[Federal Register Volume 59, Number 111 (Friday, June 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14092]


[[Page Unknown]]

[Federal Register: June 10, 1994]


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Part IV





Department of Agriculture





_______________________________________________________________________



Food and Nutrition Service



_______________________________________________________________________



7 CFR Parts 210 and 220




National School Lunch Program and School Breakfast Program: Nutrition 
Objectives for School Meals; Proposed Rule
DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 210 and 220

 
National School Lunch Program and School Breakfast Program: 
Nutrition Objectives for School Meals

AGENCY: Food and Nutrition Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule proposes to amend the regulations outlining the 
nutrition standards for the National School Lunch and School Breakfast 
Programs. It is part of an integrated, comprehensive plan for promoting 
the health of children. Specifically, this proposal would update the 
current nutrition standards to incorporate the Dietary Guidelines for 
Americans, which reflect medical and scientific consensus on proper 
nutrition as a vital element in disease prevention and long-term health 
promotion. This proposal would also adopt meal planning based on 
analysis of key nutrients (Nutrient Standard Menu Planning) in lieu of 
the current meal pattern. These changes would be implemented no later 
than July 1, 1998. The Department will be providing State agencies and 
school food authorities with technical assistance to enable them to 
meet this implementation date.
    In developing this proposed rule, the Department is responding to 
an array of medical and scientific evidence linking improper diet with 
increased incidence of heart disease, strokes and certain cancers. 
These proposals acknowledge the positive role school programs must play 
in establishing childhood eating patterns that influence lifelong 
habits. The Department also considered extensive oral testimony 
presented at four public hearings and meetings as well as written 
comments submitted in response to a notice published in the Federal 
Register on September 13, 1993.
    In recognition of the importance of reinventing and streamlining 
government programs, this proposal would also remove various paperwork 
burdens associated with the school meal programs and would modify the 
review requirements for the National School Lunch Program to ensure 
adequate oversight of the proposed updated nutrition standards. The 
overriding purpose behind this proposed rule is to serve more 
nutritious and healthful meals to school children while maintaining 
access to the meal programs for needy children, and to enhance the 
flexibility of local schools to administer the programs.

DATES: To be assured of consideration, comments must be postmarked on 
or before September 8, 1994.

ADDRESSES: Robert M. Eadie, Chief, Policy and Program Development 
Branch, Child Nutrition Division, Food and Nutrition Service, USDA, 
3101 Park Center Drive, Alexandria, Virginia 22302.

FOR FURTHER INFORMATION CONTACT: Robert M. Eadie at the above address 
or by telephone at 703-305-2620.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule is issued in conformance with Executive Order 
12866 and has been designated significant.
    Included at the end of this proposal is the Regulatory Cost/Benefit 
Assessment. The Assessment provides the background on the economic, 
market and benefit impacts of this proposal.

Regulatory Flexibility Act

    This proposed 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 Food and Nutrition Service (FNS) has 
certified that this rule will not have a significant economic impact on 
a substantial number of small entities. In the interest of furthering 
efforts to reinvent government, this rule proposes a substantial 
reduction in current State agency administrative burdens and a 
technical adjustment in the recordkeeping burdens. Moreover, the 
Department of Agriculture (the Department or USDA) does not anticipate 
any adverse fiscal impact on local schools. A recent analysis by FNS 
and the Department's Economic Research Service found that the menu 
planning aspects of this proposal can be met at the current cost of 
food in the National School Lunch Program. Therefore, food costs should 
not be a barrier to implementation of this regulation.

Catalog of Federal Domestic Assistance

    The National School Lunch Program and the School Breakfast Program 
are listed in the Catalog of Federal Domestic Assistance under Nos. 
10.555 and 10.553, respectively, 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 final 
rule-related notice at 48 FR 29112, June 24, 1983.)

Executive Order 12778

    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This proposed 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 proposed 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 proposed rule or the application of the provisions, 
all applicable administrative procedures must be exhausted. In the 
National School Lunch Program and School Breakfast Program, the 
administrative procedures are set forth under the following 
regulations: (1) School food authority appeals of State agency findings 
as a result of an administrative review must follow State agency 
hearing procedures as established pursuant to 7 CFR 210.18(q); (2) 
School food authority appeals of FNS findings as a result of an 
administrative review must follow FNS hearing procedures as established 
pursuant to 7 CFR 210.30(d)(3); and (3) State agency 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).

Information Collection

    This proposed rule contains information collection requirements 
which are subject to review by the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act of 1980 (44 U.S.C. chapter 35). 
The title, description, and respondent description of the information 
collections are shown below with an estimate of the annual reporting 
and recordkeeping burdens. Included in the estimate is the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. The Department would like to note that the 
description of burden hours represents full implementation of the 
proposed regulation, which would be School Year 1998-9, and only 
provides for the recordkeeping burden associated with the proposed 
regulatory changes.
    Title: National School Lunch Program and School Breakfast Program: 
Nutrition Objectives for School Meals.
    Description: Under this proposed rule on Nutrition Objectives, some 
existing recordkeeping activities contained in 7 CFR 210 and 220 would 
be affected. The OMB control numbers are 0584-006 and 0584-0012, 
respectively.
    Description of Respondents: State agencies, school food authorities 
and schools doing on-site preparation of meals. 

                                      Estimated Annual Recordkeeping Burden                                     
----------------------------------------------------------------------------------------------------------------
                                                   Annual number      Annual      Average burden   Annual burden
                                                  of respondents     frequency     per response        hours    
----------------------------------------------------------------------------------------------------------------
7 CFR 210.8 (a)(3):                                                                                             
    Existing....................................          20,249              12         2 hours         485,976
    Proposed....................................               0               0               0               0
    Difference..................................  ..............  ..............  ..............        -485,976
7 CFR 210.10/210.10a:                                                                                           
    Existing....................................       \1\71,176             180             .25    \1\3,202,920
    Proposed....................................          71,176             180            .333       4,266,289
    Difference..................................  ..............  ..............  ..............      +1,063,369
7 CFR 210.15(b)(4):                                                                                             
    Existing....................................          20,249              12          52.333      12,716,291
    Proposed....................................               0               0               0               0
    Difference..................................  ..............  ..............  ..............     -12,716,291
7 CFR 220.8/220.8a:                                                                                             
    Existing....................................       \2\60,585             180            .083      \2\905,140
    Proposed....................................          60,585             180            .117       1,275,920
    Difference..................................  ..............  ..............  ..............        +370,780
7 CFR 220.13(i):                                                                                                
    Existing....................................           5,658              12              34       2,308,464
    Proposed....................................               0               0               0               0
    Difference..................................  ..............  ..............  ..............      -2,308,464
----------------------------------------------------------------------------------------------------------------
\1\The current OMB approved burden is based on 70,455 schools. However, for the purposes of a more accurate     
  comparison, the current burden has been adjusted here to include the same number of schools used to determine 
  the proposed burden.                                                                                          
\2\The current OMB approved burden is based on 49,962 schools. However, for the purposes of a more accurate     
  comparison, the current burden has been adjusted here to include the same number of schools used to determine 
  the proposed burden.                                                                                          

    As required by section 3504(h) of the Paperwork Reduction Act of 
1980, 44 U.S.C. 3504(h), FNS has submitted a copy of this proposed rule 
to OMB for review of these information collection requirements. Other 
organizations and individuals desiring to submit comments regarding 
this burden estimate or any aspects of these information collection 
requirements, including suggestions for reducing the burdens, should 
direct them to the Policy and Program Development Branch, Child 
Nutrition Division, (address above) and to the Office of Information 
and Regulatory Affairs, OMB, Room 3208, New Executive Office Building, 
Washington, DC 20503, Attention: Laura Oliven, Desk Officer for FNS.

Background

Nutrition Standards in the School Meal Programs

    The primary purpose of the National School Lunch Program (NSLP), as 
originally stated by Congress in 1946 in section 2 of the National 
School Lunch Act (NSLA), 42 U.S.C. 1751, is ``to safeguard the health 
and well-being of the Nation's children * * *.'' At that time, 
nutritional concerns in the United States centered on nutrient 
deficiencies and issues of underconsumption. Over time, meal 
requirements for the NSLP, 7 CFR 210.10, were designed to provide foods 
sufficient to approximate one-third of the National Academy of 
Sciences' Recommended Dietary Allowances (RDA). Participating schools 
were required to offer meals that complied with general patterns 
established by the Department. These patterns were developed to provide 
a balanced meal by focusing on minimum amounts of specific components 
(meat/meat alternate, bread/bread alternate, vegetables, fruits and 
dairy products) rather than on the nutrient content of the entire meal. 
Over the years, virtually no substantive changes have been made to 
these patterns.
    An array of scientific data now augments our knowledge by 
documenting that excesses in consumption are a major concern because of 
their relationship to the incidence of chronic disease. The typical 
diet in the United States is high in fat, saturated fat and sodium and 
low in complex carbohydrates and fiber. The meal requirements for the 
NSLP have not kept pace with the growing consensus of the need to 
modify eating habits. Given the importance of school meals to the 
nation's children, especially needy children, the Department is 
committed to meeting its health responsibilities by updating the 
nutrition standards for school meals to ensure that children have 
access to a healthful diet as well as an adequate one. To accomplish 
this task, the Department is proposing to have school meals conform to 
the 1990 Dietary Guidelines for Americans (hereinafter referred to as 
the Dietary Guidelines) as well as provide proper levels of nutrients 
and calories.
    Although this proposal would expressly incorporate the 1990 Dietary 
Guidelines into the school meals programs' nutrition requirements, the 
Department will consider incorporating into the regulations any updates 
of the Dietary Guidelines or other scientific recommendations. Specific 
use of the 1990 Dietary Guidelines will allow the Department to review 
any revisions of the Dietary Guidelines to determine their 
applicability to school programs, and will avoid any undue burden on 
State agencies and school food authorities to make the changes without 
the direction of implementing regulations.

Scientific Studies Leading to Development of the Dietary Guidelines

    Over the past thirty years a large body of evidence based on 
epidemiological, clinical and laboratory investigation has established 
that dietary patterns in the United States are associated with an 
increased risk of chronic disease including coronary heart disease, 
stroke, diabetes and certain types of cancer (Surgeon General's Report 
on Nutrition and Health, 1988; National Academy of Sciences, Diet and 
Health: Implications for Reducing Chronic Disease Risk, 1989). Research 
summarized in the Surgeon General's Report indicates that five of the 
ten leading causes of death in the United States are associated with 
diet.
    As a result of this accumulating body of scientific research 
establishing diet/disease links, dietary recommendations for the United 
States population were developed in the late 1970's. The first of these 
developed in 1977 by the Senate Select Committee on Nutrition and Human 
Needs, established Dietary Goals for the United States. This was 
followed closely by The Surgeon General's Report: Healthy People 
(1979). USDA and the Department of Health and Human Services (DHHS) 
released the first Dietary Guidelines for Americans in 1980.
    The Dietary Guidelines were subsequently updated in 1985 and again 
in 1990. Also in 1990, Title III of the National Nutrition Monitoring 
and Related Research Act of 1990 (NNMRRA) (Pub. L. 101-445), 7 U.S.C. 
5301, et seq., was enacted. Section 301 of the NNMRRA, 7 U.S.C. 
5341(a), requires that the Dietary Guidelines be reviewed at least 
every five years by a panel of experts in the various fields that 
contribute to nutrition guidance. The task of the panel is to decide 
whether there is sufficient evidence for altering the existing Dietary 
Guidelines and, if so, to recommend specific changes. The Secretaries 
of the DHHS and USDA then make the final decision on whether or not to 
incorporate the recommended changes.
    The process was first established when the Senate Appropriations 
Committee, in November, 1980, stipulated that a Dietary Guidelines 
Advisory Committee be established to review the first edition of the 
Dietary Guidelines and to make any recommendations deemed appropriate. 
The committee consisted of nine members (three from USDA, three from 
DHHS and three selected from a list of nominees recommended by the 
National Academy of Sciences). In 1988, a second committee comprised of 
nine prominent experts in nutrition and health was appointed by the 
Secretaries of USDA and DHHS. Pursuant to Section 301(a) of the NNMRRA, 
a Dietary Guidelines Advisory Committee will be empaneled in 1995 to 
determine whether the 1990 Guidelines should be modified.
    As a result, the Dietary Guidelines are based on the best available 
scientific and medical knowledge. Consequently, the Department is 
proposing to use the Dietary Guidelines as the basis for the nutrition 
standards for school meals. This established procedure enables medical 
and scientific experts to continually review and recommend updating of 
the Dietary Guidelines in light of the most current and highly-regarded 
data in this area. Moreover, the private sector and general public have 
widely endorsed and relied upon the Dietary Guidelines in nutrition 
education programs, activities and marketing. Because of the widespread 
acceptance of the recommendations in the Dietary Guidelines, the 
Department believes that the transition to using these recommendations 
as the cornerstone for the school meal programs will be readily 
accepted.
    The 1988 Surgeon General's Report on Nutrition and Health and a 
1989 National Academy of Science Report: Diet and Health: Implications 
for Reducing Chronic Disease Risk reinforce the Dietary Guidelines. One 
common theme runs throughout each of the publications, that is, an 
improved diet can have positive health consequences.
    The most recent Diet and Health report issued by the Food and 
Nutrition Board of the National Academy of Sciences (1989) provides a 
very thorough review of the scientific evidence linking diet to disease 
and gives quantifiable goals for some of the Dietary Guidelines. The 
report recommends that Americans reduce fat intake to 30% or less of 
calories, reduce saturated fat intake to less than 10% of calories and 
reduce the intake of cholesterol to less than 300 mg per day. The 
report also recommends that sodium intake be limited to 2400 milligrams 
or less per day.

School Meals' Lack of Compliance With Current Dietary Guidelines

    The current Dietary Guidelines recommend that people eat a variety 
of foods; maintain a healthy weight; choose a diet with plenty of 
vegetables, fruits, and grain products; and use sugar and sodium in 
moderation. The Dietary Guidelines also recommend diets low in fat, 
saturated fat, and cholesterol so that over time, fat comprises 30 per 
cent or less of caloric intake, and saturated fat less than 10 per cent 
of total calories, for persons two years of age and older.
    However, information available to the Department consistently shows 
that children's diets, including meals served in schools, do not 
conform to the recommendations of the Dietary Guidelines. For example, 
according to data from the 1989 and 1990 Continuing Survey of Food 
Intakes by Individuals conducted by USDA, fat composed, on average, 35 
per cent of calories for the diets of children ages six to nineteen.
    Equally significant were the findings of a nationally 
representative USDA study entitled the School Nutrition Dietary 
Assessment (SNDA) Study. Released in October, 1993, the SNDA Study 
presented findings on the nutrients and foods provided in school meals 
and described the dietary intakes of students on a typical school day. 
A total of 545 schools were surveyed, and approximately 3,350 students 
in grades one through twelve (with assistance from parents for children 
grades one and two) provided detailed information about foods and 
beverages consumed in a day that included school attendance. The study 
compared nutrients provided in school meals with the Dietary 
Guidelines' recommendations on fat and saturated fat, the National 
Research Council's (NRC) Diet and Health Recommendations on sodium, 
cholesterol and carbohydrate intake, and the current objective that the 
nutrients provided in the NSLP meet one-third of the RDA and that the 
School Breakfast Program (SBP) meet one-fourth of the RDA.
    The SNDA findings showed that, while school lunches meet or exceed 
one-third of the RDA for key nutrients and food energy, they do not 
meet the recommended levels of fat and saturated fat established by the 
Dietary Guidelines. In fact, the report showed that school lunches 
exceeded the Dietary Guidelines' recommendations for fat and saturated 
fat. Specifically, the average percentage of calories from total fat 
was 38 per cent compared with the recommended goal of 30 per cent or 
less; and the percentage from saturated fat was 15 per cent, compared 
with the recommended goal of less than 10 per cent. The report also 
found that children who ate the school lunch consumed a significantly 
higher amount of calories from fat than children who brought their 
lunch from home or obtained a lunch from vending machines or elsewhere 
at school. Further, the report showed that virtually no schools were in 
compliance with the Dietary Guidelines. In over 40 percent of schools, 
students could select a meal that met the Dietary Guidelines, but few 
did so. The SNDA study also showed that while school meals met the NRC 
recommendation on cholesterol, the meals did not meet the NRC 
recommendations on sodium and carbohydrate levels. In fact, the level 
for sodium, at 1,479 milligrams, was nearly two times the lunch target 
of 800 milligrams.
    Even though the SBP did meet most of the recommendations in the 
Dietary Guidelines, the majority of school meals do not conform to 
current scientific knowledge of what constitutes a healthful diet. The 
SNDA findings underscore that the program has not adapted or changed 
school meal patterns over the years to incorporate scientific knowledge 
about diet. This situation is cause for concern because it demonstrates 
the need for significant improvement if the programs are to play their 
appropriate role in promoting long-term health through proper 
nutrition.
    As the first step toward achieving meaningful improvement in 
children's diets and, thus, their health and future well being, the 
Department considers it necessary to update the regulations which 
establish the specific nutrition criteria for reimbursable school meals 
to incorporate the RDA for key nutrients, energy allowances for 
calories, and the most current nutritional standards as outlined in the 
Dietary Guidelines. In this way, the school meal programs can provide 
an example of nutritional achievement as well as ensuring that children 
are served healthful meals.
    Before proceeding with a rulemaking, however, the Department 
recognized the importance of public input. The following is a 
description of the Department's procedure for obtaining input and a 
discussion of significant issues raised by commenters.

Providing a Public Forum

    To obtain input from the public prior to drafting proposed 
regulations, the Department solicited comments on nutrition objectives 
for school meals through public hearings and written comments. In a 
Notice published in the Federal Register (58 FR 47853, September 13, 
1993), the Department announced a series of four public hearings. Any 
person who was interested could register to speak at any of the 
hearings. Persons unable to testify in person were invited to submit 
written comments. The Notice identified the following four questions as 
the focus areas for comments and suggestions:
    I. What are the health consequences of children's current dietary 
patterns?
    II. How can the Dietary Guidelines for Americans be used to bring 
about measurable nutritional improvements in school meals and in 
children's diets?
    III. What are the opportunities and obstacles in meeting current 
nutrition recommendations in school meal programs?
    IV. What actions can the USDA, parents, school food service, food 
industry and other public and private organizations take to encourage 
the implementation of current nutrition recommendations in local 
schools?
    The four hearings were held in Atlanta, Georgia on October 13, 
1993; in Los Angeles, California on October 27, 1993; in Flint, 
Michigan on November 12, 1993; and in Washington, DC on December 7, 
1993. Each hearing was presided over jointly by officials from USDA and 
officials from USDA's Federal partners in this effort--the Department 
of Education (DOEd) and DHHS. The inclusion of representatives from 
DOEd and DHHS is an important asset in modifying the school meal 
programs both because of their expertise and their missions. The school 
meal programs must be considered in the context of the educational 
framework, as overseen by DOEd, and the national policies regarding 
health care and disease prevention under the aegis of DHHS. Therefore, 
USDA is very pleased that a partnership is being forged among all 
Federal agencies responsible for assisting the nation's schoolchildren. 
USDA is also pleased to be working with DOEd and DHHS to further their 
policy initiatives--Goals 2000: Educate America Act (DOEd) and Healthy 
People 2000: National Health Promotion and Disease Prevention 
Objectives (DHHS). Of particular concern are solutions to issues such 
as increasing public awareness of the links between diet and health, 
familiarizing the public with the need to establish good eating habits 
in children that will be carried on through their lifetimes and finding 
innovative ways to incorporate the school meal as a learning experience 
into daily school curriculums.
    A variety of witnesses from the fields of medicine, nutrition and 
education, food service, production and processors and other food 
industry representatives, as well as parents, students and other 
consumers and the general public, testified at each of the hearings. 
Witnesses were asked to focus their remarks on one of the four 
questions stated above. A transcript of each hearing was prepared, and 
witnesses could, if they wished, also submit written testimony and 
copies of any materials used to prepare their remarks. As noted above, 
the Federal Register Notice also solicited written comments from anyone 
who could not attend one of the hearings. To be assured of 
consideration, comments had to be submitted on or before December 15, 
1993. The written testimony and all comment letters were reviewed and 
analyzed by the Department prior to preparation of this proposed 
regulation. This portion of the preamble provides a summary of the 
comments.

Summary of Comments Received

    The overwhelming majority of commenters, representing a broad range 
of backgrounds and experiences, called for improvements to school 
meals. Comments from the public, students, and parents, while 
expressing serious concerns and supporting change, were general in 
nature and provided few specific details. However, commenters from the 
medical, nutrition, and food advocacy communities, State and local food 
service professionals, and food industry representatives provided 
detailed information and frequently recommended specific actions.

Commenter Categories

    A total of 363 witnesses testified at the hearings, and an 
additional 2,013 written comments were received by the Department. Of 
the 2,376 commenters: 21% were medical professionals, nutritionists or 
dietitians, representatives of public health, nutrition, or food 
organizations; 21% were from the general public; 21% were parents and 
students; 16% were school food service personnel, representatives of 
school food service organizations or representatives from State 
education/child nutrition agencies; 11% were teachers, school officials 
or representatives from school associations; 7% were food industry 
representatives; and 3% were representatives of other State or Federal 
agencies or members of Congress.
    The Department is very pleased that so many persons took the time 
to testify or to submit written comments and would like to take this 
opportunity to express its appreciation for their comments and 
suggestions. The commenters represented an extensive cross-section of 
perspectives and provided a great variety of opinions and 
recommendations. Especially gratifying were the number of students and 
parents who commented. These groups are, after all, the constituency 
that the Department considers program ``customers,'' and it is these 
groups the Department is seeking to serve better.

Comment Breakdown

    The following number of commenters addressed some aspect of the 
four basic questions: I. 796; II. 703; III. 752; IV. 1,464. Though 
comments varied greatly in content, the following significant themes 
emerged: (1) The need to improve school meals in order to improve the 
health of children; (2) the need for school meals to reflect current 
nutrition recommendations, specifically reductions in fat and saturated 
fat as recommended in the Dietary Guidelines; (3) the importance of an 
integrated nutrition education program that involves students, parents, 
teachers, and school food service personnel; (4) the need to revise 
current commodity programs to provide schools with more nutritious 
foods; and (5) the need to incorporate nutritional improvements while 
at the same time improving the appeal of meals offered to ensure that 
nutritious meals are consumed.
    The Department also notes that many commenters raised distinct 
issues within the four stated questions. For example, many commenters 
cited the need for vegetarian alternatives; others argued for inclusion 
of fast food companies in the NSLP, and several specific commodity 
issues were raised. Therefore, the Department has included an analysis 
of several of these issues in this preamble. Following are the more 
prevalent issues raised by the over 2,300 commenters and the number of 
commenters who addressed them:
    (1) Fat levels in school meals: 1,048;
    (2) The need for more fruits and vegetables: 829;
    (3) The importance of nutrition education: 794;
    (4) Concerns about milk and dairy products including the statutory 
requirement for whole milk and recommendations for a beverage 
substitute: 687;
    (5) The Department's Food Distribution Program and commodities: 
493;
    (6) The costs and operational difficulties of implementing the 
Dietary Guidelines: 448;
    (7) The need for whole grains in school meals: 387;
    (8) Fast foods and fast food companies (both for and against 
availability in schools): 385;
    (9) Vegetarian alternatives for school meals: 263;
    (10) Sodium levels in school meals: 213;
    (11) The importance of breakfast: 200.
    Readers should note that while all comments were taken into 
consideration, this preamble does not generally discuss individual 
comments. The preamble does, however, address the common themes which 
emerged and responds to specific individual comments when they raised 
significant issues.

