School Nutrition Programs: Nondiscretionary Technical Amendments

Federal RegisterSep 20, 1999

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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR parts 210, 215, 220, 235 and 245

RIN 0584-AC01

School Nutrition Programs: Nondiscretionary Technical Amendments

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule makes a number of technical changes to the

regulations governing the National School Lunch Program, the Special

Milk Program for Children, the School Breakfast Program, State

Administrative Expense Funds, Determining Eligibility for Free and

Reduced Price Meals and Free Milk in Schools. A number of these changes

are a direct result of statutory changes made under the Child Nutrition

and WIC Reauthorization Act of 1989, the Healthy Meals for Healthy

Americans Act of 1994, the Personal Responsibility and Work Opportunity

Reconciliation Act of 1996, and the William F. Goodling Child Nutrition

Reauthorization Act of 1998. This rule also removes and updates

obsolete provisions in these regulations. These amendments are

nondiscretionary and technical in nature and will conform these

regulations to statutory requirements.

EFFECTIVE DATE: October 20, 1999.

FOR FURTHER INFORMATION CONTACT: Ms. Mary Jane Whitney, Section Chief,

School Programs Section, Policy and Program Development Branch, Child

Nutrition Division, Food and Nutrition Service at 703-305-2620.

SUPPLEMENTARY INFORMATION:

Background

Four different public laws, Public Law (Pub. L.) 101-147 (the Child

Nutrition and WIC Reauthorization Act of 1989), Pub. L. 103-448 (the

Healthy Meals for Healthy Americans Act of 1994), Pub. L. 104-193 (the

Personal Responsibility and Work Opportunity Reconciliation Act of

1996), and Pub. L. 105-336 (the William F. Goodling Child Nutrition

Reauthorization Act of 1998), made specific changes to the National

School Lunch Act and the Child Nutrition Act of 1966, necessitating

changes in the regulations that guide the National School Lunch

Program, the School Breakfast Program, the Special Milk Program, State

Administrative Expense Funds, and Determining Eligibility for Free and

Reduced Price Meals and Free Milk in Schools.

In section 201 of Pub. L. 101-147, the Child Nutrition and WIC

Reauthorization Act of 1989, enacted on November 10, 1989, Congress

amended the National School Lunch Act (NSLA) (42 U.S.C. 1751 et. seq.)

to make changes in the way the National School Lunch Program (NSLP) and

School Breakfast Program (SBP) operate. Specifically, section 201

amended Section 8 of the NSLA by making permanent the agreements

between the State agencies (SA) and school food authorities (SFA) for

carrying out the school lunch program and school breakfast program.

In section 112 of Pub. L. 103-448, the Healthy Meals for Healthy

Americans Act of 1994, enacted on November 2, 1994, Congress amended

the definition of School in section 12(d) of the NSLA to make child

care centers in Puerto Rico ineligible to participate in the NSLP and

SBP. Additionally, section 202 of Pub. L. 103-448 amended section 7(a)

of the Child Nutrition Act of 1966 (CNA) (42 U.S.C. 1771 et seq.) to

authorize the Secretary to withhold State Administrative Expense (SAE)

funds when the Secretary determines that the SA's administration of the

program is seriously deficient.

Section 703 of Pub. L. 104-193, the Personal Responsibility and

Work Opportunity Reconciliation Act of 1996, amended section 9(b)(2) of

the NSLA. The amendment requires that after initial submission, an SFA

would not be required to submit a new free and reduced price policy

statement to a State educational agency unless there is a substantive

change in the free and reduced price policy of the SFA. Section 707 of

Pub. L. 104-193 amended section 14(e) of the NSLA by removing the

requirement for States to have State food distribution advisory

councils and adding in its place a requirement that SAs which receive

food assistance payments for any school year must consult with schools

regarding the selection and distribution of donated foods. Furthermore,

section 723 of Pub. L. 104-193 removed section 4(f) of the CNA which

dealt with breakfast outreach activities. Section 724(b) of Pub. L.

104-193 amended section 7(e) of the CNA by removing the requirement

that State administrative expense plans be submitted annually by State

agencies for approval by FNS and revising the regulation to require

that States only need submit substantive changes to approved plans. In

section 726 of Pub. L. 104-193 Congress amended section 11(a) of the

CNA by revising the prohibition regarding the imposition of any

requirements with respect to teaching personnel, curriculum,

instruction and methods and materials of instruction. Section 726

removed references to State, thus directing the prohibition only to

USDA.

In section 102(c) of Pub. L. 105-336, the William F. Goodling Child

Nutrition Reauthorization Act of 1998, Congress added section 9(h) to

the NSLA to establish new requirements regarding annual food safety

inspections for schools participating in the NSLP or SBP. Section

102(d) added section 9(i) to the NSLA to require each SFA to submit a

single agreement and a common claim form for programs administered by

the SA. Section 104(b) amended section 12(g) of the NSLA to make

changes in criminal penalties for attempting to defraud the program.

Section 104(d) added section 12(n) to the NSLA to incorporate a

provision to require that schools purchase, to the maximum extent

practicable, domestic commodities or products. Finally, section 202(b)

revised section 7(a)(6) of the CNA to eliminate the 10% transfer

limitation for SAE funds.

The following chart summarizes the statutory provisions:

[[Page 50736]]

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Regulatory section

Statute Provision affected

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Pub. L. 101-147:

Section 201................. Mandates permanent Secs. 210.9,

agreements. 215.7 and

220.7(e).

Pub. L. 103-448:

Section 112................. Revises definition Secs. 210.2 and

of ``school''. 220.2(u).

