[Federal Register Volume 64, Number 249 (Wednesday, December 29, 1999)]
[Rules and Regulations]
[Pages 72898-72907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33619]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 250 and 251

RIN 0584-AC49


Food Distribution Programs: Implementation of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (Welfare 
Reform)

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends provisions of the Food Distribution 
Program regulations and the Emergency Food Assistance Program (TEFAP) 
regulations to implement certain provisions of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996, 
commonly known as Welfare Reform, while generally streamlining and 
clarifying these regulations. In accordance with the Welfare Reform 
legislation, the provisions contained in this rule address various 
changes required by the repeal of section 110 of the Hunger Prevention 
Act of 1988, which authorized the former Soup Kitchens/Food Banks 
Program, the former beneficiaries of which are now served by an 
expanded TEFAP. It amends the definitions relating to organizational 
eligibility in TEFAP to reflect the program consolidation, and to 
achieve consistency with the Emergency Food Assistance Act of 1983 as 
amended by Welfare Reform. Changes to these and other definitions also 
provide greater clarity to the regulations. As mandated by Welfare 
Reform, this rule also changes the required content and frequency of 
submission of the TEFAP State plan of operation, and encourages State 
agencies to create advisory boards comprised of public and private 
entities with an interest in the distribution of TEFAP commodities. In 
addition, this rule broadens the allowable uses of TEFAP administrative 
funds at the State and local levels, and provides greater flexibility 
for State agencies in meeting the TEFAP maintenance-of-effort

[[Page 72899]]

requirement. Finally, in order to reduce the paperwork burden and 
afford State agencies greater flexibility, this rule makes 
discretionary changes in TEFAP recordkeeping, monitoring, and reporting 
requirements.

EFFECTIVE DATE: This final rule is effective February 28, 2000.

FOR FURTHER INFORMATION CONTACT: Lillie Ragan, Assistant Branch Chief, 
Household Programs Branch, Food Distribution Division, Food and 
Nutrition Service, U.S. Department of Agriculture, Room 612, 4501 Ford 
Avenue, Alexandria, Virginia 22302, or telephone (703) 305-2662.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

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

Regulatory Flexibility Act

    This action has been reviewed with regard to the requirements of 
the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). The 
Administrator of the Food and Nutrition Service (FNS) has certified 
that this action will not have a significant economic impact on a 
substantial number of small entities. The procedures in this rulemaking 
would primarily affect FNS regional offices, and the State distributing 
and recipient agencies that administer food distribution programs. 
Private enterprises that enter into agreements for the storage of 
donated food or meal service management would also be affected. While 
some of these entities constitute small entities, a substantial number 
will not be affected. Furthermore, any economic impact will not be 
significant.

Unfunded Mandate Reform Act

    Title II of the Unfunded Mandate Reform Act of 1995, Pub. L. 104-4, 
(UMRA), establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, FNS 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local or tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. When such a statement is needed for a rule, section 205 of 
the UMRA generally requires FNS to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, more 
cost-effective or least burdensome alternative that achieves the 
objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, and tribal 
governments or the private sector of $100 million or more in any one 
year. Thus this proposed rule is not subject to the requirements of 
sections 202 and 205 of the UMRA.

Executive Order 12372

    These programs are listed in the Catalog of Federal Domestic 
Assistance under 10.550, 10.568 and 10.569 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 notices published at 48 FR 29114, June 24, 1983 
and 49 FR 22676, May 31, 1984).

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
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. 
There are no administrative procedures which must be exhausted prior to 
any judicial challenge to the provisions of this rule or the 
application of its provisions.

Paperwork Reduction Act

    The reporting and recordkeeping requirements included in 7 CFR 
parts 250 and 251 have been approved by the Office of Management and 
Budget under OMB No. 0584-0293.

Background

    On July 8, 1999, the Department of Agriculture (hereinafter 
``USDA'' or ``Department'') published a proposed rule in the Federal 
Register (64 FR 36978) to amend provisions of the Food Distribution 
Program regulations and the TEFAP regulations to reflect changes 
brought about in the administration of food distribution programs by 
the Personal Responsibility and Work Opportunity Reconciliation Act of 
1996, (hereinafter ``Welfare Reform''). The rule also proposed changes 
which would clarify existing regulatory requirements and reduce the 
burden associated with the administration of TEFAP. The specific 
changes made by this rule were discussed in detail in the preamble to 
the proposed rule, which provided a 60-day comment period.

Analysis of Comments Received

    The Department received a total of 14 comment letters. Comment 
letters were submitted by three State TEFAP agencies, one inter-church 
local food pantry, seven food banks on the city, regional, state and 
national levels, one national commodity distribution association, one 
State community action program association, and one local human 
resources council. The 14 commenters were generally enthusiastic in 
their support for the rule. Seven of them supported implementation of 
the proposed rule without change. Comments received are discussed in 
detail below. For a complete understanding of the provisions contained 
in this final rule, the reader should refer to the preamble of the 
proposed rule.

Definition of Eligible Recipient Agency

    As discussed in the proposed rule, a definition of ``eligible 
recipient agency'' (ERA) as contained in section 251.3(d) of the 
proposed rule is not found in current regulations. This definition was 
included in the proposed rule to clarify the types of organizations 
eligible to receive TEFAP commodities and administrative funds, 
provided they meet all pertinent eligibility criteria. Three comments 
were received concerning the list of organizations identified in the 
definition of ERA under subparagraph (6).
    One commenter expressed concern about the inclusion of ``disaster 
relief programs'' as a type of ERA. He said that if the new definition 
allows provision of food to such organizations on the same basis as 
other ERAs, i.e., without USDA approval, then current regulations must 
be clarified. The definition of ERA contained in the Emergency Food 
Assistance Act of 1983 (EFAA) includes disaster relief programs as a 
type of ERA. Therefore, they were included in the proposed regulatory 
definition of ERA. However, as stated above, such organizations would 
be required to meet TEFAP eligibility criteria (i.e., if the 
organization provides commodities to households, it must administer a 
means test; if it uses TEFAP commodities to provide prepared meals, it 
must serve predominantly needy persons). This contrasts with the 
regulatory requirements governing the distribution of commodities to 
disaster organizations for use in providing assistance in 
Presidentially declared disasters and situations of distress as set 
forth in