Health Consequences Comments

    Close to 800 commenters addressed some issue relevant to health 
consequences and diet. The majority of commenters were from the public 
and the medical communities. Generally speaking, all of the commenters 
focused on the link between diet and disease, specifically, 
cardiovascular disease, obesity, and cancer. The majority of these 
commenters cited the high incidence of cardiovascular disease in the 
United States, both among children and adults, and the need to improve 
the diets of young children in order to prevent the development of 
heart disease in adulthood.
    Many commenters wrote in support of the positions taken by a number 
of major medical associations. These commenters focused on the 
importance of improving the diets of children, given the strong 
evidence that heart disease begins early in life, and emphasized the 
need to provide foods rich in fiber and complex carbohydrates for the 
possible prevention of some cancers.
    A number of commenters addressed the potential link between diet 
and learning and behavioral difficulties. These comments ranged from 
general observations regarding improper nutrition and lack of 
concentration, to specific concerns addressing functional disabilities, 
behavioral disturbances, fatigue, and cognitive disabilities.
    Commenters also pointed out that nutritional issues are especially 
vital for under-privileged and ethnic populations. Specifically, 
commenters cited the poor nutritional intake among low income children 
and certain minority populations. One commenter indicated that these 
populations, who are most at risk, do not appear to associate 
nutritional risk factors with leading causes of death. Commenters also 
expressed concern over the high incidence of major diseases among low-
income, minority populations--specifically, the higher incidence of 
heart disease and hypertension among African-Americans, obesity among 
Hispanics and Native Americans, and diabetes among Native Americans.
    Finally, a large number of commenters addressed the growing 
incidence of obesity among children, and the threat this poses to 
future health. A number of commenters expressed concern over the lack 
of physical activity in schools as a factor leading to the increase of 
obesity among school children. Several indicated the need to integrate 
exercise with other components of good health including school meals. 
In addition, the unique needs of children with special health problems, 
the need for proper diet in the prevention of osteoporosis, and the 
escalating cost of health care and the role of diet as a preventative 
measure were identified as important concerns.

Dietary Guidelines for Americans' Comments

    Over 700 commenters, many from the public and from the school food 
service community, addressed the issue of school meals meeting 
nutritional guidelines, the majority of which overwhelmingly agreed 
that meals should comply with the Dietary Guidelines, especially the 
recommended limits on fat and saturated fat. Most commenters agreed 
with the need for school meals to meet the Dietary Guidelines; however, 
several commenters indicated that compliance with the Dietary 
Guidelines should be voluntary. With respect to the current meal 
patterns, many school food service commenters indicated that they could 
not meet the Dietary Guidelines within the meal pattern requirements, 
and others indicated that the current meal pattern requirements make it 
difficult to provide multi-cultural meals to children.
    Many commenters supported the implementation of Nutrient Standard 
Menu Planning (NSMP), a menu planning system that is based on the 
analysis of nutrients. Commenters believed this system would provide 
increased flexibility in meal planning as well as consistent analysis 
of nutrients. Commenters also suggested that this NSMP approach can 
assist in providing more culturally diverse meals. It must be noted 
that some commenters expressed concern that some smaller schools may 
not have or be able to afford the technical capability needed to 
conduct the analysis. Some commenters also suggested that the 
Department or State agencies should develop menus that meet the Dietary 
Guidelines. These menus can be used by smaller and school districts 
with fewer resources, which may initially have difficulty implementing 
NSMP.

Nutrition Education Comments

    Close to 800 commenters pointed to the need for nutrition education 
for parents, teachers, children, food service staff, and school 
administrators. Many commenters came from the nutrition and food 
service arenas as well as the general public. Commenters supported the 
idea that nutrition education should be included in comprehensive 
health education curriculums and should begin at an early age. 
Commenters also indicated the need for nutrition education to be 
reinforced by healthful meals in the cafeteria. Commenters pointed to 
the need for a national nutrition media campaign. Many school food 
service commenters expressed their desire for national minimum 
professional standards which food service personnel would be expected 
to meet. In addition, a significant number of commenters urged health 
promotion as a component of health care. Finally, many commenters 
supported the need for increased funding for the Department's Nutrition 
Education and Training (NET) program, 7 CFR Part 227.

Taste and Plate Waste Comments

    Many commenters from a wide range of commenter categories were 
quite critical of the current quality of school meals, noting that lack 
of appeal leads to increased plate waste. Some cautioned, however, that 
drastic changes in the kinds of food served may drive children away 
from school meals. These commenters generally supported the need to 
make meals both appealing to children and nutritious. A number of 
commenters also cautioned that the increased amount of certain foods 
that may be necessary to provide a nutritious diet may result in more 
plate waste if children do not find the meals to be appetizing. Several 
commenters supported the need to involve culinary institutes and chefs 
in meal preparation as a way to improve taste and presentation.

Fat in Meals Comments

    Nearly one out of two commenters discussed fat in school meals, 
with most of these commenters coming from the general public and the 
medical community. The large majority of commenters who addressed the 
issue of fat content cited the need to lower fat and saturated fat 
levels in school lunches. Some of the comments were general statements 
such as ``need more low fat foods,'' while others made specific 
recommendations detailing the levels of fat and saturated fat that 
school meals should meet.
    A number of medical, public health, and school food service related 
organizations addressed this issue, all of which were in support of 
lowering the fat content of meals. A number of commenters recommended 
that the fat content of meals be set at between 10 to 20 percent of 
total calories--lower than the current Dietary Guidelines 
recommendation of 30 percent of calories from fat.
    A number of food service workers and directors cautioned that 
increasing portion sizes of certain foods and serving more expensive 
fresh produce to meet a 30 percent limit on calories from fat may 
result in higher costs. Some commenters also expressed concern that 
lowering fat may result in decreased calories critical for growing 
children. Several commenters advised that low fat meals need to be 
appealing so children will consume them.
    Several industry representatives indicated that industry is 
responsive to the need to lower fat and is already making a number of 
changes to provide more low fat products. A number of commenters, 
including food service staff, parents and members of the general public 
made specific recommendations on how to lower fat in school meals, such 
as trimming or draining fat from meat, eliminating added fats from 
vegetables, and serving soups more often.
    Moreover, many commenters, primarily students and the general 
public, suggested that the fat content in school meals could be reduced 
by offering more vegetarian meals, eliminating the whole milk 
requirement, revising the commodity system to encourage more purchases 
of low fat items such as fruits and vegetables, and reducing the amount 
of fast food items and processed foods in school meals.

Meat and Meat Related Comments

    The Department received over 200 comments related to meat products, 
with most comments coming from students, parents and the general 
public. Many commenters indicated that the current serving size for the 
meat/meat alternate component is too large and recommended that schools 
cut down on the amount of meat served. Commenters also indicated that 
more poultry and fish should be offered. Some commenters recommended 
that tofu and isolated soy proteins, as well as yogurt, be added to the 
list of allowable meat alternatives. (The Department wishes to call 
attention to the fact that isolated soy proteins are currently 
permitted with some limitations.) On the other hand, several industry 
representatives cautioned against reducing the amount of meat too much 
due to its nutritional contributions, specifically, essential amino 
acids, iron, zinc, and vitamin B6. They also observed that children are 
familiar with meat and will consume it more readily than some 
alternative protein sources.

Menu Selection and Variety Comments

    The Department received over 250 comments in support of offering 
more vegetarian meals. Commenters supported the low fat nature of 
vegetarian meals and their contribution to a healthful diet. Others 
addressed the need to expose children to more vegetarian foods and 
foods from diverse cultures at an early age. Some commenters provided 
specific examples of non-meat items, such as tofu and other plant-based 
sources, that could be used in school meals, while others simply 
indicated a general need for more meat-free alternatives. Students as 
well as school food service personnel indicated the need to offer 
vegetarian choices as students are requesting them more.
    The Department received over 800 comments in support of the use of 
more fruits, vegetables, or grain products. Commenters gave specific 
recommendations regarding preparation methods and serving ideas, 
including offering salad bars more frequently, increasing the variety 
of fruits and vegetables, and serving more whole grain items. Others 
recommended the use of more grain and bean products, citing their 
nutritional benefit as well as low cost. Many school food service 
commenters expressed concern over serving more and a wider variety of 
fruits and vegetables as children may not be familiar with them and, 
therefore, may not consume them.

Breakfast Comments

    About 200 commenters, primarily from the medical, school food 
service, and education communities, addressed breakfast meal issues 
with a number of these commenters supporting the importance of 
breakfast to the health of children. A number of food service personnel 
indicated their success with the SBP and desire to increase 
participation. Others, while supporting the SBP, expressed concern with 
the nutritional quality of breakfasts currently offered.

Financial, Paperwork, and Other Operational Obstacles Comments

    Over 250 commenters addressed financial and paperwork obstacles, 
with many of these comments coming from food service (local and State) 
professionals, the general public, and the nutrition community. A 
number of commenters indicated that the need to avoid operating at a 
deficit has prevented food service staff from providing more nutritious 
meals. Commenters also complained that the amount of paperwork required 
to administer the feeding programs is excessive and that the review 
system is cumbersome and inflexible. Specifically, commenters stressed 
the need to focus more on nutrition and less on meal-by-meal 
accountability, income verification, and review requirements.
    Many commenters expressed concern over the cost of producing meals 
under the current meal pattern system. Commenters indicated that 
schools already find it difficult to provide meals within current 
resources and maintained that any further nutritional requirements 
placed on schools would result in additional financial hardship. 
Commenters specifically noted obstacles such as the increased cost of 
providing more foods such as fresh fruits and vegetables, low fat and 
low sodium ingredients, and the increased portion sizes needed to meet 
the nutrition standards without exceeding the 30% fat limitation. On 
the other hand, some parents and students indicated that they would be 
willing to pay extra for more nutritious meals.
    A number of commenters indicated that the school meal periods are 
not adequate, thereby forcing students to throw food away, consume it 
too quickly, or bring meals from home to prevent waiting in the lunch 
line. Others expressed concern that more nutritious meals would require 
larger portions or extra food items that children may not be able to 
consume during short lunch periods.

Partnerships and Coordination Comments

    A number of commenters expressed the need for the Department to 
establish partnerships with other Federal agencies such as DOEd, DHHS, 
the Centers for Disease Control and Prevention, as well as with 
industry representatives, State agencies, school boards, nutrition 
professionals, extension programs, parents, teachers, and especially 
students. Commenters also addressed the need for Federal efforts to 
support, not hamper, local efforts. Commenters indicated that the 
Department should use its resources and purchasing power to promote 
change and improve meal quality.

Commodity Comments

    The Department received close to 500 comments on various aspects 
connected with the donation of commodities to schools. The majority of 
these commenters were from the general public as well as the school 
food service and industry arenas. Over 250 commenters indicated that a 
more healthful variety of USDA commodities should be made available to 
States. The majority encouraged the Department to reduce the amount of 
fat, cholesterol, and/or sodium in the commodities. These and a number 
of closely related comments are perhaps best characterized by the 
opinion of over 50 commenters that the commodities provided to the NSLP 
should comply with the Dietary Guidelines.
    The Department also notes that over 100 commenters addressed the 
Department's September 1993 announcement of the Fresh Fruit and 
Vegetable initiative. Most of the comments were supportive of the 
initiative. Twenty-five commenters stressed the need to use the funds 
available to schools for direct food purchases as effectively as 
possible.

Miscellaneous Comments

    Some commenters indicated the need to upgrade school kitchens to 
allow for the storage and preparation of more nutritious meals. In line 
with this objective, some commenters urged reauthorization of Federal 
funding for food service equipment. Commenters also pointed to the need 
for schools to disclose nutrition information so that students can make 
informed choices and parents and the community would have a basis by 
which to assess progress. A number of commenters cautioned against 
instituting changes too rapidly and encouraged the Department to take 
gradual steps. Others recommended that the Department market successful 
programs to serve as models. Several commenters recommended that the 
Department allow for a reimbursable snack to be served as a way to 
supply the extra foods that may be required to meet nutritional 
standards.

Other Comments Not Addressed in This Proposal

    Finally, the Department wishes to call attention to several issues 
raised by commenters that are not germane to this proposal, either 
because of statutory constraints or because they address areas in which 
the Department believes State agencies and school food authorities need 
flexibility.

Milk and Dairy Products

    The Department received over 600 comments regarding milk and dairy 
products, with most comments coming from the general public, parents 
and the school food service community. The majority of commenters 
recommended that schools not be required to offer whole milk, with a 
large number of these comments coming from the food service community. 
Commenters' reasons for eliminating the whole milk requirement included 
the high fat content, the perceived conflict with the Dietary 
Guidelines and its higher cost. Many commenters also recommended that 
non-dairy alternatives be offered in place of milk, as dairy products 
are high in fat, cholesterol, and protein; contain little iron and 
fiber; and, commenters claimed, are not tolerated well by many 
children. Commenters also recommended that more skim, one percent, and 
two percent milk be offered.
    A few commenters supported maintaining the whole milk requirement, 
on the grounds that children may not consume low fat alternatives and 
eliminating the requirement would be costly to the Federal dairy 
program. Others, while not supporting the whole milk requirement, did 
caution against reducing or eliminating dairy products, as they provide 
necessary calcium for growing children.
    The Department wishes to call attention to the fact that the 
requirements that fluid milk be available as a beverage and that whole 
milk be available as an option for the NSLP, are required by section 
9(a)(2) of the NSLA, 42 U.S.C. 1758(a)(2). Therefore, the Department 
cannot deviate from these provisions by regulatory action.

Free Meals to All Children

    Over 140 commenters, primarily from the school food service 
community, advocated a program in which meals would be served free of 
charge to all children, regardless of their families' economic status. 
Such a program would eliminate the income eligibility requirements, and 
all children would receive meals free of charge, regardless of their 
family's income. Many indicated that such a program would reduce 
paperwork, increase time for necessary nutrition-related activities, 
and reduce the stigma associated with participation.
    Again, however, such a revision would require specific statutory 
authority in light of the requirement of section 9(b)(1)(A) of the NSLA 
42 U.S.C. 1758(b)(1)(A), that school meals be provided at no cost only 
to those children from households with incomes of less than 130% of the 
Federal Income Poverty Guidelines. The Department also notes that such 
a program, implemented fully in all schools, would increase the cost of 
NSLP by $7 billion if fully implemented in School Year 1996. About one-
half of this increase would be spent on higher reimbursement for meals 
currently reimbursed at the fully paid and reduced price rates. In 
other words, about $3.5 billion of the additional funding would be 
spent even before reaching any more children.

Fast Foods, Competitive Foods, Other Foods

    Several commenters were concerned with the increase of fast food 
companies, fast food-like items and competitive foods of low 
nutritional value that are sold in schools. Others felt that, since 
fast foods are popular, their use should be increased. The Department 
is not proposing any specific provisions on fast foods or competitive 
foods at this time. However, it should be noted that, under this 
proposal, meals claimed for reimbursement which include such foods will 
be required to comply with established nutritional standards over one 
week. Further, school food authorities would be required to continue to 
observe the restrictions currently in the regulations prohibiting the 
sale of foods of minimal nutritional value in competition with the NSLP 
and SBP.
    Several commenters recommended that certain kinds of foods--
principally milk, meat and processed foods--be eliminated entirely from 
program meals. These recommendations were based on the assumption that 
some foods are good for people and some are intrinsically bad. However, 
the Department does not share this view. The Department continues to 
believe that it is important to obtain essential nutrients from a 
variety of foods. The Department also emphasizes that foods, 
particularly those high in fat, must be eaten in moderation, but there 
are no plans to prohibit any foods from school meals other than the 
foods of minimal nutritional value currently enumerated in appendix B 
of part 210 for the NSLP and Sec. 220.12 for the SBP.

Minimum Professional Standards

    Some commenters suggested that the Department establish minimum 
professional standards for local food service workers. The Department 
is aware that efforts are being made to address this issue. For 
example, the American School Food Service Association has developed a 
program to certify food service workers. However, given the wide range 
of variances in needs and resources among the 20,000 school food 
authorities and 92,000 schools operating under the NSLP, as well as 
varying State requirements, the Department does not believe it is 
feasible to propose uniform national standards. Nevertheless, the 
Department does intend to continue to provide technical assistance and 
guidance to both State agencies and local school food authorities on 
ways to improve food service operations.

Cash in Lieu of Commodities/Commodity Letter of Credit

    Under section 18(b) of the NSLA, 42 U.S.C. 1769(b), Congress 
established the Cash in Lieu of Commodities (CASH) and Commodity Letter 
of Credit (CLOC) demonstration projects as a means of examining 
alternatives to the current commodity distribution system for schools. 
Under CASH, schools receive their per-meal commodity support 
entitlement (currently $.14) in the form of a direct cash payment. CLOC 
provides commodity support through a Letter of Credit which must be 
used to purchase specific commodities that mirror the Department's 
commodity purchases. Fifty-nine school districts participate in the 
CASH/CLOC demonstration. The current project authorization expires at 
the end of Fiscal Year 1994.
    Several commenters supported CASH/CLOC, while a small number 
opposed it. Others implicitly favored the current commodity 
distribution system if more healthful commodities can be provided. 
These commenters would support alternatives only in the event that the 
current commodity system cannot be strengthened and improved. The 
Department intends to continue and expand efforts already underway to 
improve the commodity program. Moreover, the Department does not have 
the statutory authority to address the CASH/CLOC issue through the 
rulemaking process.

Guiding Principles and Framework for Action

    Improving the nutritional standards of school meals is our national 
health responsibility. There is no question that diet is linked to 
health and that chronic disease often begins in childhood. Since eating 
habits are firmly established by age 12, it is essential that dietary 
patterns be formed early. What children eat helps determine not only 
how healthy they are as children, but how healthy they will be as 
adults.
    Updating our nutrition standards and streamlining the 
administration of school meals programs reinforces President Clinton's 
priorities for health care reform and government reinvention. Five 
principles are at the core of our vision and grow out of our analysis 
of public comments and the participation of those who hold a stake in a 
healthy future for our children. These principles are:
    Healthy children: Our goal is to provide our nation's children with 
access to school meal programs that promote their health, prevent 
disease, and meet the Dietary Guidelines for Americans.
    Customer appeal: We understand that if food doesn't look good or 
taste good, children will not eat it. We must involve students, 
parents, teachers, and the food and agriculture community in any change 
through a national nutrition education campaign, using the media that 
children and parents understand and speaking in the language that they 
speak.
    Flexibility: We have to reduce the burden of paperwork, streamline 
reporting systems, recognize regional and economic differences and 
offer schools different approaches to designing menus that meet the 
Dietary Guidelines. To do this, we must use technology more 
effectively.
    Investing in people: We must provide schools and school food 
service directors with the training and technical assistance they need 
to bring about nutrition changes in the school meals programs and build 
the nutrition skills of our nation's children, and thereby improve 
their health.
    Building partnerships: To meet our national health responsibility 
to American children and to increase cost effectiveness, we must forge 
partnerships throughout the public and private sectors. This includes 
continuing collaborative efforts with our federal partners at the 
Departments of Education and Health and Human Services and building 
bridges to consumer and industry groups.
    Guided by these five principles, USDA constructed a comprehensive, 
integrated framework for action:
    I. Eating for Health: Meeting the Dietary Guidelines. School meal 
nutrition standards will be updated and expanded to include the Dietary 
Guidelines for Americans with standards for fat and saturated fat as 
well as required nutrients. The current meal planning system which 
requires that certain types of foods be served in certain quantities 
will be replaced by a more flexible system that allows schools to 
concentrate on serving a variety of foods in amounts that are suitable 
for children.
    II. Making Food Choices: Nutrition Education, Training and 
Technical Assistance. It is not enough to change the food on the plate. 
We must also provide the knowledge that enables children to make 
choices that lead to a nutritious diet and improved health. It also is 
vital that local meal providers receive training on how to improve meal 
quality. This dual initiative to educate children and assist meal 
providers offers many opportunities to influence both what foods are 
offered by schools and what foods are eaten by children.
    III. Maximizing Resources: Getting the Best Value. By marshalling 
all available resources and strengthening partnerships with our state 
and local cooperators, we will stretch food dollars and cut costs while 
improving the nutritional profile of commodities. We will enhance 
access to locally grown commodities and better use regional 
agricultural resources. And we will provide assistance, training and 
the power of federal purchases to help school administrators manage 
school meals programs in a more cost-effective manner.
    IV. Managing for the Future: Streamlined Administration. It is 
necessary to reduce paperwork and administrative burdens of local 
administrators. We will streamline procedures and emphasize 
administrative flexibility to free state and local food program 
managers to concentrate on nutrition.

The Framework for Action

    The regulatory proposals that follow are intended to support the 
Department's goal of promoting the long term health of children through 
updating nutrition standards to include the Dietary Guidelines. In 
addition, several of the proposals reflect the Administration's desire 
to streamline administration of government programs through increasing 
State and local flexibility and making better use of advanced 
technology.
    It is important to recognize, however, that these regulatory 
proposals are but one part of the Department's overall plan for 
improving the quality of school meals. The Guiding Principles and 
Framework for Action described above grew out of public comment and the 
recognition that it is not enough just to change the food served to 
children on their plates. What is required is a much broader approach 
that includes significant administrative actions initiated by the 
Executive Branch.
    For example, the Department is committed to investing in people--
both the State and local professionals who operate the program and the 
children who participate in it. This investment will take the form of 
nutrition education to build the skills necessary to make healthful 
food choices, training for food service workers and technical 
assistance. The Department has already committed existing funds toward 
the development of improved recipes for school meal service, a 
computerized data bank of standard nutritional values for foods served 
in the school meals program, and a demonstration project on the use of 
Nutrient Standard Menu Planning. On the nutrition education front, the 
Department has already announced a strategy that includes challenge 
grants to localities to develop community-based, comprehensive 
approaches to nutrition education and a nutrition publication directed 
at grade school children. The Department is also assisting local school 
food service professionals in working with chefs, farmers and others to 
harness all of their unique skills to make school meals appealing and 
healthful, and to educate children about food and cooking.
    Looking to the future, the Administration's budget proposal for 
Fiscal Year 1995 contains a request for $18.4 million in additional 
funds to support nutrition education and technical assistance. Plans 
for these funds include extensive training for local school meal 
providers on how to plan and prepare nutritious and appealing meals as 
well as launching a national media campaign directed at building 
children's skills at making wise food choices for life-long health.
    All these initiatives are being undertaken with the support of 
USDA's Federal partners at DHHS and DOE. This collaboration extends to 
addressing issues of common concern such as reducing redundant 
paperwork requirements, integrating nutrition education into school 
curriculum and exploring ways to integrate the school meals program 
more fully into the school environment and into school-based health 
initiatives. Within the Department, there are also plans to strengthen 
ties with the Food Service Management Institute and, indeed, with 
private organizations so that as many resources and as much creativity 
as possible can be brought to bear on this important issue of improving 
children's health through sound nutrition.
    Efficient and effective government requires that the use of the 
finite resources available to administer the programs be maximized. 
Therefore, part of the Department's Framework for Action is to maximize 
resources wherever possible. One of the important avenues to pursue in 
this regard is effective use of the USDA commodity program. The 
Department recognizes that commodity foods are a significant component 
of the meals that are served to children and, therefore, need to be as 
nutritious as possible. A wide variety of foods ranging from grain 
products to fruits and vegetables to meat, poultry and fish are already 
being offered. The Department plans to continue to offer this wide 
array of foods. Improvement is always possible, however, and the 
Department intends to intensify its review of purchase specifications 
to assure that products are as low in fat and sodium as possible while 
still maintaining palatability for consumers.
    In addition, the USDA agencies that are key partners in delivering 
commodities are working with one another, as well as with industry, to 
modify labels on commodities that go to the schools to include 
nutrition information, and to develop new products, like low-fat 
cheeses, that will provide the schools with more flexibility to meet 
the Dietary Guidelines. This latter effort will have a salutary effect 
not only on the commodity program, but could also prove useful in 
providing schools with a larger array of healthful products to choose 
from when they make their local purchases.
    Because schools do purchase significant amounts of food independent 
of the commodity program, the Department is also considering various 
other strategies for improving the quality and effectiveness of those 
purchases. For example, a pilot test is planned for School Year 1994 
with the Department of Defense to procure produce for the school meal 
programs. Through this project, schools can obtain a much wider variety 
of fresh produce than USDA can provide directly. The Department is also 
working to facilitate interaction among schools, State Departments' of 
Agriculture, small resource farmers and farmers' markets. This has 
great potential for improving the quality of the foods used by those 
schools that are close to particular growing areas as well as providing 
important new markets for small farmers.
    In summary, the Department is committed to improving the quality of 
school meals and the health of the nation's children through a variety 
of approaches. There is complete recognition that success can only be 
achieved over time and through the efforts of the Federal government 
working in concert with State and local administering agencies, 
industry, the Congress, a variety of private organizations and the 
ultimate beneficiaries of the school meals programs--children and their 
parents.

