues to mandate that distributing agencies give first priority in

the distribution of these commodities to soup kitchens, as defined in

Sec. 250.3, and other like organizations that serve meals to homeless

persons, and to food banks for distribution to such organizations. If

distributing agencies determine that they will not likely exhaust their

allocation of section 110 commodities through distribution to this

first priority group, the distributing agency must make the remaining

commodities available to food banks for distribution to the second

priority group, institutions that distribute commodities to the needy.

Eligibility to receive the commodities for household consumption from

such institutions must be established through a means test as

determined appropriate by the distributing agency. If a food bank

determines that it will not likely exhaust its allocation of section

110 commodities through distribution to this second priority group, it

may distribute the remaining commodities to institutions that serve

meals to needy individuals but whose programs do not use a means test

as part of their eligibility criteria, provided that such organizations

have documented, to the satisfaction of the food bank, that they do, in

fact, serve predominantly needy persons. Examples of this third

priority group include domestic violence shelters, child care centers

and alcohol rehabilitation centers.

Section 250.52(a) of this final rule is revised to provide for the

distribution of section 110 commodities in accordance with the priority

system described above. In addition, the definitions of ``food bank''

and ``soup kitchen'' have been deleted from this section and

incorporated in Sec. 250.3, ``Definitions,'' for the purpose of

consistency.

Tax-Exempt Status (Sec. 250.52(b))

Sections 250.41(d)(2)(ii) and 250.41(d)(3)(ii) of the proposed rule

required that soup kitchens and food banks must have obtained

recognition of tax-exempt status, or have applied for, and be moving

toward, obtaining recognition of their tax-exempt status by the

Internal Revenue Service, or be currently operating a Federal program

requiring nonprofit status. The proposed rule would allow them 12

months to receive recognition of Federal tax-exempt status. No comments

were received opposing this provision. Thus, it is retained in

Sec. 250.52(b) of this final rule with minor revisions emphasizing

recognition of tax-exempt status by the Internal Revenue Service and

clarifying that the 12-month grace period runs from the effective date

of the organization's approval for participation, not from the date of

filing with the Internal Revenue Service, and that documentation of

recognition of tax-exempt status must be not only obtained, but also

forwarded to the State distributing agency, within that period. So as

not to penalize soup kitchens or food banks for delays which are beyond

their control, when a soup kitchen or food bank has not received a

decision on its application for tax-exempt status in the required 12-

month period, Sec. 250.52(b) of this final rule also permits such an

organization to continue participation in the program if the

distributing agency determines that it has provided sufficient

documentation of compliance with all IRS requirements and provided

information to IRS in a timely manner.

Participation Data and Household Distribution (Sec. 250.52(c)(2))

The proposed rule recognized that soup kitchens, unlike certain

other types of charitable institutions, have been established for the

specific purpose of providing assistance to the indigent. Thus, the

Department believes that it is reasonable to assume that individuals

seeking a meal at a soup kitchen are needy. Based on this premise,

Sec. 250.41(d)(2)(iii) of the proposed rule provided for the

distribution of section 110 commodities on the basis of the number of

meals expected to be served daily, as submitted by the soup kitchen or

food bank that has an agreement with the State and approved or adjusted

by the distributing agency, rather than using the detailed formula

required for other charitable institutions.

Sections 250.41(d)(3)(iii) (A) and (B) of the proposed rule also

provided that distributing agencies must base the distribution of

commodities to food banks on: (1) The number of meals to be served

daily in a congregate meal setting by institutions receiving

commodities from the food bank; and (2) the number of needy households

that meet the State's eligibility criteria for participation in TEFAP

that will be provided food for home consumption by such institutions.

Given that commenters did not oppose these provisions, the

provision concerning the number of congregate meals projected to be

served is retained in Sec. 250.52(c)(2)(i) of this final rule as

proposed, with certain technical changes to clarify that projections

must contain the number of days that meals will be served during the

agreement period. The provision concerning household distribution is

contained in Sec. 250.52(c)(2)(ii) of this final rule with a change to

the eligibility determination. In instances in which section 110

commodities are made available for distribution to households,

Sec. 250.41(d)(3)(iii)(C) of the proposed rule required food banks to

ensure that organizations receiving the commodities distribute them

only to households which meet the eligibility criteria established by

the State pursuant to Sec. 251.5(b) of the TEFAP regulations. However,

section 922(a) of Public Law 102-237 amended section 110(j)(2) of the

Hunger Prevention Act to authorize institutions that distribute

commodities to the needy for home consumption to determine eligibility

through a means test that has been determined appropriate by the

distributing agency. Thus, the State need not require the same

eligibility criteria it has established for TEFAP. Sections 250.52

(c)(2)(ii) and (c)(6)(ii) of this final rule have been revised to

reflect this current legislative provision.

Section 250.41(d)(3)(iii) of the proposed rule also required that

food banks ensure that organizations distributing section 110

commodities to households comply with the provisions contained in

Sec. 251.10(f) concerning the limitation on unrelated activities (e.g.,

recipients cannot be required to register to vote as a condition for

receiving USDA commodities). Since commenters did not oppose this

provision, it has been retained in Sec. 250.52(c)(6)(i) of this final

rule.

Allocation of Additional Commodities by the Department

Section 214 of the EFAA and section 110 of the Hunger Prevention

Act require the Secretary to allocate, on an annual basis, the

additional TEFAP and soup kitchen/food bank commodities to States based

on a formula that takes into account each State's population of low-

income and unemployed persons as percentages of the national totals.

Each State's share of commodities must be based 60 percent on the

number of households within the State which have incomes below the

poverty line and 40 percent on the average monthly number of unemployed

persons within the State. These sections also require that such

additional commodities be allocated among States on the basis of value.

Soup Kitchen/Food Bank Commodities (Sec. 250.52(d)(1))

In accordance with the legislative provisions described above,

Sec. 250.41(d)(4)(i) of the proposed rule incorporated the allocation

formula and provided for the annual allocation, based on value, of

section 110 commodities by the Department.

TEFAP Commodities (Secs. 251.3 and 251.7(a))

The definition of ``formula'' was revised in Sec. 251.3 of the

proposed rule to more closely follow the wording relative to the 60/40

formula contained in section 214 of the EFAA and to clarify that

surplus commodities made available for distribution through TEFAP will

continue to be allocated based on the amount of commodities in pounds

while the purchased commodities will be allocated based on value. In

addition, Sec. 251.7(a) of the proposed rule was revised to provide for

the allocation formula of the purchased commodities to be adjusted once

a year.

Comments in response to the provisions contained in the proposed

rule relative to the Department's allocation of section 110 and TEFAP

commodities addressed the use of the 60/40 formula. Two commenters

supported the use of the 60/40 formula, whereas one commenter expressed

concern that current allocations are based on 1980 poverty statistics

and stated that more up-to-date information should be utilized when

making allocations. Although the Census is conducted once every 10

years, it represents the best available source of national data on low-

income persons. Since no better data base is available, the Department

must accept the limitations resulting from the relative infrequency of

the Census. It should be noted, however, that the program allocation

data base has been updated based on the results of the 1990 Census.

