[Federal Register Volume 60, Number 233 (Tuesday, December 5, 1995)]
[Proposed Rules]
[Pages 62227-62229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29569]



 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 60, No. 233 / Tuesday, December 5, 1995 / 
Proposed Rules  

[[Page 62227]]


DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Part 226

RIN 0584-AB19


Child and Adult Care Food Program: Overclaim Authority

AGENCY: Food and Consumer Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule proposes an amendment to the Child and Adult Care 
Food Program (CACFP) regulations which would explicitly authorize the 
Department and State agencies to assess overclaims against institutions 
that fail to abide by CACFP recordkeeping requirements. This authority 
has been successfully challenged in several judicial rulings on the 
grounds that such authority was not specifically established in program 
regulations. This rule serves to affirm the Department's authority to 
assess overclaims for recordkeeping infractions and to clarify any 
regulatory ambiguities or inconsistencies regarding overclaims 
authority.

DATES: To be assured of consideration, comments must be postmarked no 
later than February 5, 1996.

ADDRESSES: Comments should be addressed to Mr. Robert M. Eadie, Chief, 
Policy and Program Development Branch, Child Nutrition Division, Food 
and Consumer Service, Department of Agriculture, 3101 Park Center 
Drive, Room 1007, Alexandria, Virginia 22302. Comments in response to 
this rule may be inspected at the address above during normal business 
hours, 8:30 a.m. to 5:00 p.m., Monday through Friday.

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

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866, and, therefore, has not been 
reviewed by the Office of Management and Budget.

Regulatory Flexibility Act

    This action has been reviewed with regard to the requirements of 
the Regulatory Flexibility Act (5 U.S.C. 601-612). The Administrator of 
the Food and Consumer Service has certified that this action will not 
have a significant economic impact on a substantial number of small 
entities. There will be no significant impact because this rule 
represents only a clarification of current procedures.

Executive Order 12372

    This Program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.558 and is 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 published in 48 FR 29114, June 24, 1983).

Information Collection

    This proposed rule contains no new information collection 
requirements. In accordance with the Paperwork Reduction Act of 1980 
(44 U.S.C. 3507), current reporting and recordkeeping requirements for 
Part 226 were approved by the Office of Management and Budget under 
Control Number 0584-0055.

Executive Order 12778

    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is intended to have preemptive effect 
with respect to any State or local laws, regulations or policies which 
conflict with its provisions or which would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the ``Effective Date'' section of the preamble 
of the final rule. All available administrative procedures must be 
exhausted prior to any judicial challenge to the provisions of this 
rule or the application of its provisions. In the Child and Adult Care 
Food Program, the administrative procedures are set forth under the 
following regulations: (1) Institution appeal procedures in 7 CFR 
Sec. 226.6(k); and (2) Disputes involving procurement by State agencies 
and institutions must follow administrative appeal procedures to the 
extent required by 7 CFR Sec. 226.22 and 7 CFR Part 3015.

Background

    The Child and Adult Care Food Program (CACFP) is authorized by 
section 17 of the National School Lunch Act, as amended (42 U.S.C. 
1766). Section 17(n) of that Act stipulates that ``States and 
institutions participating in the program shall keep accounts and 
records as may be necessary to enable the Secretary to determine 
whether there has been compliance with the requirements of this 
section.'' Furthermore, the CACFP regulations include a number of 
requirements relating to recordkeeping: Section 226.7(m) requires State 
agencies to establish standards for institutional recordkeeping; 
Section 226.15(e) prescribes the minimum recordkeeping requirements for 
institutions in the CACFP; Section 226.10(c) requires institutions to 
certify that records are available to support reimbursement claims; and 
Section 226.10(d) establishes a timeframe for record retention. 
Moreover, Section 226.6(f)(1) requires that the Program agreement 
between the State agency and each institution stipulate that each 
participating institution must agree to comply with all regulatory 
requirements including these recordkeeping requirements. Finally, the 
importance with which the Department views an institution's 
recordkeeping responsibilities is found in Section 226.6(c)(4), where 
failure to maintain adequate records is specifically listed as a 
serious deficiency for which termination of an institution's 
participation may be appropriate.
    On numerous occasions, the Department and State agencies have used 
the authority in the regulatory provisions cited above to recover funds 
paid to institutions which did not have records necessary to support 
claims for reimbursement. However, this authority has been successfully 
challenged in court cases in Arkansas and California. In both cases, 
assessment of overclaims against institutions which were based on 
inadequate or missing records were 

[[Page 62228]]
overturned by the courts on the grounds that the CACFP regulations do 
not specifically authorize overclaims for those reasons.
    In recognition of the fact that State agencies may review an 
institution's performance under the CACFP as infrequently as once every 
four years, effective administration depends on access to complete 
documentation of program activities for an entire review period. Such 
documentation is necessary for the Department and State agencies to 
maintain a check on possible fraud, abuse and mismanagement in the 
Program. Without proper records concerning the content and number of 
meals served, and documentation of participants' income category, there 
is no evidence that such participants were fed in accordance with basic 
program requirements, and no assurance that program funds were spent as 
mandated in the law and in the regulations.
    Accordingly, the Department is proposing to amend Sections 
226.14(a), 226.15(e) and 226.16(e), and to add new Sections 226.17(c), 
226.18(g), 226.19(c), and 226.19a(c) to the CACFP regulations to 
clarify that failure to adhere to CACFP recordkeeping requirements may 
be used as a basis for State agencies to assess overclaims against 
sponsors.
    This rulemaking also contains a technical change to the CACFP 
regulations which would transfer two recordkeeping responsibilities 
established for sponsoring organizations from Section 226.16(e) to 
Section 226.15(e).
    Accordingly, the Department proposes to amend Sections 226.15(e) 
and 226.16(e) by moving Section 226.16(e) (1)-(2) to Section 226.15(e) 
under redesignated paragraphs (10) and (12).