Proposed Regulatory Changes

Expanding and Updating Nutrition Requirements

    The Department's mission continues to be to carry out the declared 
policy of Congress to ``safeguard the health and well-being of the 
Nation's children.'' In order to meet this goal, school meals must 
change to reflect the scientific consensus that is articulated in the 
Dietary Guidelines. Therefore, the Department believes that current 
nutrition standards must be expanded to incorporate the Dietary 
Guidelines in the NSLP and SBP regulations and is proposing to amend 
Secs. 210.10 and 220.8 to require that school meals meet the applicable 
recommendations of the Dietary Guidelines including the quantified 
standards established for fat and saturated fat. Proposed regulations 
would also require schools to make an effort to reduce sodium and 
cholesterol, increase dietary fiber and serve a variety of foods.
    A more comprehensive discussion of implementation occurs later in 
this preamble, including the time frames that would be followed for the 
shift to the updated nutrition standards.
    While the proposed regulations would include the basic provision 
that school meals meet nutrition standards over a one week menu cycle, 
the proposed revision would also require meals to provide a level of 
nutrients for specified age groups rather than meet minimum amounts of 
specific food items for each age group as is currently required. 
Sections 210.10 and 220.8, therefore, would incorporate nutrition 
standards for various age/grade groups based on the RDA for the 
following nutrients: Protein, vitamin A, vitamin C, iron, and calcium 
as well as the energy allowances for calories. Sections 210.10 and 
220.8 would also set the maximum levels of calories from fat and 
saturated fat at 30 percent and 10 percent of calories, respectively.
    Although RDA have been established for more nutrients than 
indicated above, the Department has chosen to monitor only those listed 
because these are key nutrients that promote growth and development 
which are consistent with those required in the Nutrition Labeling and 
Education Act of 1990 (Pub. L. 101-535). The proposal would also 
require schools to decrease the levels of sodium and cholesterol and 
increase the amount of dietary fiber in school meals. The Department is 
not proposing specific levels for these components, since numeric 
targets are not established by the current Dietary Guidelines. However, 
progress in this area could be assessed through a variety of ways 
including gradual reductions in sodium, and if necessary, cholesterol 
levels, and increased use of vegetables, fruits and grain products.
    The Department wishes to note that the Dietary Guidelines are 
designed for persons aged two and over. The Department will maintain 
current meal patterns for children in the zero to eleven months and one 
to two year age groups. For children who are two years old, schools 
will have the option of using the minimum calorie and nutrient 
requirements for school meals for children ages three-six or developing 
a separate set of nutrient and calorie levels for this age group. 
Finally, because compliance with the Dietary Guidelines will not be 
required until School Year 1998-1999, which begins July 1, 1998, the 
current meal patterns and quantities will be retained temporarily and 
will be redesignated Sec. 210.10a for the NSLP and Sec. 220.8a for the 
SBP. This proposal does not apply to infant meal patterns and meal 
supplements; therefore, the appropriate sections of the redesignated 
Sec. 210.10a and Sec. 220.8a will continue to be followed by schools 
serving infants and meal supplements.

New Approaches to Menu Planning: Nutrient Standard Menu Planning and 
Assisted Nutrient Standard Menu Planning

    Schools must currently meet a meal pattern which specifies minimum 
amounts (by age group) of the five food items which must be offered in 
order to receive reimbursement for meals. An alternate approach that 
provides an excellent tool for improving the nutritional quality of 
school meals is Nutrient Standard Menu Planning (NSMP). Under NSMP, the 
menu is developed through the nutrient analysis of all foods offered 
over a school week to ensure that meals meet specific nutrition 
standards for key nutrients, and meet recommended levels of fat and 
saturated fat. Other dietary components that will be analyzed are 
cholesterol, sodium and dietary fiber. However, the Department 
recognizes that some school food authorities may not have the computer 
capability or the degree of access to technical support necessary to 
independently conduct NSMP. In these circumstances, the Department is 
proposing to allow school food authorities to use a modified form of 
NSMP entitled Assisted Nutrient Standard Menu Planning (ANSMP). Use of 
ANSMP would allow development and analysis of menus by other entities 
while still applying the essentials of NSMP. (A more complete 
discussion of ANSMP may be found later in this preamble.)
    Under NSMP, the menu planner is expected to use effective 
techniques to provide menus that meet the updated nutrition standards. 
All menu items (i.e., any single food or combination of food) or other 
foods offered as part of the reimbursable meal will be counted toward 
meeting the nutrition standards. An exception to this is foods of 
minimal nutritional value, as provided for in Sec. 210.11(a)(2) or 
Sec. 220.12(b), which are not offered as part of a menu item in a 
reimbursable meal. A definition of ``menu item'' is proposed to be 
added to Sec. 210.2 and Sec. 220.2 to expand upon the current 
definitions of food item and food component that are used in various 
sections of the regulations concerned with point of service meal 
counts. The definition would also specify that one menu item offered 
must be an entree and one must be fluid milk. Further, as discussed 
later in this preamble, the Department is proposing that the entree 
must be selected as part of a reimbursable lunch.
    Menu items will be analyzed based on production levels to more 
accurately reflect the overall nutritional composition of the menu. 
Menus will be planned, analyzed for nutrient content and adjusted as 
needed to ensure that production and selection trends are considered 
and nutrition standards are met. A discussion of NSMP software programs 
and the National Nutrient Database for Child Nutrition Programs is 
provided later in this preamble.
    The purpose of NSMP and ANSMP is two-fold: To provide a flexible 
way to plan menus using certain nutrient levels, not on limited food 
items and amounts, and to measure how well meals are meeting nutrition 
standards. The Department is proposing to adopt NSMP and ANSMP by 
amending Sec. 210.10(k) and (l) of the regulations to incorporate NSMP 
and ANSMP for the NSLP and Sec. 220.8(j) and (k) for the SBP.
    While school meals will be expected to comply with the updated 
nutrition standards and to be planned through NSMP or ANSMP, the 
Department wishes to emphasize that compliance monitoring would stress 
technical assistance to enable the school to achieve the standards. 
While all meals offered during a menu cycle that fail to meet the 
established nutrition standards could technically be subject to an 
overclaim, the regulations will require State agencies to establish 
claims only when school food authorities refuse, not simply fail, to 
take corrective action. It is the Department's intent that every effort 
be made to provide nutritious meals to children rather than taking 
punitive actions which could undermine this initiative. Further 
discussion on this point may be found later in this preamble in the 
section on monitoring.

Nutrition Disclosure

    Since information on the nutritional composition of the menu is 
readily available as a result of NSMP/ANSMP, the Department is 
proposing to amend Sec. 210.10(n) to encourage school food authorities 
to make public disclosure of the nutrients contained in their meals. 
Many school food authorities, recognizing the benefits of nutrition 
disclosure, already make this information available in the classroom, 
on menus or by notifying local media. These benefits include: (1) An 
increased awareness on the part of students and parents on the 
nutritional quality of school meals; (2) depending on how the 
information is disclosed, an enhanced ability for students and parents 
to make healthful choices, and; (3) increased support for the school 
meal programs through recognition of the improved quality of school 
meals.
    The Department recognizes the differing needs of school food 
authorities, and, therefore, is not proposing to mandate nutrition 
disclosure. The Department believes this information should be readily 
available to students and parents without their having to request it. 
In providing this information, school food authorities would take into 
account local factors such as nutrition analysis capabilities and 
student/parent requests. For example, the school may disclose 
information either: (1) Developed through the weekly nutrient analysis 
of meals; (2) based on sample meals offered each day, or; (3) provided 
along with food item(s) offered in the cafeteria.
    The Department also wishes to emphasize that school food 
authorities that make this disclosure would not experience an 
additional administrative burden. The information being disclosed is a 
product of NSMP/ANSMP, and the school food authority can determine, for 
itself, the most efficient means of disclosure.
    Although nutrition disclosure will not be required, the Department 
recognizes that many school food authorities are already providing this 
information to students and parents, and strongly encourages others to 
make public such information. The Department would also like to solicit 
comments regarding nutrition disclosure, particularly effective 
nutrition disclosure approaches; which nutrition information to 
disclose; and disclosure's value as a tool to help children choose 
nutritious meals.

Assisted Nutrient Standard Menu Planning

    As stated above, the Department recognizes that some school food 
authorities may not have the resources or capacity to independently 
conduct NSMP. For these school food authorities, the optional method of 
ANSMP is an alternative approach to NSMP which is proposed in 
Sec. 210.10(l) for the NSLP and Sec. 220.8(k) for the SBP. School food 
authorities would draw on the expertise of others to provide menu 
cycles, adjusted for local needs and preferences. The provided menu 
would be analyzed to ensure that it meets the required nutrition 
standards. The menu analysis must be consistent with the local 
preferences, production records, preparation techniques and food 
procurement specifications. The provided menu cycles could be developed 
in a variety of ways--by States, consortiums of school food 
authorities, by consultants or even by the Federal government.
    To ensure consistency with the nutrient analysis of the provided 
menu, the following components must be standardized: Recipes, food 
product specifications, and preparation techniques. To accurately 
reflect the nutrient analysis of the menu as offered, the provided menu 
must be analyzed and adjusted to the quantities of food prepared and 
served.
    In addition, the school, in conjunction with the entity providing 
the menu cycle, must periodically review their application of ANSMP to 
ensure the suitability of the selected menu cycle and the accuracy with 
which it is being managed. (i.e., Are the prescribed procurement 
specifications and preparation techniques being followed and are on-
going production adjustments made to reflect student choices, thereby 
resulting in reanalysis of the menu?) It is also possible that standard 
menus, recipes and procurement specifications could be provided by the 
Federal government, then adjusted and reanalyzed at the State or local 
level as necessary. The Department is most interested in receiving 
comments regarding the usefulness of this approach.

Reimbursable Meals

    Schools currently receive reimbursement for each meal served to 
children that meets the requirements of the lunch or breakfast meal 
pattern and, if applicable, the offer versus serve option. Basically, 
the required components (meat/meat alternate, two or more servings of a 
vegetable and/or fruit, bread/bread alternate and milk) must be offered 
and a minimum number of items must be selected. In order to determine 
if the meal chosen by the child is reimbursable, the cashier observes, 
at the point of service, if the proper number of components are taken.
    Under NSMP and ANSMP, a meal will be reimbursable if at least three 
menu items (one must be an entree and one fluid milk) are being 
offered, and if at least three menu items are selected. For 
reimbursable lunches, one of the menu items selected must be an entree. 
If the school participates in offer versus serve, a meal will be 
reimbursable if at least three menu items are offered and two menu 
items are selected. Again, for reimbursable lunches, one of these two 
menu items must be an entree. For the purpose of point of service 
counts, this proposal will not change the basic concept of a 
reimbursable meal. Cashiers will continue to determine if the proper 
number of menu items was selected and, for the lunch service, that one 
of the menu items is an entree.
    The reason for requiring that one of the selected items for lunch 
be an entree stems from the Department's concern that the school 
lunches children consume provide an adequate amount of calories and 
other essential nutrients. Traditionally, the most significant 
nutrition contribution in a school lunch comes from the entree. 
Therefore, this proposal is being offered as a way of assuring that 
children (particularly those children that participate in offer versus 
serve) select and, hopefully, consume the most nutritious lunch 
possible.
    The Department recognizes that this proposal deviates from current 
requirements which do not stipulate that the child must select an 
entree for lunch. The Department would be concerned if commenters 
believe this restriction inhibits the flexibility that this proposed 
rule was designed to promote. For example, if children were inhibited 
from selecting lunches that were consistent with ethnic or vegetarian 
preferences, or if plate waste was a potential by-product. Therefore, 
the Department is particularly interested in receiving comments on and 
alternatives to this proposed requirement, including comments on 
whether the minimum number of menu items, both in terms of the standard 
meal and the offer versus serve option, is adequate even with requiring 
selection of an entree for lunch.
    The Department is not proposing to extend the requirement that a 
reimbursable meal contain an entree to the SBP. This decision was made 
due to the nature of the breakfast meal and the possible confusion that 
may result by trying to define an ``entree'' for the breakfast program.

Point of Service

    While implementation of the updated nutrition standards affects the 
content of meals, it will not affect basic counting methodology. 
Cashiers will continue to take counts at the point of service on the 
basis of the number of menu items selected. Consequently, food service 
personnel will be able to recognize individual reimbursable meals, as 
they will not differ substantially from current practice.
    In fact, under NSMP/ANSMP, point of service identification of a 
reimbursable meal may be easier as cashiers would no longer need to 
determine which of the required components discussed above have been 
meet by a particular food item, such as a pot pie, which contains a 
number of different ingredients. Under NSMP/ANSMP, a pot pie would be 
the entree which is simply a required one menu item for claiming 
purposes.

Preparation for Implementation of NSMP and ANSMP

    The Department is currently sponsoring a demonstration project to 
evaluate the optimum use of NSMP as a way for school meals to meet the 
Dietary Guidelines while ensuring that students also receive needed 
nutrients and calories. One of the main objectives of this 
demonstration is to assist the Department in identifying the technical 
assistance necessary to most efficiently and effectively implement 
NSMP. This approach shifts the focus from the traditional specifics of 
a meal pattern to meals containing a combination of foods that meet the 
nutritional needs of school-age children, by age group, over a school 
week. Under NSMP and ANSMP, school food authorities will have more 
flexibility in deciding what other foods will be offered as long as the 
nutrition standards are met.

The Flexibility of NSMP and ANSMP

    The proposed menu development and analysis system has a number of 
advantages over the current meal pattern, and the Department believes 
the proposed change to adopt NSMP and ANSMP will greatly assist local 
school food authorities with implementation of the proposed nutrition 
standards. With NSMP and ANSMP, there is greater flexibility in food 
selections and portion sizes because meals are not limited to specific 
types of foods in specified portions. Further, menus with cultural or 
other special preferences will be easier to design.
    NSMP and ANSMP would also eliminate the need for cumbersome and 
often confusing food crediting decisions such as whether taco chips or 
just taco pieces could be considered as a bread alternate or whether 
yogurt can be allowed as part of a reimbursable meal. The complex Child 
Nutrition labeling program, which requires the Department to determine 
how commercial products are credited as food components under the meal 
pattern, would be substantially reduced in scope or perhaps even 
eliminated entirely. More nutrient dense items could be added to menus 
under NSMP, and the nutritional contributions of all foods offered to 
the child can be recognized. The Department also wishes to emphasize 
that all nutrients offered to the child are counted in the analysis, 
including those in foods such as yogurt and desserts which do not 
presently count toward a reimbursable meal. Of course, the most 
important aspect of both NSMP and ANSMP is that school food authorities 
will have an accurate, practical on-going means of determining if the 
nutrition standards are being met.

Fortification

    This proposal does not require school food authorities to 
distinguish between naturally occurring nutrients and those that are 
added through fortification. However, the Department is committed to 
the principle that the preferred source of adequate nutrition is a meal 
comprised of a variety of conventional foods, as recommended in the 
Dietary Guidelines, rather than one containing formulated fortified 
foods.
    The Department has been unable to develop a practical method for 
regulating or monitoring fortification. For example, it is virtually 
impossible to calculate the amounts of nutrients added to food items 
and those naturally occurring, especially for food items with numerous 
ingredients. Although a comparison could be made between a fortified 
item and a similar item that had no added nutrients, there may not be 
an identical product on which to base the comparison.
    The Department believes the standards as outlined under NSMP that 
meals contain adequate calories and that at least three menu items be 
offered, as well as the higher expense of engineered foods, will 
inhibit excessive reliance on highly fortified foods.
    The Department welcomes commenters to address the use of fortified 
foods in school meal programs, particularly whether there are practical 
ways to control over-use of fortification, the degree to which this 
should be a concern, and potential impacts on the character of school 
meals.
    It should be noted that if NSMP/ANSMP is implemented on a 
nationwide basis, the current regulatory requirements on the use of 
alternate foods would no longer be necessary. During the interim and 
where the meal patterns are still in use, these regulations would 
remain in force.

Operational Aspects of NSMP and ANSMP

National Nutrient Database for the Child Nutrition Programs

    In order to conduct nutrient analysis, data on the nutrients 
contained in a wide range of foods must be available. To meet this 
need, the Department has developed a centralized National Nutrient 
Database to allow for accurate nutrient analysis of the menus and 
recipes used in the NSLP and SBP. The National Nutrient Database 
contains information on the nutritional composition of: (1) Commodities 
supplied through the Department; (2) standard reference food items 
which are used in the SBP and NSLP; (3) Quantity Recipes for School 
Food Service developed by the Department, and; (4) convenience, 
processed and pre-prepared foods from food manufacturers. The 
Department is working closely with the food industry to obtain nutrient 
analysis of many common food products used by schools for inclusion in 
the database.
    The implementation of NSMP, as opposed to ANSMP, is dependent upon 
the school or school food authority's ability to analyze the nutrient 
content of foods. Therefore, the Department is proposing to require 
that the National Nutrient Database be incorporated into all school 
food service software systems used for menu and recipe analysis under 
NSMP. Under ANSMP, the database would be used by the entity providing 
assistance with nutrition analysis. The Department is making the 
database available free of charge to participating school food 
authorities and to computer software companies to develop school food 
service software programs. The database will be regularly maintained 
and updated to ensure that the information is as accurate and current 
as possible. School food authorities would be expected to incorporate 
these updates into their own software as they are made available. It 
should be noted that a preliminary version of the Department's database 
is now available. Information on how to obtain it can be secured from 
the Department's Child Nutrition Database Hotline at (301) 436-3536.

School Food Service Software Systems

    The computer software industry has many nutrient analysis software 
programs on the market. Few of these, however, are specific to the 
school programs and do not contain the types of foods, descriptions, 
weights and measurements used in these programs. Moreover, the results 
of nutrient analysis can vary dramatically depending on which software 
package is being used. Nutrient analysis must be based on standardized 
specifications to ensure accuracy. Therefore, the Department has also 
developed software specifications for NSMP. The overall objective of 
any software system used for this purpose is to adapt advanced data 
automation technology to simplify completion of the mathematical and 
analytical tasks associated with NSMP. The software specifications 
include menu planning, nutritional analysis of menus and recipes, and 
data management reports presented in a comprehensive, simplified and 
user-friendly manner. To ensure that school food authorities are using 
a software package which meets the Department's specifications, school 
food authorities will be required to use a software system that has 
been evaluated by FNS and, as submitted, been determined to meet the 
minimum requirements established by FNS. However, such review does not 
constitute endorsement by FNS or USDA. This proposed requirement is 
found in Sec. 210.10(k)(1)(ii) for the NSLP and Sec. 220.8(j)(1)(ii) 
for the SBP.

Use of Weighted Averages

    Some food items are more popular than others and, thus, will be 
selected by school children more frequently. To accurately perform an 
assessment of the nutritional composition of reimbursable meals 
offered, nutrient analysis must be based on production levels of foods 
offered, as production levels are an indication of foods actually 
selected. For example, a menu item which is chosen frequently (and 
therefore more portions are prepared) will contribute more nutrients to 
the meal than a menu item chosen less frequently.
    The calculation method for computing a weighted nutritional 
analysis will require the school food authority to enter the following 
information into the selected software program the menu item; portion 
size; projected servings of each menu item; and the projected number of 
reimbursable meals each day for the school week. It should be noted 
that the software specifications discussed above are designed to easily 
perform weighting calculations. This provision is proposed in 
Sec. 210.10 (k)(2) and Sec. 210.10 (k)(4) for the NSLP and Sec. 220.8 
(j)(2) and (j)(4).

Definition of School Week

    A new definition would be added for ``school week'' to indicate 
that, for NSMP and ANSMP, a minimum of three days and a maximum of 
seven days must be included. This is because the nutrition analysis is 
proposed to be an average of the reimbursable meals served over the 
course of a week. To ensure common understanding of the terms NSMP and 
ANSMP, a proposed definition would be added to Sec. 210.2 and 
Sec. 220.2 explaining the term ``school week.''

Transition to NSMP and ANSMP

    The Department recognizes that school food authorities will need 
technical assistance in order to implement these changes efficiently. 
The Department is conducting NSMP demonstration projects in several 
school food authorities, and the ongoing experiences gained from these 
will be shared as part of the overall assistance to school food 
authorities to phase in NSMP and ANSMP.
    The Department also plans to provide extensive training and 
technical assistance to State and local agencies as they prepare to 
implement NSMP and ANSMP. As noted earlier in this preamble, the 
Department has requested specific funding in the Administration's 
Fiscal Year 1995 budget for this purpose as well as to fund other 
technical assistance and nutrition education activities. Other projects 
to support the move towards updated nutrition standards are already 
being undertaken within existing resources, including modification of 
more than fifty recipes to include more fruits, vegetables, and grain 
products and to decrease fat levels, and collaboration with the 
National Food Service Management Institute. Finally, the Department is 
committed to working with State agencies to target Nutrition Education 
and Training (NET) resources more intensely toward implementation of 
the Dietary Guidelines.
    This proposed regulation would require school food authorities to 
adopt the updated nutrition standards and NSMP or ANSMP no later than 
July 1, 1998, the start of School Year 1998-99. However, school food 
authorities are encouraged to begin working towards full implementation 
of the updated nutrition standards as soon as practicable after 
publication of a final rule or to even use NSMP, ANSMP, or nutrient-
based menu analysis in conjunction with the current meal patterns prior 
to the effective date.
    State agencies would need to determine when school food authorities 
are ready to begin NSMP or ANSMP and would, of course, provide training 
and technical assistance to help school food authorities whenever they 
begin implementing this procedure. In determining when to begin NSMP in 
a particular school or school food authority, States should evaluate 
their capabilities both in terms of computer technology and 
availability of other technical resources. States will also need to 
evaluate implementation on an on-going basis to determine if any 
adjustments are needed and to provide support when start-up 
difficulties occur. The Department is not establishing a specific 
procedure for determining the readiness of school food authorities to 
phase in NSMP or ANSMP. Rather, the Department believes State agencies 
are in the best position to determine if a school food authority is 
ready to begin the shift to NSMP or ANSMP and will be able to respond 
to the wide range of situations that may occur and to concentrate on 
achieving the goal. This approach frees State agencies from assuring 
that a particular process is followed and allows them the flexibility 
to invest their time and efforts as they judge best.

Monitoring Compliance With Updated Nutrition Standards

    The Department also proposes to modify the monitoring requirements 
to include compliance with the updated nutrition standards. Currently, 
states monitor compliance with meal pattern components and quantities 
on a per-meal basis. On the day of a review, the lunch service is 
observed to ensure that all required food items are offered and, if 
applicable, that children accept the minimum number of components 
stipulated both under the standard meal service and the offer versus 
serve option. Meal services that offer fewer than the five required 
food items are disallowed for Federal reimbursement, as are meals for 
which the child has not taken the minimum number of items under the 
offer versus serve option. States also examine menus and production 
records for the review period to ensure that all components were 
available, and that sufficient quantities were offered. Thus, a direct 
correlation exists between the meal service offered and the meals taken 
on a given day and the allowable reimbursement for those meals.
    Under NSMP and ANSMP, Federal reimbursement will continue to be 
predicated upon similar factors. As noted earlier in this preamble, 
under NSMP and ANSMP, schools will continue to offer a minimum number 
of menu items, and children must accept a minimum number of items. 
Meals which do not meet these requirements will not be eligible for 
reimbursement. However, to allow school food authorities adequate time 
to move towards full implementation of NSMP or ANSMP, school food 
authorities that implement prior to School Year 1998-1999 will be 
exempt from Coordinated Review Effort (CRE) Performance Standard 2 on 
reimbursable meals containing the required food items/components in 
Sec. 210.18(g)(2) if they are scheduled for an administrative review 
prior to School Year 1998-1999.
    Under this proposal, in addition to meeting the minimums for the 
number of menu items, the reimbursable meals offered over a school week 
must also collectively meet the updated nutrition standards 
established. To determine compliance with the nutrition standards, 
State agencies will need to closely examine school food authority's 
nutrient analysis in the course of a review. While this is a much more 
precise examination than in past practice, it continues the concept of 
ensuring that the entire food service, not just an individual meal, 
conforms to program requirements. State agencies must also observe the 
meal service to determine if meals claimed for reimbursement contain 
the appropriate number and type of menu items. The Department is 
proposing to amend Sec. 210.19, Additional Responsibilities, to outline 
review requirements for nutrition standards. The Department is 
proposing to add the compliance requirements for the nutrition 
standards to this section rather than to Sec. 210.18, Administrative 
Reviews, in order to allow for operational experience and corrective 
action prior to any imposition of fiscal action.