Until such time as the Department identifies the existence of data

more appropriate for use in allocating TEFAP and section 110

commodities, the allocation formula described in Secs. 251.3, 251.7(a)

and 250.52(d)(1) of this final rule will continue to be used.

Allocation of Section 110 Commodities by States (Sec. 250.52(d)(3))

Section 250.41(d)(4)(iii) of the proposed rule required State

distributing agencies to use the data reported in the agreement by soup

kitchens and food banks to allocate section 110 commodities. This

section of the proposed rule also required that section 110 commodities

be allocated in a manner that ensures that commodities will not be made

available in quantities that are in excess of anticipated use or the

ability of the organization to accept and store the commodities. Since

no comments were received concerning this provision, it is retained in

Sec. 250.52(d)(3) of this final rule with language clarifying that the

distributing agency may critically review and adjust the estimates as

appropriate.

Reallocation of Additional Commodities (Secs. 250.52(d)(4) and 251.3)

When a State determines that it will not accept all of its share of

the additional TEFAP commodities, section 214(g) of the EFAA, as added

by section 104 of the Hunger Prevention Act, requires the Department to

reallocate these commodities on the basis of the same 60/40 formula

that is used for the initial allocation. Section 251.3 of the proposed

rule expanded the definition of ``formula'' to include the reallocation

requirement. This final rule retains the definition as proposed.

When a State determines that it will not accept all of its share of

section 110 commodities, section 110(e) of the Hunger Prevention Act

requires the Department to reallocate these commodities in a fair and

equitable manner among States that have already accepted the full

amount of their allocation and have requested additional amounts. This

procedure for reallocating section 110 commodities was included in

Sec. 250.41(d)(4)(iv) of the proposed rule.

One commenter suggested that the Department set aside a particular

month of the year to make reallocations to afford each soup kitchen/

food bank the opportunity to plan ahead accordingly. Unfortunately,

this recommendation is not feasible. Often the commodities have been

purchased for the proximate shipping period, forcing the Department to

reallocate commodities turned back by States immediately. Thus, the

proposed reallocation formula is retained without modification in

Sec. 250.52(d)(4) of this final rule. The Department will continue to

review its procurement methods so that reallocations can be as

responsive to State planning needs as possible.

Notification of Acceptance of Additional Commodities (Secs.

250.52(d)(2) and 251.4(c)(3))

Section 214(g) of the EFAA and section 110(e) of the Hunger

Prevention Act require that each State promptly notify the Secretary

when it has determined that it will not accept any or all of its

allocation of the additional TEFAP or section 110 commodities. So that

reallocations can be made and deliveries can be arranged in a timely

manner, Secs. 250.41(d)(4)(ii) and 251.4(c)(3) of the proposed rule

required State agencies to notify the Department at least 30 days prior

to the shipping period of the amount of the commodities which they will

accept. Since no comments were received in response to these

provisions, they are retained in Secs. 250.52(d)(2) and 251.4(c)(3) of

this final rule as proposed, with clarification that the requirement

for notification applies to the beginning of the shipping period.

State Maintenance-of-Effort Requirement (Secs. 250.52(f) and 251.10(h))

Section 214(i) of the EFAA, as added by section 104 of the Hunger

Prevention Act, prohibits a State which uses its own funds to provide

commodities or services to organizations receiving funds or services

under that section from diminishing the level of support it provides to

such organizations or from reducing the amount of funds available for

other nutrition programs in the State in each fiscal year. This

provision was incorporated in Sec. 251.10(h) of the proposed rule, and

is retained in the final rule.

The proposed rule also incorporated the requirement in section

110(h)(3) of the Hunger Prevention Act that local agencies receiving

section 110 commodities provide assurance to the State that donations

of food from other sources will not be diminished as a result of the

receipt of the section 110 commodities. To implement this provision,

Sec. 250.41(d)(6) of the proposed rule required that distributing

agencies obtain this assurance from each institution prior to making

commodities available. The proposed rule mandated that this assurance

be provided in writing and maintained on file by the distributing

agency. Commenters did not oppose this method for ensuring compliance

with the Hunger Prevention Act. Thus, the provision is retained in

Sec. 250.52(f) of this final rule.

Emergency Food Assistance Program Administrative Funds

Allowable Costs

Administrative Costs for Additional Commodities (Secs. 250.52(e),

251.6(a)(4), 251.8(d) (1) and (2), and 251.10(e)(7))

Section 204(a)(1) of the EFAA, as amended by section 105 of the

Hunger Prevention Act, authorizes States and emergency feeding

organizations to use TEFAP administrative funds to pay costs associated

with the distribution of commodities provided under section 214 of the

EFAA and section 110 of the Hunger Prevention Act.

Section 250.41(d)(5) of the proposed rule included this provision

and required that soup kitchens and food banks receiving foods under

section 110 enter into a TEFAP agreement in order to receive TEFAP

administrative funds for costs associated with the distribution of

section 110 commodities. Commenters did not oppose this requirement.

The Department believes that this arrangement will ensure

accountability by applying the same requirements for the use of all

TEFAP administrative funds, whether used by traditional TEFAP emergency

feeding organizations or soup kitchens/food banks. In addition, this

will mean that funds provided to soup kitchens and food banks may be

counted toward the amount of TEFAP funds a State agency is required to

pass through to emergency feeding organizations in accordance with the

provisions contained in Sec. 251.8(d)(3)(i). This requirement is

retained in Sec. 250.52(e) of this final rule with minor revisions.

The provision allowing the use of TEFAP funds to cover the costs

associated with the distribution of section 110 commodities was also

included in Sec. 251.8(d)(1) of the proposed rule. As stated in the

proposed rule, the Department will continue to make all TEFAP

administrative funds available only to the TEFAP State agencies. When

it is determined that TEFAP administrative funds will be made available

to pay costs associated with the distribution of section 110

commodities and the State agency responsible for TEFAP is not also

responsible for the distribution of section 110 commodities,

Sec. 251.8(d)(1) of the proposed rule required the TEFAP State agency

to enter into an agreement with the entity which will receive and, if

applicable, allocate the TEFAP funds in connection with section 110

commodities. This agreement would be with either: (1) The soup kitchens

or food banks; or (2) the distributing agency responsible for the

distribution of section 110 commodities, which would in turn enter into

a TEFAP agreement with each soup kitchen and food bank. The proposed

rule provided for the agreement to be in the form of the TEFAP

agreement currently being used for emergency feeding organizations or

an amended charitable institution agreement which requires compliance

with Sec. 251.8, which governs the use of TEFAP administrative funds,

and Secs. 251.10 (a) (records) and (e) (State monitoring).