[[Page 72900]]

section 250.43 and section 250.44 respectively. Under sections 250.43 
and 250.44, State agencies must obtain approval from USDA prior to 
making commodities available for distribution to households in disaster 
or emergency situations. Once approval is obtained, commodities from 
TEFAP (and other food distribution programs) can be made available to 
disaster organizations and distributed to disaster victims without 
regard to TEFAP eligibility requirements.
    Another commenter recommended that the definition be revised to 
make summer camps and child nutrition programs which receive assistance 
through other Federal nutrition assistance programs ineligible for 
TEFAP commodities and administrative funds. As discussed in the 
proposed rule, Welfare Reform defines ERA to include summer camps for 
children and child nutrition programs. Therefore, the Department does 
not have the authority to categorically exclude such organizations from 
participation in the program.
    The same commenter requested that the definition be revised to 
eliminate reference to the Nutrition Program for the Elderly (NPE), and 
add ``other nutrition projects that serve on-site or home-delivered 
meals to needy elderly people'' since sites participating in NPE 
receive Federal support from other sources. As discussed above, the 
list of organizations contained in the definition of ERA in the 
proposed rule reflects the organizations listed in the definition of 
ERA in the EFAA. The Department lacks the authority to exclude a 
clearly eligible organizational type from participation in the program. 
In addition, revising the definition in the manner suggested would not 
make ineligible those NPE sites that meet the eligibility criteria.
    Another commenter requested that community action programs be 
specifically mentioned as a type of EFO, and noted that they were 
mentioned in the preamble of the proposed rule, but not in the 
regulatory text. Specific reference to community action programs was 
included in the preamble of the proposed rule as an example of the 
types of organizations that could be considered an EFO. However, such 
reference does not appear in the regulatory text because it is not 
included in the definition set forth in the EFAA. Furthermore, it would 
be impossible to identify all the different types of organizations that 
could be considered an EFO. This in no way, however, affects their 
eligibility to participate in the program.
    We appreciate the recommendations made by the commenters. However, 
for the reasons described above, this final rule retains the definition 
of ERA as originally proposed.

Eligible Recipient Agency Eligibility Criteria

    Section 251.5(a)(2) of the proposed rule would limit the 
eligibility of organizations providing prepared meals to those which 
serve ``predominantly needy'' persons. Two commenters, although 
enthusiastic supporters of implementation of the proposed rule without 
change, expressed concern about the ``new'' standard. They believe that 
the new standard will require additional monitoring to ensure that it 
does not restrict access of the needy to TEFAP. The EFAA requires that 
TEFAP commodities be used to provide assistance to those in need. Prior 
to Welfare Reform, TEFAP regulations (7 CFR part 251) only addressed 
the distribution of TEFAP commodities to households through 
organizations which impose a means test. With the consolidation of the 
Soup Kitchen/Food Bank Program (SK/FB) into TEFAP, it became necessary 
to establish requirements relative to the distribution of commodities 
to organizations which provide prepared meals to ensure that such 
organizations are providing nutrition assistance to the needy. Upon 
reviewing the provisions relative to the distribution of SK/FB 
commodities contained in section 250.52, it was determined that 
limiting participation of organizations that provide prepared meals to 
those that serve ``predominantly'' needy persons would meet the 
requirements of the EFAA. In addition, this limitation is no more 
stringent than the limitations that were placed on State agencies in 
the distribution of SK/FB commodities. Therefore, the Department does 
not expect needy persons to be adversely affected as a result of 
establishing this criterion for these types of organizations. Thus, 
this provision is retained in section 251.5(a)(2) as proposed.
    Another commenter was concerned about the provision contained in 
section 251.5(a)(3)(iii) of the proposed rule which states that 
organizations ``organized or operated exclusively for religious 
purposes'' are automatically tax exempt under Internal Revenue Service 
(IRS) rules. The commenter expressed concern that States and ERAs may 
be unfamiliar with IRS rules, and asked if organizations would be 
allowed to simply self-declare that they meet this definition, or if 
they would be required to provide documentation. Under IRS rules, such 
organizations effectively self-declare their status, i.e., once having 
claimed the tax exemption, they are deemed to possess it unless 
successfully challenged by the IRS. Therefore, the rule did not propose 
to require State agencies to obtain documentation.
    Some of the comments have led the Department to believe that the 
language of the proposed rule regarding eligibility of organizations 
for TEFAP is in need of further clarification. Section 251.2(c)(2) 
states that ``[p]rior to making donated foods or administrative funds 
available, State agencies must enter into a written agreement with 
eligible recipient agencies to which they plan to distribute donated 
foods and/or administrative funds. State agencies must ensure that 
eligible recipient agencies in turn enter into a written agreement with 
eligible recipient agencies to which they plan to distribute donated 
foods and/or administrative funds before donated foods or 
administrative funds are transferred between any two eligible recipient 
agencies.'' However, section 251.5(a) of the proposed rule speaks only 
in terms of commodities and does not mention administrative funds, 
leading to possible confusion. Therefore, section 251.5(a) of the 
proposed rule is revised to specifically include administrative funds.

Recipient Eligibility Criteria

    One commenter recommended that the criteria for recipient 
eligibility under section 251.5(b) of the proposed rule be expanded to 
include ``needy persons in situations of emergency and distress due to 
disasters.'' As discussed in detail above, commodities are made 
available for distribution to households in disasters and situations of 
emergency and distress in accordance with the provisions contained in 
sections 250.43 and 250.44. These provisions permit TEFAP commodities 
to be distributed to households without regard to income only after 
proper authorization has been obtained.
    Two commenters recommended that section 251.5(b)(2), which requires 
the use of income-based standards in determining a household's 
eligibility to receive TEFAP commodities, be removed and replaced with 
language that would permit the use of non-income-based eligibility 
criteria. The EFAA does not explicitly require income-based standards 
to be met by TEFAP recipients. However, TEFAP regulations have always 
required the use of such criteria. This requirement is necessary in 
order to ensure that only those households in need of assistance

[[Page 72901]]

receive commodities. In addition, it is consistent with eligibility 
requirements for other nutrition assistance programs, as well as other 
types of Federal assistance, such as the Temporary Assistance to Needy 
Families Program.

Reduction in Administrative Burden (State Agreements with Eligible 
Recipient Agencies and TEFAP State Distribution Plan)

    Several commenters expressed interest in reductions in 
administrative burdens beyond those set forth in the proposed rule. The 
Department believes it has come close to the proper balance between 
reduced administrative burden and sufficient program accountability. 
However, in reviewing the provisions contained in the proposed rule, it 
has been determined that the administrative burden can be further 
reduced by making minor changes in the following requirements. Section 
251.2(d)(1)(iii) of the proposed rule would require the agreement to 
include ``the name of the person responsible for administering the 
program in the receiving eligible recipient agency.'' With the move to 
permanent agreements, it is prudent to avoid requiring information that 
could change frequently. Therefore, the final rule is revised to remove 
subparagraph (iii) in section 251.2(d)(1) of the proposed rule.
    Section 251.6(a)(1) of the proposed rule would require State 
agencies to include ``[a] designation of the State agency responsible 
for distributing commodities and administrative funds provided under 
this part, the address of such agency, and the name of the agency 
official entrusted with binding signature authority'' in their 
distribution plan. Under Welfare Reform, TEFAP State plans are to be 
submitted every four years instead of annually, which was the previous 
regulatory requirement. Thus, while TEFAP State plans do not have the 
potential to be permanent, as do State agreements with ERAs, the plans 
are now of sufficient duration to justify a re-evaluation of this 
provision. The Department has determined that the name of the agency 
official entrusted with binding signature authority also falls into the 
category of information that could change frequently. Therefore, the 
final rule is amended to remove this element of the requirement in 
section 251.6(a)(1) of the proposed rule.