Section 202................. Authorizes USDA to Sec. 235.4.

withhold SAE

funds when State

agencies are

deemed seriously

deficient.

Pub. L. 104-193:

Section 703................. Mandates permanent Sec. 245.10.

Free and Reduced

Price Policy

Statement.

Section 707................. Removes Sec. 210.28

requirement for

State Food

Distribution

Advisory Council.

Section 723................. Removes breakfast Sec. 220.13(k).

outreach

activities.

Section 724................. Replaces annual Sec. 235.5

State

Administrative

Expense Plan with

a permanent base

plan updated for

substantive

changes.

Section 726................. Revises Sec. Sec. 210.27

educational and 220.17(a).

prohibitions.

Pub. L. 105-336:

Section 102(c).............. Mandates food Secs. 210.13(b),

safety 220.7(a-2).

inspections.

Section 102(d).............. Mandates single Secs. 210.8(c),

agreements and 210.9(b),

common claim 215.7(d),

forms for SFAs. 215.10(b),

220.7(e) and

220.11(b).

Section 104(b).............. Changes criminal Secs. 210.26,

penalties for 215.6(b),

fraud. 220.6(b), 2356(g)

and 245.12.

Section 104(d).............. Mandates purchase Secs. 210.21(d)

of domestic and 220.16d.

commodities or

products.

Section 202(b).............. Eliminates 10% Sec. 235.6(a).

transfer for SAD

funds.

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Additionally, the Department is taking the opportunity to remove

obsolete provisions from and make technical corrections to 7 CFR parts

210, 215, 220, 235 and 245. For example, the obsolete references to

``handicapped'' children are removed, using instead the term ``children

with disabilities''. The rule also incorporates technical conforming

amendments to 7 CFR parts 210, 215, 220, 235 and 245. The remainder of

this preamble discusses these amendments.

What Specific Revisions and Additions are Being Made to the

Regulations?

The changes being made fall under four categories. They are:

Changes to definitions

New, updated or removed requirements

Removal of obsolete references

Technical amendments

What Changes are Being Made to the Definition Sections?

Definition of Child

The definition of the term Child in Secs. 210.2 and 220.2(c) and

the definition of the term Children in Sec. 215.2(e-1) are amended to

remove references to handicapped children, adding in their place the

term disabled, thus conforming the definition to operating terminology.

Definition of Handicapped Student

The definition of the term Handicapped student in Sec. 210.2 is

removed, in order to remove references to handicapped children. A new

definition, Student with disabilities, is used in its place.

Definition of School

Section 112(a) of Pub. L. 103-448 amended the definition of School

in section 12(d)(5) of the NSLA. This amendment removed child care

centers in the Commonwealth of Puerto Rico from the definition of

School, effective October 1, 1995. As of that date, child care centers

in Puerto Rico were no longer eligible to participate in the NSLP and

SBP. However, these child care centers could provide meals and snacks

to children under the Child and Adult Care Food Program, 7 CFR part

226, or milk under the Special Milk Program, the same as other child

care centers in the contiguous United States. Affected child care

centers were advised of their change in status. This rule codifies the

provision by amending the definition of School in Secs. 210.2 and

220.2(u) to remove child care centers in Puerto Rico from the

definition of school to conform to this nondiscretionary statutory

provision. Corresponding technical changes are made to the definition

of School in Sec. 235.2(o) to reflect these amendments.

Definition of Financial Management Circulars

The definition, 7 CFR part 3015, in Secs. 210.2, 215.2(x-1),

220.2(x-1), and 235.2(q-1) is revised to remove obsolete references to

A-124 and A-128, as well as the Single Audit Act of 1984 (31 U.S.C.

7501 et seq.). New definitions, 7 CFR part 3017, 7 CFR part 3018, and 7

CFR part 3052 are added to Secs. 210.2, 215.2, 220.2 and 235.2. Part

3017 refers to the Department's Common Rule regarding Governmentwide

Debarment and Suspension (Nonprocurement) and Governmentwide

Requirements for Drug-Free Workplace (Grants). Part 3018 refers to the

Department's Common Rule regarding New Restrictions on Lobbying. Part

3052 refers to the Department's rule regarding Audits of States, Local

Governments and Non-Profit Organizations.

Definition of State

The definition of State (Secs. 210.2; 215.2(y); 220.2(y); 235.2(r))

is revised to accommodate the elimination of the territories under the

Compact of Free Association and the block grant status of American

Samoa and the Commonwealth of the Northern Marianas. Because both

American Samoa and the Commonwealth may elect to forego the block grant

and participate under part 210, 215, 220 and 235, they continue to be

included in the definition of State agency, ``as applicable''.

What Requirements are Being Added, Updated or Removed?

Agreements/Claims

Section 201 of Pub. L. 101-147 amended section 8 of the NSLA by

making permanent the agreements between SAs and SFAs for carrying out

the NSLP and SBP. On May 28, 1991, USDA issued a proposed rule which

would have implemented the provision to make these agreements

permanent, to be amended as necessary (56 FR 24033). Fifty comments

were received on that proposed rule during the 60-day public comment

period, which closed on July 29, 1991. Commenters represented 19

different SAs, 22 SFAs, 4 State or local Departments of Human Services

and 2

[[Page 50737]]

professional organizations. Only one commenter was opposed to having

the agreement made permanent, stating that the agreement is a legal

document that should have a beginning and ending date. All other

commenters who addressed this provision viewed it as a paperwork

reduction measure and supported the proposal. On May 12, 1991, USDA

issued a memorandum implementing this provision. This memorandum stated

that, because the Department did not anticipate any changes to the

proposal for permanent agreements, the SAs would be able to accept

current agreements as permanent, at their discretion. This was

effective as of school year 1992--1993. This final rule codifies this

provision in Sec. Sec. 210.9(b), 215.7(d) and 220.7(e).