The administration of TEFAP funds allotted to a State becomes more

complicated when the State agency responsible for TEFAP is not the

agency responsible for the distribution of section 110 commodities. As

stated in the proposed rule, when TEFAP funds will be made available to

pay costs associated with the distribution of section 110 commodities,

it will be the responsibility of the two State agencies to determine

how to allocate TEFAP administrative funds between the State agencies

and among the emergency feeding organizations, including any soup

kitchens/food banks with TEFAP agreements. To ensure proper monitoring

of the distribution of TEFAP funds within the State, Sec. 251.6(a)(4)

of the proposed rule required TEFAP State agencies to describe in the

State plan how these funds will be allocated between State agencies and

among emergency feeding organizations, including soup kitchens and food

banks. In addition, Sec. 251.10(e)(7) of the proposed rule required

TEFAP State agencies to ensure that emergency feeding organizations

receiving funds for the distribution of section 110 commodities are

reviewed to ensure compliance with the provisions contained in

Sec. 251.8.

Most commenters supported the proposed regulations on the payment

of funds for storage and distribution costs, and the need for States to

enter into agreements with organizations receiving section 110

commodities and to describe the allocation of funds in their plan.

Thus, the requirements described above are retained, as proposed, in

Secs. 251.6(a)(4), 251.8(d)(2) and 251.10(e)(7) of this final rule with

minor clarifying changes.

Due to commenter concern about the difficulty of administering one

program through two State agencies, the Department would like to

emphasize that States have the authority to structure the

administration and distribution of section 110 commodities in the

fashion they deem most efficient and accountable. The Department

recognizes that there may be some dissension among State agencies

regarding the allocation of funds. As stated in the preamble to the

proposed rule, when the allocation of these funds cannot be mutually

agreed upon by the State agencies, the Department anticipates that the

necessary decisions will be made by the Governor's office.

Administrative Costs for Non-USDA Commodities (Secs. 251.8(d) (1)(ii)

and (2)(ii))

Section 102 of the Hunger Prevention Act added a new section

203D(b) to the EFAA, which authorizes States and emergency feeding

organizations to use funds made available under the EFAA to pay costs

incurred for the storage, handling and distribution of commodities

which have been donated by persons or entities other than USDA. Section

251.8(d)(1) of the proposed rule incorporated this provision, and is

retained in Secs. 251.8(d) (1)(ii) and (2)(ii) of this final rule with

certain clarifying changes which are described below.

Costs of Providing Information to Recipients (Sec. 251.8(d)(1)(i))

Section 109(c) of the Hunger Prevention Act amended section

204(a)(2) of the EFAA to permit emergency feeding organizations to use

TEFAP funds to cover the costs of providing information on the

appropriate storage and preparation of USDA commodities to persons

participating in TEFAP. This provision was included in Sec. 251.8(d)(3)

of the proposed rule, and is retained in the final rule, although it

has been moved to Sec. 251.8(d)(1)(i). This provision is discussed in

more detail below.

Restructuring of Administrative Cost Provisions (Secs. 251.3

(Definition of ``Storage and Distribution Costs'') and 251.8(d))

Currently, the allowable uses of TEFAP administrative funds are set

forth in Sec. 251.3(f) in the definition of ``storage and distribution

costs.'' Now that TEFAP administrative funds may be used not only in

connection with TEFAP commodities, but also in connection with both

section 110 commodities and other commodities under varying

circumstances, a single definition setting forth the allowable uses of

these funds has become awkward. In order to clarify the administrative

costs for which TEFAP administrative funds may be used, the definition

of ``storage and distribution costs'' has been removed from this final

rule, and Sec. 251.8(d) has been restructured to perform the now more

complex function previously served by the definition.

The EFAA does not explicitly authorize the use of TEFAP

administrative funds to pay administrative costs associated with USDA

commodities other than those provided under TEFAP and section 110. A

requirement that reimbursable administrative costs associated with

TEFAP and section 110 commodities be separated from costs generated in

the management of USDA commodities received from other sources would

impose a burden on many local program operators which they could not

reasonably be expected to meet. This burden would make commodity

distribution more difficult without any compensatory increase in either

the quality of service to participants or program accountability.

Typically, local organizations receive commodities from several

sources. For example, a soup kitchen receiving commodities under

section 110 may also get commodities as a charitable institution, as

well as donations from non-USDA sources. Some USDA commodities received

under different authorities are identical in type and package size, and

thus cannot be distinguished from each other unless segregated upon

receipt so as to be able to identify storage costs by commodity source.

Furthermore, it would be burdensome for local organizations to record

the staff time spent handling USDA commodities received under different

legislative authorities so as to assure that only time devoted to TEFAP

and section 110 commodities is reimbursed with TEFAP administrative

funds. Therefore, permitting local organizations to use such funding to

handle section 110 commodities, but not the USDA commodities they

receive as charitable institutions, would be unreasonable. It would

also be illogical to permit the use of TEFAP administrative funds for

the storage, handling, and distribution of non-USDA commodities, as the

EFAA clearly does, while prohibiting the use of funds for the same

costs associated with USDA commodities not provided under TEFAP or

section 110.

By allowing those costs associated with the storage, handling, and

distribution of non-USDA commodities, as well as TEFAP and section 110

commodities, we believe the EFAA intended to streamline commodity

management at the local level. Therefore, the Department believes that

it is fully within the intent of Congress, as well as prudent from a

management perspective, to allow TEFAP administrative funds to be used

for the same categories of costs for all USDA commodities received by

organizations participating in TEFAP or receiving section 110

commodities. This policy would include the costs of processing and

repackaging all USDA commodities, regardless of the authority under

which they are provided.

Thus, Sec. 251.8(d)(1)(i) of the final rule consolidates the

allowable uses of TEFAP administrative funds in connection with the

distribution of USDA commodities. This section contains the allowable

uses previously contained in the definition of ``storage and

distribution costs,'' incorporates the addition of repackaging and

processing costs as allowable administrative costs in connection with

all USDA commodities received by organizations which get commodities

under TEFAP or section 110, and includes the provision from

Sec. 251.8(d)(3) of the proposed rule authorizing emergency feeding

organizations to use TEFAP administrative funds to pay costs incurred

for providing information to recipients relative to the appropriate

storage and preparation of USDA commodities.

Section 251.8(d)(1)(ii) of the final rule provides that TEFAP

administrative funds may also be used for the direct costs associated

with the intrastate distribution of non-USDA commodities. This section

further makes clear that such costs are limited to the costs of

storing, handling and distributing these commodities and that State-

level expenditures are allowable only for costs associated with

commodities which are ultimately distributed by emergency feeding

organizations or soup kitchens/food banks receiving TEFAP

administrative funds. These restrictions are necessary to comply with

the limitations in section 203D(b) of the EFAA, which authorizes the

use of TEFAP administrative funds in connection with non-USDA

commodities. A related provision in Sec. 251.8(d)(2)(i) of the final

rule requires local organizations to have entered into an agreement

pursuant to Sec. 251.2(c) (for the receipt of TEFAP commodities) or

Sec. 251.8(d)(2)(ii) (for the receipt of administrative funds in

connection with the distribution of section 110 commodities) in order

to be eligible to receive TEFAP funds for non-USDA commodities.