Disbursement of Administrative Funds

    Two commenters, although both generally supporting implementation 
of the proposed rule without change, expressed concern that the new 
requirements in section 251.8 for documenting the 40 percent pass-
through of administrative funds may require additional monitoring. 
Section 251.8(d)(3) of the current regulations requires, as mandated by 
the EFAA, that State agencies pass through 40 percent of TEFAP 
administrative funds to emergency feeding organizations (EFOs). Current 
regulations also restrict the distribution of TEFAP administrative 
funds to EFOs. (The proposed rule would amend the definition of EFO in 
a way that does not materially affect the pass-through requirement.) 
While section 251.8 of the proposed rule retains the 40 percent pass-
through requirement, the rule would permit the distribution of TEFAP 
administrative funds to non-EFOs. However, as discussed in the preamble 
to the proposed rule, State agencies which pass through 40 percent of 
such funds to ERAs that are EFOs, as defined in section 251.3, will be 
considered to have met the pass-through requirement. The Department 
will continue to monitor the distribution of TEFAP administrative funds 
by State agencies to ensure that they are in compliance with this 
requirement. Therefore, while TEFAP administrative funds may be 
distributed to non-EFOs under the provisions contained in the proposed 
rule, monitoring activities at the State or local level will not be 
affected.

Allowable Administrative Costs, Non-USDA Commodities

    Upon further review of the proposed rule, the Department has 
identified a need to revise section 251.8 to clarify provisions 
relative to the distribution of TEFAP administrative funds to cover 
costs associated with the distribution of non-USDA commodities. Section 
251.5(a) of the proposed rule requires that all organizations, 
including those that distribute only non-USDA commodities, must qualify 
as ERAs in all respects under section 251.3(d) in order to receive 
TEFAP administrative funds. Section 251.8(d) of the proposed rule 
refers to ``organizations which distribute only non-USDA commodities.'' 
For the sake of clarity, this rule revises section 251.8(d) to remove 
the term ``organizations'' and replaces it with ``ERA.''

Recordkeeping and Reporting Requirements

    The proposed rule's reduction in the administrative burden for 
TEFAP drew the most praise from commenters. It was the factor most 
often noted by those who merely wrote to urge speedy implementation of 
the rule. However, one commenter expressed concern about the amendment 
to section 251.10(d)(2) which eliminates the requirement that State 
agencies report to FNS on a quarterly basis the total number of 
households served in TEFAP. While the commenter noted that this 
requirement has already been eliminated by TEFAP Policy Memorandum No. 
12, dated December 23, 1997, the State agency has continued to collect 
and maintain such data. These data have been used to document the 
success of the program and for allocating resources at the local level. 
The Department is aware that such information is used by some ERAs and 
State agencies for various purposes. However, as discussed in the 
preamble to the proposed rule, the information is no longer useful to 
FNS. Therefore, while section 251.10(d)(2) of the proposed rule would 
no longer require that State agencies report such information to FNS, 
it does not prohibit State agencies from collecting household 
participation data from ERAs.
    One commenter recommended that requirements associated with 
maintaining inventory records be kept to a minimum. While these 
requirements were not addressed in the proposed rule, TEFAP agencies 
have raised a number of questions and concerns about this issue. The 
Department is in the process of preparing guidance which will clarify 
what the Federal requirements are and explain the minimum requirements 
a State agency could choose to adopt in order to comply with the 
regulations.

Monitoring Requirements

    Commenters were all in favor of the proposed rule's reduction in 
TEFAP monitoring requirements. However, one commenter recommended that 
sections 251.2(d)(2)(i) and 251.10(e) be revised to permit State 
agencies to delegate to ERAs with which States have agreements, the 
authority to conduct reviews of ERAs with which those ERAs in turn have 
agreements. Only in instances in which deficiencies are identified 
would the ERA be required to report to the State agency, which would 
assist in effecting corrective action. The Department is appreciative 
of the need to reduce the administrative burden as much as possible, 
but this goal must be balanced with the need for a certain level of 
accountability necessary to insure program integrity. The Department 
does not believe this balance can be achieved if State agencies are 
allowed to delegate authority for conducting reviews of ERAs to other 
ERAs. There must be a unified, independent and objective review 
authority. Therefore, the

[[Page 72902]]

Department cannot adopt this recommendation.
    The commenter also expressed concern about the burden associated 
with selecting ERAs for review based on the dollar value of TEFAP 
commodities distributed or deficiencies that have been identified 
through various means. As discussed in the preamble to the proposed 
rule, State agencies would be afforded flexibility to develop a system 
for selecting ERAs for review. No selection criteria are mandated. The 
criteria listed in the preamble are merely suggestions regarding how to 
select sites for review. The only requirement is that the system must 
ensure that deficiencies in program administration are detected and 
resolved in an effective and efficient manner.
    In reviewing the provisions contained in section 251.10, the 
Department has determined the following changes are necessary for 
clarification purposes. First, section 251.10(e)(3) of the proposed 
rule is being revised to include civil rights in the list of areas to 
be covered during a review, given the fact the revised FNS Instruction 
113-3 will specify that on-site civil rights reviews be conducted at 
the frequency established in section 251.10(e). Since these reviews 
must be conducted at the same frequency, State agencies will likely 
consolidate civil rights and program reviews into one effort. Second, 
section 251.2(d)(2)(i) of the proposed rule would prohibit State 
agencies from delegating the authority to establish eligibility 
criteria for organizations or recipients, or for conducting reviews of 
ERAs. The prohibitions on delegating authority to establish eligibility 
criteria are then repeated in section 251.5(c). For the sake of 
consistency, section 251.10(e)(1) of the proposed rule is being revised 
to include the prohibition on the delegation of authority to conduct 
reviews.

Maintenance of Effort

    Two commenters, although both generally supporting implementation 
of the proposed rule without change, were concerned about the new 
requirements for documenting the State maintenance-of-effort 
requirement, in section 251.10(h). The commenters suggested 
``additional monitoring'' would be needed to insure compliance. This 
requirement is applied to State agencies, and compliance is monitored 
by the Department. Therefore, it will have no impact on monitoring 
activities at the State or local level.