State Agency Responsibilities

    The following summarizes the State agency's responsibilities under 
the Department's proposal for general program management, including 
taking fiscal action against school food authorities that consistently 
refuse to meet program requirements. While State agencies would 
probably combine a determination of how the nutrition standards and 
NSMP/ANSMP are being met with the cyclical administrative review, the 
Department is also proposing to provide State agencies with flexibility 
to conduct these important evaluations at other times such as during 
technical assistance visits or even as a separate, special assessment. 
However, assessments of compliance with the nutrition standards must be 
conducted no less frequently than administrative reviews.
    As proposed by the Department, State agencies would assess the 
nutrient analyses for the last completed school week. The purpose would 
be to determine if the school food authority is applying the correct 
methodology and is properly conducting the NSMP or ANSMP based on the 
actual menu cycle including any substitutions. The State agency would 
also review the menus and production records to determine if they 
correspond to the information used to conduct NSMP or ANSMP.

Corrective Action

    If it is indicated that the school food authority is not conducting 
NSMP accurately or properly applying ANSMP, if the school week's meals, 
as offered, do not comply with nutrition standards, or if the meal 
observation identified a significant number of meals that did not meet 
the definition of a reimbursable meal, the school food authority would 
be required to take appropriate corrective action to achieve 
compliance. However, at this time, no claim would be established if the 
failure to comply was not intentional. (Intentional violations are 
discussed later in this preamble.)
    Pursuant to section 16(b) of the CNA, 42 U.S.C. 1785(b), the 
Secretary of Agriculture is given authority to settle, adjust or waive 
any claims under both the NSLA or the CNA if to do so would serve the 
purposes of either Act. The Department recognizes that the transition 
to NSMP and ANSMP will not in every instance be completed without 
problems and unforeseen circumstances to be surmounted. The Department 
expects State agencies to act quickly to rectify any problems found and 
to monitor any corrective action undertaken. In the interests of 
facilitating the transition to NSMP/ANSMP, the Secretary is proposing 
to exercise his authority to settle, adjust and waive claims by not 
requiring State agencies to disallow payment or collect overpayments 
resulting from meals which do not meet the nutrition standards of the 
regulations as long as State agencies are satisfied that such 
deviations from the nutrition standards were not intentional and that 
the school food authority is working towards successful completion of a 
acceptable corrective action plan in a timely manner.
    The Department stresses that this proposal does not establish 
specific steps or time frames for corrective action. State agencies, as 
a result of their evaluation of the school food authority, are in the 
best position to establish corrective action goals and time frames, 
working in partnership with local school food authorities. The 
Department believes that State agencies and school food authorities 
need flexibility in developing a corrective action plan and is, 
therefore, providing such flexibility in this proposal. Further, in 
recognition of the fact that timely and effective corrective action is 
in the best interest of all, the Department intends to incorporate 
review of this area into its management evaluation activities at the 
State level.
    The Department would like to once again emphasize that, under this 
proposal, compliance with the updated nutrition standards is of 
paramount importance. First, corrective action will be required if a 
meal service does not meet the nutrition standards. The State agency 
cannot overlook these shortcomings and must ensure that the meal 
service is improved as stipulated in the corrective action plan. 
Secondly, the State will be required to monitor the school's corrective 
action efforts. In most cases, monitoring would include reviewing 
production records, menus and computer analyses submitted by the school 
food authority and providing any support indicated by such a review. 
When a school food authority refuses to make a good faith effort to 
comply with the terms of the corrective action plan, the State agency 
would be required to establish a claim.

Exception to Claim Establishment

    Under this proposal, State agencies would require corrective action 
for meals not meeting the nutrition standards, but would receive 
reimbursement for those meals. This procedure represents a significant 
means of easing the transition to and operation of the updated 
nutrition standards. Section 8 of the NSLA, 42 U.S.C. 1757, and section 
4(b)(1)(D) of the CNA, 42 U.S.C. 1773 (b)(1)(D), clearly provide that 
reimbursement for meals served is available only for those meals that 
meet Program requirements. Further, section 12(g) of the NSLA, 42 
U.S.C. 1760(g), continues to provide for Federal criminal penalties for 
certain intentional Program violations under either the NSLA or the 
CNA. The Department is concerned that the corrective action provision 
not be construed by State agencies or school food authorities as an 
invitation to relax efforts to comply with the nutritional or 
administrative review requirements of Secs. 210.10, 210.10a, 210.18 and 
210.19. The institution of corrective action would not be a sufficient 
remedy by itself in an instance in which a State agency determined that 
school officials had intentionally failed to meet the nutrition 
standards required by NSMP. In these situations, while the State agency 
would initiate corrective action, it must also disallow claims for 
reimbursement for the substandard meals and, in very severe cases, 
consider referring the matter to the Department for criminal 
prosecution.
    While continued refusal to take corrective action could result in 
loss of Federal funding, this provision is not intended to be punitive 
when school food authorities are acting in good faith to comply with 
the nutrition standards. The Department is far more concerned about 
correcting these situations than it is with pursuing fiscal action. The 
Department's foremost goal is to ensure that children are provided with 
the most nutritious meals possible. Consequently, the emphasis in this 
process is on corrective action and technical assistance. If school 
food authorities implement appropriate corrective action and make 
satisfactory progress toward compliance, no fiscal action would be 
required.

Streamlined Administration

    The Department is also proposing to streamline program 
administration by allowing State agencies and school food authorities 
flexibility in three important areas. The first provision would extend 
the Coordinated Review Effort (CRE) review cycle from 4 to 5 years. The 
Department's experience with CRE indicates that a one-year extension in 
the cycle would not adversely affect accountability, but it would 
result in a 20 percent decrease in the number of reviews currently 
conducted in any given year. While the exact reduction in burden would 
vary from State to State, the Department expects this decrease would 
provide the States with additional flexibility to enable them to 
continue to improve school meals. Section 210.18(c) is proposed to be 
amended to include this change.
    The second provision eliminates the regulatory requirement for a 
specific type of edit check on daily meal counts contained in 
Sec. 210.8(a)(2) for schools where the most recent CRE review did not 
identify meal counting and claiming problems. Currently, the edit check 
provision requires that each school food authority compare each 
school's daily meal count with data such as the number of children 
eligible for free, reduced price or paid meals multiplied by an 
attendance factor. This check is intended to ensure that monthly claims 
for reimbursement are based on reasonable and accurate counts of meals 
offered on any day of operation to eligible children.
    The Department believes, however, that school food authorities that 
have demonstrated, through the CRE review, the accuracy of their meal 
counts and claims should be provided an optional approach to specific 
edit checks. This proposal would establish a system whereby these 
school food authorities could develop and implement their own systems 
of internal controls designed to ensure the accuracy of claims for 
reimbursement. This system would then be submitted to the State agency 
for review. If the State agency's review determined that the proposed 
method constituted an accurate internal control, no further action 
would be required, and the school food authority's own proposed 
internal controls would remain in effect. However, if the State agency 
concluded that the suggested system of internal controls was 
inadequate, the school food authority would be required to modify its 
procedures accordingly. In addition, if during the course of a CRE 
review or other oversight activity of the school food authority, it is 
determined that the internal controls were ineffective, the specific, 
regulatory edit check would replace their system until a future 
regularly scheduled CRE review indicates there are no meal count 
problems.
    This proposal would virtually eliminate the requirement for a 
specific edit check for school food authorities with accurate meal 
counts and claims measured by the CRE review and replace it with a more 
flexible procedure to allow these school food authorities to design and 
implement a system that is streamlined for their particular 
circumstances. However, this proposal also maintains the necessary 
specificity of an edit check for school food authorities found to have 
meal counting and claiming violations. Further it provides for State 
agency oversight of accountability procedures and a ready mechanism, if 
needed, to substitute a Federally-defined procedure to ensure accurate 
claims for reimbursement. The Department believes that program 
integrity must be maintained by requiring specific criteria when review 
results indicate problems or failure of the school food authority's 
alternative system. Section 210.8(a)(2) and (a)(3) would be modified to 
reflect these proposed changes.
    The Department is especially interested in receiving comments on 
this provision. Commenters should address the flexibility this proposed 
provision allows well-managed school food authorities and any 
implementation issues this poses. In addition, the Department would be 
interested in receiving alternative proposals that would accomplish the 
desired balance between local flexibility and sound accountability.
    The third area that the Department is addressing to reduce 
paperwork at the school food authority level is the requirement in 
Sec. 210.15(b)(4) that distinct records be maintained to document the 
nonprofit status of the school food service. These records are the 
accounts which any enterprise needs to maintain in the normal course of 
conducting business (i.e., receipts, costs, etc.). Therefore, since 
these kinds of records are a necessary part of a school food 
authority's own accountability system and, in many cases, are required 
by State laws, the Department does not consider it necessary for the 
program regulations to mandate this recordkeeping requirement. It is 
important to emphasize that the school food authority would still have 
to be operated on a nonprofit basis. This proposal is only amending the 
requirements for documentation of nonprofitability. This proposal would 
amend Sec. 210.14(c) and Sec. 210.15(b) to include this change. In the 
event that a question or dispute arises in connection with whether a 
nonprofit school food service has been properly operated, the burden of 
proof still be upon the school food authority to demonstrate that the 
school food service is being operated on a nonprofit basis.

Length of Meal Periods

    As noted above, many commenters expressed concern that children be 
given sufficient time in which to eat, particularly if larger portion 
sizes are to be served. The Department also recognizes the need to 
balance the time for academics with the time to receive and eat school 
meals, especially lunch. Although the Department has no authority in 
this area, school food service directors are strongly encouraged to 
work with other school officials to ensure that adequate meal service 
times and facilities are provided. Likewise, the Department will 
continue to work with DOEd to solicit support in the education 
community to ensure that educators and school administrators understand 
the importance of students having adequate time to eat.
    To indicate its concern in this area, the Department is proposing, 
in Sec. 210.10(i), to recommend that school food authorities make every 
effort to provide adequate meal service times and periods to ensure 
that students can effectively participate in the school lunch program.

Changes to the School Breakfast Program Nutritional Requirements

    In order to facilitate uniform implementation, the Department is 
also proposing to amend the nutritional requirements of the SBP to 
parallel the changes made to the nutritional requirements of the NSLP. 
The current Sec. 220.8 would be redesignated as Sec. 220.8a to retain 
the requirements that would be in effect until implementation of the 
updated nutrition standards on July 1, 1998, while Sec. 220.8 would 
contain provisions on nutrition standards, NSMP and ANSMP for the SBP.
    The major differences for the SBP are that fewer calories are 
required and one-fourth of the RDA are to be met. A new guide would be 
incorporated into Sec. 220.8 to indicate the nutrition standards 
required for the SBP. In addition, separate analyses for SBP and NSLP 
would be required to meet the different nutrition standards for each 
program. As previously discussed, a reimbursable meal under the SBP 
will not be required to contain an entree.

Effective Dates

    As discussed earlier, this proposal requires school food 
authorities to serve meals through the use of NSMP or ANSMP and be in 
compliance with updated nutrition standards by School Year 1998-1999 
which begins on July 1, 1998. The Department believes this schedule 
provides sufficient time to enable States to develop appropriate 
technical assistance and guidance materials, to allow local food 
service staff to become familiar with the updated requirements and to 
make appropriate changes in meals. There would be no mandate for school 
food authorities to implement the required changes prior to July 1, 
1998. In the interest of promoting children's long-term health through 
diet, the Department encourages State agencies to work with school food 
authorities to implement as soon as possible and, in fact, as discussed 
earlier, expects State agencies to approve plans for early 
implementation. The Department considers that early implementation will 
also provide both State agencies and school food authorities with 
valuable experience before mandatory implementation.
    To encourage early implementation, compliance activities described 
above will not take effect before School Year 1998-1999. In the interim 
period, reviews and oversight activities that focus on the food service 
portion of program operations will provide excellent opportunities for 
technical assistance and for State agencies to assess preparation for 
full implementation. All other changes in this rule, including the 
paperwork reductions and streamlined administration methods, could be 
implemented 30 days after final publication of the final rule.

List of Subjects

7 CFR Part 210

    Children, Commodity School Program, Food assistance programs, 
Grants programs--social programs, National School Lunch Program, 
Nutrition, Reporting and recordkeeping requirements, Surplus 
agricultural commodities.

7 CFR Part 220

    Children, Food assistance programs, Grant programs--social 
programs, Nutrition, Reporting and recordkeeping requirements, School 
Breakfast Program.

    Accordingly, 7 CFR parts 210 and 220 are proposed to be amended as 
follows:

PART 210--NATIONAL SCHOOL LUNCH PROGRAM

    1. The authority citation for 7 CFR part 210 is revised to read as 
follows:

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

    2. In Sec. 210.2:
    a. The definition of ``Food component'' is amended by adding the 
words ``under Sec. 210.10a'' at the end of the sentence;
    b. The definition of ``Food item'' is amended by adding the words 
``under Sec. 210.10a'' at the end of the sentence;
    c. The definition of ``Lunch'' is revised;
    d. A new definition of ``Menu item'' is added in alphabetical 
order;
    e. A new definition of ``Nutrient Standard Menu Planning/Assisted 
Nutrient Standard Menu Planning'' is added in alphabetical order;
    f. The definition of ``Reimbursement'' is amended by adding the 
words ``or Sec. 210.10a, whichever is applicable,'' after 
``Sec. 210.10''; and
    g. A new definition of ``School Week'' is added in alphabetical 
order.
    The revision and additions read as follows:


Sec. 210.2  Definitions.

* * * * *
    Lunch means a meal which meets the nutrient and calorie levels 
designated in Sec. 210.10 or the school lunch pattern for specified 
age/grade groups as designated in Sec. 210.10a.
    Menu item means, under Nutrient Standard Menu Planning or Assisted 
Nutrient Standard Menu Planning, any single food or combination of 
foods. All menu items or foods offered as part of the reimbursable meal 
may be considered as contributing towards meeting the nutrition 
standards provided in Sec. 210.10(a), except for those foods that are 
considered as foods of minimal nutritional value as provided for in 
Sec. 210.11(a)(2) which are not offered as part of a menu item in a 
reimbursable meal. For the purposes of a reimbursable lunch, a minimum 
of three menu items must be offered, one of which must be an entree (a 
combination of foods or a single food item that is offered as the main 
course) and one must be fluid milk. For the purposes of a reimbursable 
lunch, one of the selected menu items must be an entree. Under the 
offer versus serve option, three menu items must be offered and an 
entree and one other menu item must be selected.
* * * * *
    Nutrient Standard Menu Planning/Assisted Nutrient Standard Menu 
Planning means a way to develop meals which is based on the analysis of 
nutrients which would require school lunches, when averaged over a 
school week, to meet specific levels for a set of key nutrients and 
calories rather than a specific set of food categories. Analysis of the 
menu items and foods shall be based on averages that will be weighted 
by production quantities as offered to the students. Such analysis is 
normally done by a school or a school food authority. However, for the 
purposes of Assisted Nutrient Standard Menu Planning, menu planning and 
analysis are completed by other entities and shall incorporate the 
production quantities needed to accommodate the specific service 
requirements of a particular school or school food authority.
* * * * *
    School week means the period of time used as the basis for 
determining nutrient levels of the menu and for conducting Nutrient 
Standard Menu Planning or Assisted Nutrient Standard Menu Planning for 
lunches. The period shall be a minimum of three days and a maximum of 
seven days. Weeks in which school lunches are offered less than three 
times shall be combined with either the previous or the coming week.
* * * * *


Sec. 210.4  [Amended]

    3. In Sec. 210.4, paragraph (b)(3) introductory text is amended by 
removing the words ``Sec. 210.10(j)(1) of this part'' and adding in 
their place the words ``Sec. 210.10a(j)(1)''.


Sec. 210.7  [Amended]

    4. In Sec. 210.7:
    a. Paragraph (c)(1)(v) is amended by removing the reference to 
``Sec. 210.10(b) of this part'' and adding in its place the words 
``Sec. 210.10(a) or Sec. 210.10a(b), whichever is applicable,''; and
    b. Paragraph (d) is amended by removing the reference to 
``Sec. 210.10(j)(1) of this part'' and adding in its place the 
reference ``Sec. 210.10a(j)(1)''.
    5. In Sec. 210.8:
    a. The third sentence of paragraph (a)(2) is removed and new 
paragraphs (a)(2)(i) and (a)(2)(ii) are added;
    b. Paragraph (a)(3) is revised;
    c. The first sentence of paragraph (a)(4) is amended by removing 
the words ``review process described in paragraphs (a)(2) and (a)(3) of 
this section'' and adding in their place the words ``the internal 
controls used by schools in accordance with paragraph (a)(2)(i) of this 
section or the claims review process used by schools in accordance with 
paragraphs (a)(2)(ii) and (a)(3) of this section''; and
    d. The first sentence of paragraph (b)(2)(i) is amended by removing 
the reference to ``paragraph (a)(2)'' and adding in its place a 
reference to ``paragraph (a)(3)'' and by adding at the end of the 
sentence the words ``or the internal controls used by schools in 
accordance with paragraph (a)(2)(i) of this section''.
    The revision and additions reads as follows:


210.8  Claims for reimbursement.

    (a) Internal controls. * * *
    (2) School food authority claims review process. * * *
    (i) Any school food authority that was found by its most recent 
administrative review conducted in accordance with Sec. 210.18, to have 
no meal counting and claiming violations may:
    (A) Develop internal control procedures that ensure accurate meal 
counts. The school food authority shall submit any internal controls 
developed in accordance with this paragraph to the State agency for 
approval and, in the absence of specific disapproval from the State 
agency, shall implement such internal controls. The State agency shall 
establish procedures to promptly notify school food authorities of any 
modifications needed to their proposed internal controls or of denial 
of unacceptable submissions. If the State agency disapproves the 
proposed internal controls of any school food authority, it reserves 
the right to require the school food authority to comply with the 
provisions of paragraph (a)(3) of this section; or
    (B) Comply with the requirements of paragraph (a)(3) of this 
section.
    (ii) Any school food authority that was identified in the most 
recent administrative review conducted in accordance with Sec. 210.18, 
or in any other oversight activity, as having meal counting and 
claiming violations shall comply with the requirements in paragraph 
(a)(3) of this section.
    (3) Edit checks. (i) The following procedure shall be followed for 
school food authorities identified in paragraph (a)(2)(ii) of this 
section, by other school food authorities at State agency option, or, 
at their own option, by school food authorities identified in paragraph 
(a)(2)(i) of this section: The school food authority shall compare each 
school's daily counts of free, reduced price and paid lunches against 
the product of the number of children in that school currently eligible 
for free, reduced price and paid lunches, respectively, times an 
attendance factor.
    (ii) School food authorities that are identified in subsequent 
administrative reviews conducted in accordance with Sec. 210.18 as not 
having meal counting and claiming violations and that are correctly 
complying with the procedures in paragraph (a)(3)(i) of this section 
have the option of developing internal controls in accordance with 
paragraph (a)(2)(i) of this section.
* * * * *


Sec. 210.9  [Amended]

    6. In Sec. 210.9:
    a. Paragraph (b)(5) is amended by adding the words ``or 
Sec. 210.10a, whichever is applicable'' at the end of the paragraph 
before the semicolon;
    b. Paragraph (c) introductory text is amended by removing the 
reference to ``Sec. 210.10(j)(1) of this part'' and adding in its place 
the reference ``Sec. 210.10a(j)(1)''; and
    c. Paragraph (c)(1) is amended by removing the reference to 
``Sec. 210.10'' and adding in its place the reference ``Sec. 210.10a''.


Sec. 210.10  [Redesignated as Sec. 210.10a]

    7. Section 210.10 is redesignated as Sec. 210.10a.
    8. A new section 210.10 is added to read as follows:


Sec. 210.10  Nutrition standards for lunches and menu planning systems.

    (a) Nutrition standards for reimbursable lunches. School food 
authorities shall ensure that participating schools provide nutritious 
and well-balanced meals to children based on the nutrition standards 
provided in this section or, if applicable, for very young children and 
meal supplements, the appropriate provisions of Sec. 210.10a. For the 
purposes of this section, the nutrition standards are:
    (1) Provision of one-third of the Recommended Dietary Allowances 
(RDA) of protein, calcium, iron, vitamin A and vitamin C to the 
applicable age groups in accordance with the Minimum Nutrient Levels 
for School Lunches in paragraph (e)(4)(i) of this section;
    (2) Provision of the lunchtime energy allowances for children based 
on the four age groups provided for in the Minimum Nutrient Levels for 
School Lunches in paragraph (e)(4) of this section;
    (3) The applicable 1990 Dietary Guidelines for Americans which are:
    (i) Eat a variety of foods;
    (ii) Limit total fat to 30 percent of calories;
    (iii) Limit saturated fat to less than 10 percent of calories;
    (iv) Choose a diet low in cholesterol;
    (v) Choose a diet with plenty of vegetables, fruits, and grain 
products; and
    (vi) Use salt and sodium in moderation; and
    (4) The following measures of compliance with the 1990 Dietary 
Guidelines for Americans:
    (i) A limit on the percent of calories from total fat to 30 percent 
based on the actual number of calories offered;
    (ii) A limit on the percent of calories from saturated fat to less 
than 10 percent based on the actual number of calories offered;
    (iii) A reduction of the levels of sodium and cholesterol; and
    (iv) An increase in the level of dietary fiber.
    (b) General requirements for school lunches. (1) In order to 
qualify for reimbursement, lunches, as offered by participating 
schools, shall, at a minimum, meet the nutrition standards provided in 
paragraph (a) of this section when averaged over each school week. 
Except as otherwise provided herein, school food authorities shall 
ensure that sufficient quantities menu items and foods are planned and 
produced to meet, at a minimum, the nutrition standards in paragraph 
(a) of this section.
    (2) School food authorities shall ensure that each lunch is priced 
as a unit and that lunches are planned and produced on the basis of 
participation trends, with the objective of providing one reimbursable 
lunch per child per day. Any excess lunches that are produced may be 
offered, but shall not be claimed for general or special cash 
assistance provided under Sec. 210.4.
    (c) Requirements for meals served to infants and very young 
children (birth to 24 months of age). Meals for infants from birth to 2 
years of age shall meet the requirements in Sec. 210.10a (a), (c), (d) 
and (h).
    (d) Specific nutrient levels for children age 2. Schools with 
children age 2 who participate in the program shall ensure that the 
nutrition standards in paragraph (a) of this section are met except 
that, such schools have the option of either using the RDA and calorie 
levels for children ages 3-6 in the table, Minimum Nutrient Levels for 
School Lunches, in paragraph (e)(4)(i) of this section, or developing 
separate nutrient levels for this age group. The methodology for 
determining such levels will be available in menu planning guidance 
material provided by FNS.
    (e) Requirements for meals for children ages 3-17--(1) General. In 
order to receive reimbursement, school food authorities shall ensure 
that participating schools offer lunches which meet the nutrition 
standards provided in paragraph (a) of this section to children age 
three and over.
    (2) Nutrient levels. The nutrients of reimbursable lunches shall, 
as offered and as averaged over each school week, meet the requirements 
in the table, Minimum Nutrient Levels for School Lunches, in paragraph 
(e)(4)(i) of this section for children of the appropriate age group.
    (3) Records. Production, menu and nutritional analysis records 
shall be maintained by schools to demonstrate that lunches meet, when 
averaged over each school week, the nutrition standards provided in 
paragraph (a) of this section and the nutrient levels for children of 
each age group in the table Minimum Nutrient Levels for School Lunches 
in paragraph (e)(4)(i) of this section.
    (4) Specific nutrient levels for children ages 3-17. (i) Schools 
that are able to offer meals to children based on nutrient levels 
reflecting one of the four age levels in the table in this paragraph 
should do so. Schools that cannot offer meals to children on the basis 
of the age levels in the table in this paragraph shall, under Nutrient 
Standard Menu Planning or Assisted Nutrient Standard Menu Planning, 
adjust the established levels following guidance provided by FNS, or, 
if only one age is outside the established level, use the levels 
provided in the table for the majority of children. For example, a 
school has grades one through five, but if some first graders are six, 
the levels for Group II would be used as the majority of students are 
in this age group. Schools shall ensure that lunches are offered with 
the objective of providing the per lunch minimums for each age level as 
specified in the following table: 

               Minimum Nutrient Levels for School Lunches               
------------------------------------------------------------------------
                        Group I      Group II    Group III     Group IV 
Nutrients and energy    ages 3-6    ages 7-10    ages 11-13   ages 14-17
     allowances          years        years        years        years   
------------------------------------------------------------------------
Energy allowance/                                                       
 Calories...........          558          667          783          846
Total Fat (as a                                                         
 percent of actual                                                      
 total food energy).        (\1\)        (\1\)        (\1\)        (\1\)
Total Saturated Fat                                                     
 (as a percent of                                                       
 actual total food                                                      
 energy)............        (\2\)        (\2\)        (\2\)        (\2\)
RDA for protein (g).          7.3          9.3         15.0         16.7
RDA for calcium (mg)          267          267          400          400
RDA for iron (mg)...          3.3          3.3          4.5          4.5
RDA for vitamin A                                                       
 (RE)...............          158          233          300          300
RDA for vitamin C                                                       
 (mg)...............         14.6         15.0         16.7         19.2
------------------------------------------------------------------------
\1\Less than or equal to 30% of actual calories offered.                
\2\Less than 10% of actual calories offered.                            