Section 102 (d) of Pub. L. 105-336 amended section 9 (c) of the

NSLA by establishing two requirements with respect to SFAs which

administer any combination of the Child Nutrition Programs under the

same State administering agency. First, the SA must use a single State/

local agreement for all programs operated by the SFA under that SA.

This also means that multiple SFA programs operated under an alternate

SA must be combined into a single agreement. This rule makes the

necessary changes to Secs. 210.9(b), 215.7(d), and 220.7(e).

Second, an SFA must be able to use a common reimbursement form to

claim meals under all of the programs. Previously, single agreements

and common claim forms were permitted at SA option for SFAs

administering multiple Child Nutrition Programs under a single SA. This

rule makes the necessary changes to 7 CFR 210.8(c), 215.10(b), and

220.11(b) to reflect the implementation of the statutory requirements.

Free and Reduced Price Policy Statement

As noted above, on May 28, 1991, the Department had proposed to

make the agreement between the SA and SFA a permanent document to be

amended as necessary (56 FR 24033). Although Pub. L. 101-147 had not

directed the Department to make the SFA's free and reduced price policy

permanent, the Department used its discretionary authority to include

the policy statement in the permanency provision, because the

Department considers the policy statement part of the agreement. The

Department had proposed in that rule to (1) Increase the number of

provisions required in an SFA's policy statement and (2) remove the

requirement for annual resubmission of the policy statement to the SA

for approval, unless there was a substantive change to the SFA's free

and reduced price policy. Of the 50 comments received on the proposal,

only one commenter supported the increase in the required provisions to

be included in the policy statement. Before the department could issue

a final rule, section 703 of Pub. L. 104-193 amended section 9(b)(2) of

the NSLA by making permanent the free and reduced price policy

statement. Unless there is a substantive change made to the free and

reduced price policy of the SFA, the policy statement need not be

changed and resubmitted. Routine changes, such as an annual adjustment

of the income eligibility guidelines, are not sufficient to require

resubmission. This rule implements this provision by making the

necessary amendments to Secs. 245.10 and 245.11.

Food Safety Inspections

Section 102(c) of Pub. L. 105-336 amended section 9 of the NSLA by

adding subsection (h) to require schools participating in the NSLP or

the SBP to obtain food safety inspections conducted by a State or local

government agency responsible for such inspections at least once a year

if a State or local governmental agency does not otherwise require

inspections. This provision does not apply to schools that must comply

with State or local requirements for food safety inspections even if

the time frames for these inspections are less frequent than annual.

Moreover, if a State or local governmental agency responsible for food

safety inspections conducts voluntary inspections in schools, these

inspections may be counted toward meeting this requirement. This rule

implements this provision by amending Secs. 210.13 and 220.7 by adding

a new paragraph, Food safety inspections.

State Agency Consultation With Schools

Section 707 of Pub. L. 104-193 removed the requirement for the

State to establish a food distribution advisory council and in its

place required SAs that receive food assistance payments to consult

with schools that receive commodities in order to make the best

assessment of the specific needs of that school relating to the manner

of selection and the distribution of commodity goods. This rule removes

Sec. 210.28, State Food Distribution Advisory Council, and amends

Sec. 210.19 (b) to implement this provision. To accommodate the

changes, the definition of State Food Distribution Advisory Council is

removed and sections are redesignated.

Buy American

Section 104(d) of Pub. L. 105-336 amended section 12 of the NSLA to

require SFAs participating in the NSLP and SBP in the contiguous United

States (U.S.) to purchase for those programs, to the maximum extent

practicable, domestic commodities or products. This requirement will

help ensure that Federal funds dispensed to States support the U.S.

agricultural economy to the extent feasible. For purposes of this

provision, Pub. L. 105-336 defines the term ``domestic commodity or

product'' to mean an agricultural commodity that is produced in the

U.S. and a food product that is processed in the U.S. substantially

using agricultural commodities that are produced in the U.S. The

Conference Report accompanying Pub. L. 105-336 makes it clear that the

term ``substantially'' means that over 51 percent of the processed food

comes from American produced products. Pub. L. 105-336 also stipulates

that an SFA in Hawaii is required to purchase commodities or products

that are produced in Hawaii, to the extent that such products are in

adequate supply for program purposes. This rule implements this

provision by adding new paragraphs (d), Buy American to Secs. 210.21

and 220.16.

Criminal Penalties

Section 104(b) of Pub. L. 105-336 amended section 12(g) of the NSLA

to increase from $10,000 to $25,000 the maximum fine for embezzling,

willfully misapplying, stealing or obtaining by fraud any funds, assets

or property acquired under the NSLA or CNA. This rule reflects this

provision by amending Secs. 210.26, 215.6(b), 220.6(b), 235.6(g) and

245.12(a).

Educational Prohibitions

Prior to Pub. L. 104-193, section 12 of the NSLA prohibited SAs and

USDA from imposing any educational requirements with respect to

teaching personnel, curriculum, instruction, methods of instruction,

and materials of instruction in any school. Section 726 of Pub. L. 104-

193, recognizing the educational responsibilities of the State

education agencies, amended section 11 of the CNA by removing the

reference to the State. This rule implements this provision by amending

Secs. 210.27 and 220.17 to limit the prohibition to USDA.