Finally, the provisions from proposed Sec. 251.8(d)(1) regarding

the agreements necessary for soup kitchens/food banks to receive TEFAP

administrative funds for section 110 commodity distribution are moved

to Sec. 251.8(d)(2), and references to ``storage and distribution

costs'' throughout the regulation have been changed to ``administrative

costs'' to reflect the broader uses of TEFAP administrative funds now

permitted.

Distribution Charges (Sec. 251.8(d)(3)(ii))

One commenter was concerned that proposed Sec. 251.8(d)(2)(ii)

would prohibit States with commercial distribution systems from

charging a fee to soup kitchens for the storage and handling of section

110 commodities. The Department appreciates the commenter's request for

clarification. Proposed Sec. 251.8(d)(2)(ii) prohibited State agencies

from charging for commodities made available to emergency feeding

organizations. However, this prohibition does not apply to instances in

which State agencies provide section 110 commodities to soup kitchens

and food banks. Confusion regarding this regulation stems from the

``dual identity'' soup kitchens and food banks have when they receive

section 110 commodities: For purposes of eligibility to receive TEFAP

administrative funding, they are considered to be emergency feeding

organizations; for all other purposes, they are classified as recipient

agencies. Thus, State agencies may charge soup kitchens and food banks

for costs incurred at the State level for intrastate transportation and

storage of section 110 commodities as long as State agencies comply

with the provisions in Sec. 250.15(a)(2) governing fees for recipient

agencies. Section 251.8(d)(3)(ii) of this final rule makes clear that

the prohibition on fees applies only to commodities made available

under Part 251.

Local Support (Sec. 251.8(d)(3)(i))

Section 103(b) of the Hunger Prevention Act amended Sec. 204(a)(2)

of the EFAA to increase the percentage of Federal TEFAP administrative

funds which must be made available to, or expended on behalf of,

emergency feeding organizations from 20 percent to 40 percent.

Section 251.8(d)(3) of this final rule also clarifies that the 40

percent pass-through should not be applied to the amount of funds

provided to each State agency; rather, the requirement applies to the

total TEFAP grant of the State. When TEFAP administrative funds are

made available to pay costs associated with the distribution of section

110 commodities, and the State agency administering TEFAP is not the

agency responsible for the distribution of section 110 commodities, the

TEFAP State agency is responsible for ensuring that the 40-percent

requirement is met. If the TEFAP State agency makes funds available to

the State agency responsible for section 110 commodities, only the

amount of funds ultimately provided to emergency feeding organizations,

or used to pay costs on their behalf, may count toward the State's 40-

percent requirement. Any funds retained by the distributing agency to

pay State-level administrative costs associated with the distribution

of section 110 commodities must be matched in accordance with the

provisions contained in Sec. 251.9(a).

For the purpose of clarification, Sec. 251.8(d)(2)(i) of the

proposed rule was also amended to reference ``Federal Temporary

Emergency Food Assistance Program administrative funds'' in lieu of

``State funds.'' No comments were received in response to this change,

which more accurately describes the funds in question. Since this

clarification will help to ensure that 40 percent of the ``Federal''

grant is passed on to emergency feeding organizations or expended on

their behalf, the term ``Federal Emergency Food Assistance Program

administrative funds'' is retained in Sec. 251.8(d)(3)(i) of this final

rule with the following changes: (1) Deletion of the word

``Temporary,'' (2) use of the term ``administrative costs'' rather than

``storage and distribution costs,'' and (3) restructuring of the

paragraph for the sake of clarity.

State Matching Requirement (Secs. 251.9(a) and 251.9(c))

The proposed rule amended Sec. 251.9(a) to clarify that the portion

of the TEFAP grant the State is required to match is that portion which

is retained by the State agency to pay State-level storage and

distribution costs. No comments were received concerning the clarifying

language. Thus, Sec. 251.9(a) of this final rule is retained as

proposed with a change in terminology from ``storage and distribution

costs'' to ``administrative costs.''

An area of concern during development of the proposed rule involved

a limitation on the types of State expenditures which meet the matching

requirements for TEFAP. Section 204(a)(4) of the EFAA requires States

to match the portion of Federal TEFAP funds which is retained by the

State to pay State-level administrative costs. This section also

prohibits States from passing the cost of the matching requirements on

to emergency feeding organizations. In Sec. 251.9(c) of the current

regulations, the Department limits the types of contributions which may

count toward the match to contributions (cash or in-kind) for costs

which could otherwise be allowable as State-level administrative costs.

It was pointed out that this provision prohibited States from counting

two types of State expenditures toward meeting the match: (1) State-

appropriated funds which were used to pay local-level costs associated

with the distribution of commodities; and (2) any in-kind contributions

made by the State agency to an emergency feeding organization.

The Department re-evaluated this provision together with

Department-wide rules describing allowable contributions toward

matching requirements. The proposed rule eliminated the restriction in

Sec. 251.9(c) that any contributions to the matching requirement be

limited to State-level storage and distribution costs. Two commenters

supported this revision; none opposed it. Thus, as proposed,

Sec. 251.9(c) of this final rule allows the following contributions to

be counted toward meeting the match: Any cash outlay of the State

agency specifically identifiable as an allowable State- or local-level

administrative cost, including the outlay of money contributed to the

State agency by other public agencies and institutions, and private

organizations and individuals; in-kind contributions by the State

agency or third parties identifiable as being used to defray State-

level administrative costs; and State agency in-kind contributions

toward a local-level administrative cost. However, the prohibition

against passing on the costs of the matching requirement to emergency

feeding organizations remains. Therefore, only those emergency feeding

organization cash or in-kind contributions which can be specifically

identified as addressing State-level administrative costs may be

counted toward the match.

As set forth in current regulations, in order for a third-party in-

kind contribution to be classified as an allowable cost for the

purposes of meeting the State's matching requirement, the cost must be

specifically identified as addressing State-level storage and

distribution costs. For purposes of clarification, Sec. 251.9(c) of

this final rule also includes the following criteria which must be met

in order for a third-party in-kind contribution to qualify as a State-

level storage and distribution cost for purposes of meeting the match:

(1) In its administration of food assistance programs, the State has

performed this type of function over a sustained period of time in the

past; (2) the function was not previously performed by the State on

behalf of emergency feeding organizations; and (3) the State would

normally perform the function as part of its responsibility in

administering TEFAP or related food assistance programs if it were not

provided as an in-kind contribution.

Procedures for the Distribution of Non-USDA Commodities

(Sec. 251.4(i))

Section 203D(b) of the EFAA, as added by section 102 of the Hunger

Prevention Act, also requires that the Secretary establish procedures

for the distribution of commodities which have been donated by persons

or entities other than USDA. The Department responded to this

legislative provision by proposing in Sec. 251.4(i) that emergency

feeding organizations be permitted to distribute such commodities

either in conjunction with or separate from the distribution of USDA

commodities.