    (ii) A reimbursable lunch shall include a minimum of three menu 
items as defined in Sec. 210.2; one menu item shall be an entree and 
one shall be fluid milk as a beverage. An entree may be a combination 
of foods or a single food item that is offered as the main course. All 
menu items or foods offered as part of the reimbursable meal may be 
considered as contributing towards meeting the nutrition standards in 
paragraph (a) of this section, except for those foods that are 
considered foods of minimal nutritional value as provided for in 
Sec. 210.11(a)(2) which are not offered as part of a menu item in a 
reimbursable meal. Reimbursable lunches, as offered, shall meet the 
established nutrition standards in paragraph (a) of this section when 
averaged over a school week.
    (f) Milk requirement for children ages 2-17. Schools shall comply 
with the requirements for offering milk as provided for in 
Sec. 210.10a(d)(1).
    (g) Offer versus serve. Each participating school shall offer its 
students at least three menu items as required by paragraph (e)(4)(ii) 
of this section. Under offer versus serve, senior high students are 
required to take at least two of the three menu items offered; one menu 
item selected must be an entree. At the discretion of the school food 
authority, students below the senior high level may also participate in 
offer versus serve. The price of a reimbursable lunch shall not be 
affected if a student declines a menu item or accepts smaller portions. 
State educational agencies shall define ``senior high.''
    (h) Choice. To provide variety and to encourage consumption and 
participation, schools should, whenever possible, offer a selection of 
menu items, foods and types of milk from which children may make 
choices. When a school offers a selection of more than one type of 
lunch or when it offers a variety of menu items, foods and milk for 
choice as a reimbursable lunch, the school shall offer all children the 
same selection regardless of whether the children are eligible for free 
or reduced price lunches or pay the school food authority's designated 
full price. The school may establish different unit prices for each 
type of lunch offered provided that the benefits made available to 
children eligible for free or reduced price lunches are not affected.
    (i) Lunch period. At or about mid-day schools shall offer lunches 
which meet the requirements of this section during a period designated 
as the lunch period by the school food authority. Such lunch periods 
shall occur between 10 a.m. and 2 p.m., unless otherwise exempted by 
FNS. With state approval, schools that serve children 1-5 years old are 
encouraged to divide the service of the meal into two distinct service 
periods. Such schools may divide the quantities and/or menu items or 
foods offered between these service periods in any combination that 
they choose. Schools are also encouraged to provide an adequate number 
of lunch periods of sufficient length to ensure that all students have 
an opportunity to be served and have ample time to consume their meals.
    (j) Exceptions. Lunches claimed for reimbursement shall meet the 
school lunch requirements specified in this section. However, lunches 
offered which accommodate the exceptions and variations authorized 
under Sec. 210.10a(i) are also reimbursable.
    (k) Nutrient Standard Menu Planning for children age 2-17. In order 
to assure that school lunches meet the nutrition standards provided in 
paragraph (a) of this section, nutrient analysis shall be conducted on 
all menu items or foods offered as part of the reimbursable meal, 
except for those foods that are considered as foods of minimal 
nutritional value as provided for in Sec. 210.11(a)(2) which are not 
offered as part of a menu item in a reimbursable meal. Such analysis 
shall be over the course of each school week. The school food authority 
shall either independently conduct Nutrient Standard Menu Planning or 
shall request that the State agency allow Assisted Nutrient Standard 
Menu Planning.
    (l) The National Nutrient Database and software specifications. (i) 
Nutrient analysis shall be based on information provided in the 
National Nutrient Database for Child Nutrition Programs. This database 
shall be incorporated into software used to conduct nutrient analysis. 
Upon request, FNS will provide information about the database to 
software companies that wish to develop school food service software 
systems.
    (ii) Any software used to conduct nutrient analysis shall be 
evaluated by FNS and, as submitted, been determined to meet the minimum 
requirements established by FNS. However, such review does not 
constitute endorsement by FNS or USDA. Such software shall provide the 
capability to perform all functions required after the basic data has 
been entered including calculation of weighted averages as required by 
paragraph (k)(2) of this section.
    (2) Determination of weighted averages. (i) Menu items and foods 
offered as part of a reimbursable meal shall be analyzed based on 
portion sizes and projected serving amounts and shall be weighted based 
on their proportionate contribution to the meals. Therefore, menu items 
or foods more frequently selected will contribute more nutrients than 
menu items or foods which are less frequently selected. Such weighting 
shall be done in accordance with guidance issued by FNS as well as that 
provided by the software used.
    (ii) An analysis of all menu items and foods offered in the menu 
over each school week shall be computed for calories and for each of 
the following nutrients: protein; vitamin A; vitamin C; iron; calcium; 
total fat; saturated fat; and sodium. The analysis shall also include 
the dietary components of cholesterol and dietary fiber.
    (3) Comparing average daily levels. Once the appropriate procedures 
of paragraph (k)(2) of this section have been completed, the results 
shall be compared to the appropriate age group level for each nutrient 
and for calories in the table, Minimum Nutrient Levels for School 
Lunch, in paragraph (e)(4)(i) of this section. In addition, comparisons 
shall be made to the nutrition standards provided in paragraph (a) of 
this section in order to determine the degree of conformity.
    (4) Adjustments based on students' selections. The results obtained 
under paragraph (k)(2) of this section shall be used to adjust future 
menu cycles to accurately reflect production and student selections. 
Menus may require further analysis and comparison, depending on the 
results obtained in paragraph (k)(3) of this section when production 
and selection patterns change. The school food authority may need to 
consider modifications to the menu items and foods offered based on 
student selections as well as modifications to recipes and other 
specifications to ensure that the nutrition standards provided in 
paragraph (a) of this section are met.
    (5) Standardized recipes. Under Nutrient Standard Menu Planning, 
standardized recipes shall be developed and followed. A standardized 
recipe is one that was tested to provide an established yield and 
quantity through the use of ingredients that remain constant in both 
measurement and preparation methods. USDA/FNS standardized recipes are 
included in the National Nutrient Database for the Child Nutrition 
Programs. In addition, local standardized recipes used by school food 
authorities shall be analyzed for their calories, nutrients and dietary 
components and added to the local database by that school food 
authority in accordance with paragraph (k)(1)(ii) of this section.
    (6) Processed foods. Unless already included in the National 
Nutrient Database, the calorie amounts, nutrients and dietary 
components, in accordance with paragraph (k)(3) of this section, of 
purchased processed foods and menu items used by the school food 
authority shall be obtained by the school food authority or State 
agency and incorporated into the database at the local level in 
accordance with FNS guidance.
    (7) Substitutions. If the need for serving a substitute food(s) or 
menu item(s) occurs at least two weeks prior to serving the planned 
menu, the revised menu shall be reanalyzed based on the changes. If the 
need for serving a substitute food(s) or menu item(s) occurs two weeks 
or less prior to serving the planned menu, no reanalysis is required. 
However, to the extent possible, substitutions should be made using 
similar foods.
    (l) Assisted Nutrient Standard Menu Planning. (1) For school food 
authorities without the capability to conduct Nutrient Standard Menu 
Planning, as provided in paragraph (k) of this section, menu cycles 
developed by other sources may be used. Such sources may include but 
are not limited to the State agency, other school food authorities, 
consultants, or food service management companies.
    (2) Assisted Nutrient Standard Menu Planning shall establish menu 
cycles that have been developed in accordance with paragraphs (k)(1) 
through (k)(6) of this section as well as local food preferences and 
local food service operations. These menu cycles shall incorporate the 
nutrition standards in paragraph (a) of this section and the Minimum 
Nutrient Levels for School Lunches in paragraph (e)(4)(i) of this 
section. In addition to the menu cycle, recipes, food product 
specifications and preparation techniques shall also be developed and 
provided by the entity furnishing Assisted Nutrient Standard Menu 
Planning to ensure that the menu items and foods offered conform to the 
nutrient analysis determinations of the menu cycle.
    (3) If a school food authority requests Assisted Nutrient Standard 
Menu Planning, the State agency shall determine if it is warranted. At 
the inception of any approved use of Assisted Nutrient Standard Menu 
Planning, the State agency shall approve the initial menu cycle, 
recipes, and other specifications to determine that all required 
elements for correct nutrient analysis are incorporated. The State 
agency shall also, upon request, provide assistance with implementation 
of the chosen system.
    (4) After initial service under the Assisted Nutrient Standard Menu 
Planning menu cycle, the nutrient analysis shall be reassessed in 
accordance with paragraph (k)(2) of this section and appropriate 
adjustments made.
    (5) Under Assisted Nutrient Standard Menu Planning, the school food 
authority retains final responsibility for ensuring that all nutrition 
standards established in paragraph (a) of this section are met.
    (m) Compliance with the nutrition standards. If the analysis 
conducted in accordance with paragraphs (k) or (l) of this section 
shows that the menus offered are not meeting the nutrition standards in 
paragraph (a) of this section, actions, including technical assistance 
and training, shall be taken by the State agency, school food 
authority, or school, as appropriate, to ensure that the lunches 
offered to children comply with the nutrition standards established by 
paragraph (a) of this section.
    (n) Nutrition disclosure. School food authorities are encouraged to 
make information available indicating efforts to meet the nutrition 
standards in paragraph (a) of this section, such as publicizing the 
results of the nutrient analysis of the school week menu cycle.
    (o) Supplemental food. Eligible schools operating after school care 
programs may be reimbursed for one meal supplement offered to an 
eligible child (as defined in Sec. 210.2) per day. Meal supplements 
shall conform to the provisions set forth in Sec. 210.10a(j).
    (p) Implementation of the nutrition standards and Nutrient Standard 
Menu Planning/Assisted Nutrient Standard Menu Planning. (1) No later 
than School Year 1998-99, school food authorities shall ensure that 
lunches offered to children ages 2 and above by participating schools 
meet the nutrition standards provided in paragraph (a) of this section.
    (2) Further, no later than School Year 1998-99, school food 
authorities shall ensure that Nutrient Standard Menu Planning, or 
Assisted Nutrient Standard Menu Planning, where applicable, is applied 
to lunches offered by participating schools.
    (3) Schools and/or school food authorities may begin to implement 
any or all of the provisions of this section before School Year 1998-99 
with prior approval of the State agency. In these situations, State 
agencies shall evaluate the ability of school food authorities to begin 
Nutrient Standard Menu Planning or Assisted Nutrient Standard Menu 
Planning and provide start-up training and facilitate initial 
implementation. However, school food authorities shall not be subject 
to the provisions of Sec. 210.19(a) for failure to comply with the 
nutrition standards established by paragraph (a) of this section or 
Nutrient Standard Menu Planning or Assisted Nutrient Standard Menu 
Planning established by paragraphs (k) and (l) of this section until 
School Year 1998-99. In addition, school food authorities that 
implement Nutrient Standard Menu Planning or Assisted Nutrient Standard 
Menu Planning prior to School Year 1998-99 shall be exempt from 
Sec. 210.18(g)(2) until required implementation in School Year 1998-99.
    (4) State agencies shall monitor implementation of Nutrient 
Standard Menu Planning or Assisted Nutrient Standard Menu Planning at 
the school food authority level in order to ensure proper compliance. 
Such monitoring shall include the State agency observation of the meal 
service to determine if meals claimed for reimbursement contain the 
appropriate number and type of menu items. FNS may review State agency 
evaluation criteria and monitoring procedures as part of any management 
evaluation review conducted during the implementation period.
    (5) Beginning with School Year 1998-99, State agencies shall 
monitor compliance by school food authorities with the nutrition 
standards in paragraph (a) of this section in accordance with the 
requirements of Sec. 210.19(a).
    9. In the newly redesignated Sec. 210.10a:
    a. The section heading is revised; and
    b. The table in paragraph (c) is amended by revising the ``Milk'' 
description under ``Food Components and Food Items''.
    The revisions read as follows:


Sec. 210.10a  Lunch components and quantities for the meal pattern, 
lunches for very young children and meal supplements.

* * * * *
    (c) Minimum required lunch quantities. * * * 

                 School Lunch Pattern-per Lunch Minimums                
                                                                        
                     Food Components and Food Items                     
                                                                        
Milk (as a beverage):                                                   
  Fluid whole milk and fluid unflavored lowfat milk must be offered;    
   (Flavored fluid milk, skim milk or buttermilk optional)              
                                                                        
                                  *****                                 
                                                                        

* * * * *
    10. In 210.14, paragraph (c) is revised to read as follows:


Sec. Sec. 210.14  Resource management.

* * * * *
    (c) Financial assurances. The school food authority shall meet the 
requirements of the State agency for compliance with Sec. 210.19(a) 
including any separation of records of nonprofit school food service 
from records of any other food service which may be operated by the 
school food authority as provided in paragraph (a) of this section.
* * * * *
    11. In 210.15:
    a. Paragraph (b)(2) is revised;
    b. Paragraph (b)(3) is amended by removing the reference to 
``210.10(b) of this part'' and adding in its place the words 
``Sec. 210.10(a) or Sec. 210.10a(b), whichever is applicable''; and
    c. Paragraph (b)(4) is removed and paragraph (b)(5) is redesignated 
as paragraph (b)(4).
    The revision reads as follows:


Sec. 210.15  Reporting and recordkeeping.

* * * * *
    (b) Recordkeeping summary. * * *
    (2) Production and menu records as required under Sec. 210.10a and 
production, menu and nutrition analysis records as required under 
Sec. 210.10, whichever is applicable.
* * * * *
    12. In 210.16:
    a. Paragraph (b)(1) is amended by adding the words ``developed in 
accordance with the provisions of Sec. 210.10 or Sec. 210.10a, 
whichever is applicable,'' after the words ``21-day cycle menu'' 
whenever they appear; and
    b. The first sentence of paragraph (c)(3) is revised to read as 
follows:


Sec. 210.16  Food service management companies.

* * * * *
    (c) * * *
    (3) No payment is to be made for meals that are spoiled or 
unwholesome at time of delivery, do not meet detailed specifications as 
developed by the school food authority for each food component/menu 
item specified in Sec. 210.10 or 210.10a, whichever is applicable, or 
do not otherwise meet the requirements of the contract. * * *
* * * * *


Sec. 210.18  [Amended]

    13. In 210.18:
    a. Paragraph (c) introductory text is amended by removing the 
number ``4'' in the phrase ``4-year review cycle'' wherever it appears 
and adding in its place the number ``5'';
    b. The first sentence of paragraph (c)(1) is amended by removing 
the number ``4'' in the phrase ``4-year review cycle'' and adding in 
its place the number ``5'' and by removing the number ``5'' in the 
phrase ``every 5 years'' and adding in its place the number ``6'';
    c. Paragraph (c)(2) is amended by removing the number ``4'' in the 
phrase ``4-year cycle'' and adding in its place the number ``5'';
    d. Paragraph (c)(3) is amended by removing the number ``5'' in the 
phrase ``5-year review interval'' and adding the number ``6'' in its 
place;
    e. Paragraph (d)(3) is amended by removing the reference to 
``210.19(a)(4)'' and adding in its place a reference to 
``210.19(a)(5)''; and
    f. Paragraph (h)(2) is amended by removing the reference 
``Sec. 210.10'' and adding in its place a reference to 
``Sec. 210.10a''.
    14. In 210.19:
    a. Paragraphs (a)(1) through (a)(5) are redesignated as paragraphs 
(a)(2) through (a)(6), respectively, and a new paragraph (a)(1) is 
added;
    b. Newly redesignated paragraph (a)(2) is revised;
    c. The last sentence in newly redesignated paragraph (a)(3) is 
revised;
    d. The number ``4'' in the second sentence of newly redesignated 
paragraph (a)(6) is removed and the number ``5'' is added in its place;
    e. The second sentence of paragraph (c) introductory text is 
revised;
    f. A new sentence is added at the end of paragraph (c)(1);
    g. The reference to ``Sec. 210.10'' in paragraph (c)(6)(i) is 
removed and a reference to ``Sec. 210.10a'' is added in its place; and
    h. The word ``or'' is removed at the end of paragraph (c)(6)(i), 
the period at the end of paragraph (c)(6)(ii) is removed and ``; or'' 
is added in its place, and a new paragraph (c)(6)(iii) is added.
    The additions and revisions read as follows:


Sec. 210.19  Additional responsibilities.

    (a) General Program management. * * *
    (1) Compliance with nutrition standards. At a minimum, beginning 
with School Year 1998-99, school food authorities shall meet the 
nutrition standards established in Sec. 210.10(a) for reimbursable 
meals.
    (i) Beginning with School Year 1998-99, State agencies shall 
evaluate compliance with the established nutrition standards over a 
school week. At a minimum, these evaluations shall be conducted once 
every 5 years and may be conducted at the same time a school food 
authority is scheduled for an administrative review in accordance with 
Sec. 210.18. State agencies may also conduct these evaluations in 
conjunction with technical assistance visits, other reviews, or 
separately. The State agency shall assess the nutrient analysis for the 
last completed school week to determine if the school food authority is 
applying the methodology provided in Sec. 210.10 (k) or (l), as 
appropriate. Part of this assessment shall be an independent review of 
menus and production records to determine if they correspond to the 
analysis conducted by the school food authority and if the menu, as 
offered, over a school week, corresponds to the nutrition standards set 
forth in Sec. 210.10(a).
    (ii) If the menu for the school week fails to meet any of the 
nutrition standards set forth in Sec. 210.10(a), the school food 
authority shall develop, with the assistance and concurrence of the 
State agency, a corrective action plan designed to rectify those 
deficiencies. The State agency shall monitor the school food 
authority's execution of the plan to ensure that the terms of the 
corrective action plan are met.
    (iii) If a school food authority fails to meet the terms of the 
corrective action plan, the State agency shall determine if the school 
food authority is working towards compliance in good faith and, if so, 
may renegotiate the corrective action plan, if warranted. However, if 
the school food authority has not been acting in good faith to meet the 
terms of the corrective action plan and refuses to renegotiate the 
plan, the State agency shall determine if a disallowance of 
reimbursement funds as authorized under paragraph (c) of this section 
is warranted.
    (2) Assurance of compliance for finances. Each State agency shall 
ensure that school food authorities comply with the requirements to 
account for all revenues and expenditures of their nonprofit school 
food service. School food authorities shall meet the requirements for 
the allowability of nonprofit school food service expenditures in 
accordance with this part and, as applicable, 7 CFR part 3015. The 
State agency shall ensure compliance with the requirements to limit net 
cash resources and shall provide for approval of net cash resources in 
excess of three months' average expenditures. Each State agency shall 
monitor, through review or audit or by other means, the net cash 
resources of the nonprofit school food service in each school food 
authority participating in the Program. In the event that net cash 
resources exceed 3 months' average expenditures for the school food 
authority's nonprofit school food service or such other amount as may 
be approved in accordance with this paragraph, the State agency may 
require the school food authority to reduce the price children are 
charged for lunches, improve food quality or take other action designed 
to improve the nonprofit school food service. In the absence of any 
such action, the State agency shall make adjustments in the rate of 
reimbursement under the Program.
    (3) Improved management practices. * * * If a substantial number of 
children who routinely and over a period of time do not favorably 
accept a particular menu item; return foods; or choose less than all 
food items/components or foods and menu items as authorized under 
Sec. 210.10(e)(4)(ii) or Sec. 210.10a(e), poor acceptance of certain 
menus may be indicated.
* * * * *
    (c) Fiscal action. * * * State agencies shall take fiscal action 
against school food authorities for Claims for Reimbursement that are 
not properly payable under this part including, if warranted, the 
disallowance of funds for failure to take corrective action in 
accordance with paragraph (a)(1) of this section. * * *
    (1) Definition. * * * Fiscal action also includes disallowance of 
funds for failure to take corrective action in accordance with 
paragraph (a)(1) of this section.
* * * * *
    (6) Exceptions. * * *
    (iii) When any review or audit reveals that a school food 
authority's failure to meet the nutrition standards of Sec. 210.10 is 
unintentional and the school food authority is meeting the requirements 
of a corrective plan developed and agreed to under paragraph (a)(1)(ii) 
of this section.
* * * * *


Appendix A to Part 210   [Amended]

    15. In Appendix A to part 210, Alternate Foods for Meals, under 
Enriched Macaroni Products with Fortified Protein, the first sentence 
of paragraph 1(a) is amended by removing the reference to 
``Sec. 210.10'' and adding in its place a reference to 
``Sec. 210.10a''.
    16. In Appendix A, Alternate Foods for Meals, under Cheese 
Alternate Products,
    a. Introductory paragraph 1 is amended by removing the reference to 
``Sec. 210.10'' and adding in its place a reference to 
``Sec. 210.10a''; and
    b. Paragraph 1(d) is amended by removing the reference to 
``Sec. 210.10'' and adding in its place a reference to 
``Sec. 210.10a''.
    17. In Appendix A, Alternate Foods for Meals, under Vegetable 
Protein Products:
    a. Introductory paragraph 1 is amended by removing the reference to 
``210.10'' and adding in its place a reference to ``210.10a'';
    b. The second sentence of paragraph 1(d) is amended by removing the 
reference to ``210.10'' and adding in its place a reference to 
``210.10a'' ;
    c. The first sentence of paragraph 1(e) is amended by removing the 
reference to ``210.10'' and adding in its place a reference to 
``210.10a'' ; and
    d. The first sentence of paragraph 3 is amended by removing the 
reference to ``Sec. 210.10'' and adding in its place a reference to 
``Sec. 210.10a''.
    18. In Appendix C to Part 210, Child Nutrition Labeling Program:
    a. Paragraph 2(a) is amended by removing the reference to 
``210.10'' and adding in its place a reference to ``210.10a'';
    b. The first sentence of paragraph 3(c)(2) is amended by removing 
the reference to ``210.10'' and adding in its place a reference to 
``210.10a'' and by removing the reference to ``220.8'' and adding in 
its place a reference to ``220.8a''; and
    c. The second sentence of paragraph 6 is amended by removing the 
reference to ``210.10'' and adding in its place a reference to 
``210.10a'' and by removing the reference to ``220.8'' and adding in 
its place a reference to ``220.8a''.

PART 220--SCHOOL BREAKFAST PROGRAM

    1. The authority citation is revised to read as follows:

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

    2. In 220.2:
    a. Paragraph (b) is amended by adding the words ``or Sec. 220.8a, 
whichever is applicable,'' after the reference to ``Sec. 220.8'';
    c. Paragraph (m), previously reserved, is added;
    d. A new paragraph (p-1) is added;
    e. Paragraph (t) is amended by adding the words ``or Sec. 220.8a, 
whichever is applicable,'' after the reference to ``Sec. 220.8''; and
    f. A new paragraph (w-1) is added.
    The additions read as follows:


Sec. 220.2   Definitions.