Removal of School Breakfast Outreach Requirements

Prior to Pub. L. 104-193, Section 4(f) of the CNA mandated that the

Department and SAs initiate outreach and education on the benefits of

the SBP. Section 723 of Pub. L. 104-193

[[Page 50738]]

removed the SBP outreach activities. This rule removes paragraph (k) of

Sec. 220.13 to implement this provision.

Withholding State Administrative Expense Funds

Section 202(a) of Pub. L. 103-448 amended section 7(a) of the CNA

to stipulate that USDA may withhold SAE funds when SAs are seriously

deficient in either their administration of the Child Nutrition

Programs or their compliance with regulations issued to implement the

Child Nutrition Programs, and that USDA may restore those withheld

funds when performance improves. This rule adds a new paragraph (h) to

Sec. 235.4 to implement this provision.

State Administrative Expense Plans

Section 724(b) of Pub. L. 104-193 amended section 7(e) of the CNA

by removing the requirement that SAE plans be submitted annually by

State agencies for approval by FNS and revising the regulation to

require that States only need submit substantive changes to approved

plans. FNS notified State agencies of this change on June 5, 1997. The

SAE plan used for fiscal year 1997 is the permanent plan document

(i.e., the ``base year'' SAE plan). For SAs not participating in the

Child Nutrition Programs in FY 1997, the first SAE plan submitted will

be considered the base year plan. After submitting the base plan, the

SA is only required to submit substantive changes, as defined in the

June 5, 1997 guidance, for approval by FNS. When those substantive

changes are submitted and the plan is amended, the fiscal year in which

those changes are effective becomes the plan's base year. This rule

implements this provision by amending Sec. 235.5.

Transfer of State Administrative Expense Funds

Section 202(b) of Pub. L. 105-336 amended section 7(a)(6) of the

CNA by eliminating the previous 10 percent limit on SAE funds that may

be transferred from one child nutrition program to another. Now, SAs

may transfer their SAE funds among the programs as they deem necessary

for efficient administration of the programs. This rule implements the

limitation by amending Sec. 235.6(a).

Which References are Being Removed as Obsolete?

The Department is taking this opportunity to remove the obsolete

Sec. 210.18a, Assessment, Improvement and Monitoring system, in its

entirety and to make technical changes throughout 7 CFR part 210 and

235 to reflect its removal. The Department is removing the Appendix to

7 CFR part 215, which shows the apportionment of funds to States for

the SMP for 1976. Finally, the Department is removing Sec. 245.13 in

its entirety because the Department of Health, Education and Welfare

Public School Civil Rights Survey no longer exists.

What Technical Amendments are Being Made?

Audit Requirements in Secs. 215.13 and 220.15

The audit requirements contained in Secs. 215.13 and 220.15 are

revised to match those set forth in Sec. 210.22. This revision will not

result in changes in program operation.

Coordinated Review

In Sec. 210.18, a technical error is corrected. The review

threshold set forth for Performance Standard I at Sec. 210.18(i)(3)(B)

is revised by revising the parenthetical phrase (but not less than 10

lunches) to read (but not less than 100 lunches).

Correction of OMB Numbers

The regulations governing the SAE funds (7 CFR part 235) are being

revised to reflect corrected Office of Management and Budget

information collection/ recordkeeping control numbers. This rule amends

Sec. 235.12 to reflect this change.

Correction of an Incorrect Reference

Section 245.5 requires SFAs to publicly announce the eligibility

criteria for free and reduced price school meals and free milk. An

announcement is not required for certain schools, including schools

defined in Sec. 210.2 paragraph (c) of the definition of School.

Section 245.5(a) currently makes an incorrect reference. This rule

corrects that error.

The following chart restates the changes affected in this

regulation:

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Affected section of

Provision regulation Reason for change

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Definition of ``child'' and Secs. 210.2, Updated to reflect

``children''. 215.2(e-1) and commonly accepted

220.2(c). terminology.

Definition of ``handicapped Sec. 210.2......... Updated to reflect

student''. commonly accepted

terminology.

Definition of ``school''.... Secs. 210.2, Excluding Puerto

220.2(u) and Rico child care

235.2(o). centers from

participation in

NSLP and SBP

because they may

now participate in

the CACFP

(Statutory

Provision).

Definition of Financial Secs. 210.2, 215.2, Updated to reflect

Management Circulars. 220.2 and 235.2. current

terminology.

Definition of ``State''..... Secs. 210.2, 215.2 Accommodates the

(y), 220.2 (y),and elimination of the

235.2(r). territories under

the Compact of Free

Association and the

block grant status

of American Samoa

and the

Commonwealth of the

Northern Marianas.

Single Agreements/Claims.... Secs. 210.8(c), Paperwork reduction

210.9(b), 215.7(d), (Statutory

215.10(b), 220.7(e) Provision).

and 220.11(b).

Permanent Free and Reduced Secs. 245.10 and Paperwork reduction

Price Policy Statement. 245.11. (Statutory

Provision).

Food safety inspections..... Secs. 210.13 and Raising health

220.7(a-2). standards

(Statutory

Provision).

State agency consultation Secs. 210.2, Food distribution

with schools. 210.19(b) and advisory council

210.28. was eliminated

(Statutory

Provision).

Buy American................ Secs. 210.21 and Supporting American

220.16. farmers and

industries

(Statutory

Provision).

Criminal penalties.......... Secs. 210.26, Updating penalties

215.6(b), 220.6(b) for fraud

235.6(g) and (Statutory

245.12(a). Provision).

[[Page 50739]]

Educational prohibitions.... Secs. 210.27 and Recognizing

220.17. educational

responsibilities of

SAs (Statutory

Provision).

Removal of School Breakfast Sec. 220.13(k)..... No longer required

Outreach Requirements. by law (Statutory

Provision).