Two commenters stressed that this legislative requirement should be

clarified. They suggested that any procedures which are developed

should (1) apply only to combined distributions of USDA commodities and

non-USDA commodities, and (2) neither hinder current effective

practices, nor conflict with the donation-handling procedures as

outlined by the Internal Revenue Service in section 170(e)(3) of the

Internal Revenue Code. The Department agrees that State agencies and

emergency feeding organizations should have maximum flexibility in

distributing these non-USDA commodities; thus, no additional regulatory

requirements were imposed. Accordingly, this provision is retained in

Sec. 251.4(i) of this final rule as proposed.

References to 7 CFR Part 3016 (Sec. 251.9(c) and 251.10(a)(2))

The proposed rule amended Secs. 251.9(c) and 251.10(a)(2) to

correct references to the Department's Uniform Federal Assistance

Regulations. As stated in the proposed rule, previously all grant

programs were governed by regulations at 7 CFR part 3015. However, on

March 11, 1988, new regulations were published at 7 CFR part 3016 which

cover all USDA grants except open-ended entitlements. The references to

part 3015 in the matching and recordkeeping sections of this final rule

have been changed to part 3016, and the language describing these

provisions has been revised as proposed.

Report of Administrative Costs--Form FNS-667 (Sec. 251.10(d)(1))

Section 251.10(d)(1) of the proposed rule was revised to require

that Form FNS-667, Report of Storage and Distribution Costs (TEFAP), be

used for reporting TEFAP administrative cost data. Since it has been

determined that the revised Standard Form (SF) 269, Financial Status

Report, is inappropriate for use in TEFAP because it does not

separately identify the State- and local- level components of total

program costs, comments on the proposed rule supported use of Form FNS-

667. Therefore, Sec. 251.10(d)(1) of this final rule retains the

requirement that Form FNS-667 be used for reporting TEFAP cost data. As

stated in the preamble to the proposed rule, FNS has obtained Office of

Management and Budget approval for the use of this form in accordance

with procedures established under the Paperwork Reduction Act of 1980.

As discussed above, the title of the form has been changed from

``Report of Storage and Distribution Costs (TEFAP)'' to ``Report of

Administrative Costs (TEFAP).''

State Monitoring Requirement (Sec. 251.10(e))

The Department has been asked by States and emergency feeding

organizations to eliminate the current requirement for annual State

agency reviews of all emergency feeding organizations. The Department

agrees that the reduction in the volume of available USDA commodities

justifies a reduction in the monitoring burden imposed upon State

agencies and emergency feeding organizations. Therefore, proposed

Sec. 251.10(e)(2)(i) reduced the required State agency reviews of

emergency feeding organizations by requiring an annual review of at

least 25 percent of all emergency feeding organizations and a review of

all such emergency feeding organizations not less frequently than once

every four years.

Ten commenters supported this reduction. Three commenters, however,

asserted that monitoring requirements should be strengthened rather

than weakened. One commenter wondered what procedure should be followed

if the State agency contract requires an annual evaluation.

The reduction in the monitoring burden is retained in

Sec. 251.10(e)(2)(i) of this final rule. In addition to the support

received from commenters, the Department is committed to reducing the

administrative burden currently imposed on States while ensuring

accountability. It should be emphasized, however, that the 25-percent-

per-year requirement comprises the minimum monitoring requirement. If a

State agency sees the need to implement more stringent monitoring

standards, it is encouraged to do so.

In addition to comments addressing the proposed amendment of the

annual requirement for reviews of emergency feeding organizations, the

Department received comments relative to the review requirements for

distribution sites. Section 251.10(e)(2)(ii) of the current regulations

mandates an annual review of one-third or 50, whichever is fewer, of

all distribution sites within the State. The regulations further

require that the reviews be conducted simultaneously with actual

distribution and/or eligibility determinations. The Department has been

made aware, through comments made in response to the proposed rule and

consultation with State agencies, that in some instances, e.g., when

distributions are conducted Statewide on the same day, it is not

possible for reviews to be conducted simultaneously with actual

distribution and/or eligibility determinations. Since the Department is

in agreement with the concerns expressed and seeks to reduce the

administrative burden currently imposed on States,

Sec. 250.10(e)(2)(ii) of this final rule is revised to require that, to

the maximum extent feasible, reviews be conducted simultaneously with

actual distribution and/or eligibility determinations.

Besides reducing the monitoring requirement, the proposed rule

revised Sec. 251.10(e)(7) to require that soup kitchens and food banks

which receive TEFAP funds for the storage, handling and distribution of

commodities obtained under section 110 of the Hunger Prevention Act be

included in the TEFAP State agency's monitoring system to ensure

compliance with the provisions contained in Sec. 251.8. The proposed

rule permitted the delegation of this responsibility to the

distributing agency which administers distributions to charitable

institutions. However, under the proposed rule, the TEFAP State agency

retained the ultimate responsibility for ensuring that the review

requirements are met. Commenters did not object to this provision; thus

it is retained in Sec. 251.10(e)(7) of this final rule.

Volunteer Workers (Sec. 251.10(g))

Section 203D(c) of the EFAA, added by section 102 of the Hunger

Prevention Act, requires States and emergency feeding organizations to

continue to use, to the maximum extent practicable, volunteer workers,

as well as commodities and other foodstuffs donated by charitable and

other organizations, in the operation of TEFAP. This requirement was

included in Sec. 251.10(g) of the proposed rule. This requirement is

retained, as proposed, in Sec. 251.10(g) of this final rule.

Food Bank Demonstration Projects

Section 1773(e) of the FACT Act amended section 4 of the Commodity

Distribution Reform Act and WIC Amendments of 1987, Public Law 100-237,

to authorize, on a permanent basis, the distribution of USDA

commodities to needy individuals and families through community food

banks. Since the provisions governing the demonstration projects were

never included in regulations, this legislative revision is referenced

in this preamble to advise the general public that this provision is

now permanent but will not be included in the Code of Federal

Regulations. No additional sites will be accepted for participation as

community food banks under Public Law 100-237.

Deletion of Obsolete Provision

As discussed in the preamble to the proposed rule, section 202A of

the EFAA, which authorized the distribution of additional quantities of

flour, cornmeal, and cheese, has expired. The proposed rule deleted

reference to the obsolete provision in Sec. 251.4(d)(3) of the TEFAP

regulations. This deletion is also made in the final rule. The

reference to this provision in Sec. 251.4(h) of the proposed rule has

also been deleted in this final rule.

In addition to the changes described above, a few nonsubstantive

revisions which simply serve to clarify the regulatory wording have

been made in this final rule.