* * * * *
    (m) Menu item means, under Nutrient Standard Menu Planning or 
Assisted Nutrient Standard Menu Planning, any single food or 
combination of foods. All menu items or foods offered as part of the 
reimbursable meal may be considered as contributing towards meeting the 
nutrition standards provided in Sec. 220.8(b), except for those foods 
that are considered as foods of minimal nutritional value as provided 
for in Sec. 220.2(i-1) which are not offered as part of a menu item in 
a reimbursable meal. For the purposes of a reimbursable meal, a minimum 
of three menu items must be offered, one of which must be an entree (a 
combination of foods or a single food item that is offered as the main 
course) and one must be fluid milk.
* * * * *
    (p-1) Nutrient Standard Menu Planning/Assisted Nutrient Standard 
Menu Planning means a way to develop meals based on the analysis of 
nutrients which would require school breakfasts, when averaged over a 
school week, to meet specific levels for a set of key nutrients and 
calories rather than a specific set of food categories. Analysis of the 
menu items and foods shall be based on averages that will be weighted 
by production quantities as offered to the students. Such analysis is 
normally done by a school or a school food authority. However, for the 
purposes of Assisted Nutrient Standard Menu Planning, menu planning and 
analysis is completed by other entities and shall incorporate the 
production quantities needed to accommodate the specific service 
requirements of a particular school or school food authority.
* * * * *
    (w-1) School week means the period of time used as the basis for 
determining nutrient levels of the menu and for conducting Nutrient 
Standard Menu Planning or Assisted Nutrient Standard Menu Planning for 
breakfasts. The period week shall be a minimum of three days and a 
maximum of seven days. Weeks in which breakfasts are offered less than 
three times shall be combined with either the previous or the coming 
week.
* * * * *


Sec. 220.7   [Amended]

    3. In 220.7, paragraph (e)(2) is amended by adding the words ``or 
Sec. 220.8a, whichever is applicable,'' after the reference to 
``Sec. 220.8''.


Sec. 220.8   [Redesignated as Sec. 220.8A]

    4. Section 220.8 is redesignated as Sec. 220.8a and a new 
Sec. 220.8 is added to read as follows:


Sec. 220.8   Nutrition standards for breakfast and menu planning 
systems.

    (a) Breakfasts for very young children. Meals for infants and very 
young children (ages birth to 24 months) who are participating in the 
Program shall meet the requirements in Sec. 220.8a(a), (b) and (c).
    (b) Nutrition standards for breakfasts for children age 2 and over. 
School food authorities shall ensure that participating schools provide 
nutritious and well-balanced breakfasts to children age 2 and over 
based on the nutrition standards provided in this section. For the 
purposes of this section, the nutrition standards are:
    (1) Provision of one-fourth of the Recommended Dietary Allowances 
(RDA) of protein, calcium, iron, vitamin A and vitamin C to the 
applicable age groups in accordance with the Minimum Nutrient Levels 
for School Breakfasts in paragraph (e)(1) of this section;
    (2) Provision of the breakfast energy allowances for children in 
accordance with the age groups in the Minimum Nutrient Levels for 
School Breakfasts in paragraph (e)(1) of this section;
    (3) The applicable 1990 Dietary Guidelines for Americans which are:
    (i) Eat a variety of foods;
    (ii) Limit total fat to 30 percent of calories;
    (iii) Limit saturated fat to less than 10 percent of calories;
    (iv) Choose a diet low in cholesterol;
    (v) Choose a diet with plenty of vegetables, fruits, and grain 
products; and
    (vi) Use salt and sodium in moderation; and
    (4) The following measures of compliance with the 1990 Dietary 
Guidelines for Americans:
    (i) A limit on the percent of calories from total fat to 30 percent 
based on the actual number of calories offered;
    (ii) A limit on the percent of calories from saturated fat to less 
than 10 percent based on the actual number of calories offered;
    (iii) A reduction of the levels of sodium and cholesterol; and
    (iv) An increase in the level of dietary fiber.
    (c) General requirements for school breakfasts for children age 2 
and over. (1) In order to qualify for reimbursement, breakfasts, as 
offered by participating schools, shall, at a minimum, meet the 
nutrition standards in paragraph (b) of this section when averaged over 
each school week.
    (2) School food authorities shall ensure that each breakfast is 
priced as a unit. Except as otherwise provided herein, school food 
authorities shall ensure that sufficient quantities of menu items and 
foods are planned and produced so that breakfasts meet, at a minimum, 
the nutrition standards in paragraph (b) of this section.
    (3) School food authorities shall ensure that breakfasts are 
planned and produced on the basis of participation trends, with the 
objective of providing one reimbursable breakfast per child per day. 
Any excess breakfasts that are produced may be offered, but shall not 
be claimed for reimbursement under Sec. 220.9.
    (d) Nutritional criteria for breakfasts for children age 2 and 
over. In order to receive reimbursement, school food authorities shall 
ensure that participating schools provide breakfasts to children age 
two and over in accordance with the nutrition standards in paragraph 
(b) of this section.
    (1) The nutrients of breakfasts shall, when averaged over each 
school week, meet the requirements in the table Minimum Nutrient Levels 
for School Breakfasts, in paragraph (e)(1) of this section for children 
of each age group.
    (2) Production, menu and nutritional analysis records shall be 
maintained by schools to demonstrate that breakfasts as offered meet 
the nutrition standards provided in paragraph (b) of this section and 
the nutrient levels for children of each age group in the table, 
Minimum Nutrient Levels for School Breakfasts, in paragraph (e)(1) of 
this section.
    (3) Schools with children age 2 who participate in the program 
shall ensure that the nutrition standards in paragraph (b) of this 
section are met except that, such schools have the option of either 
using the RDA and calorie levels for children ages 3-6 in the table, 
Minimum Nutrient Levels for School Breakfasts, in paragraph (e)(1) of 
this section or developing separate requirements for this age group. 
The methodology for determining such levels will be available in menu 
planning guidance material provided by FNS.
    (e) Requirements for meals for children ages 3-17. (1) Schools that 
are able to offer meals to children based on nutrient levels reflecting 
one of the four age level in the table in this paragraph should do so. 
Schools that cannot offer meals to children on the basis of age levels 
in the table in this paragraph shall, under Nutrient Standard Menu 
Planning or Assisted Nutrient Standard Menu Planning, adjust the 
established levels following guidance by FNS or, if only one age is 
outside the established level, use the level provided for the majority 
of children. Schools shall ensure that breakfasts are offered with the 
objective of providing the per breakfast minimums for each age level as 
specified in the following table:

              Minimum Nutrient Levels for School Breakfasts             
------------------------------------------------------------------------
                        Group I      Group II    Group III     Group IV 
Nutrients and Energy    ages 3-6    ages 7-10    ages 11-13   ages 14-17
     Allowances          years        years        years        years   
------------------------------------------------------------------------
Energy allowances/                                                      
 calories...........          419          500          588          625
Total fat (as a                                                         
 percent of actual                                                      
 total food energy).        (\1\)        (\1\)        (\1\)        (\1\)
Total saturated fat                                                     
 (as a percent of                                                       
 actual total food                                                      
 energy)............        (\2\)        (\2\)        (\2\)        (\2\)
RDA for protein (g).         5.50         7.00        11.25        12.50
RDA for calcium (mg)          200          200          300          300
RDA for iron (mg)...          2.5          2.5          3.4          3.4
RDA for vitamin A                                                       
 (RE)...............          119          175          225          225
RDA for vitamin C                                                       
 (mg)...............        11.00        11.25        12.50        14.40
------------------------------------------------------------------------
\1\Less than or equal to 30% of actual calories offered.                
\2\Less than 10% of actual calories offered.                            

    (2) A reimbursable breakfast shall include a minimum of three menu 
items as defined in Sec. 220.2(m), one of which shall be fluid milk as 
a beverage, offered on cereal, or a combination of both. All menu items 
or foods offered as part of the reimbursable meal may be considered as 
contributing towards meeting the nutrition standards, except for those 
foods that are considered foods of minimal nutritional value as 
provided for in Sec. 210.2(i-1) which are not offered as part of a menu 
item in a reimbursable meal. Breakfasts, as offered, shall 
independently meet the established nutrient standards when averaged 
over a school week.
    (f) Milk requirement for children ages 2-17. A serving of milk as a 
beverage or on cereal or used in part for each purpose shall be a menu 
item for school breakfasts. Schools shall comply with the minimum 
required serving sizes for milk in Sec. 220.8a(a)(2) and with the other 
requirements for milk in Sec. 220.8a(d) and Sec. 220.8a(g).
    (g) Offer versus serve. Each participating school shall offer its 
students at least three menu items as required by paragraph (e)(2) of 
this section. Under offer versus serve, senior high students are 
required to take at least two of the three menu items. At the 
discretion of the school food authority, students below the senior high 
level may also participate in offer versus serve. The price of a 
reimbursable breakfast shall not be affected if a student declines menu 
items or accepts smaller portions. State educational agencies shall 
define ``senior high.''
    (h) Choice. To provide variety and to encourage consumption and 
participation, schools should, whenever possible, provide a selection 
of foods and types of milk from which children may make choices. When a 
school offers a selection of more than one type of breakfast or when it 
offers a variety of foods and milk for choice as a reimbursable 
breakfast, the school shall offer all children the same selection 
regardless of whether the children are eligible for free or reduced 
price breakfasts or pay the school food authority designated full 
price. The school may establish different unit prices for each type of 
breakfast offered provided that the benefits made available to children 
eligible for free or reduced price breakfasts are not affected.
    (i) Substitutions. Schools shall make substitutions for students 
who are considered to have disabilities under 7 CFR part 15b in 
accordance with Sec. 220.8a(f).
    (j) Nutrient Standard Menu Planning/Assisted Nutrient Standard Menu 
Planning for children age 2-17. In order to assure that school 
breakfasts meet the nutritional standards provided in paragraph (b) of 
this section, nutrient analysis shall be conducted on all foods offered 
as part of a reimbursable meal. Such analysis shall be over the course 
of each school week. The school food authority shall either 
independently conduct Nutrient Standard Menu Planning or shall request 
that the State agency allow Assisted Nutrient Standard Menu Planning.
    (1) The National Nutrient Database and software specifications. (i) 
Nutrient analysis shall be based on information provided in the 
National Nutrient Database for Child Nutrition Programs. This database 
shall be incorporated into software used to conduct nutrient analysis. 
Upon request, FNS will provide information about the database to 
software companies that wish to develop school food service software 
systems.
    (ii) Any software used to conduct nutrient analysis shall be 
evaluated and, as submitted, been determined to meet the minimum 
requirements established by FNS. However, such review does not 
constitute endorsement by FNS or USDA. Such software shall provide the 
capability to perform all functions required after the basic data has 
been entered including calculation of weighted averages as required by 
(j)(2) of this section.
    (2) Determination of weighted averages. (i) Foods offered as part 
of a reimbursable meal shall be analyzed based on menu items, portion 
sizes, and projected serving amounts and shall be weighted based on 
their proportionate contribution to the meals. Therefore, foods more 
frequently selected will contribute more nutrients than foods which are 
less frequently selected. Such weighting shall be done in accordance 
with guidance issued by FNS as well as that provided by the software 
used.
    (ii) An analysis of all menu items and foods offered in the menu 
over each school week shall be computed for calories and for each of 
the following nutrients: Protein; vitamin A; vitamin C; iron; calcium; 
total fat; saturated fat; and sodium. The analysis shall also include 
the dietary components of cholesterol and dietary fiber.
    (3) Comparing average daily levels. Once the procedures of 
paragraph (j)(2) of this section have been completed, the results shall 
be compared to the appropriate age group level for each nutrient and 
for calories in the table, Minimum Nutrient Levels for School 
Breakfasts, in paragraph (e)(1) of this section. In addition, 
comparisons shall be made to the nutrition standards provided in 
paragraph (b) of this section in order to determine the degree of 
conformity.
    (4) Adjustments based on students' selections. The results obtained 
under paragraph (j)(2) of this section shall be used to adjust future 
menu cycles to accurately reflect production and student selections. 
Menus will require further analysis and comparison, depending on the 
results obtained in paragraph (j)(2) of this section when production 
and selection patterns change. The school food authority may need to 
consider modifications to the menu items and foods offered based on 
student selections as well as modifications to recipes and other 
specifications to ensure that the nutrition standards in paragraph (b) 
of this section are met.
    (5) Standardized recipes. Under Nutrient Standard Menu Planning, 
standardized recipes shall be developed and followed. A standardized 
recipe is one that was tested to provide an established yield and 
quantity through the use of ingredients that remain constant in both 
measurement and preparation methods. USDA/FNS standardized recipes are 
included in the National Nutrient Database for the Child Nutrition 
Programs. In addition, local standardized recipes used by school food 
authorities shall be analyzed for their calories, nutrients and dietary 
components and added to the local database by that school food 
authority.
    (6) Processed foods. Unless already included in the National 
Nutrient Database, the calorie amounts, nutrients and dietary 
components, in accordance with paragraph (j)(2)(ii) of this section, of 
purchased processed foods and menu items used by the school food 
authority shall be obtained by the school food authority or State 
agency and incorporated into the database at the local level in 
accordance with FNS guidance.
    (7) Substitutions. If the need for serving a substitute food(s) or 
menu item(s) occurs at least two weeks prior to serving the planned 
menu, the revised menu shall be reanalyzed based on the changes. If the 
need for serving a substitute food(s) or menu item(s) occurs two weeks 
or less prior to serving the planned menu, no reanalysis is required. 
However, to the extent possible, substitutions should be made using 
similar foods.
    (k) Assisted Nutrient Standard Menu Planning. (1) For school food 
authorities without the capability to conduct Nutrient Standard Menu 
Planning, as provided in paragraph (j) of this section, menu cycles 
developed by other sources may be used. Such sources may include but 
are not limited to the State agency, other school food authorities, 
consultants, or food service management companies.
    (2) Assisted Nutrient Standard Menu Planning shall establish menu 
cycles that have been developed in accordance with paragraphs (j)(1) 
through (j)(6) of this section as well as local food preferences and 
local food service operations. These menu cycles shall incorporate the 
nutrition standards in paragraph (b) of this section and the Minimum 
Nutrient Levels for School Breakfasts in paragraph (e)(1) of this 
section. In addition to the menu cycle, recipes, food product 
specifications and preparation techniques shall also be developed and 
provided by the entity furnishing Assisted Nutrient Standard Menu 
Planning to ensure that the menu items and foods offered conform to the 
nutrient analysis determinations of the menu cycle.
    (3) If a school food authority requests Assisted Nutrient Standard 
Menu Planning, the State agency shall determine if it is warranted. At 
the inception of any approved use of Assisted Nutrient Standard Menu 
Planning, the State agency shall approve the initial menu cycle, 
recipes, and other specifications to determine that all required 
elements for correct nutrient standards and analysis are incorporated. 
The State agency shall also, upon request, provide assistance with 
implementation of the chosen system.
    (4) After the initial service, the nutrient analysis shall be 
reassessed in accordance with paragraph (j)(2) of this section and 
appropriate adjustments made.
    (5) Under Assisted Nutrient Standard Menu Planning, the school food 
authority retains final responsibility for ensuring that all nutrient 
standards established in paragraph (b) of this section are met.
    (l) Compliance with the nutrition standards. If the analysis 
conducted in accordance with paragraphs (j) and (k) of this section 
shows that the menus offered are not in compliance with the nutrition 
standards established in paragraph (b) of this section, actions, 
including technical assistance and training, shall be taken by the 
State agency, school food authority, or school, as appropriate, to 
ensure that the breakfasts offered to children comply with the 
established nutrition standards.
    (m) Nutrition disclosure. School food authorities are encouraged to 
make information available indicating efforts to meet the nutrition 
standards in paragraph (b) of this section, such as publicizing the 
results of the nutrient analysis of the school week menu cycle.
    (n) Implementation of nutrition standards and Nutrient Standard 
Menu Planning/Assisted Nutrient Standard Menu Planning. (1) At a 
minimum, the provisions of this section requiring compliance with the 
nutrition standards in paragraph (b) of this section shall be 
implemented no later than the beginning of School Year 1998-99. 
However, schools and/or school food authorities may begin to implement 
any or all of the provisions in this section with prior approval of the 
State agency.
    (2) Prior to School Year 1998-99, State agencies shall require 
school food authorities/schools to implement Nutrient Standard Menu 
Planning or Assisted Nutrient Standard Menu Planning for the School 
Breakfast Program at the same time it is implemented for the National 
School Lunch Program and in accordance with the terms of Sec. 210.10(o) 
of this chapter.

    5. The section heading of newly redesignated Sec. 220.8a is revised 
to read as follows:


Sec. 220.8a  Breakfast components and quantities for the meal pattern 
and for very young children.

* * * * *


Sec. 220.9  [Amended]

    6. In Sec. 220.9, the first sentence of paragraph (a) is amended by 
adding the words ``or 220.8a, whichever is applicable,'' after the 
reference to ``Sec. 220.8''.


Sec. 220.14  [Amended]

    7. In Sec. 220.14, paragraph (h) is amended by removing the 
reference to ``Sec. 220.8 (a)(1)'' and adding in its place a reference 
to ``Sec. 220.8a(a)(1)''.


Appendix A to Part 220  [Amended]

    8. In Appendix A to part 220, Alternate Foods for Meals, under 
Formulated Grain-Fruit Products, paragraph 1(a) is amended by removing 
the reference to ``Sec. 220.8'' and adding in its place a reference to 
``Sec. 220.8a''.


Appendix C to Part 220  [Amended]

    9. In Appendix C to part 220, Child Nutrition (CN) Labeling 
Program:
    a. Paragraph 2(a) is amended by removing the reference to 
``210.10'' and replacing it with a reference to ``210.10a'';
    b. The first sentence of paragraph 3(c)(2) is amended by removing 
the reference to ``210.10'' and adding in its place a reference to 
``210.10a'' and by removing the reference to ``220.8'' and adding in 
its place a reference to ``220.8a''; and
    c. The second sentence of paragraph 6 is amended by removing the 
reference to ``210.10'' and adding in its place a reference to 
``210.10a'' and by removing the reference to ``220.8'' and adding in 
its place a reference to ``220.8a''.

    Dated: June 6, 1994.
Ellen Haas,
Assistant Secretary for Food and Consumer Services.

Regulatory Cost/Benefit Assessment

    1. Title: National School Lunch and School Breakfast Program: 
Nutrition Objectives for School Meals.
    2. Background: This rule proposes to amend the regulations 
outlining the nutrition standards for the National School Lunch and 
School Breakfast Programs. Specifically, this proposal would update the 
current nutrition standards to incorporate the Dietary Guidelines for 
Americans, which reflect medical and scientific consensus on proper 
nutrition as a vital element in disease prevention and long term health 
promotion.\1\ This proposal would also adopt meal planning based on 
analysis of key nutrients (Nutrient Standard Menu Planning or Assisted 
Nutrient Standard Menu Planning) in lieu of the current meal pattern. 
These changes would be implemented no later than July 1, 1998. In 
recognition of the importance of reinventing and streamlining 
government programs, this proposal would also reduce various burdens 
associated with the school meal programs and would modify the review 
requirements for the National School Lunch Program to ensure adequate 
oversight of the proposed updated nutrition standards.
---------------------------------------------------------------------------

    *Footnotes appear at end of docket.
---------------------------------------------------------------------------

    3. Statutory Authority: National School Lunch Act (42 U.S.C. 1751-
1760, 1779) and Child Nutrition Act of 1966 (42 U.S.C. 1773, 1779).
    4. Cost/Benefit Assessment of Economic and Other Effects:
a. Costs To Produce a Meal:
    A nationally representative sample included in the School Lunch and 
Breakfast Cost Study found an average food cost of $0.72 for school 
meals prepared under the current meal pattern, rounded to the nearest 
whole cent. Cost data from this study were used to estimate the cost of 
two weeks of sample menus developed under the requirements for Nutrient 
Standard Menu Planning in the proposed rule. The analysis found an 
average food cost of $0.72 per meal when rounded to the nearest whole 
cent2. These sample menus were developed for elementary and high 
school students using foods and recipes common to the National School 
Lunch Program (NSLP). When planning the sample menus, milk was 
constrained to provide eight fluid ounces with each meal, to include 
milks of various fat levels and a mix of flavored and unflavored milk. 
Additional weeks of menus could have been developed at similar cost, 
but analysis of two weeks of sample menus was deemed sufficient to 
demonstrate that nutrient targets could be met at current food cost. It 
would also have been possible to have further reduced the cost of the 
sample menus, for example by substituting lower cost items or using 
smaller portions of relatively expensive items such as yogurt and fish 
sticks. The lower end of the cost range of sample menus was about 28 
percent below the two week average food cost. The sample menus were 
developed using foods and recipes already in common use in NSLP, such 
as those from ``Quantity Recipes for School Food Service''3. They 
did not reflect the potential savings which may be realized when market 
forces stimulate development of new lower fat foods and recipes. 
Increased demand for foods lower in fat, saturated fat, sodium and 
cholesterol are expected to increase availability of these foods in the 
future. Such new foods and recipes should provide greater flexibility 
to NSLP menu planners, and may facilitate further moderation of meal 
cost and food components such as sodium and cholesterol where 
appropriate.
    The sample menus include ingredients that are fresh and those that 
are processed into more convenient, labor saving forms, such as frozen. 
Examples of processed foods used in the sample menus include popular 
food items, pizza and chicken nuggets. Although these items were used 
less often than currently offered, by using foods and recipes common to 
the NSLP, the sample menus look similar to meals currently offered to 
students. By their preexisting use in NSLP, school food service 
personnel have already demonstrated that these food items can be 
prepared in the time available to prepare current school lunches, and 
similarly indicate that the staff with the skills needed to prepare 
these foods are already available. In addition, the equipment needed 
for food storage and preparation is either already available, or 
schools operating under the present rules have demonstrated that such 
equipment can be obtained within the existing reimbursement rates. 
Therefore, even though the costs of labor, equipment, and 
administration were not specifically analyzed, the manner in which the 
sample menus were developed provides confidence that non-food costs of 
the NSMP sample menus are expected to be similar to those already 
experienced in NSLP operation. FNS will continue to explore cost 
impacts. The evaluation of the Nutrient Standard Menu Planning 
Demonstration will examine the reported costs of school food service 
operations associated with implementing NSMP. This evaluation will 
examine total meal production costs and will analyze separate 
components (food, labor, other costs).
    By definition, the average results reported above mean that some 
school districts would be expected to experience food costs for the 
sample menus that vary considerably from those reported above. This is 
not different from the current situation because there is already a 
wide range of food costs due to factors such as economies of size, 
geographic variation in delivery and labor costs, and local market 
conditions.
b. Market Effects
    To estimate market effects a mathematical model was developed to 
incorporate information on the kinds, amounts, nutrient content, and 
costs of foods served in schools lunches. The model uses all of this 
information and seeks a solution which minimizes the changes in current 
amounts of foods served in NSLP meals and also meets the nutrition 
objectives set forth in the Dietary Guidelines and adds no additional 
costs to food purchases. The model constrains food offerings and 
recipes to those actually used in schools. However, the meal pattern is 
allowed to deviate from the current regulations regarding food groups 
and portion sizes as long as it meets at least one-third the RDA for 
all nutrients. In keeping with the principles of the Dietary 
Guidelines, the meals are also restricted to no more than 30 percent of 
calories from total fat and less than 10 percent of calories from 
saturated fat.
    The model can be specified to allow the amounts of all foods to 
vary, which permits substitution between high and low-fat beef as well 
as across other food groups such as pork, poultry, vegetables, and 
fruits. There are a vast number of possible scenarios which can be 
explored through this model, and the three discussed below have been 
selected as most useful in understanding the impacts of the proposed 
rule. In several of these scenarios the model is constrained to 
maintain the amounts or types of foods. In all three scenarios the 
volume of beverage milk is held constant at current consumption levels. 
This was done because milk will remain a required item under the 
proposed nutrition based menu planning system. The model minimizes the 
changes in the quantity of each item served and satisfies the nutrition 
and cost goals.
    The model includes the following constraints for all scenarios: 
Food ingredient cost at average cost for NSLP meals; calories (\1/3\ of 
average energy allowance listed in the RDA report); total fat (not more 
than 30 percent of calories); saturated fat (less than 10 percent of 
calories); carbohydrate (not less than 50 percent of calories); 
cholesterol (not more than 100 mg); \1/3\ of RDA level for the 
following select nutrients: protein, vitamins (vitamins A, B6, B12 and 
C, niacin, riboflavin, thiamin, folate), and minerals (calcium, iron, 
magnesium, phosphorus, and zinc); and milk (total volume and mix by fat 
content held constant at current levels). As described in greater 
detail below, scenario one is the basic model using these constraints, 
scenario two constrains all chicken to have the nutrient profile of 
low-fat chicken, and scenario three constrains the model to retain 
current levels for major commodity groups. The estimated changes in 
food items are then aggregated to national estimates based on the total 
number of school lunches served in FY-1993. Subsequently, the impact of 
these changes on agricultural markets are estimated using commodity 
market models developed by economists in the Economic Research Service.