Withholding SAE funds....... Sec. 235.4(h)...... Monitoring SA

performance

(Statutory

Provision).

Permanent State Sec. 235.5......... Paperwork reduction

Administrative Expense (Statutory

Plans. Provision).

Transfer of SAE funds....... Sec. 235.6(a)...... Greater efficiency

in program

administration

(Statutory

Provision).

Removal of Sec. 210.18a.... Technical changes Obsolete reference.

throughout 210 and

235.

Removal of Appendix, Sec. Sec. 215, Appendix. The appendix is

215. obsolete.

Removal of Welfare Public Sec. 245.13........ Obsolete reference

School Civil Rights Survey. to a Department of

Health and Human

Services Civil

Rights survey that

no longer exists.

Audit requirements.......... Secs. 215.13 and Intent to show

220.15. continuity

throughout the

administration of

the programs.

Coordinated review.......... Sec. 210.18(i)(3)(B Corrects technical

). error.

OMB numbers................. Sec. 235.12........ Reflect corrected

numbers.

Announcement of eligibility Sec. 245.5(a)...... Corrects technical

criteria. error.

------------------------------------------------------------------------

Executive Order 12866

This 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.

Public Law 104-4

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, the

Food and Nutrition Service (FNS) must generally prepare a written

statement, including a cost-benefit analysis, for proposed and final

rules with ``Federal mandates'' that may result in expenditures to

State, local, or tribal governments, in the aggregate, or to the

private sector, of $100 million or more in any one year. When such a

statement is needed for a rule, section 205 of the UMRA generally

requires FNS to identify and consider a reasonable number of regulatory

alternatives and adopt the least costly, most cost-effective or least

burdensome alternative that achieves the objectives of the rule.

This final rule contains no Federal mandates (under regulatory

provisions of Title II of the UMRA) for State, local, and tribal

governments or the private sector of $100 million or more in any one

year. Thus, this final rule is not subject to the requirements of

Sections 202 and 205 of the UMRA.

Regulatory Flexibility Act

This final rule has been reviewed with regard to the requirements

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

Administrator of the FNS has certified that this rule will not have a

significant economic impact on a substantial number of small entities.

Additionally, the Department of Agriculture (the Department or USDA)

does not anticipate any adverse fiscal impact on local schools.

Executive Order 12372

The National School Lunch Program, Special Milk Program for

Children, School Breakfast Program, and State Administrative Expense

Funds are listed in the Catalog of Federal Domestic Assistance under

Nos. 10.555, 10.556, 10.553, and 10.560, respectively. They 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 final rule-related notice at 48 FR 29112. June

24, 1983.)

Executive Order 12988

This final rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This final 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 impede its full

implementation. This final 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

final rule, all applicable administrative procedures must be exhausted.

In the National School Lunch Program, the Special Milk Program, and

School Breakfast Program, the administrative procedures are set forth

under the following regulations: (1) SFA appeals of SA fiscal action

resulting from an administrative review must follow SA hearing

procedures as established pursuant to 7 CFR 210.18(q); (2) SFA appeals

of FNS fiscal action resulting from an administrative review must

follow FNS hearing procedures as established pursuant to 7 CFR

210.30(d)(3); (3) FNS claims against SAs must follow hearing procedures

as established pursuant to 7 CFR 215.12(e); and (4) SA appeals of State

Administrative Expense fund sanctions (7 CFR 235.11(b)) must follow the

FNS administrative review process as established pursuant to 7 CFR

235.11(f).

Paperwork Reduction Act

This final rule does not contain reporting or recordkeeping

requirements subject to approval by the Office of Management and Budget

(OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507).

Public Participation

This action is being finalized without prior notice or public

comment under authority of 5 U.S.C. 553(b)(3)(A) and (B). The

amendments contained herein are nondiscretionary in nature and

therefore not subject to change as a result of public comment. Thus,

the Department has determined in accordance with 5 U.S.C. 553(b) that

Notice of Proposed Rulemaking and Opportunity for Public Comments is

unnecessary and contrary to the public interest and, in accordance with

5 U.S.C. 553(d), that this action will be effective 30 days after the

date of publication.

List of Subjects

7 CFR Part 210

Food and Nutrition Service, Grant programs-education, Grant

programs-health, Infants and children, Nutrition, Penalties, Reporting

and recordkeeping requirements, School breakfast and lunch programs,

Surplus agricultural commodities.

[[Page 50740]]

7 CFR Part 215

Food and Nutrition Service, Food assistance programs, Grant

programs-education, Grant programs-health, Infants and children, Milk,

Reporting and recordkeeping requirements.

7 CFR Part 220

Food and Nutrition Service, Grant programs-education, Grant

programs-health, Infants and children, Nutrition, Reporting and

recordkeeping requirements, School breakfast and lunch programs.

7 CFR Part 235

Administrative practice and procedure, Food and Nutrition Service,

Food assistance programs, Grant programs-education, Grant programs-

health, Infants and children, reporting and recordkeeping requirements,

School breakfast and lunch programs.

7 CFR Part 245

Civil rights, Food and Nutrition Service, Food assistance programs,

Grant programs-education, Grant programs-health, Infants and children,

Milk, Reporting and recordkeeping requirements, School breakfast and

lunch programs.

Accordingly, 7 CFR parts 210, 215, 220, 235, and 245 are amended as

follows:

Part 210--NATIONAL SCHOOL LUNCH PROGRAM

1. The authority citation for 7 CFR part 210 continues to read as

follows:

Authority: 42 U.S.C. 1751-1760, 1779.