Alien Provisions

    Two commenters requested that the rule make clear that 
organizations are not required to determine the citizenship status of 
any recipient pursuant to the Illegal Immigration Reform and Immigrant 
Responsibility Act of 1996 (Pub. L. 104-208). As noted in the preamble 
to the proposed rule, the provisions of Welfare Reform affecting aliens 
do not require that States in any way restrict access of aliens to 
TEFAP. Welfare Reform gives States the option to provide, or not 
provide, program benefits to any individual who is not a citizen or a 
qualified alien. As discussed in the preamble to the proposed rule, the 
Department intends to publish a separate rulemaking to incorporate the 
provisions of Welfare Reform regarding eligibility of aliens for TEFAP 
and other food distribution programs.

Miscellaneous Comments

    One commenter expressed concerns about the various problems 
involved in dealing with commodity losses and the procedures involved 
in establishing claims for those losses. The Department appreciates the 
comments provided and will consider them in developing proposals for a 
separate rulemaking aimed at addressing issues associated with 
commodity losses and claims.
    Another commenter requested that an indemnification for product 
liability be granted by USDA to States and ERAs, referencing the Good 
Samaritan Act. Such language could also be included in all agreements 
between States and ERAs and between ERAs. As praiseworthy as this 
recommendation is, unfortunately the Good Samaritan Food Donation Act 
(Pub. L. 101-610) applies to donors of food only. Therefore, USDA lacks 
the authority to extend its protections to distributors of such food.

List of Subjects

7 CFR Part 250

    Aged, Agricultural commodities, Business and industry, Food 
assistance programs, Food donations, Food processing, Grant programs-
social programs, Indians, Infants and children, Commodity loan 
programs, Reporting and recordkeeping requirements, School breakfast 
and lunch programs, Surplus agricultural commodities.

7 CFR Part 251

    Aged, Agricultural commodities, Business and industry, Food 
assistance programs, Food donations, Grant programs-social programs, 
Indians, Infants and children, Commodity loan programs, Reporting and 
recordkeeping requirements, School breakfast and lunch programs, 
Surplus agricultural commodities.

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

PART 250--DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS 
TERRITORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION

    1. The authority citation for part 250 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 612c, 612c note, 1431, 1431b, 
1431e, 1431 note, 1446a-1, 1859, 2014, 2025; 15 U.S.C. 713c; 22 
U.S.C. 1922; 42 U.S.C. 1751, 1755, 1758, 1760, 1761, 1762a, 1766, 
3030a, 5179, 5180.


Sec. 250.3  [Amended]

    2. In Sec. 250.3, the definitions of Food bank and Soup kitchen are 
removed.


Sec. 250.13  [Amended]

    3. In Sec. 250.13:
    a. Paragraph (a)(1)(iv) is amended by removing the words 
``emergency feeding organizations'' wherever they appear and adding the 
words ``eligible recipient agencies'' in their place.
    b. The last sentence of paragraph (k)(2) is amended by removing the 
words ``, including, for example, State Food Distribution Advisory 
Council Reports''.


Sec. 250.24  [Amended]

    4. In Sec. 250.24, paragraph (b)(4) is removed, and paragraphs 
(b)(5) and (b)(6) are redesignated as paragraphs (b)(4) and (b)(5), 
respectively.


Sec. 250.41  [Amended]

    5. In Sec. 250.41, the first sentence of paragraph (a)(1) is 
amended by removing the words ``With the exception of section 110 
commodities, which are to be distributed in accordance with the 
provisions of Sec. 250.52, the'' and adding in their place ``The''.


Sec. 250.52  [Removed]

    6. Section 250.52 is removed.

PART 251--THE EMERGENCY FOOD ASSISTANCE PROGRAM

    1. The authority citation for part 251 continues to read as 
follows:

    Authority: 7 U.S.C. 7501-7516.


Sec. 251.1  [Amended]

    2. In Sec. 251.1, the word ``Temporary'' is removed.
    3. In Sec. 251.2:
    a. Paragraph (a) is amended by adding the heading ``Food and 
Nutrition Service.'';

[[Page 72903]]

    b. Paragraph (b) is amended by adding the heading ``State 
Agencies.'', by removing the words ``emergency feeding organizations'' 
and by adding the words ``eligible recipient agencies'' in their place;
    c. Paragraph (c) is revised; and
    d. Paragraph (d) is added.
    The revision and addition read as follows:


Sec. 251.2  Administration.

* * * * *
    (c) Agreements. (1) Agreements between Department and States. Each 
State agency that distributes donated foods to eligible recipient 
agencies or receives payments for storage and distribution costs in 
accordance with Sec. 251.8 must perform those functions pursuant to an 
agreement entered into with the Department. This agreement will be 
considered permanent, with amendments initiated by State agencies, or 
submitted by them at the Department's request, all of which will be 
subject to approval by the Department.
    (2) Agreements between State agencies and eligible recipient 
agencies, and between eligible recipient agencies. Prior to making 
donated foods or administrative funds available, State agencies must 
enter into a written agreement with eligible recipient agencies to 
which they plan to distribute donated foods and/or administrative 
funds. State agencies must ensure that eligible recipient agencies in 
turn enter into a written agreement with any eligible recipient 
agencies to which they plan to distribute donated foods and/or 
administrative funds before donated foods or administrative funds are 
transferred between any two eligible recipient agencies. All agreements 
entered into must contain the information specified in paragraph (d) of 
this section, and be considered permanent, with amendments to be made 
as necessary, except that agreements must specify that they may be 
terminated by either party upon 30 days' written notice. State agencies 
must ensure that eligible recipient agencies provide, on a timely 
basis, by amendment to the agreement, or other written documents 
incorporated into the agreement by reference if permitted under 
paragraph (d) of this section, any information on changes in program 
administration, including any changes resulting from amendments to 
Federal regulations or policy.
    (d) Contents of agreements between State agencies and eligible 
recipient agencies and between eligible recipient agencies. (1) 
Agreements between State agencies and eligible recipient agencies and 
between eligible recipient agencies must provide:
    (i) That eligible recipient agencies agree to operate the program 
in accordance with the requirements of this part, and, as applicable, 
part 250 of this chapter; and
    (ii) The name and address of the eligible recipient agency 
receiving commodities and/or administrative funds under the agreement.
    (2) The following information must also be identified, either in 
the agreement or other written documents incorporated by reference in 
the agreement:
    (i) If the State agency delegates the responsibility for any aspect 
of the program to an eligible recipient agency, each function for which 
the eligible recipient agency will be held responsible; except that in 
no case may State agencies delegate responsibility for establishing 
eligibility criteria for organizations in accordance with 
Sec. 251.5(a), establishing eligibility criteria for recipients in 
accordance with Sec. 251.5(b), or conducting reviews of eligible 
recipient agencies in accordance with Sec. 251.10(e);
    (ii) If the receiving eligible recipient agency is to be allowed to 
further distribute TEFAP commodities and/or administrative funds to 
other eligible recipient agencies, the specific terms and conditions 
for doing so, including, if applicable, a list of specific 
organizations or types of organizations eligible to receive commodities 
or administrative funds;
    (iii) If the use of administrative funds is restricted to certain 
types of expenses pursuant to Sec. 251.8(e)(2), the specific types of 
administrative expenses eligible recipient agencies are permitted to 
incur;
    (iv) Any other conditions set forth by the State agency.
    4. Section 251.3 is revised to read as follows:


Sec. 251.3  Definitions.