List of Subjects in 7 CFR Part 226

    Day care, Food assistance programs, Grant programs-health, infants 
and children, Records, Reporting and recordkeeping requirements, 
Surplus agricultural commodities.

    Accordingly, 7 CFR Part 226 is proposed to be amended as follows:

PART 226--CHILD AND ADULT CARE FOOD PROGRAM

    1. The authority citation for Part 226 continues to read as 
follows:

    Authority: Secs. 9, 11, 14, 16, and 17, National School Lunch 
Act, as amended (42 U.S.C. 1758, 1759a, 1762a, 1765 and 1766).

    2. In Sec. 226.14, the introductory text of paragraph (a) is 
amended by adding a new sentence after the first sentence to read as 
follows:


Sec. 226.14  Claims against institutions.

    (a) * * * State agencies may consider claims for reimbursement not 
properly payable if an institution does not comply with the 
recordkeeping requirements contained in this part. * * *
* * * * *
    3. In Sec. 226.15:
    a. The introductory text of paragraph (e) is revised;
    b. Paragraphs (e)(10), (e)(11) and (e)(12) are redesignated as 
paragraphs (e)(11), (e)(13) and (e)(14);
    c. New paragraphs (e)(10) and (e)(12) are added;
    d. Newly redesignated paragraph (e)(11) is amended by removing the 
word ``and'' at the end of the paragraph;
    e. Newly redesignated paragraph (e)(13) is amended by adding the 
word ``and'' after the semicolon at the end of the paragraph; and
    f. Newly redesignated paragraph (e)(14) is amended by removing the 
first word ``Maintain'' from the paragraph.
    The additions and revisions specified above read as follows:


Sec. 226.15  Institution provisions.

* * * * *
    (e) Recordkeeping. Each institution shall establish procedures to 
collect and maintain all necessary program records. Failure to maintain 
such records shall be grounds for denial of reimbursement for meals 
served during the period covered by the records in question and for the 
denial of reimbursement for costs associated with such records. At a 
minimum, the following records shall be collected and maintained:
* * * * *
    (10) Information concerning the dates and amounts of disbursement 
to each child care facility or adult day care facility with which it 
has a program agreement;
* * * * *
    (12) Information concerning the location and dates of each child 
care or adult day care facility review, any problems noted, and the 
corrective action prescribed and effected;
* * * * *
    4. In Sec. 226.16, paragraph (e) is revised to read as follows:


Sec. 226.16  Sponsoring organization provisions.

* * * * *
    (e) Each sponsoring organization shall comply with the 
recordkeeping requirements established in Secs. 226.10(d) and 226.15(e) 
and any recordkeeping requirements established by the State agency in 
order to justify the administrative payments made in accordance with 
Sec. 226.12(a). Failure to maintain such records shall be grounds for 
the denial of reimbursement for the costs associated with those records 
during the period covered by the records in question.
* * * * *
    5. In Sec. 226.17, a new paragraph (c) is added to read as follows:


Sec. 226.17  Child care center provisions.

* * * * *
    (c) Each child care center shall comply with the recordkeeping 
requirements established in Secs. 226.10(d) and 226.15(e), and the 
recordkeeping requirements contained in this section. Failure to 
maintain such records shall be grounds for the denial of reimbursement 
for meals served during the period covered by the records in question 
and for the denial of reimbursement for costs associated with such 
records.
    6. In Sec. 226.18, a new paragraph (g) is added to read as follows:


Sec. 226.18  Day care home provisions.

* * * * *
    (g) Each day care home shall comply with the recordkeeping 
requirements established in Secs. 226.10(d) and 226.15(e), and the 
recordkeeping requirements contained in this section. Failure to 
maintain such records shall be grounds for the denial of reimbursement 
for meals served during the period covered by the records in question.
    7. In Sec. 226.19, a new paragraph (c) is added to read as follows:


Sec. 226.19  Outside-school-hours care center provisions.

* * * * *
    (c) Each outside-school-hours care center shall comply with the 
recordkeeping requirements established in Secs. 226.10(d) and 
226.15(e), and the recordkeeping requirements contained in this 
section. Failure to maintain such records shall be grounds for the 
denial of reimbursement for meals served during the period covered by 
the records in question and for the denial of reimbursement for costs 
associated with such records.
    8. In Sec. 226.19a, a new paragraph (c) is added to read as 
follows:


Sec. 226.19a  Adult day care center provisions.

* * * * *
    (c) Each adult day care center shall comply with the recordkeeping 
requirements established in Secs. 226.10(d) and 226.15(e), and the 
recordkeeping requirements contained in this section. Failure to 
maintain such records shall 

[[Page 62229]]
be grounds for the denial of reimbursement for meals served during the 
period covered by the records in question and for the denial of 
reimbursement for costs associated with such records.

    Dated: November 27, 1995.
William E. Ludwig,
Administrator.
[FR Doc. 95-29569 Filed 12-4-95; 8:45 am]
BILLING CODE 3410-30-U