2. In Sec. 210.2,

a. The definition of Child is amended by removing the words

``handicapped'' and ``handicaps'' wherever they appear and adding in

their place the words ``disabled'' and ``disabilities'' respectively.

b. The definition of Handicapped student is amended by removing the

words ``Handicapped student'', adding in their place the words

``Student with disabilities'', and redesignating the paragraph in

alphabetical order.

c. The definition of School is amended by adding the word ``or''

before paragraph (c) and by removing the words ``; or (d) with respect

to the Commonwealth of Puerto Rico, nonprofit child care centers

certified as such by the Governor of Puerto Rico''.

d. The definition of 7 CFR part 3015 is revised, and the Note

following the definition is removed.

e. New definitions 7 CFR part 3017, 7 CFR part 3018 and 7 CFR part

3052 are added.

f. The definition of State is revised, and

g. The definition of State food distribution advisory council is

removed in its entirety.

The additions and revisions read as follows:

Sec. 210.2 Definitions.

* * * * *

7 CFR part 3015 means the Uniform Federal Assistance Regulations

published by the Department to implement OMB Circulars A-21, A-87, A-

102, A-110, and A-122; and Executive Order 12372. (For availability of

OMB Circulars referenced in this definition, see 5 CFR 1310.3.)

7 CFR part 3017 means the Department's regulation to implement

Executive Order 12549, covering governmentwide rules on suspension and

debarment as well as The Drug Free Workplace Act of 1988.

7 CFR part 3018 means the Department's Common Rule regarding

Governmentwide New Restrictions on Lobbying. Part 3018 implements the

requirements established by section 319 of the 1990 Appropriations Act

for the Department of Interior and Related Agencies (Pub. L. 101-121).

7 CFR part 3052 means the Department's regulations implementing OMB

Circular A-133, ``Audits of State, Local Governments, and Non-Profit

Organizations.'' (For availability of OMB Circulars referenced in this

definition, see 5 CFR 1310.3.)

State means any of the 50 States, District of Columbia, the

Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as

applicable, American Samoa and the Commonwealth of the Northern

Marianas.

* * * * *

3. In Sec. 210.8, a new sentence is added to the end of paragraph

(c)(1) to read as follows:

Sec. 210.8 Claims for reimbursement.

* * * * *

(1) * * * If a single State agency administers any combination of

the Child Nutrition Programs, a school food authority shall be able to

use a common claim form with respect to claims for reimbursement for

meals served under those programs.

* * * * *

4. In Sec. 210.9, the heading of paragraph (b) and the first two

sentences of the introductory text are revised, and a new sentence is

added after the second sentence.

The addition and revisions read as follows:

Sec. 210.9 Agreement with State agency.

* * * * *

(b) Agreement. Each school food authority approved to participate

in the program shall enter into a written agreement with the State

agency that may be amended as necessary. Nothing in the preceding

sentence shall be construed to limit the ability of the State agency to

suspend or terminate the agreement in accordance with Sec. 210.25. If a

single State agency administers any combination of the Child Nutrition

Programs, that State agency shall provide each school food authority

with a single agreement with respect to the operation of those

programs. * * *

* * * * *

5. In Sec. 210.13, paragraph (b) is redesignated as paragraph (c),

and a new paragraph (b) is added, to read as follows:

Sec. 210.13 Facilities management.

* * * * *

(b) Food safety inspections.--(1) In general. Except as provided in

paragraph (b)(2) of this section, schools shall, at least once during

each school year, obtain a food safety inspection conducted by a State

or local governmental agency responsible for food safety inspections.

(2) Exception. Paragraph (b)(1) of this section shall not apply to

a school if a food safety inspection of the school is required by a

State or local governmental agency responsible for food safety

inspections.

* * * * *

Sec. 210.18 [Amended]

6. In Sec. 210.18,

a. The third sentence of paragraph (a) is amended by removing the

words ``, in lieu of implementing the provisions of Sec. 210.18a of

this part for school year 1991/1992''.

b. The fourth sentence of paragraph (a) is amended by removing the

reference ``Sec. 210.30 of this part'' and adding in its place the

reference ``Sec. 210.29''.

c. The undesignated paragraph after paragraph (i)(3)(i)(B) is

amended by removing the parenthetical phrase ``(but not less than 10

lunches)'' and adding in its place the new parenthetical phrase ``(but

not less than 100 lunches)''.

d. The seventh sentence of paragraph (j) is amended by removing the

reference ``Sec. 210.30 (d)(3)'' and adding in its place the reference

``Sec. 210.29 (d)(3)''.

e. The first sentence paragraph (q) is amended by removing the

reference ``Sec. 210.30 (d)(2) of this part'' and adding in its place

the reference ``Sec. 210.29 (d)(2)'', and

[[Page 50741]]

f. The first sentence of paragraph (r) is amended by removing the

reference ``Sec. 210.30 (d)(2) of this part'' and adding in its place

the reference ``Sec. 210.29 (d)(2)''.

Sec. 210.18a [Removed]

7. Section 210.18a is removed in its entirety.

8. In Sec. 210.19,

a. The third sentence of paragraph (a)(6) is amended by removing

the reference ``or Sec. 210.18a of the part''.

b. Paragraph (b) is revised.

c. The third sentence of paragraph (c)(2)(ii) is amended by

removing the reference ``or Sec. 210.18a of this part''.

The revision reads as follows:

Sec. 210.19 Additional responsibilities.