Data

    The study is based on the most recently available data on quantity 
and frequency of foods actually served in NSLP meals, detailed nutrient 
content of those foods, estimated food ingredient costs, and 
Recommended Dietary Allowances for micronutrients and Dietary 
Guidelines recommendations for fat and saturated fat.
    Data on actual foods served in the NSLP were obtained from the 1993 
USDA School Nutrition Dietary Assessment (SNDA) study conducted by 
Mathematica Policy Research for FNS. The study included a survey of 
about 3550 students in grades 1 through 12 in 545 schools throughout 
the country. The students reported detailed information on the kinds 
and amounts of foods and beverages they consumed during a 24-hour 
period. The impact analysis uses only the portion of the data on foods 
served to children as part of credited school lunches. It includes 
plate waste but excluded a la carte items, such as desserts, purchased 
in addition to the school lunch. The SNDA survey contained detailed 
information on over 600 food items served in the school lunch program. 
These items were aggregated into over 50 food groups based on the 
primary ingredient and the percent of calories from fat. For example, 
there were two beef categories: high-fat and low-fat beef; two poultry 
categories; etc.
    Food items costs are estimated from ingredient cost data obtained 
in the 1993 School Lunch and Breakfast Cost Study conducted by Abt for 
FNS and recipes for school lunch items. The recipes were necessary for 
two reasons: Aggregation of ingredient costs to costs of food served, 
and for estimating the change in usage of the various agricultural 
commodities.
    With respect to the agricultural economy, the amount of most foods 
served in NSLP meals is a small part of the total U.S. supply of 
agricultural commodities. For example, USDA and school district 
purchases of beef products account for less than two percent of the U. 
S. beef supply. Therefore, even the anticipated changes in the amounts 
of different foods served in the meals are expected to have minimal or 
no change in farm level prices.
    Three alternative scenarios were examined to gauge market effects 
with alternative specific recommendations which could be implemented 
into the meals. All three scenarios meet dietary recommendations and 
the milk requirement with no change from the current per meal average 
food cost. Table 1 shows the total U.S. market in millions of pounds 
for various groups of commodities and the corresponding current school 
market size.
    The three scenarios illustrate a range of market effects that could 
occur under alternative implementation assumptions. The first and third 
options demonstrate the range of market impacts associated with either 
minimizing the change in current food offerings or minimizing the 
change in commodity markets. The second scenario was designed to show 
how the results could change if lower fat preparation techniques were 
followed in only one of the commodity groups. Although chicken is used 
in this example, other commodities, such as beef or pork, might show 
similar changes if substitutions were made between high and low fat 
alternatives. Additional information on the constraints on the model 
imposed in each of the three scenarios is described in more detail 
below.
    The three scenarios estimate impacts using current market prices 
for foods available and in use by schools. To the extent that products 
are reformulated to provide additional lower-fat products or lower-fat 
products become more widely available and affordable, the market 
impacts would change. The scenarios do not assume any product 
innovations. Similarly, food preparation techniques will play an 
important role in how the proposal would be implemented. Using lower 
fat preparation techniques would enable schools to continue to use 
foods at current levels because fat added during preparation would be 
reduced.
    No single set of assumptions can adequately describe impacts under 
the proposed regulation. Schools have tremendous flexibility under 
nutrient standard menu planning to meet the dietary guidelines using 
the methods most appropriate to their circumstances. Schools can alter 
the mix of foods served within and among commodity groups. Changes in 
food preparation techniques could produce significant improvements in 
the nutritional profile of meals without any changes in the types of 
foods served. The model and the three scenarios examined show that 
changes in food preparation techniques for one commodity group can 
alter the results for other commodity groups. This occurs because the 
nutrient and cost targets are fixed. Nutritional improvement for one 
commodity group, such as a reduction in fat, both leaves more 
flexibility for other commodity groups to provide that food component 
within the established target, and, in the case of reduction of fat, 
required additional calories from some source to meet the calorie 
target.
    The first scenario, ``Minimum change in current offerings'', 
established the amounts of foods from each of 52 groups required to 
meet the dietary, cost, and milk requirements with as little deviation 
as possible from the current eating choices of the children. It also 
required the consumption of low-fat, medium-fat and whole milk to stay 
at the same levels as current consumption. The 52 groups include 
separate groups for high and low fat versions of food items and dishes. 
This scenario allows for substitutions among these and other groups.
    The second scenario, using poultry as the example, shows how the 
results change if lower fat preparation techniques were used in one 
food category while holding food preparation techniques in other 
categories constant. High-fat poultry preparation techniques (such as 
chicken nuggets) were entirely replaced with lower fat techniques (such 
as baked or broiled chicken parts). As noted previously, other 
commodities might show similar changes if substitutions were made 
between high and low fat alternatives.
    For the third scenario, the analysis model was modified to present 
a ``No change in commodity markets'' scenario where food commodity 
groups were restricted to their current level of use in the NSLP (with 
the exception of butter). The consumption of the various foods served 
were allowed to fluctuate within the commodity groups. For example, 
beef could be consumed alone or in a mixture such as lasagna, but the 
total level of beef served was required to be the same as is currently 
being served. In general, this adaptation required that low-fat foods 
be chosen within food groups. Notable exceptions included serving high-
fat chicken and potatoes, probably due to the need to obtain sufficient 
calories. Also, the cost became more of a constraining factor in this 
scenario. Many of the higher fat or costly foods were eliminated from 
the solution. Some of the changes included:
     Serving milk containing less than 17 percent of 
kilocalories from fat (skim and one-percent);
     Serving beef in mixtures such as chili rather than as 
roasts, steaks, or hamburger patties;
     Serving low-fat pork products such as ham instead of ribs 
or bacon;
     Serving more meal mixtures such as chili and fewer grain 
mixtures such as pizza; and
     Serving more fruits and less fruit juices.
    This analysis shows that the impact of the school lunch proposed 
rule on the major commodity markets and related farm programs would be 
minimal. Commodity prices, producer marketings and receipts, and farm 
program outlays under any of the scenarios would not vary significantly 
from the levels projected in the USDA 10-year Baseline Projections.
    The proposed rule's limited impact reflects several factors 
including:
     The share of commodities used in the school lunch program 
is typically quite small compared to total U.S. disappearance. Hence 
changes in school lunch offerings have to be very large before they 
affect the commercial market.
     For the first scenario, changes in school lunch menus were 
designed both to meet the nutritional guidelines and to minimize 
changes in children's food choices. While this was done to reflect 
children's taste/preference, it has a moderating effect on changes in 
the commodity composition of school lunches as well as a minimum change 
in food service offerings.
     The second and third scenarios demonstrate that there is 
considerable potential for substitutions within food groups (e.g., 
shifting from conventional to healthier products in the same food 
group) and for changing food preparation techniques to improve 
nutritional value (e.g., shifting from fried to roasted chicken). The 
modified menus took advantage of these options. Changes in food 
preparation techniques and use of healthier products in the same food 
group would minimize agricultural impacts.
    Individual commodity market impacts of scenarios one and two are 
described in greater detail below. These should be interpreted with the 
understanding that scenario three shows that it is possible to achieve 
the dietary, food cost and milk requirements with no change in 
commodity markets other than butter. The information presented reflects 
estimates of market impacts under full implementation of the proposed 
regulation.

Dairy Impacts

    The impacts of the proposed rule differ across the fluid milk, 
butter, and cheese components of the dairy sector. The modified menus 
hold milk offerings constant but reduce cheese and eliminate butter. 
Hence, the major impacts would be in the processed product markets 
rather than the fluid market.
    School lunch use of butter is eliminated in the three scenarios; 
the modified menus would annually displace 50-55 million pounds of 
butter in a 1.0 billion pound U.S. market. The dairy program activity 
expected under the baseline projections would keep the impact of this 
decline on producer prices, incomes, and government farm programs 
minimal. Virtually all of the displaced butter is donated by the 
Commodity Credit Corporation (CCC) from stocks acquired as part of its 
price support operations; purchases occur at the levels needed to 
support manufacturing milk prices at legislated levels and minimize 
stock holding. The school lunch volume is small enough compared to 
total CCC purchases and other disposal programs that the butter in 
question would continue to be acquired under the proposed rule but be 
donated to other institutions or sold concessionally or donated abroad. 
Hence, butter impacts would ultimately be minimal.
    The impact of the proposed rule on the cheese market could be more 
pronounced but still limited. This is because the volume differences in 
the use of cheese between the baseline and the scenarios one and two is 
larger and most of the cheese used in the school lunch program is 
bought on the open market rather than donated from CCC stocks. But the 
annual 80-90 million pound decline in cheese disappearance associated 
with these scenarios would account for less than a 1 percent drop in 
U.S. cheese disappearance. This would lower farm milk prices 7 to 8 
cents per hundredweight causing a decline in production and lower farm 
revenues from milk by $150-$200 million annually (from a 1990-93 base 
of $19.5 billion). CCC dairy program costs would increase by an 
estimated $20 to $25 million annually. Hence, even for cheese, the 
impacts on the dairy sector and the budget would be relatively small. 
As scenario two demonstrates for chicken, a more pronounced shift 
towards use of lower fat cheese or other lower fat items in schools 
could further moderate these impacts. Under scenario 3 there would be 
no reduction in cheese.

Meat Sector Impacts: Broilers and Turkeys

    The impact of the proposed school lunch rule on the broiler market 
is expected to be modest under the first and second scenarios. Broiler 
offerings in the school lunch program would decline 120 million pounds 
under the first scenario and increase 38 million pounds under the 
second. The current school lunch use of 245 million pounds is a small 
share of the total U.S. market of 19.9 billion pounds. Hence, a 120 
million pound reduction would lower broiler prices 1.8 percent and 
reduce farm revenues by 1.2 percent. The second scenario uses chicken 
as an example of how a large shift towards low-fat preparation (e.g., 
from fried to broiled) could moderate shifts in commodity usage. If 
purchases are increased by 38 million pounds as provided for under the 
second scenario, broiler prices would increase 0.4 percent and revenues 
rise by 0.2 percent. There are no direct government programs for the 
industry.
    The impact of the proposed rule on the turkey market is expected to 
be modest under scenarios 1 and 2. Total use of turkey meat would 
decline 52 million pounds under one scenario and increase 16 million 
pounds under the other. The current school lunch use of 105 million 
pounds is a small share of the total U.S. market of 4.6 billion pounds. 
Hence, turkey prices would decrease 2 percent under the first scenario 
and increase 0.5 percent under the second. Producer revenues decrease 
by $36 million under the first scenario and increase $4 million under 
the second scenario--less than 0.01 percent in either case. There are 
no direct government programs for the turkey industry. Again, under 
scenario 3 there would be no change in either broilers or turkey.

Meat Sector Impacts: Beef and Pork

    The impact of the proposed rule on the beef market is expected to 
be minimal under the first and second scenarios. School lunch offerings 
of beef would decline 100-126 million pounds from 485 million pounds 
currently, in a total U.S. market of 24 billion pounds. This school 
lunch decline would reduce the farm level market price for beef by less 
than 1 percent and result in a 0.5 percent reduction in beef producers' 
revenues. A slightly larger reduction (126 million pounds) in beef 
offerings under the second scenario would result in approximately the 
same reduction in wholesale beef prices and farm revenues. There are no 
direct government programs related to the beef industry; hence, the 
changes likely under the proposed rule have no direct federal budget 
implications. As scenario two demonstrates for chicken, a more 
pronounced shift towards the use of lower-fat beef, lower-fat beef 
preparation, or other lower-fat items in schools could further moderate 
impacts. Under scenario 3 there would be no impact at all.
    The impact of the proposed school lunch rule on the pork market is 
also expected to be minimal under the first and second scenarios. This 
is because much of the pork already in use in the school lunch program 
is lean pork such as ham. Total use of pork in the school lunch program 
would increase 16 million pounds or remain the same in the first and 
second scenarios. The school lunch program's current use of 280 million 
pounds represents a small fraction of the total U.S. market of 17.3 
billion pounds. Hence, the 16 million pound increase would boost prices 
a minimal 0.2 percent. Farm revenues would increase $11 million or 0.1 
percent of their existing revenues. There are no government support 
programs directly associated with the pork industry and hence no budget 
implications.

Fruit, Vegetable, and Potato Market Impacts

    The impacts of the proposed rule on the fruit, vegetable, and 
potato markets would be small under the first and second scenarios. 
Schools use these products in a variety of forms, including fresh, 
frozen, canned, and as components of commercially processed mixtures. 
Total usage of fruits in the school lunch program would increase 718 
million pounds under the first scenario and over 1.1 billion pounds 
under the second. Both represent less than 2 percent of the 61.1 
billion pound U.S. fruit market. Under scenario one, prices would 
increase 0.1 percent and farm revenues increase 1.2 percent or $124 
million in a $10.2 billion market. Impacts under the second scenario 
are slightly larger, with prices up 0.2 percent and revenues up $200 
million.
    Use of vegetables in the program would increase 89 million pounds 
under the first scenario and 35 million pounds under the second in a 71 
billion pound U.S. market. Under the first and second scenarios, price 
increases would be negligible and farm revenue gains would be $5-12 
million or less than 0.1 percent of industry revenues. Use of potatoes 
in the program would decline 298 million pounds under the first and 
second scenarios in response to fewer french fry offerings. These 
reductions are expected to have a little or no impact on the 34 billion 
pound U.S. potato market. Reduced potato usage would result in 0.1 
percent decline in potato prices and a comparable $20 million reduction 
in farm revenues. The School Nutrition Dietary Assessment Study found 
that potatoes are often fried or prepared with a significant amount of 
added fat. The sample menus developed for the food cost analysis show 
that lower-fat potato dishes can be readily used under nutrient 
standard menu planning. As with chicken in scenario two, a more 
pronounced shift towards use of lower-fat potato preparation or other 
lower-fat items by schools could further moderate the impacts on the 
potato market.

Field Crop Impacts

    The major impact of the proposed rule on the field crop markets 
would be in the wheat market. Menu changes would increase the wheat 
used in various forms in the school lunch program from 16.5 million 
bushels currently to 28-30 million bushels, under the first two 
scenarios, in a total U.S. market of 2.5 billion bushels. While the 
difference between scenarios is insignificant, an increase in wheat 
demand of 10 to 15 million bushels could spark a small adjustment in 
the market. After offsetting changes in production, feed use and 
exports are taken into account, the net increase in total use would be 
roughly 5 million bushels and generate a 2 cent per bushel higher farm 
price. This would reduce deficiency payments by about $35 million (from 
a 1990-93 base of $1.9 billion) and would increase farmers' market 
receipts by about $45 million (from a 1990-93 base of $7.3 billion), 
more than offsetting the lost deficiency payments.
    Rice use would increase roughly 1 million hundred weight under the 
first and second scenarios in a national market of 180 million hundred 
weight. This would generate less than a 1 percent change in the farm 
price of rice, a $7-9 million increase in market revenues, and an 
offsetting $6-8 million reduction in government payments.
    The proposed rule could also reduce use of oilseeds and related 
products. Changes in menu items as well as preparation techniques would 
decrease use of vegetable oils for frying and salad dressings.
    But the decreases would be too small to measurably affect prices; 
moreover, with government support for oilseeds limited to a loan 
program with rates set well below forecast market prices, there would 
be no budget implications.

Peanut Impacts

    In the agricultural impact models developed for this analysis, 
peanuts are part of a group including legumes and nuts. This group 
shows some increases under the first and second scenarios, although the 
direct impact on peanuts is less clear. Even if the findings for the 
group as a whole are assumed to similarly impact peanuts, the impacts 
of the proposed rule on the peanut market would be small under the 
first and second scenarios. Under the first and second scenarios, total 
usage of peanuts in the school lunch program would increase about 6 
million pounds from its current school lunch base of about 44 million 
pounds. This increase represents less than 0.3 percent of the total 
U.S. peanut market of 2 billion pounds. Farm prices of peanuts are 
expected to rise about 0.1 percent and farm revenues increase about 
$1.0 million. There would be no impact on the government cost of the 
peanut program.

                        Table 1.--Annual Quantity Impacts for Major Agricultural Markets                        
                                             [In millions of pounds]                                            
----------------------------------------------------------------------------------------------------------------
                                                 1993 market size                       Scenario                
                                          ----------------------------------------------------------------------
                                                                        One: Minimum                            
             Commodity group                 U.S. total                    change      Two: Lower     Three: No 
                                             farm-level      School        within      fat chicken    change in 
                                           disappearance     lunches       current    preparation     commodity 
                                                                         offerings                     markets  
----------------------------------------------------------------------------------------------------------------
Butter...................................         1,007           55             0             0             0  
Cheese...................................         6,633          135            53            47           135  
Broilers.................................        19,855          245           125           283           245  
Turkey...................................         4,591          105            53           121           105  
Beef.....................................        24,040          485           385           359           485  
Pork.....................................        17,268          280           296           280           280  
Fruits and juices........................        61,055        1,097         1,815         2,234         1,097  
Vegetables...............................        71,018        1,218         1,307         1,253         1,218  
Potatoes.................................        34,079          674           376           372           674  
Peanuts..................................         2,050           44            50            50            44  
Rice (million cwt).......................           180            1.3           2.3           2.2           1.3
Wheat (million bu).......................         2,500           16            30            28            16  
----------------------------------------------------------------------------------------------------------------

    The three scenarios illustrate that minimizing the change in 
current offerings creates market impacts that would not occur if lower-
fat substitutions are offered or the mix of commodities within category 
is allowed to change. They also emphasize that school menus would have 
to change in order to avoid any impacts in the commodity market.

                                    Table 2.--Farm Price, Revenue, and Program Impacts for Major Agricultural Markets                                   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Scenario                                         
                                                            --------------------------------------------------------------------------------------------
                                                                 One: Minimum change in         Two: Lower fat chicken     Three: No change in commodity
                                                     Total         current offerings                 preparation                      markets           
                                                     farm   --------------------------------------------------------------------------------------------
                                                   receipts                         Farm                           Farm                           Farm  
                    Commodity                         (in               Revenues   program             Revenues   program             Revenues   program
                                                   billions                (in      costs                 (in      costs                 (in      costs 
                                                      of       Prices   millions     (in      Prices   millions     (in      Prices   millions     (in  
                                                   dollars)  (percent)     of     millions  (percent)     of     millions  (percent)     of     millions
                                                                        dollars)     of                dollars)     of                dollars)     of   
                                                                                  dollars)                       dollars)                       dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cheese (milk equivalent).........................   \1\19.4       -0.6      -166        23       -0.6      -178        25        0.0         0         0
Butter (milk equivalent).........................   \1\19.4        0.0         0         0        0.0         0         0        0.0         0         0
Broilers.........................................      11.0       -1.8      -134         0        0.4        19         0        0.0         0         0
Turkey...........................................       2.9       -2.1       -36         0        0.5         4         0        0.0         0         0
Beef.............................................      28.3       -0.9      -143         0       -0.9      -103         0        0.0         0         0
Pork.............................................      10.7        0.2        11         0        0.0         0         0        0.0         0         0
Fruits...........................................      10.2        0.1       124         0        0.2       200         0        0.0         0         0
Vegetables.......................................       9.4        0.0        12         0        0.0         5         0        0.0         0         0
Potatoes.........................................       2.0       -0.1       -20         0       -0.1       -20         0        0.0         0         0
Peanuts..........................................       1.0        0.1         1         0        0.1         1         0        0.0         0         0
Rice.............................................       1.3        0.6         9        -8        0.5         7        -6        0.0         0         0
Wheat............................................       7.3        0.7        45       -35        0.7        45       -35        0.0         0         0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Total farm receipts from milk.                                                                                                                       

USDA Commodities

    USDA for a number of years has made adjustments to improve the 
nutritional content of commodities provided, however, the basic types 
and quantities of foods offered to schools have not changed 
significantly. The analysis conducted indicates that schools can 
provide meals that meet the dietary guidelines without significant 
changes in the types of food provided and the Department can continue 
to make improvements to the commodities provided without diminishing 
agricultural market support to farmers. In total, USDA commodities 
account for less than one-sixth of all foods used by schools; the 
overall average is 16.4 percent. Although there is some variation among 
schools in the amount of USDA commodities they receive, USDA 
commodities make up between 10 and 25 percent of the food used for the 
vast majority (96 percent) of the school food authorities.
    The market analysis for scenario one and the sample menus developed 
for the NSMP food cost analysis reflect an expected shift toward 
increased use of vegetables, fruits and grains. Such a shift is 
consistent with the Dietary Guidelines for Americans and the Food Guide 
Pyramid.4 This shift can occur without causing significant impacts 
in overall food markets, however, or in the amounts and types of food 
USDA provides to schools, with the exception of butter.
    USDA continues to make improvements that reduce the proportion of 
calories from fat in donated commodities: Reducing fat levels in ground 
beef; acquiring lower-fat cheeses and salad dressings; and providing 
foods in lower-fat forms (chicken vs. chicken nuggets). Because USDA 
provides a significant proportion of a small number of foods schools 
use (cheese--45 percent; beef--30 percent; turkey--70 percent; 
chicken--29 percent) efforts to lower the percentage of calories from 
fat for these commodities can have a substantial impact on the overall 
nutrient profile of foods used in the program. Even if there are some 
shifts in the types of foods that schools serve, there is likely to be 
little change in the overall amount of USDA acquisitions of cheese, 
beef and poultry because the Department's purchasing power would 
provide the best leverage for securing lower-fat versions of these 
products at the lowest price.
c. Benefits
    No near-term cost savings due to health improvement from the 
nutritional update are projected. However, longer term savings in 
health care costs and years of life may result. The Continuing Survey 
of Food Intake by Individuals, 1989-91 found that school-age children 
have average daily intakes of 33.7 to 34.7 percent of calories from 
fat, and 12.6 to 13.3 percent of calories from saturated fat, depending 
upon the age-sex group. The Dietary Guidelines for Americans recommends 
limiting total fat intake to not more than 30 percent of total 
calories, and limiting saturated fat intake to less than 10 percent of 
total calories. The School Nutrition Dietary Assessment Study (SNDA) 
found the average daily consumption by NSLP participants on school days 
to be 35 percent of calories from fat and 13 percent of calories from 
saturated fat, compared to 33 percent of calories from fat and 12 
percent of calories from saturated fat for non-participants.5 SNDA 
also found that students consume fat and saturated fat from school 
meals at about the same levels as those offered to them. SNDA found 
schools offering NSLP meals which averaged 38 percent of calories from 
fat and 15 percent of calories from saturated fat, and participants 
consumed NSLP meals with 37 percent of calories from fat and 14 percent 
of calories from saturated fat. Implementation of the proposed rule 
would reduce the fat levels at school meals to the Dietary Guidelines 
levels. Using these figures along with the average percent of school-
age children receiving a USDA meal (51%) and the average number of 
school days per year (182), we estimate that, on average, the proposed 
rule will achieve about 12 percent of the change needed to reach the 
Dietary Guidelines levels for percent of calories from fat and 
saturated fat for all U.S. children ages 5 to 18 years. Since school 
meal participation rates are higher for low-income children than for 
higher income children, the health benefits will be concentrated in the 
population at greatest risk of nutrition-related chronic diseases--
those with low income. Healthy People 2000: The National Health 
Promotion and Disease Prevention Objectives reports that low income is 
a special risk factor for both heart disease and cancer.6
    The long term savings in health care costs and increase in years of 
life could result to the extent that lower intakes of fat, saturated 
fat, cholesterol, and sodium, and increased intakes of grains, fruits 
and low-fat vegetables either throughout the school years or over a 
more extended period of time could reduce the risk of diet-related 
chronic diseases such as heart disease, stroke, cancer, and 
atherosclerosis. These diseases accounted for almost 65 percent of all 
deaths in the U.S. in 1991.7 McGinnis and Foege, in an analysis of 
actual causes of death in the U.S., reported about 300,000 deaths per 
year, 14 percent of the total deaths, as the lower bound estimate for 
deaths related to diet and activity patterns.8 These factors 
cannot be readily separated due to their interdependence in determining 
obesity.
    The savings in years of life and the value associated with a 
population reduction of fat, saturated fat and cholesterol has been 
estimated for the U.S. adult population. These estimates were 
incorporated into the regulatory impact analysis for the food labeling 
regulatory proposal published on November 27, 1991, the Food and Drug 
Administration (FDA).9 While no comparable estimates are currently 
available for dietary changes by school-age children, it is useful to 
consider the magnitude of effects expected from the proposed changes in 
the school meal programs with that projected for food labeling.
    The study by the Research Triangle Institute (RTI) developed for 
the food labeling proposal estimated the following changes in fat, 
saturated fat and cholesterol for male and women due to the labeling 
changes:10