    (a) The terms used in this part that are defined in part 250 of 
this chapter have the meanings ascribed to them therein, unless a 
different meaning for such a term is defined herein.
    (b) Charitable institution (which is defined differently in this 
part than in part 250 of this chapter) means an organization which--
    (1) Is public, or
    (2) Is private, possessing tax exempt status pursuant to 
Sec. 251.5(a)(3); and
    (3) Is not a penal institution (this exclusion also applies to 
correctional institutions which conduct rehabilitation programs); and
    (4) Provides food assistance to needy persons.
    (c) Distribution site means a location where the eligible recipient 
agency actually distributes commodities to needy persons for household 
consumption or serves prepared meals to needy persons under this part.
    (d) Eligible recipient agency means an organization which--
    (1) Is public, or
    (2) Is private, possessing tax exempt status pursuant to 
Sec. 251.5(a)(3); and
    (3) Is not a penal institution; and
    (4) Provides food assistance--
    (i) Exclusively to needy persons for household consumption, 
pursuant to a means test established pursuant to Sec. 251.5 (b), or
    (ii) Predominantly to needy persons in the form of prepared meals 
pursuant to Sec. 251.5(a)(2); and
    (5) Has entered into an agreement with the designated State agency 
pursuant to Sec. 251.2(c) for the receipt of commodities or 
administrative funds, or receives commodities or administrative funds 
under an agreement with another eligible recipient agency which has 
signed such an agreement with the State agency or another eligible 
recipient agency within the State pursuant to Sec. 251.2(c); and
    (6) Falls into one of the following categories:
    (i) Emergency feeding organizations (including food banks, food 
pantries and soup kitchens);
    (ii) Charitable institutions (including hospitals and retirement 
homes);
    (iii) Summer camps for children, or child nutrition programs 
providing food service;
    (iv) Nutrition projects operating under the Older Americans Act of 
1965 (Nutrition Program for the Elderly), including projects that 
operate congregate Nutrition sites and projects that provide home-
delivered meals; and
    (v) Disaster relief programs.
    (e) Emergency feeding organization means an eligible recipient 
agency which provides nutrition assistance to relieve situations of 
emergency and distress through the provision of food to needy persons, 
including low-income and unemployed persons. Emergency feeding 
organizations have priority over other eligible recipient agencies in 
the distribution of TEFAP commodities pursuant to Sec. 251.4(h).
    (f) Food bank means a public or charitable institution that 
maintains an established operation involving the provision of food or 
edible commodities, or the products of food or edible commodities, to 
food pantries, soup kitchens, hunger relief centers, or other food or 
feeding centers that, as an

[[Page 72904]]

integral part of their normal activities, provide meals or food to feed 
needy persons on a regular basis.
    (g) Food pantry means a public or private nonprofit organization 
that distributes food to low-income and unemployed households, 
including food from sources other than the Department of Agriculture, 
to relieve situations of emergency and distress.
    (h) Formula means the formula used by the Department to allocate 
among States the commodities and funding available under this part. The 
amount of such commodities and funds to be provided to each State will 
be based on each State's population of low-income and unemployed 
persons, as compared to national statistics. Each State's share of 
commodities and funds shall be based 60 percent on the number of 
persons in households within the State having incomes below the poverty 
level and 40 percent on the number of unemployed persons within the 
State. The surplus commodities will be allocated to States on the basis 
of their weight (pounds), and the commodities purchased under section 
214 of the Emergency Food Assistance Act of 1983 will be allocated on 
the basis of their value (dollars). In instances in which a State 
determines that it will not accept the full amount of its allocation of 
commodities purchased under section 214 of the Emergency Food 
Assistance Act of 1983, the Department will reallocate the commodities 
to other States on the basis of the same formula used for the initial 
allocation.
    (i) State agency means the State government unit designated by the 
Governor or other appropriate State executive authority which has 
entered into an agreement with the United States Department of 
Agriculture under Sec. 251.2(c).
    (j) Soup kitchen means a public or charitable institution that, as 
an integral part of the normal activities of the institution, maintains 
an established feeding operation to provide food to needy homeless 
persons on a regular basis.
    (k) Value of commodities distributed means the Department's cost of 
acquiring commodities for distribution under this part.
    5. In Sec. 251.4:
    a. The words ``emergency feeding organization'', ``emergency 
feeding organizations'' and ``emergency feeding organization's'' are 
removed wherever they appear in the section, and the words ``eligible 
recipient agency'', ``eligible recipient agencies'' and ``eligible 
recipient agency's'' respectively are added in their place;
    b. Paragraph (c)(1) is amended by removing the reference to 
``Sec. 251.3(d)'' and adding a reference to ``Sec. 251.3(h)'' in its 
place;
    c. Paragraph (d)(3) is removed;
    d. Paragraph (f)(5) is amended by removing the reference 
``Sec. 250.15'' and adding in its place the reference ``Sec. 250.30'';
    e. Paragraphs (g) and (h) are revised;
    f. Paragraph (j) is amended by adding the words ``that has signed 
an agreement with the respective State agencies'' after the words 
``eligible recipient agency'';
    The revisions read as follows:


Sec. 251.4  Availability of commodities.