* * * * *

(b) Donated food distribution information. Information on schools

eligible to receive donated foods available under section 6 of the

National School Lunch Act (42 U.S.C. 1755) shall be prepared each year

by the State agency with accompanying information on the average daily

number of lunches to be served in such schools. This information shall

be prepared as early as practicable each school year and forwarded no

later than September 1 to the Distributing agency. The State agency

shall be responsible for promptly revising the information to reflect

additions or deletions of eligible schools, and for providing such

adjustments in participation as are determined necessary by the State

agency. Schools shall be consulted by the Distributing agency with

respect to the needs of such schools relating to the manner of

selection and distribution of commodity assistance.

* * * * *

Sec. 210.20 [Amended]

9. In Sec. 210.20,

a. Paragraph (a)(7) is amended by removing the reference

``Sec. 210.28 (d)'' adding in its place the reference ``Sec. 250.13(k)

of this chapter''.

b. Paragraph (b)(11) is amended by removing the reference

``Sec. 210.28 (d)'' and adding in its place the reference

``Sec. 250.13(k) of this chapter''.

10. In Sec. 210.21, a new paragraph (d) is added to read as

follows:

Sec. 210.21 Procurement.

* * * * *

(d) Buy American.--(1) Definition of domestic commodity or product.

In this paragraph (d), the term `domestic commodity or product' means--

(i) An agricultural commodity that is produced in the United

States; and

(ii) A food product that is processed in the United States

substantially using agricultural commodities that are produced in the

United States.

(2) Requirement. (i) In general. Subject to paragraph (d)(2)(ii) of

this section, the Department shall require that a school food authority

purchase, to the maximum extent practicable, domestic commodities or

products.

(ii) Limitations. Paragraph (d)(2)(i) of this section shall apply

only to--

(A) A school food authority located in the contiguous United

States; and

(B) A purchase of domestic commodity or product for the school

lunch program under this part.

(3) Applicability to Hawaii. Paragraph (d)(2)(i) of this section

shall apply to a school food authority in Hawaii with respect to

domestic commodities or products that are produced in Hawaii in

sufficient quantities to meet the needs of meals provided under the

school lunch program under this part.

Sec. 210.23 [Amended]

11. In Sec. 210.23, the first sentence of paragraph (b) is amended

by removing the word ``handicap'' and adding in its place the word

``disability''.

Sec. 210.26 [Amended]

12. In Sec. 210.26, the first sentence of the paragraph is amended

by removing the word ``$10,000'' and adding in its place the word

``$25,000''.

Sec. 210.27 [Amended]

13. In Sec. 210.27, the paragraph is amended by removing the words

``neither the Department nor the State agency shall'' and adding the

words ``the Department shall not''.

Sec. 210.28 [Removed]

14. Sec. 210.28 is removed in its entirety.

Secs. 210.29, 210.30, 210.31, and 210.32 [Redesignated as

Secs. 210.28, 210.29, 210.30 and 210.31]

15. Sections 210.29, 210.30, 210.31, and 210.32 are redesignated as

210.28, 210.29, 210.30, and 210.31, respectively.

Part 215--SPECIAL MILK PROGRAM FOR CHILDREN

1. The authority citation for 7 CFR part 215 continues to read as

follows:

Authority: 42 U.S.C. 1772, 1779.

2. In Sec. 215.2,

a. Paragraph (e-1) is amended by removing the word ``handicapped''

wherever it appears and adding in its place the word ``disabled''.

b. Paragraph (x-1) is revised, and the Note following the

definition is removed.

c. Paragraph (x-2) is redesignated as paragraph (x-5).

d. New paragraphs (x-2), (x-3) and (x-4) are added, and

e. Paragraph (y) is revised.

The additions and revisions read as follows:

Sec. 215.2 Definitions.

* * * * *

(x-1) 7 CFR part 3015 means the Uniform Federal Assistance

Regulations published by the Department to implement OMB Circulars A-

21, A-87, A-102, A-110, and A-122; and Executive Order 12372. (For

availability of OMB Circulars referenced in this definition, see 5 CFR

1310.3.)

(x-2) 7 CFR part 3017 means the Department's regulation to

implement Executive Order 12549, covering governmentwide rules on

suspension and debarment as well as The Drug Free Workplace Act of

1988.

(x-3) 7 CFR part 3018 means the Department's Common Rule regarding

Governmentwide New Restrictions on Lobbying. Part 3018 implements the

requirements established by section 319 of the 1990 Appropriations Act

for the Department of Interior and Related Agencies (Pub. L. 101-121).

(x-4) 7 CFR part 3052 means the Department's regulations

implementing OMB Circular A-133, ``Audits of State, Local Governments,

and Non-Profit Organizations.'' (For availability of OMB Circulars

referenced in this definition, see 5 CFR 1310.3.)

* * * * *

(y) State means any of the 50 States, District of Columbia, the

Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as

applicable, American Samoa and the Commonwealth of the Northern

Marianas.

* * * * *

Sec. 215.6 [Amended]

3. In Sec. 215.6, paragraph (b) is amended by removing ``$10,000''

and adding in its place ``$25,000''.

4. In Sec. 215.7,

a. The second sentence of paragraph (b) introductory text is

amended by removing the words ``and thereafter at least annually'', and

b. The first sentence of paragraph (d) introductory text is removed

and three sentences are added in its place to read as follows:

Sec. 215.7 Requirements for participation.

* * * * *

(d) Each school food authority or child care institution approved

to participate in the program shall enter into a written agreement with

the State agency or FNSRO, as applicable, that may be amended as

necessary. Nothing in the preceding sentence shall be construed to

limit the ability of the State

[[Page 50742]]

agency to suspend or terminate the agreement in accordance with

Sec. 215.15. If a single State agency administers any combination of

the Child Nutrition Programs, that State agency shall provide each SFA

with a single agreement with respect to the operation of those

programs. * * *

* * * * *

5. In Sec. 215.10, paragraph (b) is amended by adding a new

sentence between the second and third sentences to read as follows:

Sec. 215.10 Reimbursement procedures.