List of Subjects

7 CFR Part 250

Aged, Agricultural commodities, Business and industry, Food

assistance programs, Food donations, Food processing, Grant programs-

social programs, Indians, Infants and children, Price support programs,

Reporting and recordkeeping requirements, School breakfast and lunch

programs, Surplus agricultural commodities.

7 CFR Part 251

Aged, Agricultural commodities, Business and industry, Food

assistance programs, Food donations, Grant programs-social programs,

Indians, Infants and children, Price support programs, Reporting and

recordkeeping requirements, School breakfast and lunch programs,

Surplus agricultural commodities.

Accordingly, 7 CFR parts 250 and 251 are amended as follows:

PART 250--DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS

TERRITORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION

1. The authority citation for part 250 is revised to read as

follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 612c, 612c note, 1431, 1431b,

1431e, 1431 note, 1446a-1, 1859; 15 U.S.C. 713c; 22 U.S.C. 1922; 42

U.S.C. 1751, 1755, 1758, 1760, 1761, 1762a, 1766, 3030a, 5179, 5180.

2. Section 250.3 is amended as follows:

a. The definition of Charitable institutions is amended by adding

the words ``, including hospitals and facilities caring for needy

infants and children,'' after the word ``institution'' in the first

sentence of paragraph (c); and

b. definitions of Food bank and Soup kitchen are added in

alphabetical order to read as follows:

Sec. 250.3 Definitions.

* * * * *

Food bank means a public or charitable institution that maintains

an established operation involving the provision of food or edible

commodities, or the products thereof, to food pantries, soup kitchens,

hunger relief centers, or other food or feeding centers that provide

meals or food to needy persons on a regular basis as an integral part

of its normal activities.

* * * * *

Soup kitchen means a public or charitable institution that

maintains an established feeding operation to provide food to needy

homeless persons on a regular basis as an integral part of its normal

activities.

* * * * *

3. In Sec. 250.41, the first sentence of paragraph (a)(1) is

revised to read as follows:

Sec. 250.41 Charitable institutions.

(a) Distribution. (1) With the exception of section 110

commodities, which are to be distributed in accordance with the

provisions of Sec. 250.52, the distributing agency shall distribute

donated food only to those charitable institutions which have entered

into a written agreement for participation in the program with the

distributing agency in accordance with Sec. 250.12(b). * * *

* * * * *

4. A new Sec. 250.52 is added to read as follows:

Sec. 250.52 Section 110 commodities.

(a) Donations. Distributing agencies shall make commodities donated

to the State under section 110 of the Hunger Prevention Act of 1988

available to soup kitchens and food banks, as defined in Sec. 250.3.

Such distributions shall be made on the following priority basis:

(1) Soup kitchens. The distributing agency shall offer, or

otherwise make available, its full allocation of commodities to soup

kitchens and other like organizations that prepare meals for the

homeless and to food banks for distribution to such organizations.

(2) Institutions that serve only low-income recipients. If the

distributing agency determines that it is not likely to exhaust its

allocation of commodities under this section through distribution to

institutions referred to in paragraph (a)(1) of this section, it shall

make the remaining commodities available to food banks for distribution

to institutions that exclusively serve the needy. When such

institutions distribute commodities to individuals for home

consumption, eligibility for such commodities shall be established

through a means test as determined appropriate by the distributing

agency.

(3) Other institutions. If a food bank determines that it is not

likely to exhaust its allocation of commodities through distribution to

institutions referred to in paragraphs (a)(1) and (a)(2) of this

section, it may make the remaining commodities available to

institutions that:

(i) Document, to the satisfaction of the food bank, that they serve

meals predominantly to needy persons; and

(ii) Do not employ a means test to determine eligibility for such

meals.

(b) Tax-exempt status. Prior to making section 110 donated food

available, the distributing agency shall ensure that the soup kitchen/

food bank has obtained recognition of tax-exempt status under the

Internal Revenue Code, has made application for recognition of such

status and is moving toward compliance with the requirements for

recognition of tax-exempt status, or is currently operating another

Federal program requiring such tax-exempt status. If the Internal

Revenue Service (IRS) denies a participating organization's application

for recognition of tax-exempt status, the organization shall

immediately notify the distributing agency of such denial, and the

distributing agency shall terminate the organization's agreement and

participation immediately upon receipt of such notification. If

documentation of IRS recognition of tax-exempt status has not been

obtained and forwarded to the distributing agency within 12 months of

the effective date of the organization's approval for participation,

the distributing agency shall terminate the organization's agreement

and participation until such time as documentation of IRS recognition

of tax-exempt status is obtained, unless the organization documents to

the distributing agency's satisfaction that it has made good faith

efforts to obtain recognition of its tax-exempt status and that such

recognition has not been provided due to no fault of the organization.

It shall be the responsibility of the soup kitchen/food bank to

document that it has complied with all IRS requirements and has

provided all information requested by IRS in a timely manner.

(c) Agreements. The distributing agency shall distribute section

110 commodities only to those soup kitchens and food banks which have

entered into an agreement for participation in the program with the

distributing agency in accordance with Sec. 250.12(b). In addition to

the terms and conditions set forth in Sec. 250.12(b), written

agreements shall, at a minimum, include:

(1) The name and location of the organization;

(2) Total number of meals expected to be served or commodities

provided to households for home consumption during the agreement

period, to be determined as follows:

(i) The total number of meals to be served in a congregate meal

setting shall be determined by projecting the average number of meals

to be served daily and the number of days meals will be served during

the agreement period; and

(ii) The number of needy households to be provided food for home

consumption shall be determined by projecting the number of households

to be served during the agreement period (in accordance with the method

set by the distributing agency) which meet the eligibility criteria

which the distributing agency has determined appropriate pursuant to

paragraph (a)(2) of this section;

(3) For congregate meal service, indication of whether the

organization will employ the services of a food service management

company to conduct its food service operations;

(4) Assurance that proper inventory controls will be maintained;

(5) Assurance that all reports will be submitted as required by the

distributing agency; and

(6) In instances in which the donated food will be made available

to an institution for household distribution, assurance that the food

bank will ensure that the institution distributing the commodities

will:

(i) Comply with the limitation on unrelated activities established

under Sec. 251.10(f) of this chapter; and

(ii) Limit distribution of the donated food to those households

which meet the eligibility criteria as determined appropriate by the

distributing agency pursuant to paragraph (a)(2) of this section.

(d) Quantities of donated foods. (1) Donated food purchased under

section 110 of the Hunger Prevention Act of 1988 will be allocated to

States by the Department on the basis of a formula that compares each

State's population of low-income and unemployed persons to the national

statistics. Each State's share of commodities, as measured by their

value, shall be based 60 percent on the number of persons in households

within the State having incomes below the poverty level and 40 percent

on the number of unemployed persons within the State. The Department

will notify each State of the types and amounts of such commodities

allotted to the State under the formula when funds have been

appropriated for the purchase of such commodities. The Department will

make annual adjustments to the commodity allocations for each State,

based on updated unemployment statistics, which will be effective for

the entire fiscal year, except that such allocations shall be subject

to reallocation or transfer in accordance with paragraph (d)(4) of this

section and Sec. 250.13(a).