* * * * *
    (g) Availability and control of donated commodities. Donated 
commodities will be made available to State agencies only for 
distribution and use in accordance with this part. Except as otherwise 
provided in paragraph (f) of this section, donated commodities not so 
distributed or used for any reason may not be sold, exchanged, or 
otherwise disposed of without the approval of the Department. However, 
donated commodities made available under section 32 of Pub. L. 74-320 
(7 U.S.C. 612c) may be transferred by eligible recipient agencies 
receiving commodities under this part, or recipient agencies, as 
defined in Sec. 250.3 of this chapter, to any other eligible recipient 
agency or recipient agency which agrees to use such donated foods to 
provide without cost or waste, nutrition assistance to individuals in 
low-income groups. Such transfers will be effected only with prior 
authorization by the appropriate State agency and must be documented. 
Such documentation shall be maintained in accordance with 
Sec. 251.10(a) of this part and Sec. 250.16 of this chapter by the 
distributing agency and the State agency responsible for administering 
TEFAP and made available for review upon request.
    (h) Distribution to eligible recipient agencies--priority system 
and advisory boards. (1) State agencies must distribute commodities 
made available under this part to eligible recipient agencies in 
accordance with the following priorities:
    (i) First priority. When a State agency cannot meet all eligible 
recipient agencies' requests for TEFAP commodities, the State agency 
must give priority in the distribution of such commodities to emergency 
feeding organizations as defined under Sec. 251.3(e). A State agency 
may, at its discretion, concentrate commodity resources upon a certain 
type or types of such organizations, to the exclusion of others.
    (ii) Second priority. After a State agency has distributed TEFAP 
commodities sufficient to meet the needs of all emergency feeding 
organizations, the State agency must distribute any remaining program 
commodities to other eligible recipient agencies which serve needy 
people, but do not relieve situations of emergency and distress. A 
State agency may, at its discretion, concentrate commodity resources 
upon a certain type or types of such organizations, to the exclusion of 
others.
    (2) Delegation. When a State agency has delegated to an eligible 
recipient agency the authority to select other eligible recipient 
agencies, the eligible recipient agency exercising this authority must 
ensure that any TEFAP commodities are distributed in accordance with 
the priority system set forth in paragraphs (h)(1)(i) and (h)(1)(ii) of 
this section. State agencies and eligible recipient agencies will be 
deemed to be in compliance with the priority system when eligible 
recipient agencies distribute TEFAP commodities to meet the needs of 
all emergency feeding organizations under their jurisdiction prior to 
making commodities available to eligible recipient agencies which are 
not emergency feeding organizations.
    (3) Existing networks. Subject to the constraints of paragraphs 
(h)(1)(i) and (h)(1)(ii) of this section, State agencies may give 
priority in the distribution of TEFAP commodities to existing food bank 
networks and other organizations whose ongoing primary function is to 
facilitate the distribution of food to low-income households, including 
food from sources other than the Department.
    (4) State advisory boards. Each State agency receiving TEFAP 
commodities is encouraged to establish a State advisory board 
representing all types of entities in the State, both public and 
private, interested in the distribution of such commodities. Such 
advisory boards can provide valuable advice on how resources should be 
allocated among various eligible outlet types, what areas have the 
greatest need for food assistance, and other important issues that will 
help States to use their program resources in the most efficient and 
effective manner possible. A State agency may expend TEFAP 
administrative funds to support the activities of an advisory board in 
accordance with Sec. 251.8 of this part.
* * * * *
    6. Section 251.5 is revised to read as follows:

[[Page 72905]]

Sec. 251.5  Eligibility determinations.

    (a) Criteria for determining eligibility of organizations. Prior to 
making commodities or administrative funds available, State agencies, 
or eligible recipient agencies to which the State agency has delegated 
responsibility for the distribution of TEFAP commodities or 
administrative funds, must ensure that an organization applying for 
participation in the program meets the definition of an ``eligible 
recipient agency'' under Sec. 251.3(d). In addition, applicant 
organizations must meet the following criteria:
    (1) Agencies distributing to households. Organizations distributing 
commodities to households for home consumption must limit the 
distribution of commodities provided under this part to those 
households which meet the eligibility criteria established by the State 
agency in accordance with paragraph (b) of this section.
    (2) Agencies providing prepared meals. Organizations providing 
prepared meals must demonstrate, to the satisfaction of the State 
agency, or eligible recipient agency to which they have applied for the 
receipt of commodities or administrative funds, that they serve 
predominantly needy persons. State agencies may establish a higher 
standard than ``predominantly'' and may determine whether organizations 
meet the applicable standard by considering socioeconomic data of the 
area in which the organization is located, or from which it draws its 
clientele. State agencies may not, however, require organizations to 
employ a means test to determine that recipients are needy, or to keep 
records solely for the purpose of demonstrating that its recipients are 
needy.
    (3) Tax-exempt status. Private organizations must--
    (i) Be currently operating another Federal program requiring tax-
exempt status under the Internal Revenue Code (IRC), or
    (ii) Possess documentation from the Internal Revenue Service (IRS) 
recognizing tax-exempt status under the IRC, or
    (iii) If not in possession of such documentation, be automatically 
tax exempt as ``organized or operated exclusively for religious 
purposes'' under the IRC, or
    (iv) If not in possession of such documentation, but required to 
file an application under the IRC to obtain tax-exempt status, have 
made application for recognition of such status and be moving toward 
compliance with the requirements for recognition of tax-exempt status. 
If the IRS denies a participating organization's application for 
recognition of tax-exempt status, the organization must immediately 
notify the State agency or the eligible recipient agency, whichever is 
appropriate, of such denial, and that agency will terminate the 
organization's agreement and participation immediately upon receipt of 
such notification. If documentation of IRS recognition of tax-exempt 
status has not been obtained and forwarded to the appropriate agency 
within 180 days of the effective date of the organization's approval 
for participation in TEFAP, the State agency or eligible recipient 
agency must terminate the organization's participation until such time 
as recognition of tax-exempt status is actually obtained, except that 
the State agency or eligible recipient agency may grant a single 
extension not to exceed 90 days if the organization can demonstrate, to 
the State agency's or eligible recipient agency's satisfaction, that 
its inability to obtain tax-exempt status within the 180 day period is 
due to circumstances beyond its control. It is the responsibility of 
the organization to document that it has complied with all IRS 
requirements and has provided all information requested by IRS in a 
timely manner.
    (b) Criteria for determining recipient eligibility. Each State 
agency must establish uniform Statewide criteria for determining the 
eligibility of households to receive commodities provided under this 
part for home consumption. The criteria must:
    (1) Enable the State agency to ensure that only households which 
are in need of food assistance because of inadequate household income 
receive TEFAP commodities;
    (2) Include income-based standards and the methods by which 
households may demonstrate eligibility under such standards; and
    (3) Include a requirement that the household reside in the 
geographic location served by the State agency at the time of applying 
for assistance, but length of residency shall not be used as an 
eligibility criterion.
    (c) Delegation of authority. A State agency may delegate to one or 
more eligible recipient agencies with which the State agency enters 
into an agreement the responsibility for the distribution of 
commodities and administrative funds made available under this part. 
State agencies may also delegate the authority for selecting eligible 
recipient agencies and for determining the eligibility of such 
organizations to receive commodities and administrative funds. However, 
responsibility for establishing eligibility criteria for organizations 
in accordance with paragraph (a) of this section, and for establishing 
recipient eligibility criteria in accordance with paragraph (b) of this 
section, may not be delegated. In instances in which State agencies 
delegate authority to eligible recipient agencies to determine the 
eligibility of organizations to receive commodities and administrative 
funds, eligibility must be determined in accordance with the provisions 
contained in this part and the State plan. State agencies will remain 
responsible for ensuring that commodities and administrative funds are 
distributed in accordance with the provisions contained in this part.
    7. Section 251.6 is revised to read as follows:


Sec. 251.6  Distribution plan.