* * * * *

(b) * * * If a single State agency administers any combination of

the Child Nutrition Programs, the SFA shall be able to use a common

claim form with respect to claims for reimbursement for meals served

under those programs. * * *

* * * * *

6. In Sec. 215.13,

a. Paragraphs (a) through (c) are removed.

b. Paragraphs (d) and (e) are redesignated as (c) and (d),

respectively, and

c. New paragraphs (a) and (b) are added to read as follows:

Sec. 215.13 Management evaluations and audits.

(a) State agencies and school food authorities shall comply with

the requirements of part 3015 of this title concerning the audit

requirements for recipients and subrecipients of the Department's

financial assistance.

(b) These requirements call for organization-wide financial and

compliance audits to ascertain whether financial operations are

conducted properly; financial statements are presented fairly;

recipients and subrecipients comply with the laws and regulations that

affect the expenditures of Federal funds; recipients and subrecipients

have established procedures to meet the objectives of federally

assisted programs; and recipients and subrecipients are providing

accurate and reliable information concerning grant funds. States and

school food authorities shall use their own procedures to arrange for

and prescribe the scope of independent audits, provided that such

audits comply with the requirements set forth in part 3015 of this

title.

* * * * *

Appendix to Part 215 [Removed]

7. In part 215, the Appendix is removed in its entirety.

PART 220--SCHOOL BREAKFAST PROGRAM

1. The authority citation for 7 CFR part 220 continues to read as

follows:

Authority: 42 U.S.C. 1773, 1779, unless otherwise noted.

2. In Sec. 220.2,

a. Paragraph (c) is amended by removing the word ``handicapped''

wherever it appears and adding in its place the word ``disabled''.

b. Paragraph (u) is amended by adding the word ``or'' before

paragraph (u)(3), and by removing the words ``; or (4) with respect to

the Commonwealth of Puerto Rico, nonprofit child care centers certified

as such by the Governor of Puerto Rico''.

c. Paragraph (x-1) is revised, and the Note following the

definition is removed.

d. New paragraphs (x-2), (x-3) and (x-4) are added, and

e. Paragraph (y) is revised.

The additions and revisions read as follows:

Sec. 220.2 Definitions.

* * * * *

(x-1) 7 CFR part 3015 means the Uniform Federal Assistance

Regulations published by the Department to implement OMB Circulars A-

21, A-87, A-102, A-110, and A-122; and Executive Order 12372. (For

availability of OMB Circulars referenced in this definition, see 5 CFR

1310.3.)

(x-2) 7 CFR part 3017 means the Department's regulation to

implement Executive Order 12549, covering governmentwide rules on

suspension and debarment as well as The Drug Free Workplace Act of

1988.

(x-3) 7 CFR part 3018 means the Department's Common Rule regarding

Governmentwide New Restrictions on Lobbying. Part 3018 implements the

requirements established by section 319 of the 1990 Appropriations Act

for the Department of Interior and Related Agencies (Pub. L. 101-121).

(x-4) 7 CFR part 3052 means the Department's regulations

implementing A-133, ``Audits of State, Local Governments, and Non-

Profit Organizations.'' (For availability of OMB Circulars referenced

in this definition, see 5 CFR 1310.3.)

(y) State means any of the 50 States, District of Columbia, the

Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as

applicable, American Samoa and the Commonwealth of the Northern

Marianas.

* * * * *

Sec. 220.6 [Amended]

3. In Sec. 220.6, paragraph (b)(1) is amended by removing

``$10,000'' and adding in its place ``$25,000''.

4. In Sec. 220.7, a.

a. New paragraph (a-2) is added, and

b. The first sentence of paragraph (e) introductory text is removed

and three new sentences are added in its place.

The additions read as follows:

Sec. 220.7 Requirements for participation.

* * * * *

(a-2) Schools shall, at least once during each school year, obtain

a food safety inspection conducted by a State or local governmental

agency responsible for food safety inspections. However, this

requirement shall not apply to a school if a food safety inspection of

the school is required by a State or local governmental agency

responsible for food safety inspections.

* * * * *

(e) Each school food authority approved to participate in the

program shall enter into a written agreement with the State agency or

the Department through the FNSRO, as applicable, that may be amended as

necessary. Nothing in the preceding sentence shall be construed to

limit the ability of the State agency or the FNSRO to suspend or

terminate the agreement in accordance with Sec. 220.18. If a single

State agency administers any combination of the Child Nutrition

Programs, that State agency shall provide each SFA with a single

agreement with respect to the operation of those programs.* * *

* * * * *

5. In Sec. 220.11, paragraph (b) is amended by adding a new

sentence between the second and third sentences to read as follows:

Sec. 220.11 Reimbursement procedures.

* * * * *

(b) * * * If a single State agency administers any combination of

the Child Nutrition Programs, the SFA shall be able to use a common

claim form with respect to claims for reimbursement for meals served

under those programs. * * *

* * * * *

Sec. 220.13 [Amended]

6. In Sec. 220.13, paragraph (k) is removed in its entirety.

7. In Sec. 220.15,

a. Paragraphs (a), (b), (c), and (d) are removed and paragraphs (e)

and (f) are redesignated as paragraphs (c) and (d), respectively, and

b. New paragraphs (a) and (b) are added.

The additions read as follows:

[[Page 50743]]

Sec. 220.15 Management evaluations and audits.