(2) The distributing agency shall notify the appropriate FNSRO of

the amount of the donated food it will accept no later than 30 days

prior to the beginning of the shipping period.

(3) The distributing agency shall accept or adjust the data

reported in the agreement by soup kitchens and food banks to determine

the number of meals to be served to needy persons and the number of

needy households to be served in order to allocate the donated food in

an equitable manner that ensures that commodities will not be made

available in quantities in excess of anticipated use or the ability of

the organization to accept and store the commodities.

(4) In instances in which a State determines that it will not

accept its full allocation, the Department will reallocate these

commodities in a fair and equitable manner among those States that

accept the full amount of their allocations and request additional

amounts.

(e) Funding. Soup kitchens and food banks receiving section 110

commodities shall be eligible to receive Emergency Food Assistance

Program administrative funds for use in accordance with the provisions

set forth in Sec. 251.8(d)(1)(ii) of this chapter, provided that they

have entered into an agreement in accordance with Sec. 251.8(d)(2) of

this chapter.

(f) Maintenance of effort. Prior to making donated food available,

the distributing agency shall obtain written assurance from the soup

kitchen or food bank that food donations from other sources will not be

diminished as a result of donated foods being made available under

section 110 of the Hunger Prevention Act of 1988. This assurance

statement shall be maintained on file by the distributing agency.

(g) Food service management companies. Institutions preparing

congregate meals with section 110 commodities may employ food service

management companies to conduct food service operations in accordance

with Sec. 250.12(c).

PART 251--THE EMERGENCY FOOD ASSISTANCE PROGRAM

1. The authority citation for Part 251 continues to read as

follows:

Authority: Pub. L. 98-8, as amended (7 U.S.C. 612c note).

2. The Part heading is revised as set forth above.

3. In Sec. 251.2, paragraph (c) is amended by removing the words

``storage and distribution costs'' in the first sentence and adding in

their place the words ``administrative costs''.

4. In Sec. 251.3, paragraph (d) is revised to read as follows,

paragraph (f) is removed, and paragraph (g) is redesignated as

paragraph (f).

Sec. 251.3 Definitions.

* * * * *

(d) Formula means the formula used by the Department to allocate

among States the commodities and funding available under this part. The

amount of such commodities and funds to be provided to each State will

be based on each State's population of low-income and unemployed

persons, as compared to national statistics. Each State's share of

commodities and funds shall be based 60 percent on the number of

persons in households within the State having incomes below the poverty

level and 40 percent on the number of unemployed persons within the

State. The surplus commodities will be allocated to States on the basis

of their weight (pounds), and the commodities purchased under section

214 of the Emergency Food Assistance Act of 1983 will be allocated on

the basis of their value (dollars). In instances in which a State

determines that it will not accept the full amount of its allocation of

commodities purchased under section 214 of the Emergency Food

Assistance Act of 1983, the Department will reallocate the commodities

to other States on the basis of the same formula used for the initial

allocation.

* * * * *

5. In Sec. 251.4:

a. A new paragraph (c)(3) is added;

b. paragraph (d)(3) is revised, and the concluding text beginning

with the word `Cheese' is removed;

c. paragraphs (h), (i) and (j) are redesignated as paragraphs (j),

(k) and (l), and new paragraphs (h) and (i) are added; and

d. the references to ``paragraph (j)(4)'' in newly redesignated

paragraph (l) are removed, and references to ``paragraph (l)(4)'' are

added in their place.

The revision and additions read as follows:

Sec. 251.4 Availability of commodities.

* * * * *

(c) Allocations. * * *

(3) State agencies shall notify the appropriate FNSRO of the amount

of the commodities they will accept not later than 30 days prior to the

beginning of the shipping period.

(d) Quantities requested. * * *

(3) Establish distribution rates, based on household size, to be

used by emergency feeding organizations which provide commodities to

needy persons in households.

* * * * *

(h) Distribution to emergency feeding organizations. Emergency

feeding organizations shall be eligible to receive commodities which

are made available under sections 202 and 214 of the Emergency Food

Assistance Act of 1983. State agencies may give priority in the

distribution of these commodities to existing food bank networks and

other organizations whose ongoing primary function is to facilitate the

distribution of food to low-income households, including food from

sources other than the Department.

(i) Distribution of non-USDA foods. Emergency feeding organizations

may incorporate the distribution of foods which have been donated by

charitable organizations or other entities with the distribution of

USDA-donated commodities or distribute them separately.

* * * * *

6. In Sec. 251.6, paragraph (a)(4) is revised to read as follows:

Sec. 251.6 Distribution plan.

(a) Contents of the plan. * * *

(4) A description of the State's formula for allocating

administrative funds among State agencies and emergency feeding

organizations, including, if applicable, soup kitchens and food banks

receiving administrative funds in connection with commodities which are

made available under section 110 of the Hunger Prevention Act of 1988

in accordance with Sec. 251.8(d)(1); and

* * * * *

7. In Sec. 251.7, paragraph (a) is revised to read as follows:

Sec. 251.7 Formula adjustments.

(a) Commodity adjustments. The Department will make adjustments to

the commodity allocation formula for each State, based on updated

unemployment statistics, as follows:

(1) Surplus commodities. Adjustments will be made semi-annually

effective on January 1 and July 1 of each fiscal year; and

(2) Purchased commodities. Adjustments will be made annually and

will be effective for the entire fiscal year, subject to reallocation

or transfer in accordance with this part.

* * * * *

8. Section 251.8 is amended by revising the section heading and

paragraph (d) to read as follows:

Sec. 251.8 Payment of funds for administrative costs.

* * * * *

(d) Use of funds--(1) Allowable administrative costs. Funds made

available under this part shall be used by State agencies or emergency

feeding organizations only for the following administrative costs:

(i) USDA commodities. Funds may be used for the direct costs

associated with the intrastate distribution of commodities donated

under this part and under section 110 of the Hunger Prevention Act of

1988 by emergency feeding organizations. In addition, emergency feeding

organizations that also receive commodities under part 250 of this

chapter may use the funds provided under this part for direct costs

associated with the distribution of such commodities. These costs

include the costs paid by an emergency feeding organization or paid by

a State agency on behalf of an emergency feeding organization for:

(A) Transporting, storing, handling, repackaging, processing, and

distributing commodities incurred after they are received by the

organization;

(B) Costs associated with determinations of eligibility,

verification, and documentation;

(C) Costs of providing information to persons receiving USDA

commodities concerning the appropriate storage and preparation of such

commodities;

(D) Costs involved in publishing announcements of times and

locations of distribution; and

(E) Costs of recordkeeping, auditing, and other administrative

procedures required for program participation.