    (a) Contents of the plan. The State agency must submit for approval 
by the appropriate FNS Regional Office a plan which contains:
    (1) A designation of the State agency responsible for distributing 
commodities and administrative funds provided under this part, and the 
address of such agency;
    (2) A plan of operation and administration to expeditiously 
distribute commodities received under this part;
    (3) A description of the standards of eligibility for recipient 
agencies, including any subpriorities within the two-tier priority 
system; and
    (4) A description of the criteria established in accordance with 
Sec. 251.5(b) which must be used by eligible recipient agencies in 
determining the eligibility of households to receive TEFAP commodities 
for home consumption.
    (b) Plan submission. A complete plan will be required for Fiscal 
Year 2001, to be submitted no later than August 15, 2000. Thereafter, a 
complete plan must be submitted every 4 years, due no later than August 
15 of the fiscal year prior to the end of the 4 year cycle.
    (c) Amendments. State agencies must submit amendments to the 
distribution plan to the extent that such amendments are necessary to 
reflect any changes in program operations or administration as 
described in the plan, or at the request of FNS, to the appropriate FNS 
Regional Office.
    8. Section 251.7 is revised to read as follows:


Sec. 251.7  Formula adjustments.

    (a) Commodity adjustments. The Department will make annual 
adjustments to the commodity allocation for each State, based on 
updated unemployment statistics. These adjusted allocations will be 
effective for

[[Page 72906]]

the entire fiscal year, subject to reallocation or transfer in 
accordance with this part.
    (b) Funds adjustments. The Department will make annual adjustments 
of the funds allocation for each State based on updated unemployment 
statistics. These adjusted allocations will be effective for the entire 
fiscal year unless funds are recovered, withheld, or reallocated by FNS 
in accordance with Sec. 251.8(f).
    9. In Sec. 251.8:
    a. Paragraph (a) is amended by removing the reference 
``Sec. 251.3(d)'' and adding in its place the reference 
``Sec. 251.3(h)'';
    b. Paragraph (b) is amended by removing the reference ``part 3015'' 
and adding in its place the reference ``part 3016 or part 3019, as 
applicable.'';
    c. Paragraph (c)(1) is amended by removing the words ``U.S. 
Treasury Department checks or'';
    d. Paragraph (c)(2) is amended by:
    1. removing the words ``FNS Instruction 407-3 (Grant Award 
Process)'' and adding in their place the words ``procedures established 
by FNS'';
    2. removing from the first sentence the words ``either'' and ``or a 
U.S. Treasury check pursuant to submission of the SF-270, Request for 
Advance or Reimbursement'';
    3. removing the second sentence; and
    4. removing reference to ``Sec. 251.8(e)'' and in its place adding 
reference to ``paragraph (f) of this section'';
    e. Paragraphs (d) and (e) are redesignated as paragraphs (e) and 
(f), and new paragraph (d) is added; and
    f. Newly redesignated paragraph (e) is revised.
    The addition and revision read as follows:


Sec. 251.8  Payment of funds for administrative costs.

* * * * *
    (d) Priority for eligible recipient agencies distributing USDA 
commodities. State agencies and eligible recipient agencies 
distributing administrative funds must ensure that the administrative 
funding needs of eligible recipient agencies which receive USDA 
commodities are met, relative to both USDA commodities and any non-USDA 
commodities they may receive, before such funding is made available to 
eligible recipient agencies which distribute only non-USDA commodities.
    (e) Use of funds. (1) Allowable administrative costs. State 
agencies and eligible recipient agencies may use funds made available 
under this part to pay the direct expenses associated with the 
distribution of USDA commodities and commodities secured from other 
sources to the extent that the commodities are ultimately distributed 
by eligible recipient agencies which have entered into agreements in 
accordance with Sec. 251.2. Direct expenses include the following, 
regardless of whether they are charged to TEFAP as direct or indirect 
costs:
    (i) The intrastate and interstate transport, storing, handling, 
repackaging, processing, and distribution of commodities; except that 
for interstate expenditures to be allowable, the commodities must have 
been specifically earmarked for the particular State or eligible 
recipient agency which incurs the cost;
    (ii) Costs associated with determinations of eligibility, 
verification, and documentation;
    (iii) Costs of providing information to persons receiving USDA 
commodities concerning the appropriate storage and preparation of such 
commodities;
    (iv) Costs involved in publishing announcements of times and 
locations of distribution; and
    (v) Costs of recordkeeping, auditing, and other administrative 
procedures required for program participation.
    (2) State restriction of administrative costs. A State agency may 
restrict the use of TEFAP administrative funds by eligible recipient 
agencies by disallowing one or more types of expenses expressly allowed 
in paragraph (e)(1) of this section. If a State agency so restricts the 
use of administrative funds, the specific types of expenses the State 
will allow eligible recipient agencies to incur must be identified in 
the State agency's agreements with its eligible recipient agencies, or 
set forth by other written notification, incorporated into such 
agreements by reference.
    (3) Agreements. In order to be eligible for funds under paragraph 
(e)(1) of this section, eligible recipient agencies must have entered 
into an agreement with the State agency or another eligible recipient 
agency pursuant to Sec. 251.2(c).
    (4) Pass-through requirement-local support to emergency feeding 
organizations. (i) Not less than 40 percent of the Federal Emergency 
Food Assistance Program administrative funds allocated to the State 
agency in accordance with paragraph (a) of this section must be:
    (A) Provided by the State agency to emergency feeding organizations 
that have signed an agreement with the State agency as either 
reimbursement or advance payment for administrative costs incurred by 
emergency feeding organizations in accordance with paragraph (e)(1) of 
this section, except that such emergency feeding organizations may 
retain advance payments only to the extent that they actually incur 
such costs; or
    (B) Directly expended by the State agency to cover administrative 
costs incurred by, or on behalf of, emergency feeding organizations in 
accordance with paragraph (e)(1) of this section.
    (ii) Any funds allocated to or expended by the State agency to 
cover costs incurred by eligible recipient agencies which are not 
emergency feeding organizations shall not count toward meeting the 
pass-through requirement.
    (iii) State agencies must not charge for commodities made available 
under this part to eligible recipient agencies.
* * * * *
    10. In Sec. 251.9:
    a. The words ``emergency feeding organization'' and ``emergency 
feeding organizations'' are removed wherever they appear in the 
section, and added in their place are the words ``eligible recipient 
agency'' and ``eligible recipient agencies'' respectively;
    b. Paragraph (a) is revised;
    c. Paragraph (c) introductory text and paragraph (c)(2)(i) are 
amended by removing the references ``3016.24(b)(1)'' and ``3016.24(c) 
through 3016.24(f)'' and adding the reference ``part 3016 or 3019, as 
applicable'' in their place;
    d. Paragraph (e) is removed, and paragraphs (f) and (g) are 
redesignated as paragraphs (e) and (f), respectively;
    e. Newly redesignated paragraph (e) is amended by removing the 
words ``SF-269, Financial Status Report'' and adding the words ``FNS-
667, Report of TEFAP Administrative Costs'' in their place.
    f. Newly redesignated paragraph (f) is amended by removing the 
reference ``SF-269'' wherever it appears and adding the reference 
``FNS-667'' in its place.
    The revision reads as follows:


Sec. 251.9  Matching of funds.