   Table 3.--Average Daily Estimated Changes in Fat, Saturated Fat and  
   Cholesterol for the U.S. Adult Population Due to FDA Food Labeling   
                                 Changes                                
------------------------------------------------------------------------
                                       Men         Women       Average  
------------------------------------------------------------------------
Changes in fat intake:                                                  
    Grams........................        -1.49        -0.67        -1.08
    Percent......................        -1.4%        -1.1%       -1.25%
Changes in saturated fat intake:                                        
    Grams........................        -0.48        -0.16        -0.31
    Percent......................        -1.3%        -0.7%        -1.0%
Changes in cholesterol intake:                                          
    Milligrams...................        -0.42        -0.26        -0.34
    Percent......................        -0.1%        -0.1%        -0.1%
------------------------------------------------------------------------
Adapted from Food and Drug Administration regulatory impact analysis    
  statement for the proposed food labeling regulations, Federal         
  Register, November 27, 1991. Average assumes equal numbers of men and 
  women.                                                                

    RTI and FDA then used the changes for men and women in a computer 
model developed by Dr. Warren Browner to estimate the effects on years 
of life over a period of 20 years. The increased years of life 
estimates were then used to estimate a value for the added years of 
life. These changes were found to result in an estimated 20-year 
reduction of 35,179 cases of cancer, and a reduction of 4,028 cases of 
coronary heart disease. As a result they estimated avoiding 12,902 
deaths and increasing life-years by 80,930.
    FDA used two different approaches to estimating the total value of 
the food labeling changes, a remaining years of life approach and a 
mean value approach (see November 27, 1991 Federal Register, pages 
60871-0872, for a more detailed description). They also estimated 
totals using two different dollar values for consumer willingness to 
pay for risk reduction--a conservative estimate of $1.5 million and a 
higher estimate of $3.0 million. The value of the benefits from 
increased life-years was estimated to be $3.6 billion (discounted at 5 
percent over a 20 year period). When benefits were valued based upon 
the number of early deaths prevented and the higher willingness to pay 
figure of $3.0 million, the estimate (similarly discounted) increased 
to $21 billion. In January 6, 1993, when publishing the final food 
labeling rule with a comment analysis, FDA updated their 20-year value 
estimates to between $4.4 billion and $26.5 billion.11
    USDA agrees with FDA that for government policy evaluation, 
society's willingness to pay for risk reduction is an appropriate 
concept to use in evaluating the impact of government actions which 
will reduce risks. The FDA estimates of $1.5 million and $3.0 million 
used in their analysis are quite conservative. Economists have three 
decades of experience in estimating the value of reducing the risk of 
fatalities using labor market data. Fisher, Chestnut and Violette 
(1989) evaluated the merits of these studies of the extra wages that 
would have to be paid for accepting a higher risk of fatality on the 
job; concluded that the results from the studies without obvious design 
flaws were reasonable consistent; and reported that the studies implied 
a value-per-statistical-life of $1.6 million to $8.5 million (in 1986 
dollars).12 This range of value-per-statistical-life becomes $2 
million to $10.4 million in 1993 dollars (updated using the change in 
Bureau of Labor Statistics' average weekly earnings paid to 
nonagriculture nonsupervisory workers).
    Viscusi (1993) also surveyed risks of death and concluded that 
``the most reasonable estimates of the value of life are clustered in 
the $3 million to $7 million range'' (p. 1942). However, he cautions 
that these estimates may be low, because the populations of exposed 
workers in these studies generally have lower incomes than individuals 
being protected by government risk regulations.13 (The positive 
income elasticity for risk reduction means that higher values for 
lifesaving should be used when evaluating many risk reduction programs, 
such as airline safety programs). Fisher, Chestnut, and Violette also 
caution that to the individual's valuation of the risk reduction should 
be added the value loved ones and altruistic others also would be 
``willing to pay for reducing the fatality risk for those exposed to 
it'' (p. 97).
    The values for risk reduction may be greater when risks are 
involuntarily assumed than when the risks are voluntarily chosen. This 
is relevant to the school lunch situation where a limited array of 
choices are offered in the lunch program. Thus, the higher estimates 
may be most appropriate for evaluating the school lunch programs' 
healthier diet and its contribution to reducing risk per-statistical-
life.
    In comparison to the dietary changes predicted by FDA for food 
labeling, the improvements in fat and saturated fat estimated for the 
school meal program proposed regulation are substantial. The School 
Nutrition Dietary Assessment Study found that dietary intake from NSLP 
lunches provides 37 percent of calories from fat and 14 percent of 
calories from saturated fat. Reducing these lunchtime intakes to the 
Dietary Guidelines levels proposed in the regulation would reduce an 
NSLP participant's intake by 5.9 grams of fat and 3.4 grams of 
saturated fat on each day school lunch is eaten. Allowing for 182 
school days per year and the percent of total U.S. children age 5 
through 18 years who receive a meal on any school day (51%), it is 
estimated that the average daily reduction across all school-aged youth 
would be 1.5 grams fat and 0.86 grams saturated fat.
    These estimates are significantly above those estimated for the FDA 
food labeling changes for fat and saturated fat. For cholesterol, 
school meals already provide a moderate intake and no further reduction 
will be required by the proposed regulation. To further compare the 
aggregate effect to that estimated for the food labeling regulations, 
consider the situation where the adult population reduces fat by 1.5 
grams, reduces saturated fat by 0.86 grams, and does not reduce dietary 
cholesterol intake. This is necessary because there are no commonly 
accepted equations to relate changes in children's intakes of fat, 
saturated fat, and cholesterol to chronic disease reduction. The 
Browner model assumes that the relative risk of cancer is a function of 
total fat. The reduction of 1.5 grams of fat is about 39 percent 
greater than the reduction of 1.08 grams average for males and females 
estimated for FDA's food labeling, so a larger reduction in cancer 
incidence and deaths would be expected. For coronary heart disease, the 
Browner model assumes that all change is mediated through changes in 
serum cholesterol, which is affected by total fat, the type of fat, and 
dietary cholesterol. FDA used the following equation from Hegsted 
(1986) to estimate the change in serum cholesterol:

    Change in serum cholesterol in milligrams per deciliter (mg/dl) = 
2.16S - 1.65P + 0.097C

Where
S = change in percentage of total calories represented by saturated 
fat,
P = change in percentage of total calories represented by 
polyunsaturated fat, and
C = change in dietary cholesterol measured in milligrams per 1000 
kilocalories.

    The Hegsted equation shows that the greatest effect on serum 
cholesterol is due to saturated fat, and that changes in dietary 
cholesterol only play a small part.14
    The NSLP changes result in an average reduction in saturated fat of 
0.86 grams, which is 2.77 times the reduction of 0.31 grams estimated 
for FDA's food labeling. Since the estimated change in polyunsaturated 
fat levels is only slightly greater for food labeling than for the 
proposed regulation, the overall estimated change in serum cholesterol 
for the adult example based upon changes at the levels which are 
proposed for school lunch would be considerably greater than that 
projected for labeling, driven by the large decline in saturated fat.
    In summary, if the reductions in fat and saturated fat intake 
instituted during the school years are continued into adulthood, the 
increase in life-years and the value in dollars based upon willingness 
to pay would be of a magnitude similar to or exceeding that estimated 
for the food labeling changes, which were $4.4 to $26.5 billion over 20 
years. However, the lag time to realize this level of benefits over a 
20 year period might be greater since FDA's estimates apply to the U.S. 
adult population and the proposed rule on school meals will begin to 
have effect with those children in school at the time of 
implementation.
    The fat and saturated fat reductions estimated to accompany the 
proposed regulation assume that: (1) Students do not replace school 
meal fat and saturated fat reductions by increasing fat intake at other 
times of the day or on non-school days, (2) that the dietary 
improvements at USDA school meals do not result in similar improvements 
at other meals or on non-school days and (3) that the improvements by 
program participants do not result in changes by non-program 
participants. If students did replace fat and saturated fat at other 
eating occasions, a smaller health benefit would result. If 
improvements on school days serve as a positive models which, when 
combined with nutrition education, result in improvements to non-USDA 
school meal, a larger improvement would result. The findings from the 
Menu Modification Demonstrations indicate that the daily fat intakes of 
NSLP participants would decline if their fat intakes at lunch were 
lower, but the effect on non-school meals is less clear.15 Four 
sites at geographically dispersed locations (Chattanooga, TN; Denver, 
CO; Princeton City, OH; and San Bernadino, CA) received grants to test 
reduction in the fat content of NSLP meals. Dietary intakes of fifth 
grade NSLP participants at lunch and over 24 hours were collected both 
at baseline and after the reduction of fat in the NSLP meals. The 
demonstration found that the percent of calories from fat over 24 hours 
declined either significantly or marginally at all sites for both boys 
and girls. In addition, the reduction of intake in grams of total fat 
over 24 hours was greater than or equal to the reduction at the NSLP 
meal at three of the four sites. At the fourth site (Princeton City), 
despite an NSLP reduction in fat, 24-hour calories and grams of fat 
increased. At the San Bernardino site, which achieved the largest 
reduction in fat at the NSLP meals, the reduction of grams of fat over 
24 hours was significantly greater than the NSLP reduction. On balance, 
the results of this demonstration indicate that when fat at the NSLP 
meal is reduced, students usually do not replace these calories by 
increasing fat intake at other eating occasions. While there is some 
indication that an accompanying reduction in fat at other eating 
occasions may be more common than an increase in fat at other eating 
occasions, findings are mixed and therefore not robust enough to 
influence benefit projections. Accordingly, the analysis in this 
section assumes that changes in NSLP fat levels do not affect fat 
intake at other occasions.
    The fat and saturated fat reductions discussed in the impact 
analysis above relate only to the lunch meal. The proposed regulation 
will also reduce fat and saturated fat in school breakfasts, from 28 to 
25 percent of total calories from fat, and from 11 to 10 percent of 
total calories from saturated fat. This will increase the overall 
reduction in average fat and saturated fat for the student population, 
but to a lesser extent than NSLP due to the smaller reductions and 
because fewer students participate in the School Breakfast Program.
    The food labeling regulations are not expected to reduce U.S. fat 
and saturated fat levels by the full amount needed to achieve the 
Dietary Guidelines. This indicates that there will be room for the fat 
and saturated fat reductions which would result from the proposed rule 
to generate health improvement.
d. Effects on Participation
    It is anticipated that the rule will have minimal effect on NSLP 
participation because implementation of the rule is not expected to 
increase meal prices or decrease meal acceptability. On a typical day, 
25 million children participate in the National School Lunch Program. 
About 14 million of these meals are served to children receiving free 
or reduced price lunches. USDA has analyzed both the impact of meeting 
the dietary guidelines on meal price and meal acceptability and the 
implications for program participation.
    Lunch price is an important factor in determining the level of 
participation among these students, with students participating at 
higher rates in schools with lower prices. Research indicates that 
price increases can cause substantial decreases in student 
participation. A key factor in maintaining participation among paid 
students while implementing the dietary guidelines is minimizing the 
meal cost. Food cost analysis demonstrated that nutritional targets can 
be reached within current food cost constraints. Minimizing cost 
impacts removes upward pressure on student fees which would result in 
decreased student participation.
    USDA's efforts to test the effect of reducing fat and sodium and 
increasing the nutritional quality of meals has shown that improvements 
can be made without affecting participation. Although the SNDA study 
found that schools that served meals with a low proportion of calories 
from fat (less than 32 percent) had lower than average program 
participation, this information needs to be viewed in the larger 
context of efforts specifically designed to examine improvements in 
school meals.
    The Department sponsored demonstration projects in five school food 
authorities from school year 1989-90 to 1991-92 to evaluate the extent 
to which menus planned to meet the NSLP meal pattern could be modified 
to better reflect the dietary guidelines.16 Through the Menu 
Modification Demonstration Project, USDA examined the process involved 
in modifying school meals, including the impact on program 
participation. The demonstration found that fat could be decreased 
significantly without decreasing program participation. The percentage 
decrease in grams of fat ranged from 12 to 31 percent in the four 
sites. In all schools, average daily participation remained stable or 
increased slightly. In addition, the improvements were made with 
relatively minor changes in the types of foods offered. Although the 
districts were not able to make comparable improvements in the 
percentage of calories from fat, because overall calories decreased, 
the results demonstrate that fat can be cut without losing 
participation.
    California is operating a State-wide demonstration of nutrient 
standard menu planning. The State reported that the nutrient-based 
system they implemented did not result in any decreases in gross meal 
participation between 1990 and 1992.
    SNDA did find lower student participation in very low-fat schools, 
however, the study also indicated that it is possible to reduce the 
average fat content of lunches offered to well below the national 
average of 38 percent of food energy without adversely affecting 
participation in the NSLP. Participation rates were similar in schools 
whose lunches provide a moderate percentage of food energy from fat (32 
percent to 35 percent) and in those whose meals provide a high or very 
high percentage of food energy from fat. It is important to note that 
the SNDA finding of low participation among low-fat schools is not 
based on experience with schools altering the nutrient content of food 
but rather on a point-in-time cross-sectional observation of schools 
with low-fat meals. The study did not collect information on how the 
schools implemented low-fat meals and what consequences these would 
have had on participation.
    USDA recognizes that significant efforts must be undertaken to 
ensure that participation is maintained as meals are improved. If a 
meal does not taste good or look good then children will not eat it. 
The proposed regulation recognizes that food changes alone will not 
bring schools meals in line with the dietary guidelines. The results of 
SNDA and the two demonstrations suggest that reductions in calories 
from fat must be accompanied by nutrition education and promotional 
activities to maintain student participation. Gradual implementation of 
the Dietary Guidelines in school meals will allow for incremental 
changes in food offerings, minimizing the impact on current 
participation in the school meal programs. School food service is a 
nonprofit business that must meet student preferences to stay viable. 
This requires maintenance of participation by meeting food preferences, 
and accomplishing nutritional improvements through changes to recipes, 
food preparation techniques and purchasing specifications that are 
consistent with these preferences.
e. Implementation Costs
    Initial implementation costs faced by schools will vary depending 
on existing capabilities and resources within districts and will take 
many forms. Local, State and Federal resources are available for 
implementation. USDA has already initiated a number of improvements: 
Updated and improved recipes for schools, a computerized data bank of 
standard nutritional values of meals served and a demonstration project 
on NSMP. The demonstration will incur much of the developmental cost of 
the basic system framework and identify cost effective strategies for 
implementation. The Department has announced the availability of 
nutrition education cooperative agreements to develop comprehensive 
community-based approaches to nutrition education and is working on a 
national publication directed at grade school children. The Department 
is assisting school food service professionals in working with chefs, 
farmers and others to make school meals appealing and healthful.
    The President's FY 1995 budget contains a request of over $20 
million to support extensive training for school meal providers on how 
to plan and prepare nutritious and appealing meals as well as launching 
a national media campaign directed at building children's skills at 
making wise food choices for life.
    States receive over $90 million annually from the Federal level in 
State Administrative Expense (SAE) funds for program oversight. A 
portion of these resources are available to assist in implementation. 
In addition, the proposed regulation would reduce the level of State 
resources devoted to local school food authority reviews, which is 
described in more detail below.
    At the local level, implementing nutrient standard menu planning 
will require computer capabilities. Many schools currently make 
extensive use of computers for management activities and have the 
facilities and capabilities to undertake nutrient standard menu 
planning. One of the goals of the initiative is to use the technology 
more effectively.
    A study of school food authorities in the mid-Atlantic region found 
that 60 percent of SFAs employ computers for some functions.17 
Over one-fourth of these districts had comprehensive systems that 
allowed them to do menu management and nutritional evaluations. The 
menu modification demonstrations found that the lack of appropriate 
computer software limited the feasibility of monitoring the nutritional 
quality of menus. More recently developed software has greatly enhanced 
the ability to perform these analyses, which will now be supported by a 
USDA developed data base. Schools with microcomputers should be able to 
use this software.
    Schools without sufficient computer capability or necessary access 
to technical assistance may opt for Assisted Nutrient Standard Menu 
Planning, which will allow development and analysis of menus by other 
entities, such as State agencies, consortiums of school districts, 
consultants or the Federal government, while still applying the 
essentials of NSMP.
    The per meal reimbursement provided to schools was designed to 
cover both the food and administrative costs (labor and operations) of 
providing meals to students and can be used to acquire computer 
hardware and software. Enhanced computing abilities offer significant 
improvements in other areas of food service management beyond nutrient 
standard menu planning. The potential for additional improvements in 
food service operations beyond menu planning, for example, inventory 
control, should help offset the cost of acquiring this capability for 
NSMP.
    The cost analysis found that the nutrient requirements of NSMP can 
be met at about the current cost of food in the National School Lunch 
Program. Because the foods used in the sample menus were drawn from 
what is currently being served, USDA does not anticipate the need for 
significant changes in meal preparation practices that would affect the 
cost to prepare meals. The administrative cost of conducting NSMP 
should be about the same as current operations once the system is fully 
implemented in a school. An evaluation of costs in the California 
nutrient standard demonstration reported that most schools experienced 
slight cost changes that ranged from 4 percent savings to 1.5 percent 
increased costs and concluded that most districts can expect to 
experience very little change in overall food service costs when 
implementing a nutrient-based system.18
f. Other Significant Effects
    The Food and Nutrition Service believes that implementation of 
nutrient-based menus will require extensive training and technical 
assistance, especially at the school food authority level. In addition, 
the acquisition of computers (for schools that do not already have 
them) or contracting for computer or assistance with the revised menu 
planning system may involve some local level expenditures during the 
implementation period. While implementation will require a dedicated 
effort on the part of our agency, the state agencies and local school 
food authorities, the ongoing operation and maintenance of nutrient-
based menu planning will be indistinguishable from the current meal 
pattern based system in terms of efforts.
    To provide for the resources needed for implementation, the 
regulation proposes a twenty per cent reduction in state monitoring 
requirements. This reduction will enhance the level of resources 
available to focus on training and technical assistance efforts. Many 
school food authorities will no longer have the requirement for 
specific edit checks to review claims submitted for reimbursable meals. 
Rather, these school food authorities will have flexibility to develop 
their own internal controls for such review. This provision is largely 
intended to streamline program administration, but will also provide 
some relief from program management burdens.

Other Regulatory Changes

    The regulation proposes to streamline some existing administrative 
procedures of State agencies and school districts. This will permit 
States and school districts to implement NSMP and focus on the 
nutritional needs of children. At the State level the school food 
authority review cycle will be extended from four to five years, 
reducing by 20 percent the resources devoted to this effort. While this 
will extend the time period between formal reviews, most districts are 
currently visited more frequently than the current four year cycle. The 
States will continue to have a significant presence at the local level. 
Although the focus of attention will be on implementing NSMP there 
should be no perceived reduction in State oversight.
    5. Reason for Selection of Proposed Alternative: The overriding 
purpose behind this rule is to serve more nutritious and healthful 
meals to school children while maintaining access to the meal programs 
for needy children and enhancing the flexibility of local schools to 
administer the programs.
    The nutrient targets selected are derived from the Dietary 
Guidelines for Americans and the Recommended Dietary Allowances 
(RDAs).19 The Dietary Guidelines for Americans encompass the 
Federal government policy on nutrition. They are developed in 
consideration of scientific sources such as The Surgeon General's 
Report on Nutrition and Health20 and the National Academy of 
Sciences reports Diet and Health: Implications for Reducing Chronic 
Disease Risk21 and Recommended Dietary Allowances. They are based 
upon the recommendations of an expert committee, the Dietary Guidelines 
Advisory Committee, specifically appointed to assist in developing 
Dietary Guidelines for use across Federal government. There are no 
alternative policy documents with official sanction by the government 
departments responsible for domestic nutrition which could provide 
alternative dietary targets for the general population. Other 
government publications in this area, such as ``Building for the 
Future: Nutrition Guidance for the Child Nutrition Programs''22 
are based upon the Dietary Guidelines.
    6. Public Comments: The Department also considered extensive oral 
testimony presented at four public hearings and meetings as well as 
written comments submitted in response to a notice published in the 
Federal Register on September 13, 1993. A summary of the comments is 
included in the preamble to the proposed rule.
    7. References:

Footnotes

    1USDA/DHHS (1990). Nutrition and Your Health: Dietary 
Guidelines for Americans. Home and Garden Bulletin No. 232, third 
edition, 1990.
    2Hirschman, J., D. Smallwood, and L. Conneen (1994). ``Food 
Cost of Healthy School Meals''. USDA Food and Nutrition Service and 
Economic Research Service, 1994.
    3USDA (1988). ``Quantity Recipes for School Food Service''. 
Program Aid No. 1371. USDA Food and Nutrition Service, Nutrition and 
Technical Services Division.
    4USDA Human Nutrition Information Service (1992). ``The 
Food Guide Pyramid''. USDA Home and Garden Bulletin No. 252, August, 
1992.
    5Devaney, B., A. Gordon and J. Burghardt (1993). The School 
Nutrition Dietary Assessment Study: Dietary Intakes of Program 
Participants and Nonparticipants. October 1993.
    6DHHS (1990). Healthy People 2000: National Health 
Promotion and Disease Prevention Objectives. DHHS Publication No. 
(PHS) 91-50213.
    7National Center for Health Statistics (1993). ``Advance 
Report of Final Mortality Statistics, 1991''. Monthly Vital 
Statistics Report, Vol. 142, No. 2 (Supplement).
    8McGinnis, J.M. and W.H. Foege (1993). ``Actual Causes of 
Death in the United States''. Journal of the American Medical 
Association, Nov. 10, 1993, Vol 270, No. 16:2207.
    9Food and Drug Administration (1991). ``Regulatory Impact 
Analysis of the Proposed Rules to Amend the Food Labeling 
Regulations''. Federal Register Vol. 56, No. 229:60856-60877, 
November 27, 1991.
    10Research Triangle Institute (1991). ``Estimated Health 
Benefits of Nutrition Label Changes, Final Report, Vol 1 and 2''. 
RTI Project Number 233U-3972-05. Prepared for Richard Williams, Food 
and Drug Administration, April 1991.
    11Food and Drug Administration (1993). ``Regulatory Impact 
Analysis of the Final Rules to Amend the Food Labeling 
Regulations''. Federal Register Vol. 58, No. 3:2927-2941, January 6, 
1993.
    12Fisher, Ann, Lauraine G. Chestnut, Daniel M. Violette 
(1989) ``The Value of Reducing Risks of Death: A Note on New 
Evidence,'' Journal of Policy Analysis and Management, Vol. 8, No. 
1, pp. 88-100.
    13W. Kip Viscusi (1993) ``The Value of Risks to Life and 
Health'', Journal of Economic Literature Vol. 31, No. 4, pp. 1912-
1946.
    14Hegsted, D.M. (1986). ``Serum-Cholesterol Response to 
Dietary Cholesterol: A Re-evaluation''. American Journal of Clinical 
Nutrition 44:299-305.
    15Fox, M.K. and R. St. Pierre (1993). Menu Modification 
Demonstration Grants: Evaluation Results, Volume I: Summary. July 
1993.
    16Fox, M.K., R. St. Pierre (1993). Menu Modification 
Demonstration Grants: Evaluation Results. Abt. Associates Inc. July 
1993.
    17Brewer, K.P., F.J. DeMicco and R.E. Conn (1993). 
``Computer Hardware and Software Use in School Food Service 
Operations''. School Food Service Research Review, Volume 17, Number 
2.
    18Duerr Evaluation Resources (1992). Evaluation of the 
Regional Model Products Networks 1991/92 Year-End Report. December 
1992.
    19National Research Council (1989). Recommended Dietary 
Allowances, 10th edition. National Academy of Sciences, 1989.
    20HHS (1988). The Surgeon General's Report on Nutrition and 
Health. DHHS (PHS) Publication No. 88-50210.
    21National Research Council (1989). Diet and Health: 
Implications for Reducing Chronic Disease Risk. National Academy of 
Sciences, 1989.
    22USDA (1992). ``Building for the Future: Nutrition 
Guidance for the Child Nutrition Programs''. Publication No. FNS-
279. Food and Nutrition Service, April 1992.

[FR Doc. 94-14092 Filed 6-8-94; 8:45 am]
BILLING CODE 3410-30-P