(ii) Non-USDA commodities. Funds may also be used by emergency

feeding organizations for the direct costs associated with the

intrastate distribution of commodities donated by persons or entities

other than USDA, provided, however, that these costs shall be limited

to the costs of storing, handling and distributing such commodities.

State-level costs shall be allowable only to the extent that the

commodities are ultimately distributed by emergency feeding

organizations which have entered into agreements with the State agency

in accordance with paragraph (d)(2) of this section.

(2) Agreements. (i) In order to be eligible for funds under

paragraph (d)(1) of this section, emergency feeding organizations shall

have entered into an agreement pursuant to Sec. 251.2(c) for the

receipt of donated foods under this part or an agreement pursuant to

paragraph (d)(2)(ii) of this section for the receipt of funds in

connection with section 110 commodities.

(ii) In instances in which administrative funds are made available

in connection with section 110 commodities and the State agency

responsible for the distribution of TEFAP commodities and funds is not

also responsible for the distribution of section 110 commodities, the

State agency responsible for the administration of TEFAP shall enter

into an agreement with the soup kitchens/food banks (as described in

Sec. 250.52(c) of this chapter) requesting the funds, or with the State

agency responsible for the distribution of section 110 commodities,

which will then enter into agreements with those soup kitchens and food

banks. The agreement with the soup kitchen or food bank shall require

compliance with the provisions of this section and Sec. 251.10(a) and

(e).

(3) Local support. (i) Not less than 40 percent of the Federal

Emergency Food Assistance Program administrative funds allocated to the

State in accordance with paragraph (a) of this section shall be:

(A) Provided by the State agency to emergency feeding organizations

as either reimbursement or advance payment for administrative costs

incurred by emergency feeding organizations in accordance with

paragraph (d)(1) of this section, except that emergency feeding

organizations may retain advance payments only to the extent that they

actually incur such costs; or

(B) Directly expended by the State agency to cover administrative

costs incurred by, or on behalf of, emergency feeding organizations in

accordance with paragraph (d)(1) of this section.

(ii) State agencies shall not charge for commodities made available

under this part to emergency feeding organizations.

* * * * *

9. Section 251.9 is amended by revising paragraphs (a) and (c) to

read as follows:

Sec. 251.9 Matching of funds.

(a) State matching requirement. The State shall provide a cash or

in-kind contribution equal to the amount of the Federal Emergency Food

Assistance Program administrative funds received under Sec. 251.8 and

retained by the State agency for State-level costs. Any portion of the

Federal grant passed through for administrative costs incurred at the

local level or directly expended by the State agency for such local-

level costs (in accordance with Sec. 251.8(d)(3)) shall be exempt from

the State match requirement.

* * * * *

(c) Applicable contributions. States shall meet the requirements of

paragraph (a) of this section through cash or in-kind contributions

from sources other than Federal funds which are prohibited by law from

being used to meet a Federally mandated State matching requirement.

Such contributions shall meet the requirements set forth in 7 CFR

3016.24. In accordance with 7 CFR 3016.24(b)(1), the matching

requirement shall not be met by contributions for costs supported by

another Federal grant, except as provided by Federal statute. Allowable

contributions are only those contributions for costs which would

otherwise be allowable as State or local-level administrative costs.

(1) Cash. An allowable cash contribution is any cash outlay of the

State agency for a specifically identifiable allowable State- or local-

level administrative cost, including the outlay of money contributed to

the State agency by other public agencies and institutions, and private

organizations and individuals. Examples of cash contributions include,

but are not limited to, expenditures for office supplies, storage

space, transportation, loading facilities and equipment, employees'

salaries, and other goods and services specifically identifiable as

State- or local-level administrative costs for which there has been a

cash outlay by the State agency.

(2) In-kind. (i) Allowable in-kind contributions are any

contributions, which are non-cash outlays, of real property and non-

expendable personal property and the value of goods and services

specifically identifiable with allowable State administrative costs or,

when contributed by the State agency to an emergency feeding

organization, allowable local-level administrative costs. Examples of

in-kind contributions include, but are not limited to, the donation of

office supplies, storage space, vehicles to transport the commodities,

loading facilities and equipment such as pallets and forklifts, and

other non-cash goods or services specifically identifiable with

allowable State-level administrative costs or, when contributed by the

State agency to an emergency feeding organization, allowable local-

level administrative costs. In-kind contributions shall be valued in

accordance with 7 CFR 3016.24(c) through 3016.24(f).

(ii) In order for a third-party in-kind contribution to qualify as

a State-level administrative cost for purposes of meeting the match,

all of the following criteria shall be met:

(A) In its administration of food assistance programs, the State

has performed this type of function over a sustained period of time in

the past;

(B) The function was not previously performed by the State on

behalf of emergency feeding organizations; and

(C) The State would normally perform the function as part of its

responsibility in administering TEFAP or related food assistance

programs if it were not provided as an in-kind contribution.

* * * * *

8. In Sec. 251.10:

a. Paragraph (a)(2) is amended by removing reference to ``3015''

and adding a reference to ``3016'' in its place;

b. the third sentence of paragraph (d)(1) is revised;

c. paragraph (e)(2) is revised; and

d. new paragraphs (e)(7), (g) and (h) are added.

The revisions and additions read as follows:

Sec. 251.10 Miscellaneous provisions.

* * * * *

(d) Reports. (1) * * * The data shall be identified on Form FNS-

667, Report of Administrative Costs (TEFAP), and shall be submitted to

the appropriate FNS Regional Office on a quarterly basis. * * *

* * * * *

(e) State monitoring system. * * *

(2) Unless specific exceptions are approved in writing by the FNS

Regional Office, the State monitoring system shall include:

(i) An annual review of at least 25 percent of all emergency

feeding organizations and a review of all such organizations not less

frequently than once every four years; and

(ii) An annual review of one-third or 50, whichever is fewer, of

all distribution sites within the State, to be conducted, to the

maximum extent feasible, simultaneously with actual distribution and/or

eligibility determinations.

* * * * *

(7) State agencies shall ensure that emergency feeding

organizations which receive administrative funds in connection with

commodities made available under section 110 of the Hunger Prevention

Act of 1988 are reviewed at the frequency stipulated in paragraph

(e)(2)(i) of this section to ensure compliance with the provisions

contained in Sec. 251.8.

* * * * *

(g) Use of volunteer workers and non-USDA commodities. In the

operation of the Emergency Food Assistance Program, State agencies and

emergency feeding organizations shall, to the maximum extent

practicable, use volunteer workers and foods which have been donated by

charitable and other types of organizations.

(h) Maintenance of effort. If the State uses its own funds to

provide commodities or services to organizations receiving funds or

services under section 214 of the Emergency Food Assistance Act of

1983, the State shall not diminish the level of support it provides to

such organizations or reduce the amount of funds available for other

nutrition programs in the State in each fiscal year.

Dated: April 3, 1994.

William E. Ludwig,

Administrator.

[FR Doc. 94-8505 Filed 4-8-94; 8:45 am]

BILLING CODE 3410-30-U