    (a) State matching requirement. The State must provide a cash or 
in-kind contribution equal to the amount of TEFAP administrative funds 
received under Sec. 251.8 and retained by the State agency for State-
level costs or made available by the State agency directly to eligible 
recipient agencies that are not emergency feeding organizations as 
defined in Sec. 251.3(e). The State agency will not be required to 
match any portion of the Federal grant passed through for 
administrative costs incurred by emergency feeding organizations or 
directly expended by the State agency for such costs in

[[Page 72907]]

accordance with Sec. 251.8(e)(4) of this part.
* * * * *
    11. In Sec. 251.10:
    a. Paragraph (a) is revised;
    b. Paragraph (b) is amended by adding the words ``commodities 
distributed for home consumption and meals prepared from'' after the 
word ``law,'';
    c. Paragraph (c) is amended by adding the words ``for home 
consumption or availability of meals prepared from commodities'' after 
the word ``foods''.
    d. Paragraphs (d) and (e) are revised;
    e. Paragraph (f) is amended by:
    1. removing the words ``emergency feeding organizations and 
distribution sites'', ``emergency feeding organization or distribution 
site'' and ``emergency feeding organization's or distribution site's'' 
wherever they appear, and adding in their place the words ``eligible 
recipient agencies'', ``eligible recipient agency'' and ``eligible 
recipient agency's'' respectively;
    2. adding the words ``or meal service'' after the word ``foods'' in 
paragraph (f)(1) introductory text;
    3. adding the words ``for home consumption or prepared meals 
containing TEFAP commodities'' after the word ``commodities'' in 
paragraph (f)(1)(ii);
    4. adding the words ``or meal service'' at the end of paragraph 
(f)(1)(iii);
    5. adding the words ``or meal service'' after the word ``foods'' in 
paragraph (f)(2); and
    6. removing the words ``the distribution of commodities by'' in 
paragraph (f)(4);
    f. Paragraph (g) is amended by removing the words ``emergency 
feeding organizations'' and adding in their place ``eligible recipient 
agencies'';
    g. Paragraph (h) is revised.
    The revisions read as follows:


Sec. 251.10  Miscellaneous provisions.

    (a) Records. (1) Commodities. State agencies, subdistributing 
agencies (as defined in Sec. 250.3 of this chapter), and eligible 
recipient agencies must maintain records to document the receipt, 
disposal, and inventory of commodities received under this part that 
they, in turn, distribute to eligible recipient agencies. Such records 
must be maintained in accordance with the requirements set forth in 
Sec. 250.16 of this chapter. Eligible recipient agencies must sign a 
receipt for program commodities which they receive under this part for 
distribution to households or for use in preparing meals, and records 
of all such receipts must be maintained.
    (2) Administrative funds. In addition to maintaining financial 
records in accordance with 7 CFR part 3016, State agencies must 
maintain records to document the amount of funds received under this 
part and paid to eligible recipient agencies for allowable 
administrative costs incurred by such eligible recipient agencies. 
State agencies must also ensure that eligible recipient agencies 
maintain such records.
    (3) Household information. Each distribution site must collect and 
maintain on record for each household receiving TEFAP commodities for 
home consumption, the name of the household member receiving 
commodities, the address of the household (to the extent practicable), 
the number of persons in the household, and the basis for determining 
that the household is eligible to receive commodities for home 
consumption.
    (4) Record retention. All records required by this section must be 
retained for a period of 3 years from the close of the Federal Fiscal 
Year to which they pertain, or longer if related to an audit or 
investigation in progress. State agencies may take physical possession 
of such records on behalf of their eligible recipient agencies. 
However, such records must be reasonably accessible at all times for 
use during management evaluation reviews, audits or investigations.
* * * * *
    (d) Reports. (1) Submission of Form FNS-667. Designated State 
agencies must identify funds obligated and disbursed to cover the costs 
associated with the program at the State and local level. State and 
local costs must be identified separately. The data must be identified 
on Form FNS-667, Report of Administrative Costs (TEFAP) and submitted 
to the appropriate FNS Regional Office on a quarterly basis. The 
quarterly report must be submitted no later than 30 calendar days after 
the end of the quarter to which it pertains. The final report must be 
submitted no later than 90 calendar days after the end of the fiscal 
year to which it pertains.
    (2) Reports of excessive inventory. Each State agency must complete 
and submit to the FNS Regional Office reports to ensure that excessive 
inventories of donated foods are not maintained, in accordance with the 
requirements of Sec. 250.17(a) of this chapter.
    (e) State monitoring system. (1) Each State agency must monitor the 
operation of the program to ensure that it is being administered in 
accordance with Federal and State requirements. State agencies may not 
delegate this responsibility.
    (2) Unless specific exceptions are approved in writing by FNS, the 
State agency monitoring system must include:
    (i) An annual review of at least 25 percent of all eligible 
recipient agencies which have signed an agreement with the State agency 
pursuant to Sec. 251.2(c), provided that each such agency must be 
reviewed no less frequently than once every four years; and
    (ii) An annual review of one-tenth or 20, whichever is fewer, of 
all eligible recipient agencies which receive TEFAP commodities and/or 
administrative funds pursuant to an agreement with another eligible 
recipient agency. Reviews must be conducted, to the maximum extent 
feasible, simultaneously with actual distribution of commodities and/or 
meal service, and eligibility determinations, if applicable. State 
agencies must develop a system for selecting eligible recipient 
agencies for review that ensures deficiencies in program administration 
are detected and resolved in an effective and efficient manner.
    (3) Each review must encompass, as applicable, eligibility 
determinations, food ordering procedures, storage and warehousing 
practices, inventory controls, approval of distribution sites, 
reporting and recordkeeping requirements, and civil rights.
    (4) Upon concurrence by FNS, reviews of eligible recipient agencies 
which have been conducted by FNS Regional Office personnel may be 
incorporated into the minimum coverage required by paragraph (e)(2) of 
this section.
    (5) If deficiencies are disclosed through the review of an eligible 
recipient agency, the State agency must submit a report of the review 
findings to the eligible recipient agency and ensure that corrective 
action is taken to eliminate the deficiencies identified.
* * * * *
    (h) Maintenance of effort. The State may not reduce the expenditure 
of its own funds to provide commodities or services to organizations 
receiving funds or services under the Emergency Food Assistance Act of 
1983 below the level of such expenditure existing in the fiscal year 
when the State first began administering TEFAP, or Fiscal Year 1988, 
which is the fiscal year in which the maintenance-of-effort requirement 
became effective, whichever is later.

    Dated: December 21, 1999.
Samuel Chambers, Jr.,
Administrator.
[FR Doc. 99-33619 Filed 12-28-99; 8:45 am]
BILLING CODE 3410-30-U